Oblivion

FISH modified

Some days it’s hard to make up news like this.

Take Twitter, for example, which Thursday released its latest operating results. Growth in new users is down by about a third and – guess what? – the company makes no money. It actually loses a lot. So investors mercilessly punished the stock, sending it hurtling downward by 24% in a single day.

Remember why I told you holding individual stocks is only appropriate for rich people with enough money to achieve diversification? Yup. This is why. Even on a day when the overall markets had triple-digit gains (and broad ETFs pranced higher), Twitter was shot out of the sky. Do you realize how long it takes for a stock to recover from that kind of whack?

Then we heard the drummer in Stephen Harper’s band (he has a band?) has been charged with sexual assault. Oops. This came with news the pilots on Justin Beiber’s plane had to wear oxygen masks a few days ago because of the pot smoke in the cabin. And Rob Ford won’t attend the gay pride parade, “because that’s the way I am.” And it’s minus 8 in Vancouver.

The nation is pooched, people.

But the biggest news comes from BeeMo, which has just confirmed most Canadians continue on a path to financial oblivion. The bank decided to ask people about tax-free savings accounts which, as you know, have a fond place in my otherwise steely, dark heart. I almost forgave the elfin deity for encouraging Conservative MPs to throw my sorry ass out of the party and Parliament the day he gave TFSAs the green light in 2009. Almost. Because it was the right move for people who seem absolutely incapable of investing.

So simple. Put away five-and-a-half grand a year. Invest it in growth assets (not Twitter stock). Enjoy decades of compounding. Take it out free of tax and finance retirement. As I’ve told you, a 30-year-old hipster with a Vespa, tats and no discipline who did so, achieving an average 7% return, would have well over $800,000 in there by age 65. That’s equivalent to a taxable RRSP of more than $1.1 million.

All for a hundred bucks a week. Like, seriously.

So what did BMO find people are actually doing?

About half of Canadians now have a TFSA, which is a big (23%) jump over last year. Fine. But half of them are using it simply as an emergency fund – a little cookie jar on the kitchen shelf with money used when you need an emergency trip to the Turks & Caicos, or new emergency Lululemon pants, or maybe an emergency new Moen faucet.

Ninety per cent of people have no idea (other than money) of what they can put into a TFSA, which may be because most of them open one at the bank. Eighty per cent don’t have a clue how much cash can be contributed annually. And, worst of all, 80% of all the money in TFSAs is sitting in either cash (57%) or GICs (23%). Arghh.

By the way, a fully-funded TFSA earning 1% over 35 years would be worth $236,000. Not bad, although most of the wealth would come from the annual contribution. And it’s still $600,000 less than investing in assets that simply pace historic market gains.

This should show, graphically, why most people fail in a world where 70% no longer have viable corporate pensions and the government hands old people crumbs. Five years ago the little pecker gave everyone a money machine, and yet 80% have turned it into a planter. Of course, at the same time, debt levels have raced off the chart.

I yakked today with an up-and-coming executive-type 35-year-old who told me he has 90% of his considerable savings in cash. Yep, including the TFSA. Why, I asked? The usuals – too busy, no idea where to put it, maybe need emergency money someday. “You’re afraid, aren’t you?” I said. And he is.

Fear of loss is debilitating, massively exaggerated, and pervasive. Every week I’m shocked at how many people I meet half my age who have absolutely no confidence – and whose phobia is crippling them. The greatest evidence they could have that investing, rather than saving, would blow up is 2008. And yet anybody who yawned their way through the biggest meltdown in 80 years lost nothing.

I can argue convincingly why another 2008 will not occur, why real estate is a far bigger risk than a balanced portfolio and why running out of money is massively worse than temporarily losing some. But what’s the point? The future course of this society is now set, and a large part of the herd is going over the cliff.

Enough. I’m running away to be a drummer.

190 comments ↓

#1 Mike on 02.06.14 at 9:44 pm

Twitter has no profit whatsoever, it’s a joke.
People are valuing companies like it’s 2000 again :)

#2 ShowBiZZa on 02.06.14 at 9:46 pm

Furst – Never underestimate the stupidity of people. Especially when they are following the ‘herd mentality’. These Toronto bidding wars are like a bunch of lemmings falling off a cliff.

Second – “Irrational exuberance” is a phrase used by the then-Federal Reserve Board chairman, Alan Greenspan, in a speech given at the American Enterprise Institute during the Dot-com bubble of the 1990s. The phrase was interpreted as a warning that the market might be somewhat overvalued.

Third – F and Harper have really F’d up the future for Canada. They have simply ‘put off’ a brutal recession until later by jacking the housing market to these ridiculous highs.

Fourth – All the best for a speedy recovery GT. Head to the sunny south for a well deserved vacation and heal up with lots of vit D to help your bones heal.

#3 DR on 02.06.14 at 9:47 pm

A drummer?

There’s an opening. — Garth

#4 Derek R on 02.06.14 at 9:48 pm

Looking on the bright side, St Valentine’s is coming up. There’s an opportunity to make someone happy!

#5 not 1st on 02.06.14 at 9:48 pm

Garth, the Twitter debacle has nothing to do with investing in individual stocks. It has everything to do with a speculative tech bubble that its been built on along with about a dozen other companies. Thats an important distinction.

#6 AlbertaGuy on 02.06.14 at 9:51 pm

FOIST!

#7 TurnerNation on 02.06.14 at 9:52 pm

Ha must be Smoking man in the pic.

#8 John in Mtl on 02.06.14 at 9:53 pm

Well, I can see that you march to the tune of your own drums. And rightly so!

I hope you leg is healing well.

J

#9 AlbertaGuy on 02.06.14 at 9:53 pm

I meant to say its the FOIST investment i make each year! Thanks Garth!

#10 timmy on 02.06.14 at 9:53 pm

Citing a risky tech stock with no track record as a reason people shouldn’t buy individual stocks is a silly and unrepresentative example. How many blue chip, dividend-paying stocks fall 24% in one day? Or, even2.4%? My portfolio is in individual stocks, and I’m only down 2% with this latest downturn. That is less than the S&P 500 and less than the TSX.

Guess how people pick stocks? — Garth

#11 MarcFromOttawa on 02.06.14 at 9:54 pm

If I plan to hold a position for 20+ years, would I be better off buying the individual stock? For example the top 10 positions in XIU for the Canadian component of a portfolio.

Does anybody have input on this asset allocation:
25% VTI
25% VXUS
25% VCN
25% VAB + cash

*shamelessly stolen from another forum

#12 Schlitz on 02.06.14 at 9:54 pm

Sad to hear so few use the TFSA. Not the FIRST time I’ve heard this.

#13 first on 02.06.14 at 9:57 pm

First!!!

#14 allan on 02.06.14 at 9:59 pm

can I have a TFSA account with a monthly deposit plan

#15 Smoking Man on 02.06.14 at 9:59 pm

Ha. passive aggression to old foes.

Well I’m sorry to report I missed the first class. I was 40 minutes early, but desided to have a pint to get over first day of school
gitters.

Well on turned to two, two to three then 4.

I still had time to make it. But decided to just go home and try again next week.

Which was a good thing. I would have looked like an idiote. I When I got home, I looked over the info. The course starts next week

#16 SuperKing on 02.06.14 at 10:00 pm

I think we’re past the cliff by now… this is the moment where Wile E Coyote ran past and is running on air and is starting to realize it… you know what comes next.

#17 Andrewski on 02.06.14 at 10:00 pm

http://www.tfsa.gc.ca/

Do not forego this excellent account!

#18 Jim Dandy on 02.06.14 at 10:02 pm

first post from a big fan. Not for first overall, first for me…whatever.

I dont get why the general advice isnt to max out RSP contributions for the tax refund and put that in the tfsa until both are maxed, but rsp first, and contribute the tax refund and any extra to the tfsa. Thoughts?

I may be single and have a pension contribution that makes maxing my rsp easy.

#19 Cow Man on 02.06.14 at 10:04 pm

Sir Garth:
I spoke with my TD Waterhouse advisor yesterday, about what cash accounts we held. I said that the one was for the next car. He said that is what at TSFA is for. Put the car savings into a TSFA. I suggested it should be for growth assets and would be too volatile for a savings vehicle. No! he said that is where you put cash. Just saying.

Get a real advisor. — Garth

#20 Victoria Real Estate Update on 02.06.14 at 10:05 pm

. . . . . . . . . . Percentage Price Decline From Peak . . . . . . . . .
. . . . . . . . . Greater Victoria – Single Family Homes. . . . . . .
. . . . . . . . . . . . . . (MLS Home Price Index). . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . .0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 0.5%. . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.0%. . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 2.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 3.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 4.5%. . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5.5%. . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . .
– 6.0%. . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . . . . . .
– 6.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 7.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 8.0%. . . . . . . . . . . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . .
– 8.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . . . . . . . . .
– 9.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 9.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-10.5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
-11.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . *. . . *. . .
———————————————————————————————–
. . . . . . . . . .10. . . . . . 11. . . . . . .12. . . . . . . 13. . . . . .14. .

This is a 6-month price chart for Greater Victoria single family homes. Price levels were plotted for June and December of each year. As well, price levels were plotted for January 2014 and the peak (May 2010).

This chart was put together using MLS home price index data.

So far single family home prices across Greater Victoria have declined 11% below peak.

This is a significant correction as it leaves many first-time buyers (who used minimum down payments) with underwater mortgages. It effectively eliminates them as move-up buyers. Many condo and townhouse first-time buyers (from 2007 through 2012) are also stuck with undewater mortgages.

Underwater mortgages contributed significantly to price declines in cities such as Miami, Phoenix, Los Angeles, Las Vegas, etc. as house prices in the US corrected.

Girls and guys, now is not the time to buy a house in Victoria. House prices will correct much more than 10-15%. Why?

* 5-year mortgage rates hit bottom last year and will generally follow an upward path in years to come. This will contribute to low sales and lower prices.

* As I’ve mentioned, there are plenty of mortgage holders in Victoria with underwater mortgages and this will contribute to low sales and further price declines.

* House prices in Victoria are still far above the level where fundamentals could potentially provide price support. The bubbliest US markets (for example Miami, Las Vegas, Phoenix, etc.) generally experienced price corrections that dipped down to the level where fundamentals (incomes and rents) were able to provide price support. The same will happen in Victoria.

Renting for now is a no-brainer. It gives you the opportunity to save money for a down payment. As well, you get to watch house prices decline, knowing that you will pay significantly less for a house when the time is right to buy. It wouldn’t be much fun to be stuck with an underwater mortgage and be forced to watch the value of your house drop significantly.

#21 NFN_NLN on 02.06.14 at 10:07 pm

Loaves and fishies
January 26th, 2014

“The last fifteen will go into growth assets – six into an ETF holding the 60 biggest companies in Canada, and nine into one owning the 500 largest corps operating in the US. Let’s wait a bit, I said, and see if this truly is the correction I’ve been expecting. If so, we’ll buy at the appropriate point.”

So I’m assuming the 500 largest US corp ETF is SPY? It dropped a bit since your article and sits below 20 on the Stochastic. Is it now the appropriate time?

I got a little spanked on CPD so I thought I would get your latest opinion.

#22 JRH on 02.06.14 at 10:08 pm

It’s always good to have some cash under the mattress, and a Tata would make an excellent vehicle compared to a Vespa.

#23 Adrian on 02.06.14 at 10:08 pm

Garth you are absolutely right that people are afraid of loss in this unusual and centrally manipulated economy. Please do make the argument sometime why you do not see another 2008 coming, I think there would be plenty of us interested in hearing it.

