Obedience

WHISPER modified

Recently a lot of investors have decided the second half of 2014 will be a mess. Or so they hope. They’ve bought financial assets that will jump in value when volatility (as measured by the VIX) erupts. In fact, there are more of these bets now being made than at any other time since 2008.

It’s impossible to know if they’re prescient or not, but I’m guessing the months to come will rock. We’re overdue for a juicy little correction on US stock markets for example, which might knock prices back 15% (before the next leg higher). And now one of the country’s leading economists (Craig Wright, of RBC) is forecasting mortgage rates could be three-quarters of a point higher by the end of the year, or into the Spring.

I’m a lot more concerned about houses than stocks. Equity markets are big short-term news, but so long as economies creep ahead and companies make money, investors will do fine. There is no 2008 in the cards, after all.

But houses? Oy. Way worse.

Real estate investing has three giant warts that financial portfolios don’t – illiquidity, leverage and duration. When a housing market decays, buyers disappear and sellers can’t escape. Bad news for property-rich wrinklies. As that happens, prices decline and kiddies with 5% equity soon find they’ve been squished.

Housing plops also last a lot longer. A balanced portfolio taking a hit in 2008 was fully recovered by the end of 2009. But the average Toronto house which was driven 30% lower in 1991 didn’t recover until almost 2007. If 2014 or 2015 brings a real estate correction (it may already be happening in Montreal, Halifax, Victoria…), just imagine the consequences after the entire population has pigged out on 3% mortgage debt.

Speaking of piggies, a new development of 48 high-end houses in the distant GTA exurb of Markham, called Oakford, is busy engendering an onslaught of them this Saturday. The developer (Grandfield Homes) has just emailed a billion people telling them they’re invited to an event that they probably won’t be able to get into. Seriously.

“Due to the incredible demand, this invitation is not a guarantee that you will get through on the first day of this two-day event as it is on a first come first serve basis,” it says. But just in case you make it through the wall of bodies clamoring to spend a million, “Please ensure you have government issued photo ID, a pre-approval letter from a financial institution and your cheque book with at least 5 cheques in order to reserve a home.”

Now, remember that these are unbuilt homes nobody can look at, and yet people are expected to buy them like they’re lining up on a Saturday morning at The Sausage King. Here is the four-step obedience process Oakford has prepared for three days from now:

(a) Registration: “First Come First Serve (Queue number will be given shortly before 12pm, May 31th). One number per family. Photo ID, mortgage pre-approval, and 5 blank Checks.” (Yes, they said ‘checks.’)

(b) Model Home Tour: “20-minute limit due to large traffic volume. 2 persons per family (3 persons including agent). Please keep your kids at home to avoid unnecessary worry.”

(c) Sales Centre: “Information package pick-up. Inquiries and purchase preparation.”

(d) Agreement Signing: “Follow our guidance to designated area. Onsite mortgage consulting (if applicable). Agreement signing”

Oh yes, and here are some helpful hints: “Please come a little early…however do not come too early or stay overnight…. Please wait in the line and maintain your order… Grandfield Homes is free from any responsibilities and liabilities that may occur.”

Well, I rest my case. I bet people will actually go to this event. Lots of them. Clutching their photos IDs and five personal cheques. And based on a maximum 20-minute exposure to a staged and artificial model home, they’ll be expected to buy an expensive house without any conditions or legal counsel. Will all 48 sell? I bet those people put more effort and research into picking out their $40,000 car than their million-dollar home.

There’s little doubt where this is headed.

Back to RBC for a minute. The bank just released its latest affordability report, and you can imagine the conclusion. Prices have risen even as mortgage rates have softened, and real estate’s becoming less affordable despite demand for it decaying. Even with a massive (and rare) 25% down payment, the average Toronto now house eats up 56% of pre-tax income (that’s two-thirds of what families actually bring home), while the number is an incomprehensible 82% in Van.

See you in Markham.

184 comments ↓

#1 Dean Mason on 05.27.14 at 6:28 pm

Today’s, RBC’s report about housing getting less affordable is just a scare tactic that will be proved wrong in coming years in Canada.

#2 CPG on 05.27.14 at 6:31 pm

“Receiving a credit card bill that totalled $243,476 would no doubt be a shock for most Canadians. But if you add up all the liabilities of every Canadian government – federal, provincial, and local – that is in fact how much each taxpayer would owe of the $4.1 trillion total in direct debt and unfunded liabilities.”

http://beaconnews.ca/calgary/2014/04/canadian-government-debt-hits-4-1-trillion/

#3 Derek R on 05.27.14 at 6:32 pm

Heh, A bunch of Markham blog dogs should turn up, just so they can say “Oh no, my cheque book only has four cheques. I’ll have to pass this time”.

#4 Mishuko on 05.27.14 at 6:32 pm

If this is urban sprawl markham then we can expect monstrosities with a mere 2 feet between each house and maybe 10m^2 of grass. Maybe even get you a 2 lane roadway.

Not a fan of the markham developments, but each to their own. I rather be the greater fool than suckered into these ‘no pressure’ sales

#5 TurnerNation on 05.27.14 at 6:35 pm

300th? (wrong day…)

#6 Fred on 05.27.14 at 6:38 pm

I’ll wait for the 49th home.

So where are the investors moving their funds towards, anticipating a 15% decline?

#7 GsAmazon on 05.27.14 at 6:39 pm

hey doggies I’m back what did I miss? whole world still crazy? yup. people still chirping that it’s a “great time to buy a house” when they really mean “great time to take on obscene amounts of debt at a low rate”? yup. glargh.

thanks for the millenials portfolio…;)

#8 Big Sexy on 05.27.14 at 6:41 pm

Party in Markham! Ill bring the beers!

#9 Liquid on 05.27.14 at 6:46 pm

If interest rates do climb by 75 bp by year end it then I should have gone with a fixed rate instead of variable. In any case it’s good to have a buffer and not stretch yourself to the max. Wow housing costs 82% of pre-tax income in Vancouver!? That hardly leaves any disposable income for food and other necessities :(

The rate rise would be on fixed, not VRMs. — Garth

#10 Ralph Cramdown on 05.27.14 at 6:48 pm

The problem with the US correction theory is that everybody’s thinking the same thing.

Surely the sell in May crowd has mostly left the building already. Crappy numbers out of China and Eurohaters elected across a Europe on the verge of deflation? No problem! Trouble at the NASDAQ? All better now, thanks. Crappy Q1 GDP? No biggie! The bull continues to grind slowly higher, breaking the hearts of all those who — now that the thing is five years old and up over 200% from the bottom — want to jump in… just as soon as there’s a correction. Bigger than that one in January that they didn’t take advantage of. Or maybe they’re waiting ’till the fall; everybody knows the market’s just going to go sideways or worse over the summer like it always does, right?

#11 catmandeux on 05.27.14 at 6:56 pm

“A collection of 48 fully detached
French-Chateauesque and Victorian inspired homes
on the north side of Willowheights Park”

How do you fit a “Chateauesque” house on a 42 foot wide lot?

#12 flatland on 05.27.14 at 6:56 pm

Apparently a developer in Regina is sitting on $35m worth of new homes.. choosing to let them sit rather than finish them due to demand.

Maybe they could take a hint or two from these folk.

#13 salvatore on 05.27.14 at 6:58 pm

I’m putting $1.5 million down on a $4 million house in Aurora. Do you think that even wealthy areas will be hit, or will those be insulated because the people who buy there actually have money and don’t worry about rates going up a point or two?

#14 Mister Obvious on 05.27.14 at 7:02 pm

It sounds a lot like the preamble for purchasing Justin Bieber tickets. Costs about as much too.

#15 Shawn on 05.27.14 at 7:05 pm

Why Play Zero Sum Games?

They’ve bought financial assets that will jump in value when volatility (as measured by the VIX) erupts.

*****************************************
Those are zero sum games. Bets against other investors.

Why not stick to the positive sum game of stock investing where cash flows from customers of businesses to stock owners on average? A positive sum game.

#16 Smoking Man on 05.27.14 at 7:06 pm

Sure Rates up……. Baha.

See what’s happening to USDCAD

Not a chance. Bonds yields low as crap.. Poloz an export low dollar disciple..

Not to mention how long will Russia stay ideal while Willy Wonka uses artillery, rockets, and aircraft machine guns on citizens.

Is that not a war crime, army on your own people.?

#17 Smartalox on 05.27.14 at 7:08 pm

Also released by Royal Bank today:

http://www.theglobeandmail.com/report-on-business/economy/housing/royal-offers-real-estate-agents-referral-fees/article18867835/

Affordability is declining, so you real estate agents will have to start working harder to bring us first time buyers, the ‘snow-white seal pelts’ of the mortgage business. Bring us 5 fresh new virgins, and get $1000 in cash, or better still, RBC rewards points! bring us one or two, and get NOTHING!

#18 Shawn on 05.27.14 at 7:10 pm

No Escape

Fred at 3 asks

So where are the investors moving their funds towards, anticipating a 15% decline?

******************************************
Some will move to other investments but on average zero dollars will flow out of equities even if we know a 15% drop is coming. Stocks can only be sold to other investors. (Setting aside stock buy backs, which investors have no power to make happen).

If you want out of stocks, someone else has to buy and in the net no money flows out of earnings.

#19 Lastline on 05.27.14 at 7:17 pm

Suckers who buy into this scam will be made an example of when the house of cards collapses. I like to be first in line to say “I told you so”.

#20 Millenial-Falcon on 05.27.14 at 7:17 pm

Haha what a joke who do these guys think they are , the soup nazi from Seinfeld? No shitty house for you!

#21 sheane wallace on 05.27.14 at 7:22 pm

CMHC expects house prices to go higher in the next 2 years. Have you not read the memo Garth? How about the TPS reports?

#22 Old Man on 05.27.14 at 7:23 pm

I am camping out for the night to be first in line, as cannot be left out on this deal.

#23 kiLLAbOY49 on 05.27.14 at 7:32 pm

Mortgage rates aren’t going up anytime soon. I guarantee it.

#24 Smoking Man on 05.27.14 at 7:33 pm

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=53129212.059400&t=l&fm=M

Ying Yang. Show this to you’re buddy.

A little shit bungalow in long-branch, South of Lake shore.

Boom, you ready for this….

And the price it sold for is….
Is……..

750k

Boom, never bet against a smoking man…..

#25 Shawn on 05.27.14 at 7:37 pm

What’s the big deal?

It’s a standard marketing technique to create an impression of scarcity and that demand is huge.

Buyer beware it’s fair enough.

Survival of the financially fit? why not?

Those so dumb to pay these high prices will not be able to afford children thereby preventing passing on their financially inept genes. Darwin would be pleased?

#26 Nemesis on 05.27.14 at 7:46 pm

#[email protected]

http://youtu.be/XSVzRBiiTxA

#27 Joe on 05.27.14 at 7:57 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/royal-offers-real-estate-agents-referral-fees/article18867835/

Royal Bank of Canada, the country’s largest mortgage lender, is offering real estate agents $1,000 for referring five first-time home buyers, as competition among banks for first-time buyers has heated up.

#28 Julia on 05.27.14 at 7:58 pm

Are people really so stupid as to fall for such advertising? I may be afraid of the answer! I’m tempted to make the trek north to see how many people show up!

#29 Derek R on 05.27.14 at 7:59 pm

#2 CPG on 05.27.14 at 6:31 pm wrote
“Receiving a credit card bill that totalled $243,476 would no doubt be a shock for most Canadians. But if you add up all the liabilities of every Canadian government – federal, provincial, and local – that is in fact how much each taxpayer would owe of the $4.1 trillion total in direct debt and unfunded liabilities.”

