Bear scare

BEAR BITE modified

It’s been 32 months – almost three years – since major stocks markets declined enough to get excited about. No drop of 10% or more since way back in 2011 when the US debt ceiling debate caused a 19% stock hit and a spike in the price of gold. The rear view mirror now tells us that was an outstanding time to buy into equities and dump metals. But, everyone did the opposite.

These days US stock prices (measured by the S&P, a much broader index than the Dow) are trading at just over 16 times the projected earnings of their member companies. A little elevated, but not extreme. Margin debt – the amount investors borrow to buy in – sits at an historic peak, just like Canadian mortgages.

Some people worry markets are toppy and laced with danger. Others say that’s bunk. Sure, no correction in the markets for 32 months when the average time between dips has been only 18 months since 1945. But isn’t it different this time?

Maybe it is. Corporate profits in the US are expected to rise 7.5% for 2014, and corporate sales to increase about half that. Is that because companies are just laying people off and dropping those savings into the bottom line?

Nope. There were 217,000 new jobs created in the States last month and 287,000 the month before. In fact, 2.4 million new positions have opened up in the last 12 months, and now all of the employment lost in the GFC has been replaced. Compare that with just 86,000 jobs created in Canada in a year, most of them early in 2013. So while the US has grown its labour force by 2%, we upped ours by 0.5%.

There’s no doubt the States is in an expansionary, pre-inflationary growth phase. House prices have been rising at a rate exceeding 1% a month for the past year. The US central bank has slashed its stimulus spending now four times in the past six months, and there have been zero negative consequences. The Fed will continue doing this until the QE is all gone by the end of the year. And to think it was just months ago this pathetic blog was overrun with doomers saying America would crumble and fail without that monthly $85-billion bond-buying binge.

Since 2011, gold has given up 34% of its value. The stock market is 73% higher. The American unemployment rate has plopped from well over 10% to just 6.3%. Four years ago GM and Chrysler were bankrupt, and this week they donated $26 million to rescue the Detroit Institute of Arts. Meanwhile the US budget deficit has fallen 37% in the past year, thanks to higher taxes and a buoyant economy.

Will stock markets correct? Of course. Just like the Canadian housing market. Nothing goes up forever. But stock values are based on corporate profits, while real estate is supported by falling rates or rising incomes. Given the US trajectory, there’s a credible case for saying we’re probably in the grip of a secular bull market that has years more to run. So if another 2011 comes along, will you have the stones to wade in when others are fleeing?

Most Canadians never will. We still have 80% of our TFSA money in savings accounts or GICs, and would rather lease out a condo for negative cash flow that ‘risk’ buying an equity ETF, or a stable bank preferred share which pays 5% with a dividend tax credit. There’s a reason only 2% of Canadians have incomes over $150,000, and a mere 1% possess investible assets exceeding $1 million. We suck at this.

And so the Bank of Canada boss, Stephen Poloz, will hold a presser on Thursday morning to tell us once more. Consumer over-indebtedness is a risk to the system and the country, he’ll say, with too many people putting too much wealth into a single asset. The BoC’s hope of a soft landing in the real estate sector now appears to be blowing up in its face as we drift into extremes. In Halifax, new housing starts just collapsed 65% and the resale market there and in Montreal has frozen over, while in Toronto and Calgary sales and prices romp higher. If anything, the kind of buyer orgies I described here yesterday move us closer to a market dump.

Poloz knows it. A goal of Thursday’s event is to accentuate risks, talk the dollar down and hope exports rise as a result, saving us from ourselves.

But I wouldn’t count on it.

There’s only one way out of this. Liquidity. There’s still time.

207 comments ↓

#1 Yitzhak Rabin on 06.10.14 at 6:20 pm

“And to think it was just months ago this pathetic blog was overrun with doomers saying America would crumble and fail without that monthly $85-billion bond-buying binge.”

Keep waiting. Q1 GDP was -1%, one more and it’s an official recession.

The winter from Hell explains the Q1 anomaly. Surely you are not that blind. — Garth

#2 Roman on 06.10.14 at 6:23 pm

I don’t quite get why you’re so fascinated with the bull market in equities, but not so much with RE?
They are kind of the same, equities bubble is actually more sever. I think it will take years to normalize, along with real estate.

#3 Drill Baby Drill on 06.10.14 at 6:24 pm

Dear Pathetic Blog ; the walk away in May rule is just a month out of sinc perhaps ? Bull market linc to corporate profits is real but many corelations seem skewed lately.

#4 Chickenlittle on 06.10.14 at 6:30 pm

How about the lack of quality rentals? Will the RE dump affect that?

#5 sheane wallace on 06.10.14 at 6:35 pm

i would not trust any statistics, half of these jobs are artificial (unverified and calculated due to the birth model), the rest are temporary or low paid jobs.

US GDP shrunk by 1 % in quarter 1, food inflation is 10 % ytd, will be 22 % by year end (this is official prognosis). pre-inflation? inflation is already here.

while i benefited handsomely from the stock market, i think that it will continue to new heights.

don’t write off gold.

the bond market crisis is pending, once inflation is recognized…

#6 Dean Mason on 06.10.14 at 6:37 pm

There are at least 10 million Americans properties that are still under water.

There are millions of Americans that have 10 year term HELOC’s that are interest only taken out in 2004 to 2006. Their payments will almost triple starting this year 2014 to 2016.

Here is how it works. For example, a $100,000 HELOC that is currently costing about $250 a month will cost $727 when its 10 year term matures.

This is because their HELOC’s after 10 years will be converted to 15 year mortgages and they will have to be paid off, principal and interest over 180 months.

They can’t refinance with another mortgage company, bank, credit union because their properties are still 20% to 40% under water.

Also, it is very difficult to get a fixed rate mortgage in the U.S. right now.

Their mortgage balance is much greater than their property’s market value.

Even if they could refinance with a low, 4.25%, 30 year fixed rate mortgage, their payments would still be almost double at $497 a month.