#24 vangrrl on 02.06.14 at 10:09 pm

Minus 8 and I’m still commuting by bike… These blue skies beat the rain any day!!!

#25 baddog on 02.06.14 at 10:09 pm

I had planned to open a tfsa after tax season at Scotiabank. They seem to have a selection of preferred shares, reits and etf’s that you have spoken at length about. I was actually feeling kind of smart. Other than a bank where can you open a tfsa??

#26 recharts on 02.06.14 at 10:13 pm

I yakked today with an up-and-coming executive-type 35-year-old who told me he has 90% of his considerable savings in cash. Yep, including the TFSA. Why, I asked? The usuals – too busy, no idea where to put it, maybe need emergency money someday. “You’re afraid, aren’t you?” I said. And he is.

you must be kidding! Who wouldn’t be afraid with these overvaluation of assets no matter what their nature is.

#27 pinstripe on 02.06.14 at 10:14 pm

The dot.com was a lesson for investors.

The 2008 crash was another lesson for investors.

It is a fact that the current market is RIGGED.

It is no surprise that many people are not willing to risk their money in this kind of investment environment.

#28 Smoking Man on 02.06.14 at 10:15 pm

For the last four years I’ve been preaching, the herd is afraid of markets, they only trust real estate. The herd is the market.

To dudes that have been around a while, know of what a speak.

But am glad Garth you are finally putting more weight on the psyche of track6ers, that
fundamentals are cool when looking back in the mirror.

#29 Ozy -let us retire rich on 02.06.14 at 10:20 pm

let us retire rich – stop the blog and let the young in debt above their heads

we need to retire in style – let them work and pay taxes

#30 Ben on 02.06.14 at 10:25 pm

Anyone young now simply cannot compete with the older generations who bought into housing before it rocketed.

They get a $400K bump for *nothing*. How many young people, who are paying a much bigger chunk on rent from their wages, can save $400K? It’ll take most of them most of their working lives.

#31 JL on 02.06.14 at 10:29 pm

Garth we hardly agree on everything but I think we’re on the same page about this guy:

http://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/already-carrying-two-mortgages-can-carl-62-afford-florida/article16683062/

Can you please help this guy out?? What a disaster. 65 years old, two mortgages and $150,000 in savings.

#32 Victor V on 02.06.14 at 10:33 pm

John Ivison: Tony Clement won ‘sick days’ skirmish, but decisive battle with unions still to come

http://fullcomment.nationalpost.com/2014/02/06/john-ivison-tony-clement-won-sick-days-skirmish-but-decisive-battle-with-unions-still-to-come/

#33 Smoking Man on 02.06.14 at 10:33 pm

#136 Homehung on 02.06.14 at 7:27 pm

Your right, a few crack heads and drunks around South side johnees , hell you could have been on off the few who had a real life smoking man sighting.

But to a prolific writer, this place is rich in characters, and stories
It’s not always going to be that way.

In the three years I’ve been here, I have seen a huge exit of low life’s. The train station, hell if your not there by 6am no parking spots. 3 years ago 8:30 lots of spots.

Confession, I have a few properties here…. :=)

I’m good on the long bet…

#34 Howard Smith on 02.06.14 at 10:34 pm

#25 Baddog

Google ” online brokerage tfsa”

#35 Chris on 02.06.14 at 10:43 pm

A large part of the herd may be going over the cliff, but there are many who read your blog, and enjoy the wit, and perception, and humour that you bring to it. Thank you!

#36 not 1st on 02.06.14 at 10:46 pm

“Most of the world’s richest people, even Warren Buffett, first made their fortunes by owning businesses, managing investments for others or inheriting it, not by investing in stocks and bonds themselves.”

http://business.financialpost.com/2014/02/05/how-to-invest-like-millionaires-do-or-at-least-copy-their-moves/

#37 Obvious Truth on 02.06.14 at 10:46 pm

Rosenbergs yakking about an unemployment rate falling too fast in the US. Seems like Fed doves are following the hawks who are getting more hawkish. Prices paid trend seems up and fed gave us the nugget that lending is up. Also testing liquidity removal facility thingy.

Australia seems to have tightening bias with rising inflation and joblessness? Canadian template?

#whodathunk

#38 Retired Boomer - WI on 02.06.14 at 10:46 pm

Garth, I hate to point to the obvious, but you ARE a drummer. A “drummer” in the colloquial term where I was raised is a salesman. You sir, have been “selling” a lot of people, and for free here, practical investment advice since I found this pathetic blog.

Thank you for already being the drummer to the investing clueless and unaware. I am quite sure you have saved many from a lifetime of GIC returns, or worse.

Hope the leg is mending without further incident.

Yeah, the stats do not look good for the great majority of Boomers edging toward idleness. Only about 20% have wealth independence, while a seemingly large percentage will carry a mortgage into retirement. Does one expect to pay a mortgage on the government old age pension in Canada? Hmmm…. must be quite a bit more generous than our social security payments here in the states.
Ours is tied to one’s personal earnings record, and you are first eligible at 62 with a 30% haircut. For the Boomers normal retirement age for drawing SS will be 66, but you can earn an 8% bonus each year you delays til 70. So, let us assume you wait til 70. You get a 32% bonus for the rest of your days.
If you have taxable savings, (think 401-K or your RRSP) it pays to use those rather than your SS benefits while you let the grow for the bigger pay off.
DEBT in retirement to me, would be a nightmare! Prior planning prevents poor performance. An old saw but, true
Heal well.

#39 Dr. Pain Pill on 02.06.14 at 10:49 pm

“A drummer?

There’s an opening. — Garth”

But why would you want to join a band with a mediocre keyboard player who is a lousy singer and worse prime minister?

#40 Matt Hughes on 02.06.14 at 10:50 pm

I’ve been collecting Toronto real estate sales data since September. Here’s a weekly chart (NOT approved by CREA/OREA):

http://jsbin.com/powug

#41 sheane wallace on 02.06.14 at 10:54 pm

Stock markets will thrive, specially dividend paying stocks.
ETFs are always better than individual stocks specially Vanguard ETFs (very little fees). Garth is spot on.

It seems currency swaps would help maintain currency stability.

It seems 25 % real estate, 65 % dividend paying stocks, 10 % gold and gold stocks in ETFs that pay dividend is good idea.

Gold as insurance as it behaves well in deflation/depression
That 10 % could be 5 % physical gold, platinum and silver, 5% stocks JUST IN CASE.

And no bonds in my portfolio, maybe some prefferreds.

#42 sheane wallace on 02.06.14 at 10:59 pm

In case if a black swan event I have some JDXJ.

I like physical silver and platinum better than gold but in very small allocations, max 5 %.

I figured out in the worse case scenario my grandchildren will play monopoly with real silver/gold/platinum.

#43 Trojan House on 02.06.14 at 10:59 pm

“I can argue convincingly why another 2008 will not occur…” Please do.

#44 quebec economist on 02.06.14 at 11:07 pm

My plan is to retire when my TFSA reachs 500 000$. I average 18% gains per year. (last 10 years) In this case, say I take out 10% of gains per year that is $50 000.

This is plenty for my needs since…

1. This is totally tax free money!
2. I am not touching the capital except in bad years
3. I don’t have to invest anymore…

Obviously reaching 500 000$ in a TFSA is a challenge. Must play smart and be ready for the golden (not too risky) opportunities. 10 000$ can easily become 100 000$ when you play smart. Please I am not encouraging you to play risky, money disappears faster than it multiplies. (pssst, if you want a secret NMX is a probable 10X in the short term (play at your own risks)….

#45 Anonymous on 02.06.14 at 11:12 pm

Did anyone see the house in Leaside that beat the Roncy and Junction places for price stupidity?
195 Glenvale Blvd
old brick bungalow, advertised as a teardown. Offered at 748,800….sold for 1,016,000!
Seriously!!! Someone was dipping into Rob Ford’s personal stash when they wrote that offer!

#46 quebec economist on 02.06.14 at 11:13 pm

to add to your gloom…

(news this morning)

The loonie was down 0.08 of a cent to 90.15 cents US as Statistics Canada reported that the trade deficit widened to $1.7 billion in December, from $1.5 billion in November.

don’t worry folks an extra .2 billion trade deficit is nothing!

#47 David FB on 02.06.14 at 11:15 pm

re: drummer
Live venues are dying and with them live drummers. Many bands use sequencers now.
ie: poor investment choice, Garth

for example:
http://www.youtube.com/watch?v=BegSVUrTZkg

#48 TurnerNation on 02.06.14 at 11:19 pm

Oh yeah, really snuck into a Scotch tasting at the Shangri-La tonite. Macallan; tried all four types. Twas good, but dunno usually stick to a few beers so I’m kinda meh.
#scotchfuelled

#49 sheane wallace on 02.06.14 at 11:20 pm

#41 Trojan House on 02.06.14 at 10:59 pm
“I can argue convincingly why another 2008 will not occur…” Please do.
—————————
it won’t because:
– stocks are undervalued compared to future profits.
– the additional money supply drives up corporate profits
– middle class is not a player any more
– there would be NO hyperinflation, on the contrary there is a very good chance of muddle through and even economic renaissance.
– get capital, not debt
– don’t listen to sites like zerohedge, they are mostly extremists, the life will go despite their doom and gloom
– even 20 % percents drop in stocks in IN-SEQUENTIAL in the grand scheme of things, it would be compensated very quickly.
– banks will NOT FAIl as they are capitalized, these 2-3 trillions in excess reserves guarantees it.
– Yes there would be inflation so stay away from bonds and prepare for higher (not much) interest rates
……

#50 X on 02.06.14 at 11:23 pm

re #19 – Guess which makes the bank more money, your TFSA sitting in cash or invested in assets. Consider the source of your ‘advice’. Just saying.

#51 quebec economist on 02.06.14 at 11:23 pm

don’t worry garth, I was attentive enough to get your drummer joke…have fun ;)

#52 World According To Garth on 02.06.14 at 11:28 pm

Garth a poster yesterday said the market volume was falling and you made fun of him and said he was wrong. I posted you a graph showing 2009 DOW 400 million a day and 2014 200 million a day. You refused to post it maybe because the link was too long. Anyone can go look it up yet you ignored it. Other people have mentioned you are doing allot of cherry picking and insulting people these days. WE LOVE YOUR BLOG. But you can you please be fair?

LOTS of people here have posted valid points as to why you are wrong about 2008. No one has a crystal ball.

“I can argue convincingly why another 2008 will not occur, why real estate is a far bigger risk than a balanced portfolio and why running out of money is massively worse than temporarily losing some. But what’s the point? The future course of this society is now set, and a large part of the herd is going over the cliff.”

#53 sheane wallace on 02.06.14 at 11:30 pm

by IN-SEQUENTIAL i meant OF NO SIGNIFICANCE, OF NO IMPORTANCE.

#54 sheane wallace on 02.06.14 at 11:31 pm

inconsequential

#55 sheane wallace on 02.06.14 at 11:33 pm

It seems I dislike ‘CON’ …

#56 mark on 02.06.14 at 11:35 pm

Pa, rum, pa, pum, pum.

#57 Happy Renting on 02.06.14 at 11:41 pm

“when you need an emergency trip to the Turks & Caicos, or new emergency Lululemon pants, or maybe an emergency new Moen faucet.”

If F would just raise the contribution limit faster, there’d be room in the TFSA for all three!