Oh dear. That is a clueless article. Yes, the taxpayers owe the money. But who do they owe it to? The taxpayers! So the article could just as easily have said,

“Receiving a lottery cheque that totalled $243,476 would no doubt be a nice surprise for most Canadians. But if you add up all the liabilities of every Canadian government – federal, provincial, and local – that is in fact how much each taxpayer is owed of the $4.1 trillion total in direct debt and unfunded liabilities.”

In practice the Feds can print up enough money to buy back their share of the debt any time they like. And the provincial debt if they’re feeling really magnanimous. They don’t need to involve the taxpayers at all.

It might well cause horrendous inflation which is why they don’t do it overnight but the US and the UK have proved that it can be done.

#30 Dean Mason on 05.27.14 at 8:01 pm

TO CPG #2

Credit cards charge anywhere from 10% to 30% annual interest rates plus a whole bunch of fees.

They are not pay more than 3.00% to 4.00% a year in annual interest government debt.

It is more like a cheap line of credit and not a credit card.

If they can’t legally cut public sector pensions and benefits from existing contracts then there is a simple solution.

A pension income tax of 20% rising to 30%. All the reds, lefties like their progressive income tax system until it comes to their government pensions and benefits.

#31 Dean Mason on 05.27.14 at 8:03 pm

Correction to my last above post, They are not paying more than 3.00% to 4.00% a year in annual interest rates on government debt……….

#32 BG on 05.27.14 at 8:04 pm

Here in Montreal I’ve been following the condo market in some supposedly “in demand” area of Montreal.
The sellers are indeed “in demand” of buyers.

Interesting times ahead, I tell you.

Man I LOVE Canada!

#33 Millenial-Falcon on 05.27.14 at 8:08 pm

With all the interest rate hikes looming, what should we be doing with our bond fund etfs? Sell now and sit in some cash? Sell and goto short term bond etf? Or leave them be and let the equity gains offset the modest bond losses?

#34 Julia on 05.27.14 at 8:10 pm

I just took a look at the Oakford site. These chateauesque homes have features such as popcorn ceilings, vinyl sliding windows, porcelain tiles, laminate bathroom countertops and a basement bathroom rough-in. Oh yeah baby, I’ll be first in line for those Versailles like features in this prime location!!

#35 Freedom First on 05.27.14 at 8:11 pm

Thanks for the info on the “Markham Project Management Analyst Buyers Obedience Program” Garth.

Garth, you know you are much more tactful than me, and at times I do get carried away, sorry about that. Soooooo, all I am going to say is I would not advise anyone to buy into this particular program as it is a “Red Alert”.

#36 Cowpoke on 05.27.14 at 8:14 pm

US Fed http://www.maxkeiser.com/2014/05/the-housing-recovery-in-four-charts/#more-73304

#37 Stumpy on 05.27.14 at 8:18 pm

So for our reference we should look back at a housing correction that occured 25 years ago. But for stock market let’s look back 5 years ago. This apples to apples comparison will prove a lot.

We also should focus on the people who were over leveraged and lost their homes but not those who were over leveraged and went bankrupt in 2009.

Investing wrecklessly in any market is bad.

Actually I made several differences clear: liquidity, leverage and duration. Given that most people have houses, and few have equities, the societal risk posed by real estate is far greater. — Garth

#38 frank le skank on 05.27.14 at 8:19 pm

I bet there will be a lot of Chinese Canadians in that line up!! Ehh hoo!

#39 Marco Polo on 05.27.14 at 8:21 pm

Smoking Man, hope you can see through the cloudy haze.

I can tell you’ve never been to Ukraine, or perhaps out of a casino. It seems, by your understanding, its fine for Russia to use their army in Chechnya, but Ukraine must remain weak and helpless in Donetsk.

A double standard for sure. Your buddy Putin isn’t a champ, or a man’s man, he’s a no-talent puppet of Russian business.

Unless you’re here to discuss housing or investment, you shoukd be starting your own blog.

#40 Mean Gene on 05.27.14 at 8:32 pm

There is something rotten in the state of Denmark… err Vancouver.

#41 devore on 05.27.14 at 8:38 pm

#14 Shawn

Why not stick to the positive sum game of stock investing where cash flows from customers of businesses to stock owners on average? A positive sum game.

Speculation is an important part of market operation.

#42 LB on 05.27.14 at 8:42 pm

Don’t forget Lebovic’s “New Prestigious Estate Golf Community” in Aurora (Leslie St./ Bloomington Rd.). 75 “Chateau” inspired homes named after Davinci and Michaelangelo! http://lebovichomes.com/golf/

#43 Grantmi on 05.27.14 at 8:47 pm

Link?????

#12 flatland on 05.27.14 at 6:56 pm
Apparently a developer in Regina is sitting on $35m worth of new homes.. choosing to let them sit rather than finish them due to demand.

Maybe they could take a hint or two from these folk.

#44 Richard on 05.27.14 at 8:52 pm

2008 “correction” took 1/3 of our nest-egg (balanced portfolio of stocks/bonds). We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return. The broker fees were almost the same as our return. At this late stage of our lives, we don’t have time left to recover from this bitter experience. Risk is everywhere, decide carefully where/what will allow you to sleep at night.

Obviously your portfolio was not properly balanced or diversified. Did you seek a second opinion? Did you mistakenly have individual equities? Too much Canadian exposure? — Garth

#45 Montellino on 05.27.14 at 8:54 pm

I saw an ad in D/T Toronto today for a 3.6% 7-year fixed mortgage. That’s a first…keep ‘er running no matter what.. 30yr fixed here we come!!!! once that happens you’ll know we hit rock bottom boys and girls…

#46 flatland on 05.27.14 at 8:56 pm

Grantimi,

It’s anecdotal evidence.. but it was heard from two different people from two different peer groups who are both in the development business.

Perhaps the SK boom is over.. a dundeel?

#47 Shawn on 05.27.14 at 9:05 pm

Go Ahead, Lower My Pension Tax

Dean Mason at 29 said:

If they can’t legally cut public sector pensions and benefits from existing contracts then there is a simple solution.

A pension income tax of 20% rising to 30%. All the reds, lefties like their progressive income tax system until it comes to their government pensions and benefits.

*****************************************
Thank you that beats the 40% or so marginal rate that most people with good government pensions are paying.

Mine will start in 2015… I don’t begrudge the tax, but if you want to lower it, okay.

#48 Retired Boomer - WI on 05.27.14 at 9:09 pm

The Honorable GT-

…..”here is the four step obedience process Oakford has”…

PLEEZ!!! That seems too close to a smoking man mannerism than might be called for in your narrative, though the effect was on target.

It should be enlightening to hear about the turn-out for this 2 day non-event.

Meanwhile the market chugs higher up on rather weak news of late. Maybe Canadian house prices mirror American equities? Both overdue for a correction soon.

Still that’s where that diversified 55/40 division should show its purpose.

#49 Ben on 05.27.14 at 9:16 pm

Insane. I’m never queuing to buy something that costs over 10K, never mind 300K. Forget it.

#50 Tony on 05.27.14 at 9:18 pm

Things have sure changed in America now that Bernanke has left… like I didn’t know that already? America will now be the yo-yo economy where they get 3 months of negative GDP (revised down to .6 percent negative this Thursday) followed by 3 months of positive GDP followed by 3 months of negative GDP and so on and now you get the picture. Never another recession again… ever. The rest of the world will suffer recessions, depressions and worst (they haven’t come up with a name for worst yet). Some day in the next century someone will get into office and set the record straight but that may not happen in most peoples’ lifetimes.

#51 Smoking Man on 05.27.14 at 9:23 pm

#38 Marco Polo on 05.27.14 at 8:21 pmI can tell you’ve never been to Ukraine, or perhaps out of a casino. It seems, by your understanding, its fine for Russia to use their army in Chechnya, but Ukraine must remain weak and helpless in Donetsk.

A double standard for sure. Your buddy Putin isn’t a champ, or a man’s man, he’s a no-talent puppet of Russian business.

Unless you’re here to discuss housing or investment, you shoukd be starting your own blog.

…………

Dude, obviously your a Ukraine, and for some strange reason you think I’m taken sides…

Just stating the facts.

I’m a Neo libertarian, dispise all forms of government, all organization, be it economic or religious..

I hate em all.

I believe in the individual, the spirt of I, me….. The only difference between, the bloods, crypts, and Congress is the address….

It’s all the same shit..

I don’t pick sides….

#52 Joe2.0 on 05.27.14 at 9:26 pm

The derivatives disaster.
The Libor rigging.
The banks manipulating metals (Barkleys)…
Banks laundering billions of drug money (HSBC)…
High frequency trading.
Bitcoin manipulation.

All of these crimes directly or indirectly have cost everyone on this blog money.
For starters.

It’s a corrupt intertwined banking system and
one day theres going to be a big wake up call.

Pisses me off when I run into a 75 year old waitress who had to go back to work because her pension wasn’t honoured.

Criminals.

Yah. Damn bitcoins. — Garth

#53 Ralph Cramdown on 05.27.14 at 9:37 pm

#43 Richard — “We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return.”

1) “What benchmark or mix of benchmarks, similar to my portfolio, are you aiming to match or exceed? Why do you believe those to be appropriate?”
2) “Why have I continued to underperform the benchmarks that we agreed were appropriate targets?”
3) “You’re fired.”

It’s that simple, and fees are mostly irrelevant. You were (or should have been) paying for measurable results, and a way, monthly or quarterly, to gauge whether you were getting those results.

If you feel that you were sold inappropriate investments, there are options for redress available to you, but some have time limits of a year or two, so research them and decide.

#54 research on 05.27.14 at 9:37 pm

“overdue for a juicy little correction on US stock markets for example”

The first hints on the horizon?

http://www.theglobeandmail.com/globe-investor/investment-ideas/stocks-arent-doing-as-well-as-you-may-think/article18739162/

#55 Nemesis on 05.27.14 at 9:42 pm

#ObligatorySquirrelReference. #ShouldaBoughtA…

http://youtu.be/zfmZSiFlgKU

[NoteToGT: Compulsion combined with an eidetic memory is a terrible curse. On the BrighterSide I do recall some OutStanding LingerieEnsembles.]

#56 Piccaso on 05.27.14 at 9:45 pm

They bought the Pacific coast, now buying the Maritime coast

https://ca.news.yahoo.com/chinese-real-estate-firm-proposes-major-move-rural-210446983.html

#57 X on 05.27.14 at 9:45 pm

I feel sorry for those highly leveraged RE purchasers the past few years….hopefully rates will rise sooner rather than later to help what few that have not purchased RE yet realize that they cannot afford RE at todays prices.

#58 Ralph Cramdown on 05.27.14 at 9:46 pm

#43 Richard

And there’s nothing wrong with asking to see five years’ worth of your stockbroker’s personal statements, and getting his branch manager to verify them in writing. His investment mix doesn’t have to match yours, but if he can’t make money for himself, or thinks it’s none of your business, find another one.

For some people, learning Couch Potato or Boglehead style indexing might be simpler.

Ethical advisors do not trade in their own accounts. — Garth

#59 Smoking Man on 05.27.14 at 9:50 pm

#38 Marco Polo on 05.27.14 at 8:21 pm

In fact my bit about Russia had a direct impact on the bond market. But your bias toward oneside blinded you to that fact.