So imagine those that have $250,000, $350,000 HELOC’s. Their payments will cost $1,192.50 to $1,670 more per month.

Add all the higher prices for food, energy, gasoline, medical, health insurance, car and home insurance, taxes etc. and higher debt loads of Americans and these people are in for a real money shocker.

This is what happens when you let money morons and the financially illiterate borrow $300,000, $400,000, $500,000 etc.

#7 sheane wallace on 06.10.14 at 6:37 pm

canada does not need low dollar, we are not making anything anyway so this int stimulating fictional export, instead is making import expensive.

poloz is supporting the us dollar at our expense.

#8 Firstest With The Murstest on 06.10.14 at 6:41 pm

Awww yisssss…

Here I am again… The firstest with the murstest…

Too fast for ya, huh?

I said too fast for ya, huh?

Aww yeaaa
In today’s economy, ya gotta be quick!

#9 Baz on 06.10.14 at 6:42 pm

Hi Mr.Garth , what do you mean by Liquidity , do you mean cash ? I have cash but I hate seeing my cash (CAD $) value going down every time Mr. Poloz hold a press conference ..

#10 MindWerk on 06.10.14 at 6:42 pm

“… hope exports rise as a result”
It is insane when we hope things will get better… even knowing that the fundamentals are all messed-up.
Hope this time is different. :)

#11 Jan on 06.10.14 at 6:46 pm

Garth, a few Canadian cities, not just Halifax are down in real estate. Namely Victoria, Regina, Edmonton, and Ottawa. All politically important cities. What do the residents in these cities know that the rest of Canada still has to learn?

#12 LH on 06.10.14 at 6:46 pm

There’s another way out: time!
Cross asset implied vols are near record lows. Carry trade baby!

Regards

LH

#13 Pope Nosty666bcVlad the Snugglebombed on 06.10.14 at 6:49 pm

#143 Foreign Student on 06.10.14 at 3:25 am — “I can’t believe the racism here.”
— plus —
#220 gladiator on 06.10.14 at 4:26 pm — “Would someone be considered racist if he/she hates a racist of a different race?”

The term racism, or racist was invented by Leon Trotsky in the early 1920s, like remote control for aircraft. It seems he has won the battle (but not the war), as people keep spouting the word not knowing where it came from, or why it was invented, and there must be a reason why it was invented.

#209 Smoking Man on 06.10.14 at 3:47 pm — “Garth my plagiarized post vanished showing all liberals scandals.”

Hey SMan, you’re not the only one. Were you aware that Led Zep plagiarized seventeen songs, including their not-so classic Stairway To Heaven (lawsuit currently underway)? You’re in good company!
*
“But stock values are based on corporate profits, . . . Corporate profits in the US are expected to rise 7.5% for 2014, and corporate sales to increase about half that. Is that because companies are just laying people off and dropping those savings into the bottom line?”

Indeed, but there are always two sides to every story. After watching our investments soar, I would gladly jump in at the bottom and let the cream rise to the top again.

#14 velo on 06.10.14 at 6:49 pm

Garth,

Every time the s&p shows sign of a correction, the dips are aggressively bought. Now the market is short term overbought and doesn’t seem to want to pullback. Caught me off guard as I rushed to cover shorts in the last wipeout. This last rally has been pushing higher on low volume as well. Tough to read the charts right now.

#15 Michael on 06.10.14 at 6:53 pm

The current P/E for the SP500 might not seem high, but that’s because profits are abnormally high (11% of GDP vs. 6% of GDP average). When you look at the Shiller P/E, things look much more concerning.

http://www.multpl.com/shiller-pe/

#16 12 Years and counting.. on 06.10.14 at 6:54 pm

RE market will not collapse in Vancouver, Toronto, or Calgary.

Too much concentrated population growth via immigration and a general urbanization of Canada.

I see it outside like this right now.

#17 Suzie Q on 06.10.14 at 6:55 pm

Seriously, Calgary Real Estate market is insane. No matter how good is a neighbourhood, I will never pay 700,000 for a mere 1400 sq.ft. Bungalow.

#18 dienekes on 06.10.14 at 6:56 pm

Talk the dollar down Thursday?
Time to move the rest into US dollars

#19 Keith on 06.10.14 at 6:59 pm

#127 – 06/09/14 – ozy – thanks Keith!

Excerpt from Tiger Woman on Wall Street by Junheng Li, Chinese born and raised equity researcher working in Manhattan, specialising in China.

“Like many visitors to China, I too experienced the effects of the poor environment. During almost every visit to China, I would come down with a sore throat-apparently my lungs had already been Americanized, and food poisoning, even though I was very careful about what I put in my mouth.

My parents and my sister repeatedly warned me not to drink milk from China, not to buy fruits and vegetables from the farmers markets, and to avoid local pork and chicken even at the fanciest restaurants. Many of my local friends subscribed to a delivery service to have organic vegetables grown on a farm outside the city sent to their homes every week. I was also advised not to exercise outside: according to my doctor friend, jogging in China’s thick polluted air takes the same toll on your health as smoking a pack of cigarettes.

How do you deal with this? It seems like China is no longer livable, I asked many friends in China, mostly young professionals and entrepreneurs. “We try to make money here but live somewhere else!” They would laugh off the concern with a shrug. Many of them bought houses in Hong Kong, London, New York, Vancouver, Melbourne or California – especially after the housing crash in 2009 made overseas real estate much more affordable.”

So it turns out that Vancouver is on the list of desireable places to live, because you can breathe the air, eat the food and drink the milk. Apparently in mainland China, you can’t.

#20 Justin Case on 06.10.14 at 7:02 pm

Can someone please clarify something about income-splitting for me? If I put money into a spousal RRSP with the intention that my wife uses it during a maternity leave I understand there is a 3 year holding period. After the 3 years the income stops being attributed to me and taxed at my wife’s tax rate. What happens if I transfer amounts several times to my wife…does the clock reset?