All joking aside, people who are house poor, spend every cent they make, or are just plain broke don’t have money for retirement savings, so emergency funds are all that’s left (if that) for the TFSA. Sad, really.

Your 35-ish exec type just goes to show that investing savvy is a completely different thing than other business skills. You need to be able to make rational decisions and have a good grip on your emotions, which isn’t in everyone’s nature. I find people are very emotional (vs. logical) when it comes to their beliefs about money. Hope Mr. Future Exec has a hefty pay package someday in the future, and saves the lion’s share of it.

#58 Retired WI Curmudgeon on 02.06.14 at 11:42 pm

Garth-

What sound does a “large part of the herd make going over the cliff.” Is the sound immediately noticeable, or do you have to wait until the herd strikes the bottom?

I’m curious of the sound a buyer made when buying a $803,000 uninhabitable dump on Toronto’s west side.

More curious of the sound the impoverished owner made when she was freed of that place.

I’m curious of the sound an “afraid to invest in the market” herd makes, but then buys into RE? Do they bleat, snort, or oink?

#59 sheane wallace on 02.06.14 at 11:48 pm

stock market crash? really?
RSD.B, BP, E, BBL, pay 4-5 % dividends based on 25-30 % net profit distribution and P/E of 8-10.

How much should they be worth? 1/4 of the current price? Dow to 5000? Gas to 30 cents per litter?
Keep dreaming. I will buy them any time.

#60 Smoking Man on 02.06.14 at 11:51 pm

#48 TurnerNation on 02.06.14 at 11:19 pm

Nice, how about a Smokey style post, then an other, and an other till garth hits the delete button.

Come on TN. Live a little…

#61 Happy Renting on 02.06.14 at 11:51 pm

#45 Anonymous on 02.06.14 at 11:12 pm

Wow, $1M for that Leaside bungalow is a whole new level of crazy. The photos show it wasn’t even professionally staged (the furniture looks older than me.)

#62 heineken on 02.06.14 at 11:56 pm

this is going to be a very interesting spring and summer.
so far we have 3 properties which sold for thousands above asking (junction, roncy and now leaside).
I predict every 2 weeks we will see more madness.
I only wish that I owned a few beater homes.

Seriously, Rob Ford has got my vote. hes too fat to walk around naked down yonge st with some gay 18 yr old spraying water from a water pistol into his crotch area. ive been down to the gay pride parade- its truly hell on wheels.

#63 Dogs playing Poker on 02.07.14 at 12:01 am

Why don’t the Vancouver Canucks have a TSFA,

Because nothing can save the Canucks.

#64 not 1st on 02.07.14 at 12:07 am

#52 World According To Garth on 02.06.14 at 11:28 pm

That was me, and my follow up posts were deleted as well.

I`m not trying to be a troll, just following the logic.

So if rising house prices amid falling sales volume in an environment of low rates is bad, then what is falling trading volume amid a doubling in the stock market in an environment of QE? Good or bad?

#65 2CntsCdn on 02.07.14 at 12:08 am

Don’t worry Garth. 5% of the people on here will actually do some of the things you recommend. The rest just come on here for entertainment ….. to listen to people bitch, the amusing rants of alcoholics and bizzare views from a few arm chair self proclaimed geniuses. There ARE a few very smart regular contributors on here however. I’ve been following you and your writings since the early 80’s and have been able to comfortably retire in my mid 50’s (even after a divorce! : ) I dabbled in Canadian real estate when dabbling in real estate made sense (and will again one day … but when it makes sense) ….. bought in Florida in 2010 (USA’s bottom) ….. got real estate down to less than 20% of my net worth and have had great success the last bunch of years with a balanced portfolio (8.5% avg return in 2012, 12.3% return in 2013 … net of adviser fee’s).

It’s not as hard to do as most people think. Just takes time, patience, a realistic plan and good advice. A few of us are listening.

#66 Smoking Man on 02.07.14 at 12:09 am

My correspondence, with the wife, my wife’s cousin of the leader of red hot chilli pipers. My attempt at getting free tickets. It worked…..

Anna:

Willie can probably get u on the guest list but he wouldn’t know that until Saturday I am sure it will be fine as I wouldn’t think it will have sold out it’s quite a big venue. Why don’t u call them and ask if u can buy tickets at the door and then we know they have availability? Sandra and Glenn r coming although I saw from ur Facebook updates that u are not buddies at the moment?? X

Smoking Man:
You caught that.? Ha. Tell you the story, I have built a huge base on several blogs. I have 26 fans. Build up for a book launch. The character I invented, some how after a night of Jack Daniels I turned into him, and made it on to face book. Hence I’m on everyone’s shit list.
Eventually it will pass I think. and we can go on being phoney to each other again. Lol

Anna:
Ha ha love i! Don’t buy tickets just check u will be able to get them at the door. Willie will get 2 for u . It was just in case it was all seated and no availability but I can’t imagine they will be popular in buffalo! (Might be empty!)
And maybe on Saturday might u will all be pals again

#67 TEMPLE on 02.07.14 at 12:11 am

Remember why I told you holding individual stocks is only appropriate for rich people with enough money to achieve diversification? Yup. This is why.

Except that isn’t why at all. Having lots of money or not that much is irrelevant to buying stocks. Not being a twit and buying junk like Twitter is the issue. Diversification is irrelevant to the debate.

Plenty of rich people, institutions and funds (diversified and otherwise) held Twitter stock. You are failing to understand that the divide is not between rich and poor when it comes to owning individual stocks, it is between investors and gamblers.

I agree with you when you say that most people shouldn’t own individual stocks, but your reasons are wrong.

TEMPLE

Wrong for you does not wrong for most. The majority do not have the capital to achieve diversification. And an undiversified investor is a gambler. — Garth

#68 Aggregator on 02.07.14 at 12:17 am

Foreign buyers risk causing London housing bubble, say economists

Wealthy foreign buyers' desire for high-end London property risked creating a housing bubble in the British capital, an economic forecasting group said this week as it called for measures to cool the market.

An influx of buyers had created bubble-like conditions in London, the EY Item Club said in a report published on Monday.

That report came as think tank Civitas estimated 27 per cent of new homes in central London went to British buyers and more than half to buyers from Singapore, Hong Kong, mainland China, Malaysia and Russia.

Now have a good look at CanEquity's internet mortgage application volume and ask who's buying if Canadians aren't inquiring for mortgages online?

#69 DR on 02.07.14 at 12:29 am

http://www.theglobeandmail.com/life/home-and-garden/real-estate/gutted-to-the-bricks-riverdale-semi-sells-71000-over-asking/article16725282/

make sure you watch the video, you wont believe it.

#70 Unearned Interest on 02.07.14 at 12:39 am

Years ago all Canadian tax filers could claim a $1000 “unearned” / interest income tax deduction.

It meant Seniors and those on fixed incomes could keep up to $1000 interest income without paying any income tax.

Then the deduction was taken away.

Today tax payers have the TFSA which protects at least some of the interest from saved income (that has already been taxed) from being taxed over and over again.

But that old term “unearned interest” implies we are not really entitled to receive it anyway. Huh!

Alwyn

#71 Happity on 02.07.14 at 12:40 am

Anyone smart enough to buy twitter in the first place would have done himself and the world better by just donating it all to a worthy cause.

Anyone still in the USA stock market, diversified or not, when margin is at the highest ever while recently the largest equity outflow in history happened should do the same.

#72 Cyclist on 02.07.14 at 12:46 am

24 Vangrl – I dont commute on my bike, but I did get out for a “quickie” near the end of the day. Lots of people on the trail walking, running and one other cyclist. -1 whenI left, -4 when I got back. I had on extra spandex, but hardly broke a sweat. My body works better at 7C, then again at about 14C, then at
21C – all corresponding to points where I can lose a
layer of clothing.

What did you think of the “fight” between the motorist and cyclist that made the news and youtube a week or
so ago. Looks dangerous over there.

#73 Cici on 02.07.14 at 12:47 am

No Garth, please stay right here. You are too smart to be a drummer, and if you take that position you’ll have to listen to Stephen Harper sing and/or play the piano.

Besides, you have plenty of Amazons here on this blog to rally you on…we’re learning every day (well most days… today I had a bimbo moment and bought an individual stock without having a large enough portfolio to justify it, but hey, I forget logic when I want something really badly. But it could have been worse: real estate or lululemon pants or another appliance).

Anyways, the point being…most of the time us Amazon’s are listening to and learning from you, and one day we’ll rich suger mommas and there to support you. This is the phenomenum that you personally are contributing to, and you should be proud:

http://oceandrive.com/living/articles/rise-of-the-new-sugar-momma

Now put down those drumsticks ;-)

#74 Cici on 02.07.14 at 12:50 am

Oops, meant phenomenon :-)

Smoking Man you should be proud of me!

#75 recharts on 02.07.14 at 12:50 am

#40 Matt Hughes on 02.06.14 at 10:50 pm
I’ve been collecting Toronto real estate sales data since September. Here’s a weekly chart (NOT approved by CREA/OREA):

http://jsbin.com/powug

Glad to see that someone else is watching these guys
You seem to go by week
Here is a suggestion. Add the TREB values to your graph so we can see the differences

#76 Cici on 02.07.14 at 12:55 am

#14 allan,

Yes, but don’t overcontribute past the annual limit once you’ve maxed out your contribution room to date, or you’ll take a tax hit.

#77 Cici on 02.07.14 at 1:00 am

# 18 Jim Dandy

I think you would Garth proud. He pushes the TFSA first and above all because a) most people don’t have enough discipline and courage to do both, and b) most young peoples’ time horizon will enable them to build a sufficient retirement nest egg with the TFSA alone.

#78 Basil Fawlty on 02.07.14 at 1:02 am

The US economic recovery is a joke. The labour participation rate is at levels not seen since the deep recession of 77-78. Median family income has been falling for the last 5 years. The middle class is being eradicated as witnessed by the collapse of retailers serving this segment of society. Food stamp use has gone from 32M to 47M, since Obama was elected. Interest rates are zero and they are printing $780B per year, that we know about. Finally, the debt is approaching $20T, whatever that means it can’t be good and will never be paid back in todays dollars.
This is no recovering economy, it’s a disaster. No matter if your philosopy is doom, boom, or somewhere in between.

#79 4 AM Sunrise on 02.07.14 at 1:33 am

I wrote on my calendar that the lock-up period for the Twitter IPO expires this month and I fully expected to see a wave of selling. Must be a coincidence with this earnings thing too.

If I hear Kim Parlee tell me one more time that I can use my TFSA for “even just a savings account”, I’m going to hurl my cereal at the TV. Oh wait, she’s a shill for TD, so no wonder.

#80 bentoverpayingtaxes on 02.07.14 at 1:35 am

“Guess how people pick stocks? — Garth”….. Only the ones with an IQ above 60 it seems…..sad. Given that it takes so little time…about the time every week that a TV show runs…..certainly far less time than a hockey game….to read the information necessary to make more profitable decisions than plowing into an ETF because you have failed to understand a single thing about the economy around you.

I disagree that ‘only a millionaire’ can invest in individual stocks. I started trading stocks on a hall phone at UBC…before the internet, BNN or cell phones existed . I easily paid for my time at UNI and then around the world by reading every business text in the investing section of the VPL. Knowledge is power….a thousand dollars in a good stock ,meant a good life…private schools for the kids, an early retirement for me.