When people use words like, group, us, them.. Instantly lose my respect.

I could go out and join a libertarian group, but the second I did that I become one of them.

And I cease to be a libertarian.. It’s a paradox, when you little people gang up on me, or others it just demonstrated your weakness as a man.

Self-worth, individually, give no shit.. That’s the ultimate secrete to happiness.

Leaves you friendless and family less.

But happy as shit…

#60 Tony on 05.27.14 at 9:52 pm

Re: #21 Old Man on 05.27.14 at 7:23 pm

Beware the slope of the land on the building site. It tilts downward a lot from north to south.

#61 pinstripe on 05.27.14 at 10:05 pm

#43 Richard

2008 “correction” took 1/3 of our nest-egg (balanced portfolio of stocks/bonds). We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return. The broker fees were almost the same as our return. At this late stage of our lives, we don’t have time left to recover from this bitter experience. Risk is everywhere, decide carefully where/what will allow you to sleep at night.

—————————————————————

I know many retirees that had their savings/investments with Wealth Management advisors and their experience was the same. Several of these retirees had money in GICs at the same time and the GICs had a better yield than the advisors.

Bank brokerage advisors? — Garth

#62 saskatoon on 05.27.14 at 10:10 pm

#22 kiLLAbOY49

i asked this before…but what’s the maximum spread (historically) between variable and fixed?

#63 sheane wallace on 05.27.14 at 10:14 pm

It seems something is in the baking and I think soon and most likely in 2014 we would see the beginning of something big. The relations between BRICS and the Anglo American empire are deteriorating and that quick, it is also obvious that China is showing some muscle which is very strange, also the attempt to discredit Brazil’s leadership and to separate Europe and Russia…. It seems something very big is coming to the international monetary, trade and political system. At this point Germany has won it’s world war as it holds all the balance of power.

I am getting more and more convinced that the world that we live in in transitory, that we are going to wake up one day in a completely different world with the only possible outcomes:
1. currency and debt destruction, coffee at 10 $,savers screwed, all triggered by the dollar crash,
2. 5-8 % interest rates and crash of the economy to save the dollar. capital controls to save the banks,

and that overnight.
Every credible player I see out there is betting to some extend on one of the outcomes, hedging for the other just in case as I believe the outcome is not know yet and might be determined ad hoc.

Well of course I could be wrong, we would muddle through and then our diversified portfolios would save us. Then I wake up, look at the insanity of the Canadian housing market and how it is getting crazier by the day and can’t help it to think that there is really no way out of this mess, that we have reached peak debt and they have to do something extraordinary to have this going for a little while longer.

#64 Bottoms_Up on 05.27.14 at 10:16 pm

Garth you kill me man:

“Now, remember that these are unbuilt homes nobody can look at, and yet people are expected to buy them like they’re lining up on a Saturday morning at The Sausage King.”

#65 Shawn on 05.27.14 at 10:18 pm

Is Stock Investing Speculation?

Devore at 40 kindly responded to me as follows:

He noted that I said:

Why not stick to the positive sum game of stock investing where cash flows from customers of businesses to stock owners on average? A positive sum game.

Then Devore said:

Speculation is an important part of market operation.

********************************************
Agreed speculation can be an important part of stock investing.

But there is basically NO speculation in buying a broad equity index ETF and holding that for many years. It WILL rise over the long term because money is flowing in from the earnings of profitable businesses on average.

Some of the earnings are paid as dividends and an average of about 60% is retained and reinvested to grow these companies and earns double digit returns on equity on average.

So yes, you CAN speculate in stocks but investing in stocks does not HAVE to be speculation.

It is however more fun to do at least a little speculating and trying to beat the index. And with some study of value investing techniques one can win money from “technical” investors like shooting fish in a barrel. (Which, I understand, is also fun, although not so much fun for the fish)

Basically anyone who usually describes stocks by their ticker symbol instead of the name of the company is easy pickin’s since they will not usually have looked at the earnings or balance sheet.

#66 Tim Hudak Makes Trees Seem Less Wooden on 05.27.14 at 10:21 pm

The 905 area will stay house horny and PC friendly longer than anyone can understand. They have a higher tolerance for crap houses and political bs it seems.

#67 Nemesis on 05.27.14 at 10:22 pm

@Smokin’Man/#58

#Friendless? #Familyless?

Schmidt bought a squirrel… thence Kathy was [“ahem”] more than ‘obliging’…

http://youtu.be/zfmZSiFlgKU

#BonusZen. #MPAA: R

http://youtu.be/G-dafG40eGU

#68 Shawn on 05.27.14 at 10:22 pm

Value stock investors who beat the index will not know exactly who they beat, but yes it will usually be non-value investors (momentum investors, fans of technical analysis especially).

#69 Bottoms_Up on 05.27.14 at 10:24 pm

#28 Derek R on 05.27.14 at 7:59 pm
—————————————
As Garth has said before, governments do not need to pay back debt.

Really it only needs to be serviced, and to be kept ‘in check’. I’m not an economist so don’t know the best ratios to use, but likely a debt to GDP is a good metric to follow.

Personal debt? Yes, that needs to be paid back at some point (lest your heirs inherit it). Government debt is a totally different beast.

#70 Nemesis on 05.27.14 at 10:25 pm

#BudWeiserFatFingerLinkErratum. #KathyObliges.

http://youtu.be/yvmdpAhBM24

#71 Smoking Man on 05.27.14 at 10:27 pm

Marco, first off thanks for the inspiration, I equate society as a machine, think of it as a weed and feed spreader.

It wants a perfect lawn, after all the planning, the right mixture of soul killing ingredients. A dandy lion sprouts up from the Centre of the lawn..

That’s me, after I do it, and a majestic yellow flower shows its face…

I will kill anyone that ties and cut it..

It made it… It deserves respect…

#72 Joe2.0 on 05.27.14 at 10:30 pm

Bitcoins aren’t the issue they are just another example of the systemic corruption aka stealing and manipulation.

Yikes.

#73 Inglorious Investor on 05.27.14 at 10:35 pm

#28 Derek R on 05.27.14 at 7:59 pm

“Yes, the taxpayers owe the money. But who do they owe it to? The taxpayers!”

Government debt is owed to those who purchased government bonds. Unless you hold government bonds, you have no claim on government debt payments, tax payer or not.

————————

“In practice the Feds can print up enough money to buy back their share of the debt any time they like. And the provincial debt if they’re feeling really magnanimous. They don’t need to involve the taxpayers at all.”

That’s not how it works. Yes, it’s true that a central bank can monetize its government’s debt (e.g. quantitative easing) but the liability falls to the tax payer (as usual). In other words, debt monetization puts more burden on the tax payer, not less. But let’s assume the government decides to just print money debt free. And let’s assume the bankers actually allow it. The burden still falls to the tax payer in the form of devalued currency, which is just another form of taxation. Or wealth transfer, if you like.

————————

“It might well cause horrendous inflation which is why they don’t do it overnight but the US and the UK have proved that it can be done.”

Inflation is not why they don’t do it. They don’t do it because that would cut the bankers out of the action. The whole reason central banks were established was to give the bankers the legal right to skim. In fact, there are those who assert that not one dime of income tax (in the US at least) actually goes to the federal government. Rather it all goes to pay interest. I don’t know if that’s true, but just keep in mind that the US was quite prosperous before they enacted the income tax and the federal government functioned just fine.

#74 Nodebt Man on 05.27.14 at 10:39 pm

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to allow the issue of currency , first by inflation , then by deflation , the banks and corporations that will grow up around the banks will deprive the people of all property -until their children wake -up homeless on the a continent their fathers conquered”……….Thomas Jefferson
Millions forclosed and millions more coming in the Land of the Free .

#75 killaboy49 on 05.27.14 at 10:40 pm

“The maximum spread (historically) between variable and fixed?” I dunno. How many years has it been that “they” have been telling us interest rates are going up soon?

#76 Smoking Man on 05.27.14 at 10:41 pm

Garth what hell do you have aganst toe nail clippings, your one strange dandelion.

Perhaps that’s why I like you..

#77 Pope Smartass Snugglebums the 666nv (aka Nosty) on 05.27.14 at 10:45 pm

#15 Smoking Man on 05.27.14 at 7:06 pm — “Is that not a war crime, army on your own people.?”

Indeed. Does this name ring a bell? (Read the headline, and add in this). What of the Euro vote yesterday (here) as well as US police forces killing their own people without justification (here)?

What of the Rothschilds’ latest slam-dunk idea, of turning Israel into the world’s first cashless society?

“. . . Israeli Prime Minister Benjamin Netanyahu’s chief of staff has come up with a three phase plan to “all but do away with cash transactions in Israel”. Individuals and businesses would still be permitted to conduct cash transactions in small amounts (at least initially), but the eventual goal is to force Israeli citizens to conduct as much business as possible using electronic forms of payment.”

That would put a fly in the ointment, esp. if China and / or Russia, along with a bunch of other countries ditch the petro-dollar and decide to set up with them.

Then tnere are Soros (who is in the process of buying gold mining stocks) and Brzezinski. Satchmo (Louis Armstrong) was right but in a weird sort of way — this is a wonderful world, but would the last one out please burn all the garbage left behind!

For those who like their comfortable NWO-controlled collectivism life, this.

#78 Derek R on 05.27.14 at 11:03 pm

#68 Bottoms_Up on 05.27.14 at 10:24 pm wrote:
As Garth has said before, governments do not need to pay back debt.

Agreed. Now we just have to convince #2 CPG…

#79 **NAKED APE** on 05.27.14 at 11:10 pm

All I can say is “WOW” as Granfield Homes drives the sheeple, like lemmings, to the cliff. It way be worthy of a follow-up to see just how many fell over the cliff, in their lust to follow the herd…….

#80 Shawn on 05.27.14 at 11:11 pm

A Victim of Ayne Rand?

Inglorious Investor said:

just keep in mind that the US was quite prosperous before they enacted the income tax and the federal government functioned just fine.

******************************************
Sigh, well perhaps prosperous by the standards of a hundred years ago.

Quite a few people even had electricity and indoor plumbing though few of the rural areas did.

Your great grand parents, if they could travel forward in time and see the progress made would beat you with a stick, for making such statements and beg to trade places with you.

#81 HD on 05.27.14 at 11:12 pm

#32 Millenial-Falcon on 05.27.14 at 8:08 pm

With all the interest rate hikes looming, what should we be doing with our bond fund etfs? Sell now and sit in some cash? Sell and goto short term bond etf? Or leave them be and let the equity gains offset the modest bond losses?

———————————–

Rebalance to your asset allocation target and go to bed.

Sleep tight.

Best,

HD

#82 Cory on 05.27.14 at 11:12 pm

This correction that all these so called experts keep calling for will not materialize. There is no reason for it other than people think it should happen…and to a magical arbitrary number of 15%. who comes up with this stuff?

There will always be rough patches and corrections along the way, its inevitable yes. However, the markets will absolutely keep moving upwards as long as interest rates and bond yields remain low, and house prices remain ridiculously high. People who are smart with money, need somewhere to go with it, the fed and governments know it, and we with funds to invest are forced into equities. Not that I mind, while all most are scared of this big oncoming correction, I’ve gladly beat the index several times over this year already. Even if the correction does materialize….and it wont….I won’t budge since when its over the markets will continue onward and upward.

#83 natrx on 05.27.14 at 11:21 pm

I’m willing to bet most of the buyers will be immigrants or minorities. They love new houses, big houses relative to lot size, and cookie cutterness.