Eg. Today I put $10k in a spousal RRSP, she should be able to remove at her tax rate in 2017? If she didn’t remove any of that amount and I then again put in $15k in April 2015 does that mean she could remove $10k in 2017 and $15k in 2018 or would it all have to wait until 2018 as we’ve effectively restarted the clock?

Thanks for any help from those not trying to be first.

#21 lilyflor on 06.10.14 at 7:03 pm

Never let a good crisis go to waste!

#22 crowdedelevatorfartz on 06.10.14 at 7:06 pm

That bear cub BITES !

#23 Darth on 06.10.14 at 7:11 pm

This time is not different. It never is different. We’re in for a big one… Once China collapses, it will make Lehman look like a bonfire. Our construction boom has ended… Mix everything in together and you have a major real estate collapse here, followed by a 5-7 year recession…

Maybe in your household. — Garth

#24 Bill Holland on 06.10.14 at 7:12 pm

So cash out on real estate and move into equity? Garth, can you provide concrete examples on how dividends from stocks are taxed compared to interest income?

I did not suggest that. Anyone moving into financial assets needs balance and diversification. Dividends, by the way, are taxed for most people at 50% of the toll on interest (or employment and rental income). — Garth

#25 Smoking Man on 06.10.14 at 7:22 pm

Nosty

I burned my led Zeppelin collection when I discovered lead belly. They ripped so much of his work… Never one acknowledgement.

The great Late Kurt Cobain, always showed respect… For

#26 spousal RRSP on 06.10.14 at 7:25 pm

@ #19 Justin

Every contribution to a spousal RRSP resets the clock for all spousal RRSP accounts.

#27 Smoking Man on 06.10.14 at 7:28 pm

Have a Beaty post in my head. The warped mind of a Liberal..

Went to doc last week for my annual… And sure enough i picked up the bug from hell.

Can’t type,, good night.. Hope I wake up..

#28 Yogi on 06.10.14 at 7:33 pm

The US central bank has slashed its stimulus spending now four times in the past six months, and there have been zero negative consequences.

Which is a euphemism for saying the Fed is buying tens of billions of dollars of US liabilities every single month. And still is.

The unemployment rate is irrelevant. The labour participation rate is brutal in the US. Participation rates haven’t been this bad since women were relegated to the kitchen to make sandwiches. Don’t even get me started about the quality of what meager jobs are being created.

US Q1 GDP figures are being blamed on the winter. Laff. How about a bunch of long-term unemployed folks losing benefits at year end 2013?

Meanwhile, the ECB is now in negative interest rate territory. Japan’s bond market is, as the Germans say, kaput. That’s not an exaggeration. Russia, China and others are moving away from the US dollar in a big way.

The US may taper and end QE3. What will follow is either a double dip recession or QE4.

#29 High Plains Drifter on 06.10.14 at 7:47 pm

Dutch disease is a term where half of a country is finished goods and for our purpose, the other harf has something like oil that is fungible the world over. Now assume it is a nice, sunny, warm day all across the country, where you making the money today? By the way in the real world it was nice in Toronto, not so nice by the big, big, oil fields.

#30 Retired Boomer - WI on 06.10.14 at 7:49 pm

True Confession Time….

When I retired 12/31/2011 I had a whole $392,000 in my TSP the equivalent of a RRSP in Canada. not bad, but not a whole ton either. (80% stocks/ 20% Bonds all index funds)

The Wife and I both had funded ROTH’s on the side, but their are contribution limits, and well, after 2008 they didn’t look that much better than they had in 2008. About 100 grand between them.

Today, the total is just over $750K that is after taking about 15 grand a year to supplement income during the past 2.5 years.

Of course, we weren’t interested in RE having worked hard to pay off the simple home we built in 1997. We only 1 year had a combined income that crested $100,000 for the two of us.

I look at the stock market, and there IS more danger there than in 2009, as prices are higher, but not crazy higher. Bonds pay little to own those debt instruments, why not a decent dividend payer that equals bonds AND has the possibility of capital appreciation?

I feel reasonably secure about the future. I have yet to claim my social security benefit, though the wife has claimed hers. Could we have done better? Maybe, but we are rather simple people, with rather simple needs so never worry about ‘might have been.’

Compared to many other Boomers we feel pretty well prepared, but one never can tell about tomorrow!

#31 R on 06.10.14 at 7:50 pm

Garth has touched on this, but I think it would be immensely helpful if TFSAs were renamed to TFIAs (Tax Free Investment Account), so that the public actually knows they are dealing with a container, not a savings account.

The information available from most banks is woefully inadequate at best, and my experience has been that if you go in looking for a TFSA, they try to sell you a pathetic premium rate savings account.

#32 Lilyflor on 06.10.14 at 7:51 pm

The thing about equities, you can make money on the way up as well as on the way down. Not to mention you can get out at the click of a button. Real estate, not so much.

#33 Bobby on 06.10.14 at 7:55 pm

For #19 Justin,

Just remember, last in first out. So, three years from your last contribution.

#34 Fleabitten Monkey on 06.10.14 at 7:55 pm

Would you still suggest to the millenials out there to wait a little before getting into the equity markets via etfs etc as was stated in the May 15th blog entry? It was suggested getting in 10-15% below the levels at that time would be a prudent step. Just looking for any revised opinion you have given current conditions in the markets. I realize there is no real crystal ball and hindsight is 20/20 but a comment would be appreciated.

#35 saskatoon on 06.10.14 at 8:06 pm

#19 Justin Case

dude, it’s first in…first out.

#36 bitter12 on 06.10.14 at 8:07 pm

Your call on housing is probably correct, but your parsing of macro data and guessing at where the stock market is going is just that: a guess. You have no idea how long this bull market hangs on. Hell, indications back in 2006 were that the housing market was cooked. Look how that played out
Owning stock in good companies is one of the only ways to hang onto your wealth. What a lot of people miss is the amount of that corporate profit that is created through money spent by governments that must borrow it. That is going to be a problem at some point. That which cannot go on, will not go on.

#37 shawn on 06.10.14 at 8:11 pm

Shiller P/E?