Now that we have the internet and easy access to quality analysis through discount brokers…making money has never been easier. In the past I’ve mentioned dozens of low priced issues that have blossomed into real profit machines….I don’t repeat myself….but I was buying energy issues yesterday before they rebounded and many are up more than 7% on the day…..while most ETFs are barely up 1/2% in the same time frame.

#81 espressobob on 02.07.14 at 1:44 am

TFSA???

All out aggressive, fully diversified global equity & damn the torpedos!!! No brainer! And tax free!

#82 DocInWaitingRoom on 02.07.14 at 2:38 am

I agree with world above 52.

Not sure why I was picked at for commenting on comments on water quality contaminated with prescription drugs on a post called drugs but sure if you need some percoset due to pain issues I cant prescribe you more but know some doctors who do

Be nice I may be treating you when you need bowel disempaction in a few years

#83 DocInWaitingRoom on 02.07.14 at 2:41 am

If not just drink some more lake ontario tap water it will have enough analgesics to last you a week…

#84 Jon on 02.07.14 at 2:51 am

Number 41 why wouldn’t you own some good bonds? Please explain?

#85 raisemyrent on 02.07.14 at 3:18 am

#24 vangrrl
indeed the heat remains off despite the headlines. I just wish it doesn;t snow this weekend as they forecast because I happen to have had my vehicle destroyed by a herder and couldn’t enjoy a nice (safe) snow drive because of this concussion thing anyhow

Smokey, fact or fiction, keep it coming mate your journal entries are hilarious. Don;t miss the first day of class, though. People are the most insecure on that day; it’s pure gold when people watching (change seats haflway through just to mess with everyone; years of being told where to sit in grade school, make university and everyone sits in the same spot for the whole term… talk about following orders lol you’re welcome).

Yes, Harper plays keyboards. Who woul’dve known eh.
I reckon I should try out to play drums in his band (it’s my main instrument) just so that I can call out the proper chords from the throne for him (even I am better at keys lol). Voici:
http://www.youtube.com/watch?v=tHbcwdYFKlA

or find creative uses for my larger drumsticks…

@ #47 David FB
sorry mate but you didn’t need a drummer to play that stuff to begin with (not that I don’t appreciate electronic music sometimes)

#86 Freedom First on 02.07.14 at 3:23 am

…….a large part of the herd is going over the cliff. Sad but true Garth. Hope you are healing well.

I am amazed, that even while you have been going through your own personal very difficult challenge, you have still been able to deliver the hard cold facts/truth/reality in such a kind and tactful manner to Canadians. One of the many things I have learned from you Garth, and I can tell that the people around me have appreciated my much better communication/tactful skills since I started reading your blog a few years ago.

So many housing crashes world wide in recent years, and yet, so many Canadians have learned nothing. Watching all of the countless Asset Bubbles rise and then burst in my short life has been astonishing.

#87 raisemyrent on 02.07.14 at 3:25 am

forgot to say, I deposited my total loss pay-out today (I use online brokerage so it all still starts at my bank).
The guy at CIBC was compelled by his script to ask me if I had the money destined for somewhere and/or offer me a way to make it “earn interest” while I figure it out. I hand’t had my coffee yet (they had some there, but I had to wait in line first. It’s my only drug allowed), so I just said no thanks the couple times. They had some whiteboard next to the coffee/tea table with pamhplets on how youc an be smart and pay down your mortgage faster AND start saving. Saw the acronyms TFSA and GIC.

No point saying anything else to the guy; just no point.

p.s. I felt smart because I didn’t buy any of those products. Yet, my cheque still went to the bank first. maybe buy some preferreds. food for thought to say the least.
keep it real, blog dogs

#88 Moe on 02.07.14 at 5:54 am

Don’t wanna spoil the party, but ETFs are a sham in a way, too. You think you own a bunch of stocks? Think again!

-ETFs replicate performance and make heavy use of derivatives to do so, not necessarily owning a large portion of the stocks they claim / advertise to replicate
-most own maybe 80% of the stocks at best
-ETFs get rehypothecated (lent out as collateral) between banks, your broker, all the while you think you have them in your account

So good luck when even just one major bank blows up and there is a stall in the chain of banks / derivatives / brokers / underlying collateral.

Some, more expensive ETFs advertise with “full replication”, that means they actually own the stocks 100%, which is better, but, again, make sure your broker firm or bank doesn’t use your account as collateral behind your back. They will double or triple your fees, if you ask them not to.

#89 Ruben on 02.07.14 at 6:25 am

#47
live music is dying?? The only reason it may be dying where you are is because people have no idea what they are listening to..there is nothing that compares to listening to a band (with a drummer) that has an idea what they are doing. I suggest getting out more.

#90 Bob Rice on 02.07.14 at 7:51 am

Agreed that one should invest in growth-oriented investments, like EATFs, but cash isn’t always a bad idea.. You should have doe cash parked somewhere and if you need it within 1 to 4 years, it’d be wise to put it in an interest-bearing TFSA account like the one offered at People’s Trust. It offers 3%. Not bad when you consider there’s not fees and it’s tax-free… that is more like the equivalent of a guaranteed 4% return!

#91 Bob Rice on 02.07.14 at 7:51 am

That should read ‘ETFs”!

#92 jess on 02.07.14 at 8:26 am

The Crossrail contract
Bombardier nabs $1.6B British rail transport contractCBC.ca ‎- 20 hours ago
The British government announced Thursday that it intends to award a billion-pound contract to Bombardier, after a 10-day waiting period.

http://www.out-law.com/en/articles/2014/january/reforms-to-eu-public-procurement-laws-finalised/

” incorporation of social clauses into publicly procured contracts and the maximisation of social benefit and value through the procurement process..” “Price is no longer allowed to be the central determining factor.”

#93 Detalumis on 02.07.14 at 8:41 am

I don’t really get the point of the column today. If I was 20 something I would live for today as well and spend my money on trips to Turks and Caicos, that way I would have some memories in my old age. I wouldn’t spend my youth piling up money to pay for some nebulous old age.

Instead of LTC insurance just pull a Ruth Goodman when the time came, $20 worth of nice barbiturates so I don’t end up a “sweet” “little” “angel” like the seniors who burnt to a crisp in their beds in L’Isle Verte – they were called “sweet little angels” before they died by the way, not after. That’s the reality of being old, you ain’t even treated as human. Maybe you need to do a column on that, money is just a diversion.

#94 jess on 02.07.14 at 8:50 am

The duo also stands accused of funnelling the funds into two special purpose companies –Oasis Property Investments and Oasis Property Trading –between 2005 and 2010.

Records on Companies House show Oasis Property Investments as being incorporated in April 2005 while Oasis Property Trading was set up in January 2008. Both companies are currently in liquidation.
=

http://www.ftadviser.com/2013/10/02/regulation/regulators/mortgage-fraud-cases-hit-london-courts-mkihYwwKOXrkqq7oqJ2LVL/article.html

http://www.moneymarketing.co.uk/news-and-analysis/mortgages/ex-rbs-manager-faces-jail-over-3m-mortgage-fraud/2004242.article

#95 TurnerNation on 02.07.14 at 8:56 am

This blog really digs into the photo archives.

Tomorrow’s image: an early daguerreotype from 1840 depicting one Anton Dewillier – once relieved of his britches after a brief but unfortunate encounter with the belt of a threshing machine.
Quipped Master Dewillier: my new nickname, is ‘Action Traction’

#96 pbrasseur on 02.07.14 at 8:58 am

Twitter, a fad driven spculative one trick pony, is a pretty lame reason to be afraid of individual stocks.

I own nothing but indididual stocks, nothing likeTwitter, been doing that for years and doing very well! Meanwhile I collect dividend and pay no fees, but most of all I know what I own.

Hoping that you are getting better Gart!

#97 jess on 02.07.14 at 9:00 am

negative gearing
https://www.moneysmart.gov.au/investing/borrowing-to-invest
http://www.prosper.org.au/2012/10/04/written-off-negative-gearing-report/
…”Over 1.7 million Aussies have worked out that you’re better off from a tax point of view becoming a landlord (well, so long as your loss-making investment gets bid up by other investors using negative gearing) than you are working and saving your dough – which attracts no tax breaks…

Tax reform lobby group Prosper Australia is behind the campaign, and it’s calling for the abolition of both stamp duty and negative gearing, suggesting that these policies have been a key ingredient in capital city house prices increasing 77 percent from between 2002 and 2010 (according to the Australian Bureau of Statistics).”

http://barefootinvestor.com/negative-gearing-problems-tax/

#98 jess on 02.07.14 at 9:13 am

What happens to these negatively geared investors when the price falls?

http://www.investopedia.com/terms/n/negative_gearing.asp

#99 Mr Happy on 02.07.14 at 9:14 am

I am so happy 99% of people put their TSFA in cash!

The banks can lend that money out and guess what?

Pay me (a 1%er) about 5-6% in dividends on the bank preferreds that I hold!

Keep on being scared people, you are funding my retirement and funding it well. At 51 years of age! :)

#100 heineken on 02.07.14 at 9:27 am

It’s great that fellow posters update us with the recent real estate transactions. I can’t wait for spring /summer sales to go into full force. How exciting has it been to see 3 properties (junction, roncy, leaside) blow thru all expectations.

I only wish I had a couple of beater homes in Toronto.

Another reason Rob Ford has my vote. Snubbing his nose at the gay pride parade is the best thing he has accomplished since being in office. Watching him walk naked down Young st dressed in a black leather belt , smiling and waving to the people would make me puke. His fat white ass doesn’t fit in with all the dancing muscular young gay men spraying the crowd with their water pistols and dressed up with their George Washington wigs. This is a freak show.

#101 Wake the flock up on 02.07.14 at 9:36 am

Your right Garth a 2008 won’t occur again……..
That was just a speed bump on the road to the main event.
When things get serious governmet lies..” If you like your healthcare you can keep it , period ”
When things get really serious they steal..MyRA (nationalized pension plan) George Carlin was right they want it all !

#102 Wake the flock up on 02.07.14 at 9:39 am

Your right Garth a 2008 won’t occur again……..
That was just a speed bump on the road to the main event.
When things get serious governmet lies..” If you like your healthcare you can keep it , period ”
When things get really serious they steal..MyRA (nationalized pension plan) George Carlin was right they want it all , and they’ll get it.

#103 Smoking Man on 02.07.14 at 9:40 am

BOOM

BAD, USA payroll… Usdcad loses cent in 2min, but coming back.

Bond yields dropping like lead on Jupiter.
Prozac and company seriously considering dropping over night.

Good news was mfg payrolls up.

#104 Louis on 02.07.14 at 10:02 am

There is fear of course, but the fear comes from experience.

I’m 43. I have been hearing the sales pitch of coumponded interests in various form since I was 10 year old (I remembered as a kid counting how I would become a millionaire by returning empty bottle and investing)….

I have saved all my life, more than 10% of my paycheck every year.

I had individual stocks… got creamed for 40k$ (I made some huge gain, and some bigger lost… My “advisor” was always saying, you don’t lose anything if you don’t sell… that worked well with Worldcom).

I had mutual funds… made a big 0% return over the years… The funds are always restructuring, when a fund is losing money, the named change so they can erase the bad years from the performance history plus management fees that eat the little return there is.

ETF and REIT look good on paper, any investment does when they are trying to sell it to you… but my “spider sense” developped after years of getting burned is telling me stay away… Which ETF do I chose… I’m sure some “advisor” will be more than happy to charge me 1000$ to tell which one, his pick will be as good as one I could chose myself and eat most of my return… Plus you are never protected against a top guy at Ishare or Vanguard pulling an Enron on you.