#84 Shawn on 05.27.14 at 11:22 pm

From post 57 Ralph, Garth said:

Ethical advisors do not trade in their own accounts. — Garth
***************************************

Really? Why should an ethical advisor who recommends highly liquid ETFs or other highly liquid investments not own the same products as advised and why would they not manage their own money?

I’d certainly prefer my chef to eat his own cooking.

Many hedge fund managers have the majority of their wealth in the fund they manage. Is that unethical?

I thought the ethics rule was to not front-end clients by buying or selling ahead of them (a big issue for illiquid stocks). But how is it unethical to own the same investments?

To me your statement is a sweeping accusation that any advisor who invests his own money is unethical.

Really?

See my response to ‘S’ on this issue. — Garth

#85 Bitcoin manipulation on 05.27.14 at 11:23 pm

Bitcoin manipulation indeed – there are strong reasons to believe that the majority of Bitcoin transactions have been made between a small group of individuals with themselves or among themselves, in order to artificially drive up the price when it is deemed good timing to do so. Good timing meaning such timing that naive outsiders are likely to want to step in and buy Bitcoins at those artificially determined prices. Bitcoin is one giant bait scam.

#86 45north on 05.27.14 at 11:32 pm

catmandeux : A collection of 48 fully detached
French-Chateauesque and Victorian inspired homes
on the north side of Willowheights Park”

I did not find references to Victorian but there is a subtle link to a past grandeur such as Downton Abbey. The name of the builder Grandfield has the same root as grandeur and has much the same sound as Lord Grantham the patriarch of Downton Abbey.

http://www.itv.com/downtonabbey/photos

The Victorian architecture of the present development ties it to the past grandeur of the Victorian era. The grandeur was based on wealth which had several dimensions. There were investments which produced income, there was the estate itself whose tenant farmers produced an income and there was an established and recognized social structure with servants and masters.

In comparison, the owners of the new development more or less do not have wealth. They have debt. I say more or less because they may have investments which produce an income. One thing they do not have is an established, recognized social system where they are the masters.

However the soon-to-be owners are not assuming wealth but debt.

#87 :):( Ying Yang on 05.27.14 at 11:36 pm

#23 Smoking Man on 05.27.14 at 7:33 pm
http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=53129212.059400&t=l&fm=M

Ying Yang. Show this to you’re buddy.
A little shit bungalow in long-branch, South of Lake shore.
Boom, you ready for this….
And the price it sold for is….
Is……..

750k

Boom, never bet against a smoking man…..

…………………………………………….
Smoking Man did you send the correct link? That plat went for $429k ???????
Too much red wine tonight?

#88 TheCatFoodLady on 05.27.14 at 11:36 pm

If I don’t stop snickering, the Main Squeeze is going to throttle me. Seems my reading lofty, (pun intended), poncy housing development ads bring out the hysterical seven year old in me. The developer may be trying to give the cramped subdivision a prep school high brow appeal but in the interest of that, perhaps someone with a better command of basic English spelling might have helped. Hell, Garth would have, if asked nicely I’m sure, seconded out one of the GF Amazon proof readers. I like “lite” too but a house like that deserves lights with at least an illusion of weight. And what the behoozles is a ‘Grate Room’? Popcorn ceilings with high luster walls & the odd, artfully placed cheese grater to add interest?

#4 – Mishuko: The one model home plunked down on a lot shows the surrounding land left on the plot is squish city. You might squeeze in a hrseshoe pit in the back yard. A pool? Nope.

I love the “NOTE” right at the end of the features list. After listing all the features, correctly spelled or not, it’s nothing more than a broad brush disclaimer. Ceiling heights, floor space, fixtures, finishes – all of those might be a tad different.

Bummer. I was gonna hitchhike out to Markham with my 5 blanque cheuqes & mojo… & gummint issued ID.

Think I’ll go for a bike ride instead.

#89 KommyKim on 05.27.14 at 11:38 pm

RE: #15 Smoking Man on 05.27.14 at 7:06 pm
Not to mention how long will Russia stay ideal while Willy Wonka uses artillery, rockets, and aircraft machine guns on citizens.
Is that not a war crime, army on your own people.?

One man’s freedom fighter is another man’s terrorist.
The victor writes the history.

#90 Dean Mason on 05.27.14 at 11:48 pm

#46 Shawn

Nice try but this is a dedicated government pension income tax which means it is on top of your marginal income tax rate.

So if you are in the 40% income tax rate then this would make it, 60% to 70% income taxes payable.

I guess you don’t understand what a progressive income tax system is when it comes paying more income taxes out of your pocket.

The more you make, the more the government takes, progress for them.

#91 ozy - EXPECT the WORSE on 05.27.14 at 11:55 pm

EXPECT the WORSE! EXPECT the WORSE!

This is, hot areas to get hotter and suburbs to stop appreciating even decrease. Same for condos, in general.

Both sides of social spectrum will be badly affected
-young professionals not affording to move out their losing value condos – no, it’s not funny, I won’t laugh of those poor trapped guys – a sacrifice generation
AND
-working suburbian class seeing the paper-appreciation evaporate – I won’t laugh either, their dreams of working hard and advancing on social class status – ruined…

of course, smart people already made big $$$ past decade and will just witness the carnage.

Side note: I expect prostitution to be legalized like in Germany after their correction decade ago. I pray people will find other line of work though to pay for debts.

#92 dienekes on 05.28.14 at 12:04 am

@43
My employees are IBEW 2085
There pension actually managed to lose money last year, i read the report. How the hell could anyone have lost money in 2013 in the markets is a miracle.

#93 Derek R on 05.28.14 at 12:14 am

#72 Inglorious Investor on 05.27.14 at 10:35 pm wrote
Government debt is owed to those who purchased government bonds. Unless you hold government bonds, you have no claim on government debt payments, tax payer or not.

Sorry, II. The original article did not differentiate between taxpayers who owed a lot of tax and taxpayers who owed no tax. So I couldn’t differentiate between taxpayers who would receive a lot (because they were bondholders) and taxpayers who would receive nothing (because they weren’t). I just had to use the mean value like the original article.

You are, of course, correct and if the original article had said “Government debt is funded by taxpayers who owe taxes. Unless you owe tax, you have no obligation to fund government debt payments, taxpayer or not”, I might well have written exactly what you did.

That’s not how it works.

Again, true. I said that the Feds can do that. But we all know that they haven’t.

Inflation is not why they don’t do it. They don’t do it because that would cut the bankers out of the action.

That makes sense too.

#94 Richard on 05.28.14 at 12:16 am

“Obviously your portfolio was not properly balanced or diversified” At the time (2008) the portfolio was well balanced, very actively managed and carefully diversified.

“Did you seek a second opinion?” Up until the crash we had no reason to question the investment approach. Many of our friends fell into the same trap. Two years after the crash we moved funds (with our same broker) to a new investment house, with promises of more freedom, opportunities and potential.

“Did you mistakenly have individual equities?” On this point… bingo! But then again, it was a seven figure portfolio.

“Too much Canadian exposure?” of the 60% in equities, probably 2/3 was Canadian, 1/3 US.

It was like a living slow death watching our flat returns after the GFC; for us no gains, no recovery, no recourse.

A balanced portfolio losing 30% of its value when the stock market declines by 60% (that rare 2008-9 event) is unfortunate but survivable. It should have rebounded completely within a year, but did not in your case because of an over-weighting in Canadian equities and lack of diversification. This is called ‘home country bias’. Seventy per cent of Canadians with equities have 100% in domestic securities. You should ask your bank-owned brokerage why that is. — Garth

#95 the jaguar on 05.28.14 at 12:18 am

Did they really say “checks” Garth? Must have hired some American firm to fluff up their sales pitch.
Americans use the term ‘check’ rather than ‘cheque’. Like color instead of colour, harbor instead of harbour, etc.
Round them all up. They can usually be spotted by their manner of dress, accents, and total lack of self awareness as a nation. Don’t be offended unless you can rebut any of those comments. (unlikely)
The comments about the Regina marketplace are especially interesting, but probably not isolated to that location. It’s the way it always begins: first rumours, small articles in newspapers about jobs being lost, today an article in one of the national papers about the Big Banks feeling a little afraid that their low loan loss provisions might all prove to be too good to be true.
Few people take notice of their own vulnerability. Financially or otherwise.

#96 GenXer on 05.28.14 at 12:38 am

A little tip to anyone planning on attending the grand field homes opening. Drive down the street to upper unionville where several discounted phase 1 and 2 lots are available. No line ups and 4 builders competing for your business. The lots are the size of a postage stamp and you are still in for a million for a cardboard house, but at least you won’t have to wait in line.

#97 Willdaman on 05.28.14 at 12:42 am

So, fixed mortgage rates going up, meaning interest rates have gone up, plus a 15% correction in the market predicted.

Where in the world am I going to park my money short/medium term??

If what you predict is true, the value of any fixed income type product will lose value to drive up yield, and buying any equity product while anticipating a 15% haircut is clearly not palatable.

I don’t want to hear any bs about the correction being a great time to average down, I would still be looking at losing a chunk of my initial investment short/medium term, which is the timeframe I’m interested in.

#98 Happy Renting on 05.28.14 at 1:01 am

Just started reading “Memoirs of Extraordinary Popular Delusions and the Madness of Crowds”. Just finished The Mississippi Scheme. Funny how the dates on the calendar have changed, but human behaviour doesn’t.

#99 SESs on 05.28.14 at 1:05 am

DELETED

#100 Nemesis on 05.28.14 at 1:11 am

#JustForRandy&ThePedagogicalArchives

http://youtu.be/g_RWFLBC4O8

#101 bob dog on 05.28.14 at 1:15 am

The sad truth is when this all blows up, nobody will demand that the financial terrorists, speculators and paradite realtors be rounded up and sent straight to the showers. Hockey season will be the only thing on their chicken sized brains.

#102 drydock on 05.28.14 at 1:41 am

“Line up at The Sausage King on Saturday morning.”

In Montreal we line up at Shwartz’s for smoked meat sandwiches after bar hopping all evening.
Just saying.

#103 OffShoreObserver on 05.28.14 at 2:11 am

#2 CPG on 05.27.14 at 6:31 pm

“Receiving a credit card bill that totalled $243,476 would no doubt be a shock for most Canadians. But if you add up all the liabilities of every Canadian government – federal, provincial, and local – that is in fact how much each taxpayer would owe of the $4.1 trillion total in direct debt and unfunded liabilities.”

http://beaconnews.ca/calgary/2014/04/canadian-government-debt-hits-4-1-trillion/
===================================

I remember when Trudeau [the first one] got Canadians in debt the first time in the 70’s. The per capita debt then was about $40,000.

I wanted to pay my portion off right then and there but not allow them to run up my debt after that.

So, my only hope is to go Non-resident.

#104 Dan7 on 05.28.14 at 2:19 am

Garth what are your thoughts on this vid:
Still bullish on equities? History’s on your side:

https://www.youtube.com/watch?v=uzC2cxf_XIc

Morningstar reviewed the last 9 recessions and the recovery time till the next one and some took 150 to 180 months for the recovery. We are only in month 61 so this bull has long legs apparently.