Michael at 14 says:

When you look at the Shiller P/E, things look much more concerning.

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

I’ve been hearing about the Case Shiller adjusted ten year average P/E for maybe eight years now.

Basically this indicator has been crying wolf since at least early 2009. A LOT of gains were missed by Mr. Shilller.

It seems to take zero account of the level of interest rates, which makes no sense. It’s a flawed indicator.

What has it predicted? 10 of the last three big market corrections?

#38 Rick on 06.10.14 at 8:22 pm

Your U.S. employment Numbers don’t cut it. What about all the people entering the workforce for the first time since the GFC?

You say the U.S. has gained all their losses back…great.

Now what about the new people coming in over the last 6 years and the higher population due to birth and immigration.

The U.S. Job market is soft and not keeping up. Don’t fool people.

Stats are stats. The US recovery is self-evident, whether you like it or not. — Garth

#39 Harbour on 06.10.14 at 8:23 pm

Since 2011, gold has given up 34% of its value
——————————————————
Not a gold bug but just saying…

It took 4 times longer to give up that 34% then make it. lol

http://www.ebullionguide.com/price-chart-gold-last-10-years.aspx

The charted gains are irrelevant if you did not crystallize them, as I urged at the peak. Did you? — Garth

#40 wayne on 06.10.14 at 8:30 pm

#30 shawn

The problem is that you don’t understand what you’re looking at – the Shiller P/E doesn’t predict anything. It’s simply a more reliable way to measure a company’s valuation.

#41 Sheane Wallace on 06.10.14 at 8:35 pm

stock markets is the only place to go with debased currencies and manipulated gold market.

Preferably energy and dividend plays, mostly internationals/Europe, ASIA/PAC, large cap US.

us middle class is doomed but international large caps boom.

The generation coming out of university in North America in the next 20 years would be a wasted generation with no chance for quality work experience.

sad, but get used to it, the rich need servants, not thinkers.

#42 Sheane Wallace on 06.10.14 at 8:36 pm

Stats are stats. The US recovery is self-evident, whether you like it or not. — Garth
……………………………….
Not really, if everything is rosy why don’t we measure stuff with the statistics used in the 80-es.

How does 22 % unemployment and 7 % inflation sound like?

#43 BigPoppa on 06.10.14 at 8:37 pm

http://www.reddit.com/r/worldnews/comments/27prbw/canada_shuts_down_investor_immigration_path/?sort=

Here is a great reddit article talking about the investor visa program in canada.

Just read through the comments. Over 950+ comments, and I have found not one to be in support of foreign property ownership in our country.

A huge problem we have in our country is that we vote once every four years, and between that time have no say.

Whereas in the united states they can regularly vote on propostions between elections. They have much nore of a voice than we do here in Canada.

#44 JSS on 06.10.14 at 8:40 pm

Hey, does anyone out there got their eye on Target Corporation (TGT), for their portfolio? Close to a 52 week low, and a dividend aristocrat.

#45 Dean Mason on 06.10.14 at 8:44 pm

To Rick #37

Rick, you made a very important point about jobs and U.S. population growth and immigration over the last 6 years.

The U.S. economy is still short 7 to 8 million jobs even with the recovery of all jobs lost in the last 6 years.

If the U.S. does not create at least 375,000 jobs a month on average for the next 36 months then it will not keep up with U.S. population growth and immigration and will not be a decent recovery.

You need at least 125,000 U.S. jobs a month just to keep up with U.S. population growth and immigration.

A strong U.S. recovery today would be 4% to 5% annual GDP growth and 450,000 to 550,000 jobs a month created for 24 months at the very least.

You are wrong. The job loss count for the US in total was 8.8 million. With the 2.4 million replaced in the last year alone, the losses have been restored. The labour participation rate, in both Canada and the States, however, has declined. Regardless of our macro musings, the stock market has gained 188% since 2009. Did you participate? — Garth

#46 Lala on 06.10.14 at 8:47 pm

#9 Baz

Hoarding cash (cad) is not smart while everyone is betting against it. Smart money moved to US, but you still have time. It will go to 2004 levels, 1CAD=0.71 USD.

#47 devore on 06.10.14 at 8:47 pm

#19 Justin Case

You put in $10k in 2014, 3 years later your wife can withdraw $10k as her own income. You put in $15k in 2015, 4 years later $15k is her money. It’s pretty simple, don’t make it complicated.

#48 james on 06.10.14 at 9:10 pm

#6

“Also, it is very difficult to get a fixed rate mortgage in the U.S. right now.”

What do you mean by this? Do you mean that lenders offering these products are hard to find? That it is hard to qualify?

Having done so recently, neither of these claims is true.

However, there is certainly a lot more documentation than in Canada. They look at your financial affairs quite closely these days. You can expect to cough up a lot of statements, tax records, etc.

Assuming that these things are in place, I don’t see how it is difficult to find a fixed 30 year mortgage. It just takes time, even for US citizens with good credit.

#49 Dean Mason on 06.10.14 at 9:14 pm

Take 125,000 *72 months=9,000,000 jobs needed to just keep up with U.S. population growth and immigration.

In 6 years, a strong recovery would be 375,000 jobs per month over 72 months which is a total of 27 million jobs.

The U.S. economy did not even come close to that and they are not even quality jobs and are not all full time jobs.

The lats 6 years stock market gains has nothing to do with a strong U.S.economic recovery which did not happen and will drop by 30% at least over the next 6 to 12 months 11,500 Dow Jones, 1,400 S&P, 3,000 Nasdaq, 10,400 TSX.

As to my question of whether you participated in the market advance, or sat on the sidelines criticizing, the answer’s now clear. Pity. — Garth

#50 Dean Mason on 06.10.14 at 9:14 pm

Correction, last 6 months……

#51 Dean Mason on 06.10.14 at 9:17 pm

Also, in the year 2000 when the U.S. had 3.9% unemployment, 30 year U.S. bonds were 6.75% not 3.45% like today, June-2014.