On the long run, the only investment vehicule that worked for me were 1-Real estate, 2-Governement bound.

– I bougth my house in 2004 for 270k$, my municipal evaluation is now 480k$ (plus I live in it all those years)… it’s fully paid now and comparable are selling in the 550-600k$ range.

– My Quebec government bound currently pay me an average of about 5.5% (I buy the long 10 years term every year so current low yield are averaging out with one I bought a long time ago)… I got about 140k$ there

– I own a 4-plex. I’m getting about 7.5% return on the equity based on municipal evaluation… I got another 150k$ equity in there.

– My kids have 30k$ between themself in their “epargne etude”… don’t know the english term for that

So my net worth is around 800k$. If I would never have touched the stock market, it would be about a million…

So yeah I’m scared. I don’t have a fear of investing, I have a fear of getting screwed by something outside of my control. I can lose money on my rental, but at least it won’t be because some bozo I don’t know decided to live the high life with my invesment money.

Spend more time looking for a good advisor. You have a very tax-inefficient portfolio. — Garth

#105 economictsunami on 02.07.14 at 10:28 am

“The employment numbers are estimates based on a sample survey and are subject to some volatility. The sampling size means that the overall employment figure could vary by up to 28,900 jobs two-thirds of the time, or up to 57,800 jobs 19 times out of 20.”

We possess the technological/ factual ability (payroll withholding taxes data from Revenue Canada) to more accurately frame the employment/ unemployment picture but (much like the US) we just can’t seem to shake the urge to guess-timate.

Is it any wonder these results become more noisy and volatile as we meander further down this ‘recovery’ path?…

#106 Louis on 02.07.14 at 10:37 am

Spend more time looking for a good advisor. You have a very tax-inefficient portfolio. — Garth

I don’t agree.

My 140k$ are in RRSP and TFSA (110 and 30k respectivly) so it’s 0% tax on interest

The kids RESP are also tax free.

The return on equity for the rental is converted to capital gain through depreciation

The equity on the house is saving me rent (after tax money) plus any money I could make selling is capital gain.

I think RRSP and TFSA are the best place to put the fixed interest part of your investment… interest is taxed 100% capital gain is just 50%.

#107 NoName on 02.07.14 at 10:38 am

http://www.coindesk.com/mt-gox-halts-bitcoin-withdrawals-price-drop/

some time ago Cyprus gov. closed banks to prevent run on deposits, now mt.gox is doing same thing. mt.gox halts ALL bitcoin withdrowals. But on another hand Cyprus gov. have good gig going on for some time, they are selling “EU” citizenships to foreigners in euros or us dollars…

time to build new comp. of i go to kijiji, to look for good used graphic card

#108 Buy? Curious? on 02.07.14 at 10:44 am

Damn, Garth! Man, you really can hold a grudge! A guy kicks you out of his party, then years later, the drummer for his band (who, by the way, will never win a Juno) gets arrested and charged for sexual assault, and you turn into a punchline? That’s cold. That’s up there with Wayne Grezty’s speech at the Winter Olympics. If it inspires Canadians to turn their backs on real estate and into a diversified portfolio, High 5!

I’m just getting to watch the Sochi Games Opening Ceremonies. I got some munchies and freshly squeezed lemonade set aside, and Gordon Lightfoot playing in the background.

Do you think it’s a good time now to buy a condo?

http://www.youtube.com/watch?v=Afp9H1tLmro

#109 Ralph Cramdown on 02.07.14 at 10:54 am

#98 jess —“What happens to these negatively geared investors when the price falls?”

Adjustments will need to be made.
http://www.youtube.com/watch?v=tfw0KapQ3qw#t=682

#110 TEMPLE on 02.07.14 at 10:58 am

Wrong for you does not wrong for most. The majority do not have the capital to achieve diversification. And an undiversified investor is a gambler. — Garth

No disagreement there, but I think you have a warped view of what diversification means. I know you think it means hundreds (or even thousands) of stocks but that isn’t correct, especially if the only purpose of diversification is to reduce volatility.

Some pretty credible sources suggest that as few as 10 stocks can roughly match the volatility of an index- that seems pretty low to me, but Ben Graham wrote in the Intelligent Investor that 10-30 stocks is enough.

Even with 50 stocks (too many), bought and sold at $10 a trade, an investor with 200K and 100% turnover could easily match the costs of most ETFs. Obviously 100% turnover is ridiculous, meaning the costs of owning stocks gets lower as we get closer to reality.

TEMPLE

#111 Obvious Truth on 02.07.14 at 11:02 am

If I’m reading the table right it seems to me we got another government of Canada self-employment report mixed in with with a public sector plus and a nice private sector minus.

I’m not a cynical kind of guy but the notes on statscan are starting to look like an RE report.

#112 Just some guy on 02.07.14 at 11:03 am

Regarding today’s photograph, I strongly recommend throwing the catch back from whence it came. Generally, they are not good eating and, in some jurisdictions, it is actually illegal to do so. And, even if you decide to keep it as a pet, you are in for a world of hurt, expense, and trouble as yet unimagined. They are basically untrainable, particularly in the later stage known as the Teenager.

Let nature take its course I say and leave these creatures in the wild where they can run free. As they age, Children ultimately become Wrinklies which is a another curious creature that is also not good for eating, even more expensive to maintain, and is generally protected by statute.

#113 Smoking Man on 02.07.14 at 11:14 am

Spend more time looking for a good advisor. You have a very tax-inefficient portfolio. — Garth
………

What is wrong with you Grath..

You remind me of son number 3 does everything right, smart as shit. But can’t close to save his life.

Next time say.
This is my email. [email protected]
I’m the best… My fee is $$$$
I have a special ending at 5pm today so act fast.

My price is going up next week.

It’s not hard dude…

How you make loot with the soft sell freaks me out…

This is not a commercial site. If people want me, they’ll find me. — Garth

#114 maggie on 02.07.14 at 11:14 am

garth, is there a mortgage rule of thumb that you’d go by?

i’ll follow your rules based on no more than 90 minus my age in a house and the rest in a balanced portfolio.

just wondering what’s reasonable for mortgage… like no more than 2.5 times my gross income?

#115 Josh in Calgary on 02.07.14 at 11:21 am

#11 MarcFromOttawa,
Buying the top 10 holdings in an ETF vs. just buying the ETF has 3 critical factors:

1) What percentage of the ETF do those holdings make up. If it’s 20% or less than you’re missing out on a lot of diversity by just buying the top 10. But I’ve seen ETFs with 50%+ in the top 10 holdings … so why don’t you just go buy those top 10?

2) It’s all about MER at that point. Let’s say the ETF has an MER of 0.5%. Now let’s say your self directed account charges you $10 to make each trade. It would cost you $100 (or $90 more than the ETF) to buy into that position. So divide $90 by 0.005 and you would have to be investing at least $18,000 to make it worth buying those top 10 holdings. Of course the ETF will be charging you that 0.5% each year, but you realistically should be rebalancing every year anyways.

3) You also will not likely be holding only 1 ETF. At a minimum you should have 1 for your fixed income, 1 for your Canadian, 1 for your US and 1 for your international. Possibly you should have more than one for some of these categories (or if you want REITs and preferred as Garth always suggests). Now multiply these by 10 if you want to hold individual top 10s. So each time you go to rebalance you have to do 10 times the work. Oh and don’t forget the accounting you will have to do for taxes if you’re working in a non-registered account. I’m thinking there would have to be quite a cost savings to make it worth all that time and effort.

#116 Louis on 02.07.14 at 11:22 am

Something wierd seems to have happened to my reply… its was “awating for moderation” and now I don’t see it anymore.

Spend more time looking for a good advisor. You have a very tax-inefficient portfolio. — Garth

I don’t agree.

My 140k$ in government bound is RRSP and TSFA (110 30k$ respectivly)… zero tax. The kids RESP is tax free also.

The rental return on equity is converted to capital gain through depreciation.

The equity on the primary resident is saving me after tax money that I would pay in rent and any profit that I might make selling get is capital gain.

So to me it looks like i’m doing pretty well tax wise.

#117 Aggregator on 02.07.14 at 11:22 am

Nice jobs report thanks to X-12-ARIMA and TRAMO/SEATS models. The real story on today's jobs report is youth employment has now declined back to 2001 levels. Chart

Meh, who cares about young folks, they're only the future of Canada. In other news, stocks are up!

#118 Aggregator on 02.07.14 at 11:25 am

(Corrected chart)

Nice jobs report thanks to X-12-ARIMA and TRAMO/SEATS models. The real story on today's jobs report is youth employment has now declined back to 2001 levels. Chart

Meh, who cares about young folks, they're only the future of Canada. In other news, stocks are up!

#119 Bottoms_Up on 02.07.14 at 11:30 am

They say the more money you have, the more fear you have of losing money. That explains why I have no fear.

#120 Josh in Calgary on 02.07.14 at 11:31 am

#25 baddog,
Open a self directed account at your bank. That way you don’t have some imp from the bank trying to usher you into their highest fee product and you still have the safety / convenience of dealing with a big bank. The added benefit is you can transfer funds from this account and you bank account very quickly. Also, some banks (mine anyways) offer discounted mutual funds to self directed investors. They’re exactly the same fund as the full price one, but you save 1% or more on the MER because you’re not involving that previously mentioned imp at the bank. They become comparable to ETFs in overall return at that point.

#121 Tony on 02.07.14 at 11:31 am

Re: #10 timmy on 02.06.14 at 9:53 pm

I’m short Medbox (heavy short) and a few other marijuana stocks. I don’t need seeking alpha to figure this one out. I know I’m taking advantage of the people whose brain cells have been destroyed by weed but in the end it’s all about making money and them transferring their money to me the short seller. Thank you all you idiots long marijuana stocks.

#122 Renter's Revenge! on 02.07.14 at 11:46 am

#104 Louis, a couple of things:

You hit the nail on the head with:

“I had mutual funds… The funds are always restructuring, when a fund is losing money, the [names] change so they can erase the bad years from the performance history…”

That’s the big secret the mutual fund industry doesn’t want people to know.

I’m guessing “epargne etude” is RESP in english :)

#123 Ralph Cramdown on 02.07.14 at 12:00 pm

Bitcoin bank holiday!

One underappreciated aspect of bitcoin is that you don’t have to decipher bankerspeak as regards why you can’t get your money. You get to decipher nerdspeak instead. Progress!

https://www.mtgox.com/press_release_20140207.html

On another note, isn’t it wonderful that well over 100,000 previously unemployed Americans found jobs in January, with the estimate for December also being revised up by a hair, November’s up by a fair bit, and all of 2013’s job creation revised up due to the annual tracking error adjustment?

#124 angela on 02.07.14 at 12:07 pm

remember this chart I posted back in sept
the one you ridiculed me for seems like history does repeat itself lol
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2014/01/20140113_1928.jpg

You still deserve ridicule, plus you Zero friend. — Garth

#125 Buy Low Sell High on 02.07.14 at 12:09 pm

When my grandfather died, my father invested some money into TD’s common shares. That was 1983. They have been held constantly since then with no additional purchases or any sales. It’s been an excellent ride having gone through 1987 Black Friday, 2000 Dot.com, 2008-2009 bank crises. The dividend has never been cut. Just as Robert Shiller states, the stock market has vastly outperformed real esate over the long term.

#126 Chickenlittle on 02.07.14 at 12:27 pm

“People are afraid of loss…” Garth

So it’s too “risky” to invest in a diversified portfolio, BUT owing the bank upwards of half a mil is a MUCH better option because you’ll make money… eventually. Just keep throwing money at it and watch it grow like a Chia Pet.