#105 huff and puff on 05.28.14 at 2:48 am

smoking man enjoy 73% asking price
scroll all the way down last 1

http://www.torontomls.net/PublicWeb/CL_CF.asp?link_no=53141606.059400&t=l&fm=M

#106 Nemesis on 05.28.14 at 3:01 am

#BreakfastZen. #YouCanDoItIfYouTry. #Learn. #Live. #NotesFromJohnLeeH.

http://vimeo.com/75848086

#107 S on 05.28.14 at 3:27 am

Ethical advisors do not trade in their own accounts. — Garth

Are you serious? What is the reason for that?
My instincts tell me to not trust the judgement of an advisor who doesn’t trust it with his own cash. (And hey, based on what I read here over time, I was under the impression you design your own portfolio.)

Over 25 years ago, as I was in the financial media and dispensing advice to people, I reached the conclusion it would be best to be devoid of any personal conflict of interest. Never did I wish to profit, or be suspected of profiting, from the consequences of my own public statements or actions. At that time I placed my personal financial assets in a discretionary account under an advisor with whom I had no other relationship. When I served in the House of Commons, this was additionally placed in a blind trust. As an investment advisor myself, I have maintained this structure, in which I have no direct involvement in the management of my own assets, because it is the most ethical one I can imagine. I realize I stand alone in this belief, and that most advisors spend many hours a day trading in their own accounts. But this is my choice. Those who look to me for financial guidance will always know it is their interests only which are on my mind. — Garth

#108 Flawed on 05.28.14 at 3:47 am

#71 Joe2.0 on 05.27.14 at 10:30 pm
Bitcoins aren’t the issue they are just another example of the systemic corruption aka stealing and manipulation.

Yikes.

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

Shows how much you know about bitcoin. Bitcoin is balanced using a computerized ledger every second of the day. Bitcoin can’t be “created out of nothing” like Govt money (done by banks). It is not “fraudulently fractionally lent out” like what banks do. It is decentralized so it can’t be manipulated like the USD or any govt “digitally created” money. Unlike corrupt banks and govts “the people of EARTH” control bitcoin. No one “forces you” to use bitcoin. There are not a bunch of “invaders” like the Americans militarily making you use bitcoin via the IMF and other criminal organizations. Fees are tiny compared to banks. I could go on but I think you get the jist of it.

Bitcoin – managed by the people of the world freely and openly (no nanny state).

Govt money – run by corrupt bankers and corrupt govt who do not represent the people as most elections do not equate to democracy AKA Canada (elected dictator PM or Premiers)

#109 Buy? Curious? on 05.28.14 at 4:12 am

Bwahahaha! Hello Greater Fools!

#43 Richard on 05.27.14 at 8:52 pm
2008 “correction” took 1/3 of our nest-egg (balanced portfolio of stocks/bonds). We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return. The broker fees were almost the same as our return. At this late stage of our lives, we don’t have time left to recover from this bitter experience. Risk is everywhere, decide carefully where/what will allow you to sleep at night.

Obviously your portfolio was not properly balanced or diversified. Did you seek a second opinion? Did you mistakenly have individual equities? Too much Canadian exposure? — Garth

Another example of why this whole diversified investment portfolio works for only the really rich and not the average person. Did he ask for a second opinion? Mistakenly have individual equities? Too much Canadian exposure? WTF? That sounds too complicated to me.

Richard, what about buying a place near a daycare and a subway station and renting the place out? I may not win the Nobel prize in Economics for that tidbit of advice but you’re not going to lose 1/3 of your money in a year and/or make 1.73 return on your money.

https://www.youtube.com/watch?v=3Js4YZ1z0to

#110 Hillbilly on 05.28.14 at 4:51 am

comment # 23 S Man

Wake up dude !
Did you look at the lot size ?

a 55 foot by 155 foot lot is huge, rare and very desireable- scarcity premium applies in all markets, proves nothing.

It is a redevelopment play – you should be able to build up to 6,000 feet on it, ergo, cost per buildable foot is actually a good buy in this market.

Just like your airline concept – you shoot off your mouth (post comments) as if you are a business guru when in fact your treatment of the subject is usually shallow, naive and inept.

Keep drinking, things will remain simpler for you to understand that way.

#111 Londoner on 05.28.14 at 4:53 am

People love to be told what to do and they love being sold things, especially when it promises them exclusivity and rewards. Why blame a company giving people what they want? They’re selling a product not managing financial risk.

Anyways, news from the UK – Nationwide warns of a “natural correction” in house prices in the UK:
http://www.bbc.co.uk/news/business-27599787

#112 Londoner on 05.28.14 at 4:56 am

Here in the UK it takes about 3 weeks for a bank to approve a mortgage. This includes getting a property survey, performing background financial checks and income verification for the applicants. A few years ago when the banks were reluctant to hand out mortgages it could take up to 7 weeks for an approval. When I was in Canada about 10 years ago I could walk into any major bank branch with my last payslip, NOA and proof of deposit in the morning and be fully approved for a mortgage by the afternoon. Can anyone tell me if things have changed in Canada since then?

#113 Led on 05.28.14 at 6:23 am

Garth, I was thinking the Turner Nation should start randomly emailing well known realtors to ask their opinions on whether we should sell our real estate now, or hold off until the following year for more money. Wouldn’t it be great to see what realtors have to say when their commission is on the line….so sneaky!

#114 Crossbordershopper on 05.28.14 at 7:17 am

buying another fixer upper in east buffalo this weekend for $8 grand. Yup, thats what they cost. about 4 grand to make it pretty and for 12 grand you get a duplex with 3 bed on each side, 600 month each side minus taxes and water and woola. another cash cow. What our kids are doing in southern ontario driving down this 401/403 everyday for a job and live like this is a true shame. the cost of being canadian is very high now. Do what the recent immigrants do, have canada as a convenient place to live, but really do all your business elsewhere. i have encountered a number of them and they said the same thing, Canada is a joke to do business, kids and wife are here, for healthcare, safety, schooling. He comes and goes as he pleases, Ontario is beautiful in the summer, winter not so much. Our forefathers should of kept their european passports. Garth talks about taxed on worldwide income, i laugh, almost everyone i know accepts cash and pays cash for stuff. Its the only way Canadians can save a buck here and there. Drive down another highway, change your life, your the mouse in the wheel. So rates rise a half point, or prices drop 10%, how does that change your life? get out of the wheel.

#115 Ralph Cramdown on 05.28.14 at 7:20 am

#83 Bitcoin manipulation — “[T]here are strong reasons to believe that the majority of Bitcoin transactions have been made between a small group of individuals with themselves or among themselves, in order to artificially drive up the price when it is deemed good timing to do so.”

Yeah, it’s good fun to watch. The bitcoin crowd got exactly what they wanted — free, anonymous markets without government supervision. And, predictably to anyone who’s read about other markets at other times, they got theft, fraud and manipulation. Now some of them are turning to the courts because, uhh, they DO want government involved as soon as they scrape their knee.

Others are turning to the other time-honoured endpoint of a free market, a like-minded group of large users who control the quality of companies who deal… a.k.a. a cartel.

Meanwhile, the Winklevii (that joke is about the only worthwhile thing to come out of the community) are starting a bitcoin ETF so the little guy can easily trade it… just like the gold miners did with the first gold ETF. I predict that by next year there will be a myriad of websites arguing that blatant manipulation — nay, naked shorting! — of “paper bitcoin” is illegally suppressing the price, to hide the true weakness of fiat currencies. And that it can’t last! Somebody will predict bitcoin at US$10,000, but in the meantime almost everyone will agree… IT’S ALL THE Fed’s FAULT.

Bitcoin users, repent! “Jack and the Beanstalk” was a great story, but the moral wasn’t that you should trade a productive milk cow for a handful of magic beans!

#116 Luc on 05.28.14 at 7:25 am

I wonder if realtors and condo developers are overweight because Global recession is tied to rising obesity rate…
http://www.ctvnews.ca/health/global-recession-tied-to-rising-obesity-rates-oecd-report-1.1840767

#117 Squad on 05.28.14 at 7:26 am

I visited the Grandfield Homes website to take a look at his new development, and nowhere is the price mentioned – what a surprise! Don’t you think that would be the most important fact to know if you were even considering buying one? What they do say is this:

“Please visit our Presentation Centre for current prices and information.”

So, I have to actually take a trip down to their presentation centre to find out if I can even afford it. Honestly, why would anyone bother?

You should also Google Street View to see the site and take a look around at all the hundreds of other houses that will be boxing it in – how depressing!

I feel sorry for those who are going to be suckered into this “fantasy”.

Garth, you need to voice your displeasure at not being listed on their Registration Form, where it asks “Where did you hear about us?”

#118 George on 05.28.14 at 7:42 am

#108 Londoner on 05.28.14 at 4:56 am
Here in the UK it takes about 3 weeks for a bank to approve a mortgage. This includes getting a property survey, performing background financial checks and income verification for the applicants. A few years ago when the banks were reluctant to hand out mortgages it could take up to 7 weeks for an approval. When I was in Canada about 10 years ago I could walk into any major bank branch with my last payslip, NOA and proof of deposit in the morning and be fully approved for a mortgage by the afternoon. Can anyone tell me if things have changed in Canada since then?
___________________________

Yes, it has changed…now they need to verify if you are breathing and have pulse.

#119 Zeeman1 on 05.28.14 at 7:47 am

Garth, there is no doubt that due to ongoing and massive QE that stock prices are at their maximum value.

Once QE stops well be back to reality in the markets.

The Fed’s been tapering for six months, and the market hasn’t blinked. So much for that theory. — Garth

#120 The real Kip on 05.28.14 at 8:06 am

I actually enjoyed reading today’s blog. I’m a crane operator and even I know the difference between a cheque and a check.

I’ll cheque back tomorrow and about the money I owe you, the check is in the mail. Hahahaha!

#121 pbrasseur on 05.28.14 at 8:08 am

So it appears the Liberals might get re-elected in Ontario, and again as a minority with the balance of power in the hands of the even more socialist NDP.

They believe the budget problems wil sort themselse out without firing public servants and without changing collecting agreements. Good luck with that. But for the moment Ontarians buy it!

Apparently real estate is not the only secteur where delusion is rampant in Ontario!

At least the west has the economy going for it as an excuse, but Ontario, what gives, too much CBC?

#122 maxx on 05.28.14 at 8:25 am

#2 CPG on 05.27.14 at 6:31 pm

“Receiving a credit card bill that totalled $243,476 would no doubt be a shock for most Canadians. But if you add up all the liabilities of every Canadian government – federal, provincial, and local – that is in fact how much each taxpayer would owe of the $4.1 trillion total in direct debt and unfunded liabilities.”

By all means, have another glass of $16.00 orange juice, another set of gold-embossed business cards…….whilst most Canadians stress over how to make ends meet, or give up and pile on more and more debt……..

Canadians don’t much mind austerity nor diminished social programs in their hour of need, do they?

…..and why not add a few more vanity projects and mountainous piles of free cash for banks and CMHC?

#123 Smoking Man on 05.28.14 at 8:55 am

#110 Crossbordershopper on 05.28.1

You’re brilliant, please share via Google maps.

I’ll buy a few this weekend, know any good contractors..

#124 Big Brother on 05.28.14 at 8:58 am

#50 Smoking Man on 05.27.14 at 9:23 pm
#38 Marco Polo on 05.27.14 at 8:21 pmI can tell you’ve never been to Ukraine, or perhaps out of a casino. It seems, by your understanding, its fine for Russia to use their army in Chechnya, but Ukraine must remain weak and helpless in Donetsk.
A double standard for sure. Your buddy Putin isn’t a champ, or a man’s man, he’s a no-talent puppet of Russian business.