#52 Devore on 06.10.14 at 9:18 pm

RRSP splitting, I am thinking of something else, it is 3 years since last conttibution. The joys of being anonymous on the internets.

#53 I'm stupid on 06.10.14 at 9:19 pm

I’d like to share the fact I haven’t smoked a cigarette in 16weeks. I would also like to share how I managed to actually quit smoking.

I’ve smoked for 15 years, over a pack a day. I thought I would be a life long smoker but it seems that I finally kicked the habit.

This is what I did:

The patch the 21 milligram one for 4 weeks followed by 14 mg patch for 2 weeks. I then got a prescription for champix for 2 weeks.

It wasn’t as bad as I thought. A little advise to anyone that’s going to try to quit, the first 3 days are the hardest and go to sleep with the patch on.

Good luck and I hope you can so it too.

#54 RealCanadianSavings on 06.10.14 at 9:20 pm

There is a lot of market timing on this blog, how about some dollar cost averaging for a change?

#55 Dean Mason on 06.10.14 at 9:20 pm

Also, compare to the year 2000 all stock markets which most people had invested in Nasdaq 5,000 and Dow Jones 11,700, S&P 500 1,528, TSX 11,300.

Buy and hold was suppose to make 10% annual returns which it did not for the last 15 years.

Only fools buy and hold. Investors buy and rebalance. — Garth

#56 Man stands my ground on 06.10.14 at 9:21 pm

The last posts I’ve read contained a whole heap of radical feminist thought, but the recession caused many male jobs to be lost–manufacturing, construction, engineering, you name it.

Katheleen Wynee sounds like a feminist because she promotes feminist friendly office jobs, but places a burden on the manufacturing sector causing hundreds of businesses to leave Ontario for cheaper energy costs.

The feminists may have won this time by usurping the job market and having easier access to low mortgage rates and interest rates, or having a male sucker to grasp onto, to own a home and 50% chance divorce.

As much as I loathe feminists, let these “independent women” increase the housing bubble. The Canadian economy is growing because of a big bubble. Meanwhile, many sane men will work and save up and leave Ontario for retirement.

Don’t ever let an Ontario feminist dictate your life.

#57 Shawn on 06.10.14 at 9:23 pm

Labour Participation Rate is Down?

Yogi at 27 frets:

The labour participation rate is brutal in the US. Participation rates haven’t been this bad since women were relegated to the kitchen to make sandwiches.

******************************************
The labour participation rate is the percentage of EVERYONE 15 years and older who is working or looking for work.

As the percentage of the population older than 60 and 65 rises the labour participation rate falls.

As young people go to school longer, the labour participation rate falls.

As society gets more affluent, the labour participation rate falls.

Do any of those seem like bad things?

People worry about discouraged workers. Well there has always been a certain segment of the population that is unemployable.

Lower labor participation rate means less competition. It’s good news all around.

#58 Lawboy on 06.10.14 at 9:26 pm

Trouble’s coming.

I attended a professional development workshop for legal professionals very recently, all about real estate.

The leader was a veteran real estate lawyer with thirty years experience. He described some recent deals with a number of clients holding multiple SFD properties in the GTA, having to get bridge financing (at over 15% for six months – the mortgage folks make a killing on these) while waiting to sell something else. We’re talking about a very high number of second/third mortgages on single properties, he was telling us.

This expert lawyer advises us that things are very different now, and property development of any kind is “just too risky” for all involved today in the GTA, stay away he suggests to lawyers seeking work.

For legal professionals to protect themselves, he urged us all to ensure there is a clause in any mortgage refinancing deal that stipulates that the lawyers are not involved in any way in the appraisal of value of the property being refinanced. (Think about that!)

We all took notes, very carefully.

For those who like to pick on lawyers, it is usually deserved. But at least the legal profession has sniffed what’s in the wind and taken notice.

Worry about the greed and desperation in the mortgage marketeers that sees them continue to create ill-advised mortgage deals.

That won’t end well.

Lawyers will protect themselves, no worries for us.

#59 Teacher's Ass-istant on 06.10.14 at 9:31 pm

#29 Retired Boomer – WI

Congratulations, you’ve been careful and done well. I salute you and your comments are among the most sensible.

So are you saying, in this post, rather than bonds substitute for preferreds? That is what I have been thinking trying to adapt Garth’s advise to my situation.

#60 Shawn on 06.10.14 at 9:33 pm

The Dependency Ratio

(Not to be confused with the depends ratio), is the percentage of people older than 65 and younger than 15.

Under this theory the young and the old are living off the backs of the workers aged 15 to 65.

Now I can agree that those under 15 are dependent on others.

But most over 65 are not dependent on anyone. (The dependency ratio counts Warrens Buffett as dependent).

Anyone who has a company or government pension, which was FUNDED WHILE THEY WORKED, is not dependent on anyone for that income. That income is the wages of capital.

Anyone collecting CPP or social security which was funded while they worked is not dependent on today’s workers for that income. This is the wages of capital.

In fact today’s workers need that invested capital as it is invested in the companies that employ them.

Perhaps the old are dependent on today’s workers for the old age pension but that is only because the government forgot to set aside and invest the taxes they paid in to fund this.

I would say that basically all the old people in this country that worked most of their lives or had a spouse that worked are not dependent on anyone thank you very much. Their income come largely from invested money in pension plans. (Income from the old age supplement I would acknowledge as being dependent on workers)

So there! Not that anyone here mentioned it lately but just thought I would throw out this point for possible debate (though it’s perhaps unlikely I will get any argument)

#61 espressobob on 06.10.14 at 9:33 pm

#45 Lala

Forex plays have their own risks. A balanced & diversified portfolio with some USD sounds better.

#62 Mr. Reality on 06.10.14 at 9:38 pm

Garth

During the time you discuss two things occurred in the US. A historic intervention by the Fed via QE at the same time time the US housing bubble 2.0 was being reflated with all that wonderful liquidity sloshing around.

The Fed is now scaling back the QE -and the tightening begins.