Making money buy owing money makes no sense. What other “investment” puts you in the hole by $700k?

#127 maxx on 02.07.14 at 12:28 pm

“Fear of loss is debilitating, massively exaggerated, and pervasive. ”

Absolutely on the money Garth.
However exaggerated fear of loss might be, I wonder how it will play out when interest rates inevitably creep upwards (likely externally triggered) and RE prices start melting.
What might have been liquidated, has been sat upon.
A fat yield from RE proceeds might have been such great income stream.
Watching interest rates rise whilst waiting for your RE to sell won’t be a comfy, cozy place to be.

#128 Shawn on 02.07.14 at 12:31 pm

Diversification

Remember why I told you holding individual stocks is only appropriate for rich people with enough money to achieve diversification?

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

Okay, so how big a portfolio is needed for diversification?

TD just announced today that everyone gets $10 trades. Another big bank had done this last month.

So you can now buy $1000 of any stock for a fee of $10 equals 1%.

(The notion that one needs to buy in even lots of 100 is a total myth)

So if you wanted to you could have 30 stocks at $1000 each and it cost you all of $300.

More realistically 30 stocks at $2000 each costs you 1% to buy or $600. And you won’t need to trade much since it’s diversified.

It certainly does not take a $million to be diversified in stocks (and other asset classes as well).

Individual stocks are not for everyone, but those who go that route are not necessarily wrong.

#129 Fed-up on 02.07.14 at 12:38 pm

Watching Property Virgins on SLICE for shits and giggles. I just love the young American couples with $100,000 and $300,000 budgets and ALWAYS finding exactly what they’re looking for yet never exceed they’re humble budgets.

When Canadian couples are the focus, they have $600,000 + budgets, are shown shit holes and practically ridiculed by the Realtor for not being realistic and told that they must either come up with another $200,000 or have $150,000 + reno budgets over and above what they cannot afford as it is.

We’re such idiots in this icebox that we struggle in.

#130 Doug in London on 02.07.14 at 12:40 pm

@pinstripe, post #27:
Yes, absolutely, the stock market is RIGGED, I couldn’t agree more! It’s rigged in such a manner that investors who patiently wait for different kinds of assets to go on sale (they all go on sale at some time or another) and scoop them up at that time make money. Even if they don’t make money on capital gains they make money on dividends, as yield is higher when price is lower. It’s also rigged in such a manner that those “investors” who panic and bail out during corrections (also known as buying opportunities) lose money.

Why would anyone want to buy a stock like Twitter (grossly over priced) when REITs, utility stocks, and preferred shares have been on sale for the last 7 months? On the subject of REITs, the train is leaving the station, as prices are climbing up again.

#131 Old Man on 02.07.14 at 12:42 pm

#125 Buy L & S High – In 1982 had a meeting with an investment committee member, as the City of Toronto managed their own separate pension funds for city employees; this has all changed now. They had a large investment portfolio, and believe the major banks did a stock split with shares trading at about $10.00 a share. They liquidated everything, and went all in to buy the banks which made no sense to me, but probably did very well.

#132 pinstripe on 02.07.14 at 12:43 pm

harpo et al see nothing, hear nothing, do nothing. The local mp beno!t, when questioned about anything, pulls out a script and reads it. When an answer is not in the script, the response is “I will get back to you”, never to hear from him again. Why is there a need for an MP? Why do MPs not have a blog for good and bad feedback from Canadians?

http://www.cbc.ca/news/canada/edmonton/oilsands-jobs-being-taken-by-temp-foreign-workers-union-says-1.2526496

#133 Ralph Cramdown on 02.07.14 at 12:46 pm

#124 angela — “remember this chart I posted back in sept”

Wow! That looks like a slam-dunk moneymaker. If it isn’t too personal a question, may I ask how many contracts you’re short?

http://qz.com/153040/an-incredibly-misleading-chart-is-warning-of-a-1929-style-market-crash/

#134 EMERGENCY!!! on 02.07.14 at 12:54 pm

Hilarious Garth… emergency Moen faucet

“used when you need an emergency trip to the Turks & Caicos, or new emergency Lululemon pants, or maybe an emergency new Moen faucet.”

#135 Ralph Cramdown on 02.07.14 at 1:07 pm

#125 Buy Low Sell High — “When my grandfather died, my father invested some money into TD’s common shares. That was 1983. They have been held constantly since then with no additional purchases or any sales.”

One thing to keep in mind in a situation like this is estate planning. Upon death, there’s a “deemed disposition” and the estate will have to pay tax on the capital gains. You’ll need to know whether your father or his accountant opted to take the election to exempt his gains from before February 22, 1994. If not, tax is owed on all gains, otherwise only since then.

For big positions, those capital gains can push the estate way up into the top bracket, and the government will get a lot of the money that might otherwise pass to heirs. You might consider gradually selling the position over a period of several years to spread the gains into multiple taxation years and reduce the overall tax bill.

I am in the process of gradually diversifying out of a position that family members have held since the late 1960s.

Interestingly, the US has no deemed disposition upon death, though they do have an estate tax which needs to be considered. So wealthy Americans’ stocks can pass to heirs on death with the cost basis adjusting to that on death and no capital gains payable.

#136 45north on 02.07.14 at 1:13 pm

aggregator Now have a good look at CanEquity’s internet mortgage application volume and ask who’s buying if Canadians aren’t inquiring for mortgages online?

nobody?

Mark Hanson writes about the housing market in California, Arizona and Nevada. I’m just re-reading his stuff. You know I don’t think he mentions foreign investors. Like not once. I believe that foreign investment in the US is roughly comparable to foreign investment in Canada. “Roughly” could mean half.

there’s a disconnect here, basically Mark Hanson is saying that the US market is headed for a fall. Not a dip but a downturn that lasts a generation. Whereas in Canada we are not even sure if the market is going to dip.

#137 Shawn on 02.07.14 at 1:13 pm

CREDIT CARD FEE RIP-OFF?

The usual rate that Canadians pay for U.S. purchases on credit cards is the going exchange rate PLUS 2.5%.

Is this outrageous or what?

For example the following is from CIBC’s web site:

“You are charged the same conversion rate CIBC must pay, on both debits and credits. You are charged a fee of 2.5% of the converted amount, on both debits and credits; this fee is charged on the posting date (for MasterCard Transactions) or on currency conversion (for Visa Transactions).”

And from Royal Bank card holder agreement on the web:

“we will convert the charges into Canadian dollars no later than the date we post the transaction to your Account at our exchange rate which is 2.5% over a benchmark rate set by the payment card network that is in effect and that we pay on the date of the
conversion.”

On a $1000 they scoop $25.00. This is on top of the fees they charge the merchants and on top of any annual fee and interest to the card holder.

On $10,000 this $250.

This is on a purely electronic transaction.

Some will claim they face foreign exchange risks. Perhaps so. But I believe big traders probably pay claoser to 10 basis points than this 250 basis points.

We are in a world where you have to lock up your money for five years or more to get a guaranteed 2.5% return. Yet VISA scoops 2.5% in an instant for doing basically nothing?

Is this a huge rip-off or a fair charge in a competitive market?

Meanwhile if I buy $10,000 in stocks I am charged a $10 fee by my broker, that is 10 basis points. I would suggest the credit card companies are making a killing compared to my broker.

Thoughts anyone?

Oh, and by the way, unlike high credit card interest rates, this exchange fee is even faced by RICH people, not just poor people!. Now surely THAT is an outrage!!

#138 Hot and Fast on 02.07.14 at 1:13 pm

#100 heineken on 02.07.14 at 9:27 am

It’s great that fellow posters update us with the recent real estate transactions. I can’t wait for spring /summer sales to go into full force. How exciting has it been to see 3 properties (junction, roncy, leaside) blow thru all expectations.

I only wish I had a couple of beater homes in Toronto.

Another reason Rob Ford has my vote. Snubbing his nose at the gay pride parade is the best thing he has accomplished since being in office. Watching him walk naked down Young st dressed in a black leather belt , smiling and waving to the people would make me puke. His fat white ass doesn’t fit in with all the dancing muscular young gay men spraying the crowd with their water pistols and dressed up with their George Washington wigs. This is a freak show.
.————————————————
For your information, I became a gay child of two very religious lesbian parents.
The gay pride parade is not a freak show but a grand celebration of gay people who have the right to engage in sex and have homosexual relationships if they choose to do so. There are many, many gay people in all sorts of communities, and there are many people there for you when you need support.
Rob Ford will not be getting any votes in the gay community. He should relocate to Russia where gay people are frowned on. And i think you should accompany him.

#139 bill on 02.07.14 at 1:18 pm

#109 Ralph Cramdown on 02.07.14 at 10:54 am
showed a hilarious clip from modern times.
hey blog dogs:
is that jimmy Stewart at 13:07??
Thanks!

#140 Bottoms_Up on 02.07.14 at 1:28 pm

#30 Ben on 02.06.14 at 10:25 pm
—————————————–
Exactly. Someone had previously posted that the average middle class boomer lifestyle is equivalent to those living in the top 5% today.

If the average house is $350,000, with the old standard of a 25% downpayment ($87,500), just exactly how is someone saving that? That’s $1000/mo for 7 years (realistic?), or $2000/mo for 3.5 years. Not really possible if you’re raising a family today, and really only possible if you’re upper income and living like a student.

#141 kenney on 02.07.14 at 1:32 pm

236,000 earning 1% / yr for 35 years…

can I use your calculator for my savings!

I thought the max TFSA today could be 31,000

that would be 6% a year…not 1%

How would someone with no money start with $31K? — Garth

#142 Bottoms_Up on 02.07.14 at 1:32 pm

#114 maggie on 02.07.14 at 11:14 am
—————————————–
A recent globe and mail article indicated that the ‘new standard’ for (maximum) mortgage ratio should be approximately 3x gross family income.

#143 Realtor # 1 GTA on 02.07.14 at 1:37 pm

# Recharts

that graph show that prices does not follow sales. If you go back to the TREB data through 2010-11 you will find sales down 10% y/y. And prices went up.

You guys are trying desperately to find a set a numbers that shows its going to correct.

If sellers believe they can get what they want they will wait.

#144 Mr Happy on 02.07.14 at 1:42 pm

“#119 Bottoms_Up on 02.07.14 at 11:30 am
They say the more money you have, the more fear you have of losing money. That explains why I have no fear.”

This is not true. The more you have, the more you realize how much you really need. Then you save even more and in the end….live happily ever after.

or…..

The more you have, the more you read, listen, study on ways to keep it… Fear of losing, sure, but be smart and you keep it!

If I believed your theory…I would be scared s#*tless!!

;)

#145 Bottoms_Up on 02.07.14 at 1:56 pm

This semi in Burlington is listed 3x on mls. They must really think this one is gunna sell.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13928569

#146 bentoverpayingtaxes on 02.07.14 at 1:57 pm

Bwahahahahahahahahaaa…Vancouver’s ‘idiots only’ city council can’t understand why most people in Vancouver are so miserable. So they’ve come up with an idea to ‘mandate’ togetherness.

http://news.nationalpost.com/2014/02/06/how-to-turn-vancouver-into-a-cheery-engaged-city-get-strangers-to-share-a-meal-at-communal-tables-report-says/

I have posted about the filth, the rats, the roaches, the bedbugs, the vicious police, the astronomical taxation, the favorable treatment of HAM over citizen, the elite unions and civic servants making 5 and ten times more than everyone else, the unaffordability, the lower pay, the zero entertainment ( unless you’re a drunk or a doper), no museums, no galleries, no cultural forums, no dance, no music scene, no cool neighborhoods, the child poverty, the senior poverty, the middle class squeeze, the general lawlessness, dope culture, shootings, traffic…….the city you’re most likely to confront and be hurt or killed by the police.