Unless you’re here to discuss housing or investment, you shoukd be starting your own blog.

…………………………………………………………………..

Dude, obviously your a Ukraine, and for some strange reason you think I’m taken sides…
Just stating the facts.
I’m a Neo libertarian, dispise all forms of government, all organization, be it economic or religious..
I hate em all.
I believe in the individual, the spirt of I, me….. The only difference between, the bloods, crypts, and Congress is the address….
It’s all the same shit..
I don’t pick sides….
………………………………………………………………………
MKULTRA says Smoking Man does pick sides.
As you have so graciously told everyone in the past you picked Serbia over Croatia for past aggressions. You picked Good over Evil for past Nazi aggressions (duh no shit), you picked students over teachers, some of your in-laws over other in-laws, we can go on and on about you picking sides so don’t say you do not pick sides. We all have to pick sides. If you don’t stand for something then you stand for nothing! We programmed you to stand for being edgy.

#125 Ralph Cramdown on 05.28.14 at 9:00 am

#117 Squad — “Please visit our Presentation Centre for current prices and information.”

I’m guessing that, come the day, their prices are going to depend on how many people are lined up outside the door. They’ll probably have three to five different price sheets all printed up and ready to go, and they’ll pick the next lower to the one they think the market will clear at. They’ll sell maybe a third of the units at that price, with happy couples coming out the front door past the line hugging and kissing, clutching at their precious contracts, then a rep will come outside and announce to the lineup that prices have gone up $50,000. They’ll groan, but they’ll buy. The cattle in the line will think “if only I’d gotten here earlier, I could have saved $50,000.”

Some or all of the people may be paid actors.

Isn’t that how you’d do it if it was “just business”?

#126 :):(Ying Yang on 05.28.14 at 9:05 am

#120 The real Kip on 05.28.14 at 8:06 am
I actually enjoyed reading today’s blog. I’m a crane operator and even I know the difference between a cheque and a check.
I’ll cheque back tomorrow and about the money I owe you, the check is in the mail. Hahahaha!
………………………………………………………………………….
Smoking Man did you notice the difference between check and cheque, this simple use of verbiage can assist your writing. It is like grade 5 grammar, there, their and they’re.

#127 Condo Minion on 05.28.14 at 9:10 am

Police raids target new condo development areas for drugs and guns, such as Liberty Village.

http://www.thestar.com/news/crime/2014/05/28/toronto_police_conducting_raids_across_the_city_report.html

This morning on CBC radio 1 Toronto, the same development area was discussed as being soul-less and lacking a sense of community or shared space, where entitled dog owners don’t pick up after their mutts.

http://www.cbc.ca/metromorning/episodes/2014/05/27/liberty-village/

What will happen first, I wonder?

Will the glass and steel cladding all fall apart, or will Toronto’s new unliveable waterfront area condo strip become a social wasteland for poverty and crime?

People who have invested in such Toronto condos are truly greater fools.

Slums of the future, just give it a little time.

#128 Ralph Cramdown on 05.28.14 at 9:16 am

#122 maxx — “[…] whilst most Canadians stress over how to make ends meet, or give up and pile on more and more debt.”

It’s worth thinking about two groups:

TFWs: Apparently a lot of them are willing to come here and work for minimum wage. On that wage, they don’t “struggle to make ends meet,” but save a significant amount to send back to their families.

Public sector workers: They organize, and fight for what they feel they’re entitled to. Regardless of whether you think they ARE entitled to it, the fact is that they often get it.

Obviously, hard working Canadians who play by the rules but have trouble making ends meet should adopt the strategies of one of those two groups, or find another group that isn’t struggling and do what they do. Just sayin’

#129 mr awesome pants on 05.28.14 at 9:34 am

Garth should show up on his harley, pull up next to the buyers waiting in line, and just rev the crap out of it.

#130 Herb on 05.28.14 at 9:38 am

#121 pbrasseur,

as an Ontario voter, I am faced with this horrible choice, made worse by the fact that I know the three major candidates in my riding. All three of them would be outstanding MPPs.

So my vote will not be for the best candidate, nor even for the best platform. All parties and candidates lie to get elected, even if only telling voters what they think voters want to hear, so platforms are irrelevant the day after the election. BTW, don’t bother calling Liberals “Lieberals” – everybody does it.

My vote will be strategic, for provincial and federal damage control. Do I want to encourage Harper? No way, so Hudak, as Harper Light with deader eyes and a on-demand smile, is out, regardless of whether his 1 M jobs over eight years would be credible or not. And cutting 100 K public servants is nothing but ideological red meat; show me the plan and I will vote for it or not.

Horvath? No problem with the lady, but the NDP has no chance of forming a government, so a vote only opens up the way for the unintended consequence of electing a party you’d rather not. Which kind of leaves Wynn, who saw, heard and spoke no evil while serving in government. Man, oh man.

So I will hold my nose and mark my ballot this time around too. Later, I will personally apologize to the two good candidates I could not vote for. It’s a bastard being a voter kept in the dark and fed fertilizer, but that’s the state of our democracy.

#131 Daisy Mae on 05.28.14 at 9:47 am

#43 Richard: “We gritted our teeth and waited patiently…”

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

I experienced the same thing with Investors Group.

Get out NOW, while you can. Trust me, you can trust Garth! ;-)

#132 OttawaMike on 05.28.14 at 9:49 am

114 Crossbordershopper on 05.28.14 at 7:17 am

Interesting anecdote.

I heard a tale this week about a successful slumlord who bought up properties in the Hintonburg/Mechanicsville areas of Ottawa 20-30 years ago and has reaped huge rewards as these ‘hoods have morphed into hipster havens.

This same self made man has also now moved onto Buffalo as his new frontier.

#133 Ralph Cramdown on 05.28.14 at 9:52 am

Liberty Village drug bust quotes from area residents:

“It was like something big had dropped. There were men yelling, ‘Clear! Clear!’ I went back to bed. I thought it was just the slaughterhouse down the street.”

“Sure, I’ve smelled some funny odours once in a while, but I thought it was just the slaughterhouse down the street.”

“I don’t see anyone that makes me uncomfortable. Nothing like this has happened in the neighbourhood. Well yeah, MY drug dealer looks like me, but I thought everybody else’s drug dealer looked… umm… like the ones you see on TV?”

#134 Smoking Man on 05.28.14 at 10:01 am

#124 Big Brother on 05.28.14 at 8:58 am

You make all that loot as a spooke only to discover I’m a serial lier.. Bravo
So I pick sides, but I do flip flop em depending on which side is dominating the debate..

I like swimming against the current, get over it.

You should get a big bonus.. You smarty paints

#135 Daisy Mae on 05.28.14 at 10:11 am

#57 Ralph Cramdown: “#43 Richard

And there’s nothing wrong with asking to see five years’ worth of your stockbroker’s personal statements…”

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

Wow! No one has the right to scrutinize an investment advisers’ personal portfolio, especially his clients. Clearly an invasion of privacy. If you’ve done your homework, you’d know whether he’s ethical…or not.

#136 Rational Optimist on 05.28.14 at 10:17 am

114 Crossbordershopper on 05.28.14 at 7:17 am

Out of curiosity, who manages your duplex for you once rented? What are the tenants like? How long have you held these things so far?

These are good-faith questions, no sarcasm at all. It sounds like you’re having a good time, I’m sure others here would be curious what your experiences have been so far.

#137 HD on 05.28.14 at 10:20 am

#128 Ralph Cramdown on 05.28.14 at 9:16 am

TFWs: Apparently a lot of them are willing to come here and work for minimum wage. On that wage, they don’t “struggle to make ends meet,” but save a significant amount to send back to their families.

I don’t disagree with the point you are making in that post but to say that TFW don’t “struggle to make ends meet” is a stretch in my humble opinion.

The young lady featured in the story below is not a TFW but her story offers an idea of what it might be like.

http://www.cbc.ca/thecurrent/episode/2014/01/14/a-day-in-the-life-of-acsana-fernando/

Best,

HD

#138 Yo on 05.28.14 at 10:30 am

A property bubble is already popping in China
http://blogs.wsj.com/chinarealtime/2014/05/28/as-chinas-property-market-slumps-buyers-stay-away/

There is a reason why commodity prices are dropping. It is pure financial stupidity to put down say 5-10-20% down for a house that will have you take on a $400-800K mortgage. I live in Markham, the market has slowed down allot despite not much inventory. In the whole block of unionville there are maybe about 15 houses for sale, most sitting for a while.

#139 Ronaldo on 05.28.14 at 10:38 am

#126 Ying Yang – cheque vs check.

Check this out.

http://grammarist.com/spelling/check-cheque/

#140 miketheengineer on 05.28.14 at 10:57 am

Referral Fees:

I thought referral fees violate a “code of ethics”.

When I did the training for Home Inspection…it was said that you could not give out referral fees to the realtors, this was not allowed and considered a conflict of interests.

From the Realtor site:

All financial arrangements between REALTORS® and others (e.g. referral fees, compensation from more than one party, rebates or profits on expenditures) must be fully disclosed to clients;

I wonder how many are going to do that….?

Tell me Garth-o-man….how many?

Here is da link

http://beta.realtor.ca/RealtorCodeOfEthics.aspx?

#141 Ralph Cramdown on 05.28.14 at 10:59 am

#135 Daisy Mae — “Wow! No one has the right to scrutinize an investment advisers’ personal portfolio, especially his clients. Clearly an invasion of privacy. If you’ve done your homework, you’d know whether he’s ethical…or not.”

I don’t have the right to see them, but I have the right to ask, and the right to take my money elsewhere if an advisor can’t back up claims with proof. If he’s good at what he does, he should be PROUD of his record, and able to prove it. If you’re not buying a proven track record (statements, not just referrals from other happy clients who may well be clueless), you’re just buying a smile and a handshake.

The homework isn’t to decide whether he’s ethical or not. Ethical is important, but you don’t hire an advisor to hold your hand in an ethical manner. The job is to GROW your money with an amount of volatility you can live with. Keep your eye on the ball, Daisy Mae.

#142 Smoking Man on 05.28.14 at 11:12 am

Anyone check, no I mean cheque the yield on the 10 year treasury..

Ops,, seams the traders really liking that bond.

Yielding 2.445 ouch for basement dwellers..

Run bastards rates are going to the moon… Lol

#143 Vamanos Pest on 05.28.14 at 11:20 am

#93 Richard

I’m really sorry to hear that, but I just don’t understand why you didn’t see a recovery. Both the TSX and S&P 500 (which would be the benchmarks for 60% of your portfolio at the time) recovered in about in about 2 years, without dividends. Any additional capital invested in that time would have substantially accelerated your recovery.
Also, bonds did extremely well after the Fed announced QE. So the other 40% of your portfolio should have also been strong.

Again, I’m sorry for your troubles, but I just don’t see how that’s possible. There must’ve been wild abandonment of index weightings, or huge allocations to individual stocks that did poorly, because almost anything reasonably balanced and diversified should have had markedly positive returns in that timeframe.

#144 Ralph Cramdown on 05.28.14 at 11:23 am

#137 HD — “I don’t disagree with the point you are making in that post but to say that TFW don’t “struggle to make ends meet” is a stretch in my humble opinion. The young lady featured in the story below is not a TFW but her story offers an idea of what it might be like.”

She’s supporting three people in Canada on one minimum wage. TFWs don’t do that; the people they support live where the cost of living is significantly lower.