At the same time there is a barometer telling us the story of houses. It’s lumber, and its not very happy right now.

http://www.nasdaq.com/markets/lumber.aspx

Lumber prices are in a free fall and nobody is even talking about it.

Mr. R.

The new home market is miniscule compared to the US resale market. — Garth

#63 Paul Krugman on 06.10.14 at 9:43 pm

So basically…. what you’re saying is:

three years ago, gold was up, stocks were down, so buying stocks and selling gold was a no brainer

today, stocks are at all time highs, gold is in the toilet, so buying stocks and selling gold is a no brainer

Nope, you rebalance continuously. The small amount of metals exposure an average person should have is easily contained in an ETF owning the TSX 60. — Garth

#64 Montellino on 06.10.14 at 9:45 pm

Air Canada stock is > $10
does anyone else find that strange? For me it’s reason enough to stay the heck out of tsx..

#65 Big Al (New) on 06.10.14 at 9:46 pm

Dismissing the participation rate really isn’t an answer now is it. People don’t just vanish out of thin air, but that’s the problem when the government provides the numbers, you can’t tell what’s true or a lie. Regardless of whether ones profited from this runup or not if the figures have been manipulated how can you trust it. I’ve got a lot of American friends who would argue otherwise as to the current economic turnaround you harp about every other day. Let’s see what the rest of the year has in store for them now that weather can’t be blamed on anything.

Good idea. It will be robust. — Garth

#66 learningfromyou on 06.10.14 at 9:48 pm

I just visited Montreal downtown and I was surprised at the pace that the cranes move there, new constructions, trucks, metallic sticks going deep into the ground for high buildings, they do not read Garth for sure, they are getting somewhere else the statistics for their predictions.
The buses at Bonaventure station are diverted because of new constructions

#67 Fiendish Thingy on 06.10.14 at 9:51 pm

The number of jobs lost in the US may have been replaced, but not the wages. Most replacement jobs are below the wages earned by the employee previously.

Not only is that incorrect, it’s irrelevant to an investor. — Garth

#68 Timmy on 06.10.14 at 9:55 pm

Listed in on a town hall by Vancouver Mayor Gregor “Paver” Robinson. He is finally saying that they have to take measures to discourage real estate speculation in Vancouver and that they will start to gather data on this. So after 10 plus years of rampant speculation and huge price increases to a point where the city is severely unaffordable, he decides it’s time to crack down on this. What a clever fellow…lol I wonder how his developer buddies–the biggest campaign contributor–will react

#69 wayne on 06.10.14 at 9:55 pm

#51 Shawn

Wrong in post #36. Wrong in post #51. Simplistic view in post #54 is likely wrong as well, but your track record is so bad there’s no point doing any research to prove it.

http://www.forbes.com/sites/realspin/2014/01/15/u-s-unemployment-retirees-are-not-the-labor-exodus-problem/

#70 Big Al (New) on 06.10.14 at 9:57 pm

And if it isn’t then what will you admit being incorrect. I’ll keep the date of this conversation on my calendar to remind you.

#71 wayne on 06.10.14 at 9:58 pm

That should read:

Wrong in post #36. Wrong in post #56. Simplistic view in post #59 is likely wrong as well, but your track record is so bad there’s no point doing any research to prove it.

#72 Inglorious Investor on 06.10.14 at 10:00 pm

“The rear view mirror now tells us that was an outstanding time to buy into equities and dump metals. But, everyone did the opposite.”

Yes, hindsight is 20/20, isn’t it? And of course not “everyone” did the opposite or stocks would not have climbed.
——————————–

“Margin debt – the amount investors borrow to buy in – sits at an historic peak, just like Canadian mortgages.”

In both cases, very cheap money. Also, corporations are borrowing huge amounts of money to buy back their own stock. Volumes are thin. Breadth is narrow. Volumes and breadth will both expand when the retail investor reluctantly steps into the markets in a big way.

————————–

“Sure, no correction in the markets for 32 months when the average time between dips has been only 18 months since 1945.”

The higher they climb…

————————

“But isn’t it different this time? Maybe it is.”

An early sign of rationalization?

———————–

“Corporate profits in the US are expected to rise 7.5% for 2014, and corporate sales to increase about half that. Is that because companies are just laying people off and dropping those savings into the bottom line?”

Too a large degree, yes.

———————

“In fact, 2.4 million new positions have opened up in the last 12 months, and now all of the employment lost in the GFC has been replaced.”

So there’s some quantity, but what about quality? But what about the employment needed to account for population growth?

————————

“There’s no doubt the States is in an expansionary, pre-inflationary growth phase.”

Quite possibly. But it’s a bifurcated economy. This is why there has been plenty of evidence to support both the bull case and the bear case on the US economy. It has confused many, but the reality is that, economically, there are now at least two ‘Americas.’
—————–

“The US central bank has slashed its stimulus spending now four times in the past six months, and there have been zero negative consequences.”

Except financial repression of those who supposedly did the right thing and save for their retirements. One should not have to necessarily be forced to climb onto the stock market inflation wagon to ‘save’ for retirement, but the Fed is turning everyone into speculators. The Mrs. Watanabe phenomenon in America.

Also, there’s always Belgium.

——————–

“Since 2011, gold has given up 34% of its value. The stock market is 73% higher.”

So… buy gold and sell stocks?

——————–

“But stock values are based on corporate profits, […]”

Again, a lot of it is corporate buy-backs. Thanks to QE. Supply and demand.
———————

“And so the Bank of Canada boss, Stephen Poloz, will hold a presser on Thursday morning to tell us once more.”

They’ve been trying to talk down the Canadian people for years. Debt. Risk. Mortgages. Blah, blah, blah… I don’t know what’s worse, that Canadians are not listening, or that our central bank is so pathetic that talk is all it is capable of.

——————————–

“A goal of Thursday’s event is to accentuate risks, talk the dollar down and hope exports rise as a result, saving us from ourselves.”

We don’t need to be saved from ourselves. We need to be saved by an interventionist government and an impotent central bank.

——————————–

“There’s only one way out of this. Liquidity.”