Bwahahahahahahhahaa……they wonder why they can’t be seen as elites riding past the poor while gallivanting along the multi million dollar bike lanes bi- secting the poor area’s of downtown’s DTES warzone and drug pits…..and the thousands of wretched homeless. The elites can’t understand why Vancouver is polled as the loneliest, least friendly, a-holish city in the world…..Why can’t people just get used to the syringes and vomit and admit that it’s the best place on Earth?

#147 Aggregator on 02.07.14 at 1:58 pm

#123 Ralph Cramdown

On another note, isn’t it wonderful that well over 100,000 previously unemployed Americans found jobs in January, with the estimate for December also being revised up by a hair,

Wonderful indeed. Until you look at these charts.

#148 Hillbilly on 02.07.14 at 2:06 pm

The scenario that has unfolded with real estate in Canada and elsewhere is really a function of four things;

1) low interest rates

2) lax lending

3) government desire to continue credit creation to continue economic activity

4) governments bailing out banks to allow them to continue buying government debt so that they can continue their profligate spending

Central banks needed to;

a) goose private sector spending

b) provide their governments with more money to spend on social benefits / unemployment, etc. to cover job losses and lessened tax income in order to get re-elected.

What did they do?
Cut interest rates, which achieved the following;

1) drove up real estate prices which allowed people to refinance their homes to take out money to spend,

2) reduced the interestrates that governments had to pay so that they could borrow more to spend

3) lowered the (monthly) costs of financing everything from cars to homes to personal consumption so people could spend more

4) punish savers and force them to invest money in equities and bonds in order to get a return which allows the government and companies who raise equity to spend

5) drive savers int the hands of Wall Street and other financiers who get those savers to buy government bonds and securities

5) promote consumption and discourage saving as there is no real return on saving after tax and inflation

6) drive down the cost of capital so that big business can have another competitive advantage in accessing cheap money

Now that everyone’s debt load is very high, what is their next step?

Why, inflate all that debt away of course !

Only problem is that there is too much capacity in the world for just about every good and service and they are staring at deflation. It is doubtful that enough economic growth can be generated to retire the debt organically.

We know that Central banks are terrified by the spectre of deflation as it is economically corrosive and difficult to arrest once it takes hold. So inflation it will be, as soon as they can arrange it.

Perhaps those big mortgages will not seem so daunting in the face of serious inflation.

Only fly in the ointment is that with international wage arbitrage and structural high unemployment and rising tax burdens, inflation will impact consumption.

Ah well, we didn’t need a middle class after the point that they spent all of their future income stream anyway.

#149 OttawaMike on 02.07.14 at 2:12 pm

Canadian employment report says lots of new jobs this month.

I hope all the basement dwellers on here have built a nice mold and mildew tolerance by gradually inhaling small quantities since 2008.
You should have bellied up to the cheap money trough like everybody else did.

This spring is going to see another roaring increase in 416 SFH prices.

#150 Shawn on 02.07.14 at 2:15 pm

Ralph and Mis-leading Charts

Everyone should click to Ralph’s link at 132.

Even the experts seem to get fooled by posting lines with two different scales and claiming strong correlation.

Basically charts can show whatever you want them to.

A 1% gain can be shown as a 45 degree slope if you simply play with the scale and fail to start at zero.

At the very least charts should rise by the same percentage on both sides when two scales are used. Always.

Another trick is to fail to use a log scale on an exponentially growing asset. For stocks, houses and CPI you must use log charts when you go over about 25 years otherwise they shoot to the moon.

#151 recharts on 02.07.14 at 2:21 pm

#143 Bottoms_Up on 02.07.14 at 1:56 pm
This semi in Burlington is listed 3x on mls. They must really think this one is gunna sell.

http://beta.realtor.ca/propertyDetails.aspx?PropertyId=13928569I am seeing significant number of properties sold twice in two months. Different contract dates. Not sure why but this is double counting for sure. Next year this time someone (Aggregator) will notice again that TREB reviewed their data and we were give manure for stats in Jan 2014

#152 gladiator on 02.07.14 at 2:22 pm

@136 Hot and Fast:
The world doesn’t owe you anything – no love, no respect, no attention. If you are what/who you are and are proud of it – good for you, but don’t get upset if people ignore you. You get your parade day once a year for celebrating your homosexuality and no one should be forced to attend – even the mayor. The parade is about you and others like you, not about the mayor. Leave him alone and yes, don’t vote for him – I will and just because of you. Whatever he did, he still has his verticality, doesn’t bend under any “minorities with hurt feelings” and I respect that.

#153 Kingarthur on 02.07.14 at 2:22 pm

Minus two and sunny in Vancouver; Spring is just around the corner.

#154 recharts on 02.07.14 at 2:39 pm

#142 Realtor # 1 GTA on 02.07.14 at 1:37 pm
# Recharts

that graph show that prices does not follow sales. If you go back to the TREB data through 2010-11 you will find sales down 10% y/y. And prices went up.

You guys are trying desperately to find a set a numbers that shows its going to correct.

If sellers believe they can get what they want they will wait.

Are you stupid?
These are TREB numbers
http://i.imgur.com/D2iammM.png
They clearly show that you much trumpeted price appreciation originated in A LOT lower sales on the low segment and MUCH higher in the more expensive segment.

The result: more RE agents out of work (like you) polluting this site and a RE mass media orgasm: “OMG the prices are higher oh oh oh…I am fainting, this market is crazy”
Hoards of divas and bimbos turned Realtors overnight will invade the Twitterverse’s #TorontoRealEstate channel with their wet dreams about selling condos. With a lot more units on the market this year than last year you sold less condos in 2014. That sucks.

Back to your numbers. TREB’s numbers actually, because you are not equipped to handle numbers.
The sales mix this month shows you a clear increase in high end sales (SFH >$1.5M and Condos >400K). These are properties that have been on the market for an year. The sellers are taking a hit on the CAD$ side so they now want to exit the market.

#155 Old Man on 02.07.14 at 2:42 pm

I hope this is a temporary situation with grocery economics as surveyed 5 major outlets and the big sales this coming week have disappeared for what counts. During the past two weeks have noticed food imports from Europe coming in and the prices are the same but the glass jars are half the size. Now for a laugh. In the basement have this high-tech pop machine that accepts a loonie, toonie, or quarters, so used four quarters; one always came back, so no pop for me. I am a coin collector; saw the date and checked it with a magnet. This machine was rejecting 80% pure silver from 1964.

#156 Vamano Pest on 02.07.14 at 2:43 pm

#27 pinstripe
I don’t really understand what lessons you can draw from the examples you mentioned. In the dot.com bubble, I suppose it could be “don’t invest in companies that have never turned a profit but are priced like they make billions”. But honestly, duh! With respect to the 2008 crisis, the lesson is simply not to panic. Anyone that just held through was made whole again by the market in about 2 years, and has enjoyed very handsome returns since.

With respect to the rigged markets: wrong. Equities markets are probably the most transparent and regulated asset class there is. You want to talk about rigged markets, then we should start with housing. No credible source of market information, taxpayer underwritten mortgage risk with 5% down (you think the bank would take on the risk themselves if you only had 5% down?), artificially low ’emergency’ interest rates for the past 5 years.

It is the housing market that is ‘rigged’, and people don’t seem to be afraid of that (as evidenced by all time high home ownership).

I think this is one of Garth’s pervasive messages in the blog: people are guided by the fear of risk without even understanding where risk truly lies.

#157 Future Expatriate on 02.07.14 at 2:48 pm

Isn’t Ted Nugent the guitarist in Harper’s band?

#158 Westcdn on 02.07.14 at 2:49 pm

I was looking at the CREB (Calgary RE) January 2014 monthly report. The numbers look credible to me so I think Calgary RE still has upward price momentum for the near future baring any significant job losses. http://www.creb.com/public/documents/statistics/2014/package/res-stats-2014_January.pdf
North American stock markets may have found a floor – it would be nice to get a camel toe to confirm. The set up looks good, US debt ceiling looks to be resolved and Janet is Fed chairman but she has that rascal Fisher as her lieutenant. The Ukraine has the potential to send markets into a tizzy. It appears to me that Russia wants the protests crushed so I predict many Ukrainian speaking protesters are going to a gulag/Fema camp shortly after the Olympics. The US is going to be angry and will want to retaliate. I got a kick out of the US State department complaining about the Russians intercepting a private comment (F the EU). I think I will throw a few bucks at a gold EFT.
Our Feds claim to be close to balancing their budget which is okay but the real Cdn government budget woes are in Ontario and Quebec. The balancing has no connection to a happy productive federal public service. The spat over sick days is sad. The use of averages covers sick day abuses by many. I find it stunning the Union leader said sick days cost the taxpayer nothing because it just represents work not done. Well, in my world that represents paying twice for “work not done”. To be fair, I also think most C suite executives are overpaid. Share prices usually go up than down when they are replaced. I have to say our spend thrift Alberta politicians continue to surprise me with their indulgences. I guess the $2 billion of Fed money for flood damages makes them giddy.
Having been born into the lowest economic strata, I had to get around a lot of people who were ahead of me. I still think a lot of people don’t appreciate the advantages to which they were born (Texas proverb: those born on 3rd base grow up thinking they hit a triple). Nepotism – derived from nipote, Italian for nephew as the Popes in the 14th and 15th centuries would make their nephews into Cardinals in order to maintain power. The game is still afoot. http://www.dailymail.co.uk/sciencetech/article-2398979/Keeping-family-How-nepotism-workplace-helps-rich-stay-wealthy.html

#159 recharts on 02.07.14 at 2:51 pm

#118 Aggregator on 02.07.14 at 11:25 am
(Corrected chart)

Nice jobs report thanks to X-12-ARIMA and TRAMO/SEATS models. The real story on today’s jobs report is youth employment has now declined back to 2001 levels. Chart

Meh, who cares about young folks, they’re only the future of Canada. In other news, stocks are up!

Yeah I guess that “elevated” youth employment will translate to more condo sales.

#160 Realtor # 1 GTA on 02.07.14 at 2:51 pm

My buyers are willing to put more of their disposable income towards their mortgage.

They think “after 5, 10 years my mortgage will be cheaper”
and then I will be able to save or pay down dept. Also They believe that after 30 years they will have a million dollar home to sell and live off the profits.

#161 Squatter on 02.07.14 at 3:14 pm

#136 Hot and fast:
“Rob Ford will not be getting any votes in the gay community. He should relocate to Russia where gay people are frowned on.”.
—————————————————
I think it’s getting ridiculous, in order to be politically-correct, politicians have to participate to all minorities events.
By the way, I think there should be no shame or pride to be gay/lesbian. I would rename the event ‘Gay Parade’.

#162 Smoking Man on 02.07.14 at 3:19 pm

This is not a commercial site. If people want me, they’ll find me. — Garth
………….

You’re so Canadian, so polite, you’re good manors are earatating to Smoking Men world over.

The free bees you’ve been handing out, man O man.

Pain killers is what I’m thinking.. You never did this in such detail before.

Snap out of it…..