She’s got permanent full time work through a temp agency, which is another way the system screws the poor. By staffing through agencies, companies avoid paying benefits and have workers that they can terminate at will with no recourse, with the agency making a few bucks per hour on top.

I’m amazed at how much the poorer among us (and these days, that’s most people who don’t drive a German car) are willing to take in the name of competitiveness and globalizaton. There’s a number of peaceable countries that are nice places to live where wages and workers’ rights haven’t been screwed down to nothing, but the masses here are convinced otherwise. Nobody’s going to give them power. They’ll have to take it.

#145 young & foolish on 05.28.14 at 11:28 am

Those who look to me for financial guidance will always know it is their interests only which are on my mind. — Garth

Where do I sign up?

#146 Son of Ponzi on 05.28.14 at 11:30 am

Interesting.
http://www.cicnews.com/2009/07/children-temporary-foreign-workers-alberta-ontario-apply-open-work-permits-07735.html

#147 Bottoms_Up on 05.28.14 at 11:56 am

Blog Dogs:

Is it possible to get a rate hold on a mortgage now, and use that in 3 months time in order to do early renewal?

Or does the early renewal period (4 months in length) already take into account the rate hold period (and therefore one can only get a rate hold at the start of the early renewal period)?

Thanks for your help!

#148 Bottoms_Up on 05.28.14 at 11:57 am

#145 young & foolish on 05.28.14 at 11:28 am
————————————————
Type in ‘Garth Turner and Associates’ into google and you will find him. He also has an email address you can reach him at.

#149 :):(Ying Yang on 05.28.14 at 12:04 pm

#139 Ronaldo on 05.28.14 at 10:38 am
#126 Ying Yang – cheque vs check.
Check this out.
http://grammarist.com/spelling/check-cheque/
……………………………………………………………………..

Correcto my friend but unless you are in the USA it is cheque. I lived in both countrys and know how to spell both in living color or is that colour?

#150 :):(Ying Yang on 05.28.14 at 12:05 pm

Smoking Man didn’t understand you last night on the small shithouse on James street. What was the link to that you provided?

#151 Brian on 05.28.14 at 12:06 pm

As long as people have JOBS and interest rates remain stable, the housing market will remain strong. Families will continue to supplement their income with debt, as long as they can service the debt. It’s no surprise based on Van’s affordability that Toronto has a long way to go still.

If banks are willing to lend people will buy. Simple. You don’t have to look to far South, or West for evidence of that. Ask your friends and family how they did it.

“Toronto now house eats up 56% of pre-tax income (that’s two-thirds of what families actually bring home), while the number is an incomprehensible 82% in Van.”

Crazy isn’t it? Not really. CMHC holds all the risk. Keep the money flowing.

#152 Son of Ponzi on 05.28.14 at 12:08 pm

More interesting:
http://www.cicnews.com/2009/07/quebec-experience-class-mimics-canadian-experience-class-offers-faster-route-canadian-permanent-residency-07734.html

#153 Ralph Cramdown on 05.28.14 at 12:11 pm

Here’s a case study for that high school econ teacher, and all those out there who believe rational actors set prices at the marginal cost of production plus capital, and wages at the marginal rate of productivity:

“Biznismanski Demands Action from Politburo”

Gerard Curran, owner of Calgary’s James Joyce Irish Pub and board member of Restaurants Canada, said the impact of the [TFW] ban has been very hard on his staff and his business.

Staff are stretched thin and he has had to shorten his hours of operation.

Mr. Curran said Ottawa needs to lift the moratorium before the coming tourist season.

“We’re going into the tourist season,” he said from Charlottetown, where Canada’s restaurant sector gathered for a board meeting. “This is the worst time to do this moratorium, especially in Calgary with Stampede. We don’t have the staff to man the restaurant the hours that we would like.”

Tourists visiting Alberta will be greeted with long lineups and slower service for everything from meals to a cup of coffee, a situation he warns will ultimately mean less tax revenue for governments.

“I see all this starting to happen in Alberta,” he said. “Don’t come to the restaurant and blame [us]. You should talk to the federal government because they’re the ones who put the moratorium on.”

http://www.theglobeandmail.com/news/politics/temporary-foreign-worker-ban-will-hurt-tourist-trade-restaurateurs-warn/article18878523/

– I just want to say one word to you. Just one word.
– Yes, sir.
– Are you listening?
– Yes, I am.
– Lobbying.

#154 Bottoms_Up on 05.28.14 at 12:13 pm

#135 Daisy Mae on 05.28.14 at 10:11 am
——————————————
Agreed, I don’t see how knowing an investment advisor’s personal investments reveals their ability to manage your money. Their track record with other clients is probably the best bet.

Your investment advisor has every right to gamble with their own money and take risks and/or be unbalanced (perhaps in an attempt to maximize growth in a child’s RESP). Completely different than managing clients’ monies.

Would one have to also scrutinize their real estate holdings, and other assets, comic book collection etc.?

How about their life decisions?

#155 Butch on 05.28.14 at 12:28 pm

Yea… rate’s aren’t going anywhere any time soon!

http://www.theglobeandmail.com/report-on-business/economy/housing/mortgage-battle-escalates-as-scotiabank-offers-297-five-year-rate/article18880534/

It’s not ‘soon’ that worries me. — Garth

#156 pinstripe on 05.28.14 at 12:31 pm

#43 Richard

2008 “correction” took 1/3 of our nest-egg (balanced portfolio of stocks/bonds). We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return. The broker fees were almost the same as our return. At this late stage of our lives, we don’t have time left to recover from this bitter experience. Risk is everywhere, decide carefully where/what will allow you to sleep at night.

—————————————————————

I know many retirees that had their savings/investments with Wealth Management advisors and their experience was the same. Several of these retirees had money in GICs at the same time and the GICs had a better yield than the advisors.

Bank brokerage advisors? — Garth

—————————————————————–

Most were linked to the major banks. OTOH, the independent advisors did not do that well either. Regardless of the outcome, the client was the only one taking the biggest hit.

False. Investors with proper diversification – that is, not 66% in Canadian equities – saw their portfolios recover rapidly. Bank-owned brokerages in this country are notoriously heavy in domestic stocks. Guess why? — Garth

#157 Smoking Man on 05.28.14 at 12:38 pm

#150 :):(Ying Yang on 05.28.14 at 12:05 pmSmoking Man didn’t understand you last night on the small shithouse on James street. What was the link to that you provided?
………

Scroll down and find it.. Sold for 751k teardown on a big lot…

I just heard that Rogers and Bell
don’t pay interns….. Cool

My book is done less the gross technical typos, I’m going to hire
an intern, to fix it up..

In return they can write their own appraisal letter on my corporate letter head, IL sign it.

I might though in a Smoking Man Hat, tee shirt, and ride on the boat…..

#158 Herb on 05.28.14 at 12:52 pm

#153 Ralph Cramdown,

saw the appearance on the CBC News channel and thought it was embarrassing. If I were going to lobby a government, even this one, I would not do it in such a transparently self-interested manner. You want to give them cogent reasons that make it hard to say “no”, vice making it easy to say “Get lost!”

#159 maxx on 05.28.14 at 1:01 pm

#128 Ralph Cramdown on 05.28.14 at 9:16 am

Go tell that to an 80-year old on fixed income with needless stress-induced health problems.

Just sayin’.

#160 chickenlittle on 05.28.14 at 1:10 pm

That’s nice. More junky new houses crammed together. Ontarians are strange: they either want junky nnew houses with no yards or junky semis with no yards or parking. What fabulous choices!

Having said that, the husband and I went for a walk yesterday in the old part of Milton. It was very nice with full grown trees, larger lots, and homes with character.

#161 chickenlittle on 05.28.14 at 1:14 pm

Sorry! My phone is strange..

Anyways, not one of those older homes was for sale. NOT ONE. You could go down any other newer development and see homes for sale, but not there. It was amazing! Those new houses are like a new car: they lose their appeal after they leave the lot.

Same with these new million dollar homes… Everyone wants one now, but wait till later.

#162 Rational Optimist on 05.28.14 at 1:24 pm

153 Ralph Cramdown on 05.28.14 at 12:11 pm

“Lobbying.”

…exactly how do you mean?

#163 Mark on 05.28.14 at 1:36 pm

Not sure why anyone thinks that the Canadian stock market has ‘recovered’. 6 years ago the TSX index level was 15,200. Today, its 14,600. With dividends, okay, it has barely just broken even. Over the long term, the TSX’s performance has been around 10%/year, so over the past 6 years, we’ve missed almost a doubling.

Having said that, Canadian stocks are mostly at their cyclical lows rather than cyclical highs. And lots of firms look ready to explode higher.

I did not claim the Canadian market had recovered, but rather that a well-diversified and balanced portfolio recovered. Those with a surfeit of Canadian equities saw serious underperformance after the GFC. — Garth

#164 Flawed on 05.28.14 at 2:04 pm

#115 Ralph Cramdown on 05.28.14 at 7:20 am
#83 Bitcoin manipulation — “[T]here are strong reasons to believe that the majority of Bitcoin transactions have been made between a small group of individuals with themselves or among themselves, in order to artificially drive up the price when it is deemed good timing to do so.”

Yeah, it’s good fun to watch. The bitcoin crowd got exactly what they wanted — free, anonymous markets without government supervision. And, predictably to anyone who’s read about other markets at other times, they got theft, fraud and manipulation. Now some of them are turning to the courts because, uhh, they DO want government involved as soon as they scrape their knee.

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

Ralph the whole reason people are turning to bitcoin is because they do not trust corrupt banks and corrupt govt.

Again if people would “take a minute” to understand how bitcoin works they would see that it is a public ledger. Can someone buy lots of it? Sure. But its public. There is not “print billions out of thin air” and give it to the banks (like in 2008) so the banks can continue screwing people. It is regulated and run by the people on a global scale and everyday thousands of merchants are signing up to use it. Are all these merchants stupid? Delusional? No. They and their customers are tired of corrupt banks and govts destroying the money system.

If you do some research. ALL EMPIRES fall because of Government not war. And this is where we are headed.

#165 Transplant on 05.28.14 at 2:21 pm

#94 the jaguar on 05.28.14 at 12:18 am
Did they really say “checks” Garth? Must have hired some American firm to fluff up their sales pitch.
Americans use the term ‘check’ rather than ‘cheque’. Like color instead of colour, harbor instead of harbour, etc.
Round them all up. They can usually be spotted by their manner of dress, accents, and total lack of self awareness as a nation. Don’t be offended unless you can rebut any of those comments.

Did “the jaguar” really write”cheques”? Must have used some Canadian firm to fluff up his post.

Canadians use the term “cheque” rather than “check”, “colour” instead of “color”, “harbour” instead of “harbor”, etc.

Round them all up. They can usually be spotted by their manner of dress (?hockey jackets), accents (?Ottawa Valley),and total (well OK, maybe only partial) smugness as a nation. Don’t be offended even if you can rebut any of these comments.

#166 Flawed on 05.28.14 at 2:25 pm

#155 Butch on 05.28.14 at 12:28 pm
Yea… rate’s aren’t going anywhere any time soon!

http://www.theglobeandmail.com/report-on-business/economy/housing/mortgage-battle-escalates-as-scotiabank-offers-297-five-year-rate/article18880534/

It’s not ‘soon’ that worries me. — Garth

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

I thought Flaherty was supposed to put a stop to this madness?