So the answer is more monetary inflation via cheap credit, more financial repression and ruined savers? What we need is genuine economic growth, not more government and central bank intervention, so that any liquidity increase is actually collateralized by real wealth. More liquidity does not necessarily a better economy make. Given the amount of liquidity pumped into the system by the Fed, the US economy should now be in orbit of Heaven, not shrinking by 1%. Yes, yes, the weather. Like we’ve never had a winter before.

The liquidity referred to was obviously personal. I thought a guy who knew everything would figure that out. — Garth

#73 Shawn on 06.10.14 at 10:01 pm

Labour Participation rate…

From just above

Dismissing the participation rate really isn’t an answer now is it. People don’t just vanish out of thin air,

*******************************************
They mostly retired which is why they no longer participate in the labour force.

What else should we expect in an affluent aging society but a lower percentage of people over 15 working or looking for work?

#74 Dean Mason on 06.10.14 at 10:06 pm

No matter what happens in the economy, everything is just great.

People know the truth and only fools believe in fairy tales which is currently the new economy that the U.S., western world and the rest of the global economy is being engineered by the central banks, governments and all control freaks.

It is so obvious now that even if people lose everything, it will still be okay.

It is a sad society when people think that their education which is pieces of paper make them smart.

There is no more critical thinking and common sense, life skills anymore.

It is the same mentality with equities and real estate. This is why most Canadians live paycheck to paycheck and have no idea about anything economic or financial.

The last financial crisis was just a test to see how people would react to such an event and the next one will be worse, longer and more wide spread.

Count on it!

#75 espressobob on 06.10.14 at 10:11 pm

#52 I’m stupid

Smoking anything is complete waste of life!!!!!!!

#76 Big John on 06.10.14 at 10:14 pm

>> Compare that with just 86,000 jobs created in Canada in a year, most of them early in 2013.

Hi Garth,

I hate to interrupt your anecdotes with more meaningful stats, courtesy of Stats Canada, but for those who want to see the big picture….

http://www.statcan.gc.ca/daily-quotidien/140606/dq140606a-eng.htm

Note the steady rise of total employed in Canada, from 16.8 million to 17.8 million over 5 years.

And the steady fall in the unemployment rate, from 8.7% to 7.0% today..

OK, back to “the sky is falling”….

The unemployment rate just went up and the job stat I referenced is in the link you provided. You were saying? — Garth

#77 Nemesis on 06.10.14 at 10:16 pm

#Bacon,Beans’nLimousines. #BlastsFromthePast.

http://youtu.be/kyfvamwM4Yo

[NoteToSM: What was his BestKnownAphorism?]

#78 NDP voters Vote strategic on 06.10.14 at 10:18 pm

As a strong NDP supporter it pains me to vote anyone but NDP but in this case my riding could go either liberals or crazy conservatives (Hudak) and so I will vote liberals. We as NDP must send a message to NDP whorebath who forced an election even though the liberals has an NDP favorable bill. WhoreBath reminds me of Bob Rae who was a conservative in NDP clothing. We don’t need another Mike Harris. Don’t be suckered by the corporate media who is giving whorebath a lot of media time ( never seen that before) because the conservative hope you are fooled into throwing your vote away and then giving Tim Hudak a mike harris clone victory. Make your VOTE COUNT AGAINST HUDAK so dont’ throw it away .This also a good read.

http://www.thestar.com/news/gta/2014/06/10/hazel_mccallion_says_hudaks_tories_will_hurt_cities.html#

#79 Inglorious Investor on 06.10.14 at 10:21 pm

#59 Shawn on 06.10.14 at 9:33 pm

Here is an interesting article I dug up in 5 seconds that may question some of your assertions vis-a-vis pensions. It is for the United States, but it generally should apply to Canada as well.

http://www.heritage.org/research/reports/2013/02/nine-fallacies-used-to-defend-public-sector-pensions

#80 Big Al (New) on 06.10.14 at 10:23 pm

“The number of jobs lost in the US may have been replaced, but not the wages. Most replacement jobs are below the wages earned by the employee previously.

Not only is that incorrect, it’s irrelevant to an investor. — Garth”

Not only is that comment incorrect it shows the inherent greed in the system that believes that wages aren’t important as long as the company continues to grow earnings. At some point your going to run out of that income that company’s are so eager to dismiss that’s used to buy their products. Or does that logic escape them.

#81 Michael on 06.10.14 at 10:29 pm

#36 Shaun – The single best predictor of long-term returns in the market is the Shiller P/E. So, unless it’s different this time, the outlook for stocks going forward does not look good.

http://pcasd.com/content/values-vs-headlines-and-state-global-stock-valuations

#82 Dean Mason on 06.10.14 at 10:31 pm

Remember who the tax and debt masters are. They are red and orange.

In the U.S., the jack ass is destroying their own country and want to be like Europe.

What an economic model to copy after. Jimmy Carter is a light weight compared to the what the U.S. is ending up as.

People want to learn the hard way and they will and are.

Strategic destruction, one day at a time.

#83 Inglorious Investor on 06.10.14 at 10:32 pm

#56 Shawn on 06.10.14 at 9:23 pm

“As young people go to school longer, the labour participation rate falls. As society gets more affluent, the labour participation rate falls.”

Data?
—————

“People worry about discouraged workers. Well there has always been a certain segment of the population that is unemployable.”

Like American men? http://research.stlouisfed.org/fred2/series/LNS11300001
——————–

“Lower labor participation rate means less competition.”

In Europe after the Black Death, which killed as many as 200 million people (http://en.wikipedia.org/wiki/The_black_death) the labour pool shrunk and wages went up. Good news all around?

#84 Mr. Frugal on 06.10.14 at 10:33 pm

#63 Montellino on 06.10.14 at 9:45 pm
Air Canada stock is > $10
does anyone else find that strange? For me it’s reason enough to stay the heck out of tsx..