At least you still have a bit

#163 Son of Ponzi on 02.07.14 at 3:24 pm

Aggregator # 146
You’ve pointed out what is wrong with the labour stats.
They count full and part time positions as equal.
FTE (full time equivalent) number should be reported.

#164 Andrew Woburn on 02.07.14 at 3:36 pm

England ready to restrict foreign ownership. Will Canada?

http://blogs.vancouversun.com/2014/02/03/london-ready-to-restrict-foreign-ownership-will-vancouver/

#165 Ralph Cramdown on 02.07.14 at 3:38 pm

#136 Shawn — “CREDIT CARD FEE RIP-OFF? The usual rate that Canadians pay for U.S. purchases on credit cards is the going exchange rate PLUS 2.5%.”

Well of course it’s a rip-off, dear boy. That’s how competition works; the banks compete fiercely on the stuff that people actually compare when they’re deciding (interest rates, cash back, annual fee and benefits, depending on the card), and screw the customer on all the stuff that doesn’t affect their choice of card.

Three things:

I don’t know if it’s still the case, but if you read the fine print, CIBC will be defined as “CIBC VISA” and they’ll say that transactions may be made with other CIBC group companies. In other words, they charge you 2.5% on top of the rate they get from CIBC’s FX desk, and I’m quite certain that that desk’s manager is under standing orders to fire any trader who doesn’t add at least 5 pips to the best bid every day when the CC division calls. That’s how it used to work.

For customers who do a lot of US$ shopping, several (most?) Canadian banks offer US$ credit cards.

Paypal has figured out how to horn in on this lucrative racket. When I make a US$ paypal payment on my C$ credit card, paypal charges me in C$ and keeps the conversion markup for themselves. I bet the Canadian banks hate this with an infernal passion.

You know the drill. Buy the shares and take solace in your dividend payments.

#166 Musty Basement Dweller on 02.07.14 at 3:48 pm

Sir Garth:
I spoke with my TD Waterhouse advisor yesterday, about what cash accounts we held. I said that the one was for the next car. He said that is what at TSFA is for. Put the car savings into a TSFA. I suggested it should be for growth assets and would be too volatile for a savings vehicle. No! he said that is where you put cash. Just saying.

Get a real advisor. — Garth
===========================
Garth, I have one of those advisors from that place. He is definitely [email protected] but my portfolio appears to have done very well over the past 5 months, in the order of 15%. I wonder are they all a waste of time or are there any good ones there. My portfolio appears balanced but who the heck knows. I am reading your book trying to get insights into that.

#167 not 1st on 02.07.14 at 3:50 pm

Don’t know if this is a good strategy or one Garth approves of, but I hold about 4 major ETFs and then I went and bought a couple of the individual stocks inside that have a 1-2% higher dividend payment than the overall ETF offers.

#168 not 1st on 02.07.14 at 3:55 pm

I have to say, I am very partial to owning REITs over anything else, because the underlying business isn’t some iphone or facebook or twitter or even a established blue chip business under threat of competition or changing consumer behaviors. Its just straight up rent payment distributions with a management team responsible for finding long term tenants and expanding the portfolio. Whats not to like.

#169 Ralph Cramdown on 02.07.14 at 4:04 pm

Well, looks like Sochi security is holding; no spectators have managed to breach the stadium’s perimeter. There’s more empty seats than at the first period in a Leafs home game.

#170 [email protected] on 02.07.14 at 5:19 pm

yup, Harper at the keyboard could put even the most devoted pignitaries off their food. It’s not really music.
It’s kind of a hybrid of typing and kareoke

#171 espressobob on 02.07.14 at 5:21 pm

#99 Mr. Happy

Why on earth would anyone put ‘prefs’ in their TFSA? Thats what a non registered account is for! Dividend tax credit????????

#172 recharts on 02.07.14 at 5:23 pm

You were wondering who buys the ruins for sale in DT Toronto
here you go:
http://www.torontolife.com/informer/toronto-real-estate/2014/02/07/february-2014-the-chase/

#173 recharts on 02.07.14 at 5:28 pm

#159 Realtor # 1 GTA on 02.07.14 at 2:51 pm
My buyers are willing to put more of their disposable income towards their mortgage.

They think “after 5, 10 years my mortgage will be cheaper”
and then I will be able to save or pay down dept. Also They believe that after 30 years they will have a million dollar home to sell and live off the profits.

You have wet dreams my friend. You probably are as broke as many of your colleagues

Here you go, you little stupid:

http://realtylaboratory.com/2012/03/07/agent-statistics-the-top-1-of-toronto-real-estate-board/

Probably the situation din not change much since 2012. More or less the same percentages
I doubt that someone like you made any sales, especially now that the low end sales are less than an year ago. The high end sales (>$1.5M) are clearly out of your range judging by your frustration. Sales like that assume some work which you can not do because this site keeps you quite busy.

#174 Blacksheep on 02.07.14 at 5:31 pm

Too much honesty Garth?

Smokey opened the door, I just walked through.

#175 Shawn on 02.07.14 at 5:37 pm

Why Predfs in TFSA?

Expresso Bob asks

Why on earth would anyone put ‘prefs’ in their TFSA? Thats what a non registered account is for! Dividend tax credit????????

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

Perhaps because most people have not yet maxed out RRSP, TSFA and RESP so why would they have a taxable account at all?

Perhaps some people figure you put your money in things with the best return you can find.

Perhaps some people figure zero tax in a TSFA beats reduced tax in a taxable account?

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

#176 espressobob on 02.07.14 at 5:54 pm

#166 not first

Not that REIT’s are bad, their cheap. Problem is the fact someone ain’t diversified!! It’s a big world out there. It might be better to invest accordingly. An advisor can save you the trouble.

#177 smoking man on 02.07.14 at 6:00 pm

(he has a band?)

Hm, I’ll guess that the first time these guys actually meet Harper is onstage, when he turns around and goes:

“One”
“Two”
“Three”
“Hey….Jude”

And during the last campaign he was singing ‘Imagine’,
it’s still on youtube, it was beyond bad.

As for the drummer, now that he has a reputation, there’s always the Gary Glitter Band, or the Woody Allen Trio

#178 pinstripe on 02.07.14 at 6:54 pm

#155 Vamano Pest.

I don’t really understand what lessons you can draw from the examples you mentioned. In the dot.com bubble, I suppose it could be “don’t invest in companies that have never turned a profit but are priced like they make billions”. But honestly, duh! With respect to the 2008 crisis, the lesson is simply not to panic. Anyone that just held through was made whole again by the market in about 2 years, and has enjoyed very handsome returns since.

With respect to the rigged markets: wrong. Equities markets are probably the most transparent and regulated asset class there is. You want to talk about rigged markets, then we should start with housing. No credible source of market information, taxpayer underwritten mortgage risk with 5% down (you think the bank would take on the risk themselves if you only had 5% down?), artificially low ‘emergency’ interest rates for the past 5 years.

It is the housing market that is ‘rigged’, and people don’t seem to be afraid of that (as evidenced by all time high home ownership).

——————————————————–

What did the financial industry push in the dot.com and 2008 crisis era?

When and How did the transparency come about in the equities market? What are the marketing differences within the processes between the equities market and the housing market?

Would you be willing to enlighten the viewers as to How the insiders work the system?

Is it any different today?

#179 Victor on 02.07.14 at 6:59 pm

Investing in this fake economy?

#180 jess on 02.07.14 at 7:04 pm

shawn

if you think that is a rip off look why the poor use payday loans

Wednesday, 05 February 2014 09:03 Elizabeth Warren: End Usurious Payday Loan Exploitation by Making Post Offices Mini-Banks

http://truth-out.org/buzzflash/commentary/elizabeth-warren-end-usurious-payday-loan-exploitation-by-making-post-offices-mini-banks/18461-elizabeth-warren-end-usurious-payday-loan-exploitation-by-making-post-offices-mini-banks

#181 DonDWest on 02.07.14 at 7:27 pm

Why the young can’t compete with baby boomers and live in fear:

http://www.theguardian.com/business/2011/feb/28/baby-boomers-secret-millionaires

I know this article is from the UK, but the principle is the same here in Canada. Garth is telling young people to pull themselves up from their bootstraps and compete against millions of baby boomers who have essentially won the lottery by comparison.

And I’m tired of baby boomers babbling on how lucky I am to be young. Yeah, I’m soooo lucky to waste away my youth working/slaving, trying to get that equivalent worth of 500K “housing wealth” that baby boomers got by simply sitting on their collective asses.

#182 Aggregator on 02.07.14 at 7:49 pm

#162 Son of Ponzi

Even if they counted FTE only, they would just make up some other methodology to get the numbers they want. It really doesn't matter how any economic data is calculated anymore because central banks and government have a set range or bandwidth that they willing to allow the numbers fluctuate within. If that number goes above or below a mid or long term target, they'll just move the goal post and say it's time to change the models.

They will never, ever, ever link monetary or fiscal policy to real economic data. Instead, they will lie and fudge numbers because Canadians are i) too stupid ii) willing to tolerate it iii) have no patriotism and iv) only care about the value of their homes.

So as long as Harper and the UN's little socialist muppet, Chris Alexander (this guy is going to turn Canadian cities into favelas) are in power, all your going to see about job gains is headlines like this: Canadian Oilsands Staff Fired, Reportedly Replaced With Foreign Workers

Get it through your heads. They want poverty for middle class Canadians.

#183 research on 02.07.14 at 8:54 pm

“Spend more time looking for a good advisor. You have a very tax-inefficient portfolio. — Garth”

What does an average person look for, to differentiate between a good advisor and a bad advisor?

Do you have a previous post you can point us to where this was addressed, sort of similar to your ‘how to buy’ post?

#184 research on 02.07.14 at 8:57 pm

I ask this because I think that the average person would not have sufficient intuition or background knowledge to have the red warning flags go off when working with a bad advisor, until it is too late.

#185 DR on 02.07.14 at 10:00 pm

Nice find, I always wonder who is buying these houses.

171 recharts on 02.07.14 at 5:23 pm
You were wondering who buys the ruins for sale in DT Toronto
here you go:
http://www.torontolife.com/informer/toronto-real-estate/2014/02/07/february-2014-the-chase/

#186 live within your means on 02.07.14 at 10:00 pm

#3 DR on 02.06.14 at 9:47 pm
A drummer?

There’s an opening. — Garth
…………………………………….

Unfortunate how few people follow the news.

#187 live within your means on 02.07.14 at 10:17 pm

#35 Chris on 02.06.14 at 10:43 pm
A large part of the herd may be going over the cliff, but there are many who read your blog, and enjoy the wit, and perception, and humour that you bring to it. Thank you!
……………………….

I’ll 2nd that.

#188 live within your means on 02.07.14 at 11:32 pm

#70 Unearned Interest on 02.07.14 at 12:39 am
Years ago all Canadian tax filers could claim a $1000 “unearned” / interest income tax deduction.

It meant Seniors and those on fixed incomes could keep up to $1000 interest income without paying any income tax.

Then the deduction was taken away.
……………….

I remember that. Can anyone recall when it stopped?

#189 Derek R on 02.08.14 at 1:18 am

#183 research on 02.07.14 at 8:54 pm
What does an average person look for, to differentiate between a good advisor and a bad advisor?

Do you have a previous post you can point us to where this was addressed, sort of similar to your ‘how to buy’ post?

The post you want is Advice from the 18th June, 2013.

#190 Pulp Faction on 02.08.14 at 9:46 pm

Some days, you are just on a roll.
I love reading your sarcastic humor, even if it is sad that it’s all true.