#167 :):(Ying Yang on 05.28.14 at 2:35 pm

Smoking Man that is not the little shithouse I looked at on James Street, it has a lot that is twice the size. I thought you were referencing the home I was familliar with. Never been to this one. You are correct it is a tear down build up and split property.
Good luck with the book! Is it going to be an ebook or paper?
……………………………………………………………………..

9 Twenty Seventh St Sold: $751,000
Toronto, Ontario M8W2X2 Toronto W06 Long Branch List: $649,900
Orig Price: $649,900 Taxes: $3,134.08/2013 116 % List
SPIS: N Long Branch 118-6-V DOM: 5 Contract: 5/17/2014 Sold: 5/22/2014
Detached Fronting On: E Rooms: 5
Bungalow Acreage: < .49 Bedrooms: 2
Dir/Cross St: Lake Promenade Washrooms: 1
Lot: 55X155.5 Feet 1x3xGround

#168 Aggregator on 05.28.14 at 2:35 pm

Video: Has Toronto reached 'peak' condo tower development? Plus, what makes a perfect room

Peak condo development? Or did Toronto just follow China over a housing cliff?

China’s ‘Golden Era’ for Property Over, Vanke President Says

The “golden era” for China’s property market has passed, according to China Vanke Co., the nation’s biggest developer, which is shifting its focus to homes for owner occupiers rather than investors.

“The period in which everybody makes money out of property is gone,” President Yu Liang told reporters May 26 in Dongguan, a southern city in Guangdong province. “Vanke will take a cautiously optimistic approach to face the slowdown and target those buyers who need homes for self-use.”

Mmmm, but that can't happen. Development is too large relative to GDP and too big to fail. Which is why the PRC will capitulate in deflating the bubble in fear of another Tiananmen Square, and just keep doing what they've always been doing: building more until they come.

#169 Vamanos Pest on 05.28.14 at 3:11 pm

#163 Mark
I did say ‘recovered’ which, you’re right, is patently false. I was being loose with my language. My point in #143 was in response to Richard’s experience of “flat returns” in a time when the TSX went from 7500 to 14000, while the S&P500 went from 700 to 1300, and bond yields took a nosedive. (March 2009-March 2011).

How does one have flat returns in this environment? Even being outperformed by benchmarks should result in very healthy gains. He earned low single digits returns (my interpretation of “flat”) while the benchmarks of his investments doubled?

#170 Ralph Cramdown on 05.28.14 at 3:15 pm

#159 maxx — “Go tell that to an 80-year old on fixed income with needless stress-induced health problems.”

I manage the finances of two who are 80+. Being women, they didn’t make that much money when working, but one has a fully indexed pension and the other bought life annuities when rates were better. Between those and the monthly government cheques, they can pay for excellent care and comfort, appropriate for their current health situations, without even touching their growing capital accounts. When more active, they enjoyed life, travelled, bought new Oldsmobiles or Buicks as needed, and lived in a home that they loved on a wonderful large lot, landscaped and gardened to within an inch of its life.

If they are in any way representative, most members of that generation have little to worry about.

Today’s workers, with wages held down at the low end through TFWs and temp agencies, benefits and pensions cut “to remain competitive,” and low inflation holding down their wages and not shrinking their debts are living in a completely different landscape.

#171 Holy Crap Wheres The Tylenol on 05.28.14 at 3:26 pm

Garth this particular blog discussion reminds me of the song by ELP.
Karn Evil 9 it fits it to a Tee. Even the title of album fits. Brain Salad Surgery.

Welcome back my friends to the show that never ends
We’re so glad you could attend
Come inside! Come inside!
There behind a glass is a real blade of grass
be careful as you pass.
Move along! Move along!

Come inside, the show’s about to start
guaranteed to blow your head apart
Rest assured you’ll get your money’s worth
The greatest show in Heaven, Hell or Earth.
You’ve got to see the show, it’s a dynamo.
You’ve got to see the show, it’s rock and roll ….

Right before your eyes we pull laughter from the skies
And he laughs until he cries then he dies then he dies
Come inside the shows about to start
Guaranteed to blow your head apart

You gotta see the show
It’s a dynamo
You gotta see the show
It’s rock and roll

Soon the Gypsy Queen in a glaze of Vaseline
Will perform on guillotine
What a scene! What a scene!
Next upon the stand will you please extend a hand
to Alexander’s Ragtime Band
Dixie land, Dixie land
Roll up! Roll up! Roll up!
See the show!

Performing on a stool we’ve a sight to make you drool
Seven virgins and a mule
Keep it cool. Keep it cool.
We would like it to be known the exhibits that were shown
were exclusively our own,
All our own. All our own.
Come and see the show! Come and see the show! Come and see the show!
See the show!

Emerson, Lake & Palmer

http://www.youtube.com/watch?v=IwSTe9uit48

#172 Holy Crap Wheres The Tylenol on 05.28.14 at 3:38 pm

#153 Ralph Cramdown on 05.28.14 at 12:11 pm

Here’s a case study for that high school econ teacher, and all those out there who believe rational actors set prices at the marginal cost of production plus capital, and wages at the marginal rate of productivity:

“Biznismanski Demands Action from Politburo”
_____________________________________________
This may sound simple however instead of hiring temporary foreign workers to fill the restaurant industry why doesn’t the federal government let all of those unemployed workers currently on dole have a crack at working again if only for a short period of time without any penalty for going off dole? After the season if they are good enough some will be kept on. If not then back to the system they go without any penalty’s for working for say 3-4 months. It will save the government some money and the owners get employees perhaps that speak English or French. I’m sure some of the unemployed are from the service industry and some are not. The ones that are not can stay unemployed and on dole.
Just a simple observation of government functions.

#173 Holy Crap Wheres The Tylenol on 05.28.14 at 3:46 pm

Smoking Man this is your oportunity in the forum here with the title “Obedience” you are always talking about our “Obedience Certificates.” I have one from the school of Woof, woof. Non scholae, sed vitae discimus.

#174 Old Man on 05.28.14 at 3:57 pm

The MSM is slipping as a great story broke yesterday afternoon with intrigue, mystery, and deception. I have been waiting and just now see the Toronto Star has just a bit. They don’t have the story at all, so perhaps they need a freelance reporter as don’t charge much for my services.

#175 Burt Sanders on 05.28.14 at 4:02 pm

Thinking of investing in a REIT that focuses on retirement homes, long-term care, etc. With all these baby boomers, why not?

So far CSH.UN has caught my eye.

Anyone have any thoughts?

#176 april on 05.28.14 at 4:15 pm

A friend just told me she has to come up with $15.000 to replace windows. She lives in an older [40yrs or so] concrete highrise in the West End of Vancouver and that’s not the first and only levi. Stay away from condos … except for the rich.

#177 Dupcheck on 05.28.14 at 4:18 pm

People spend more time buying tomatoes then a home. 20 minutes to make your mind up and spend 400K and more on the biggest purchase of a lifetime. WOW…this is the definition of brainwashing. The RE agents are f…in magicians…

#178 Ralph Cramdown on 05.28.14 at 4:27 pm

#164 Flawed — “Ralph the whole reason people are turning to bitcoin is because they do not trust corrupt banks and corrupt govt. Again if people would “take a minute” to understand how bitcoin works they would see that it is a public ledger. […]”

Flawed, the whole reason people are investing thousands into bitcoin, payment systems, wallets, ETFs, building mining rigs, buying mining rigs etcetera is to MAKE MONEY.

You make money by buying something for $1 and selling it for $2, or providing a service for a flat fee or a percentage, or by making a market and keeping the spread.

Either bitcoin takes off and the people who use it pay fees to JP Morgan, IBM, or Amazon, or it doesn’t and this was all a colossal waste of time, money and coal-generated electricity. But everybody with half a brain in the ecosystem is trying to monetize it in one of the ways above, and most of them are probably hoping to go public (which requires a somewhat plausible plan to generate revenue to pay shareholders) or to get bought by a bigger player.

Businesses are starting to accept bitcoins (thousands a day? really? source please) for the same reason they give out tenth-one-free loyalty cards or Airmiles — because some customers might be lured by them. Do any businesses share the savings with customers (i.e. charge less for bitcoin than by credit card?

#179 Kris on 05.28.14 at 4:42 pm

#114 Crossbordershopper on 05.28.14 at 7:17 am
buying another fixer upper in east buffalo this weekend for $8 grand. Yup, thats what they cost. about 4 grand to make it pretty and for 12 grand you get a duplex with 3 bed on each side, 600 month each side minus taxes and water and woola. another cash cow. What our kids are doing in southern ontario driving down this 401/403 everyday for a job and live like this is a true shame. the cost of being canadian is very high now. Do what the recent immigrants do, have canada as a convenient place to live, but really do all your business elsewhere. i have encountered a number of them and they said the same thing, Canada is a joke to do business, kids and wife are here, for healthcare, safety, schooling. He comes and goes as he pleases, Ontario is beautiful in the summer, winter not so much. Our forefathers should of kept their european passports. Garth talks about taxed on worldwide income, i laugh, almost everyone i know accepts cash and pays cash for stuff. Its the only way Canadians can save a buck here and there. Drive down another highway, change your life, your the mouse in the wheel. So rates rise a half point, or prices drop 10%, how does that change your life? get out of the wheel.

You bought a duplex in Buffalo NY for $8,000?
Cool, gotta link…thanks

#180 Ralph Cramdown on 05.28.14 at 4:53 pm

#175 Burt Sanders — “So far CSH.UN has caught my eye. Anyone have any thoughts?”

Sure. Read a few years of their annual and quarterly reports and those of their competitors. And maybe some similar American REITS. And then go tour some of their facilities and those of their competitors — tell them you’re looking for a place for your [whatever] and see how they stack up.

When you’re done all that, you can report back whether it’s normal that Amica forgave a loan to its CEO in his capacity as a non-arms-length partner with them in a development deal, and that it hired as president a guy with basically no real estate experience. Am I missing something?

#181 Kris on 05.28.14 at 5:00 pm

Yes, obedience certificate of the educated sheeple is right.
Just like Smoking Man had called time and time again.

You rule SM.

#182 Shawn on 05.28.14 at 5:26 pm

Richard plays the blame game

From 43:

2008 “correction” took 1/3 of our nest-egg (balanced portfolio of stocks/bonds). We gritted our teeth and waited patiently, as per obedience training from Wood Gundy. We waited until fall of 2013 – no recovery of our loss, no gains on our decimated portfolio, aside from a pathetic 1.75% net yearly return.

****************************************
Looks to me like Richard scampered to the “saftety” of 100% GICs or something close to that after the crash. No balanced portfolio returned a flat 1.75% per year after fees.

Richard deserves much of the blame. Any true balanced portfolio would have more than recovered by now even with a heavy weight to Canadian equitites.

Even the TSX index is UP on a total return basis since its highs (with dividends included that is).

Bring some Wood Gundy peformance data to the table here and prove that a balanced portfolio returned a net 1.75% per year since 2008. I don’t believe it.

And tell us if you agreed to various trades along the way. Was the portfolio discretionary or they checked with you each trade?

It’s always nice to have an advisor, someone to blame.

#183 Daisy Mae on 05.28.14 at 8:34 pm

#183 Shawn: “…a flat 1.75% per year after fees.”

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

That had me concerned, as well. Perhaps, they DID pull everything out…and into the safety of GICs earning zip. If so, I agree…they have no one to blame but themselves.

#184 Daisy Mae on 05.28.14 at 8:37 pm

#177 April: “Stay away from condos … except for the rich.”

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

Stay away from condos. Period. End of story. No control!