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

I don’t find this strange at all. In fact, I’m rather enjoying the ride up. Long AC.B

#85 vancouverthunder on 06.10.14 at 10:37 pm

The US Bankers dont know anything and should read Garths Blog

Layoffs at Bank of America Corp’s mortgage business will amount to about 2,100 positions, a source told Reuters on Monday, in response to weak refinancing activity.
Wells Fargo & Co announced 2,300 layoffs in its home loan unit on August 21.

JPMorgan Chase revealed in its Investor Day presentation yesterday that its going to axe 17,000 jobs in the next two years.

Four-thousand of those cuts are expected to go down this year and the other 13,000 are expected to come from the bank’s mortgage unit

Real Estate in the USA is healthy and improving just ask Garth for crying out loud.

Oh, here are a couple hundred mortgage companies laying people off or going out of business
http://ronmamita.wordpress.com/2014/01/27/list-of-busted-mortgage-companies/

JC Penney, the department store retailer that operates 1,107 stores across the United States, will eliminate 2,000 jobs and shut down 33 stores

Macy’s announced that it would be laying off 2,500 workers.

Intel has announced a “trim” to its 107,600-strong workforce. By the end of the year it aims to rid itself of 5 percent of its workforce, or 5,380 workers.

Hewlett-Packard Company, another tech giant, will eliminate 34,000 jobs over the course of 2014, 11 percent of its workforce

In October of last year, Dow announced some serious cost-cutting: 2,400 jobs and 20 chemical plants

Best Buy is shedding 2,000 managers – about 1 percent of its workforce – after disappointing holiday season.

Electronics retailer Radio Shack plans to close as many as 1,100 stores — or nearly 20% of its locations.

Complete List of U.S. Retailers Closing Stores, Going, Bankrupt, and Going Out of Business in 2014:

Google it to get the whole list

370 Family Dollar

365 Coldwater Creek

360 Dots

300 Blockbuster

300 Sears

225 Staples (through 2015)

223 Barnes & Noble (through 2023)

200 Radio Shack

180 Abercrombie & Fitch (by 2015)

175 Aeropostale (“over the next several years”)

170 Jones Group (by mid-2014 )

155 Sbarro

150 American Eagle Outfitters

150 Rent-A-Center

145 Brown Shoes / Famous Footwear

128 GameStop

125 Children’s Place

125 P.S. from Aeropostale

91 Blockbuster (UK)

76 EE

76 Walgreens

Garth said the USA is in a growth phase….what are these idiot companies doing?

GM Channel Stuffing?
after hitting an all time high of 815K cars parked at dealer lots last month, or 83 days of supply, in April GM’s channel stuffing rose to a fresh all time high of 826K, at 85 days, in effect suggesting that had it not been for the extra 11K parked but “sold” cars, GM sales would really have been up just 2.3% Y/Y, missing estimates, and down 13K from March.

Detroit-based GM has now recalled about 13.9 million cars in the U.S. so far in 2014. Including Canada and Mexico, the total approaches 15.9 million

I agree with Garth, they must be in good shape since they donated 26 million to Detroit Institute for the arts.

The massive US economy changes daily, replete with attrition and growth. The direction is forward, as much as people like you wish it were otherwise. I gather you, also, are not an investor. A hoarder, perhaps? — Garth

#86 D.D. Corkum on 06.10.14 at 10:39 pm

#19

Regarding spousal RRSPs:

If you contribute to *any* spousal RRSP in the current year or previous two years, then you may have to claim withdrawls by your spouse.

Note, the word “contribute” differs from “deduct.” Deferring the deduction until a future tax year won’t reset the clock so long as you contributed the money in the prior year. This could make a small beneficial difference in certain advanced situations.

Source: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/wthdrwls/spsl-eng.html

#87 Inglorious Investor on 06.10.14 at 10:40 pm

“The liquidity referred to was obviously personal. I thought a guy who knew everything would figure that out. — Garth”

Well, obviously ;)

#88 Dean Mason on 06.10.14 at 10:40 pm

Greece, Argentina, Zimbabwe, Bolivia, Venezuela, U.S.S.R, Cuba etc…………….

I can on and on. Socialism, Communism, Marxism etc. all are all what these countries have in common and we have for now in many Canadian provinces a lighter form of this but it is slowly creeping in and people believe in fairly tales and economics does not matter.

I feel sorry for the next generation because they will have a tough life and I would not rule out war as economic conditions slowly but surely get worse and worse and worse.

Just look at the last 20 years. People do not even know how to manage their simple bills and finances.

The Canadian housing and real estate market is a minor problem compared to what we will see over the next 5, 10, 15 years etc.

#89 Dean Mason on 06.10.14 at 10:41 pm

Correction I can go on and on……………

#90 JSS on 06.10.14 at 10:43 pm

Only fools buy and hold. Investors buy and rebalance. — Garth

—-
Not my experience, so far.

Over the last decade, I’ve invested and DRIPed in the following, and have done well:

RBC, TD, CIBC, NA, BMO, CIBC, Enbridge, Telus, BCE, Fortis, Emera, McDonald’s, P&G, Coca Cola.

If you have the money to buy good quality stocks, then buy-and-hold is good investing.

Investors need patience, and patience seems to be lacking these days.

#91 Inglorious Investor on 06.10.14 at 10:44 pm

#79 Big Al (New) on 06.10.14 at 10:23 pm

“At some point your going to run out of that income that company’s are so eager to dismiss that’s used to buy their products. Or does that logic escape them.”

Apparently it did not escape Henry Ford, who ostensibly paid his workers at Rough River high wages so they could afford to buy the Model T. At least that’s what we were told.

Also, it was reputed to have been Ford who said, “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

#92 Inglorious Investor on 06.10.14 at 10:48 pm

What the hell is Rough River? Of course it should be Rouge River.

#93 D.D. Corkum on 06.10.14 at 10:49 pm

#63 Montellino

Re: AC.B > 10$

I think the surge in Air Canada (which I missed, darn) had to do with making significant progress toward closing its pension deficit.

Frankly, it is about time that a company that large is doing better than penny stocks. Granted, its taken quite a bit of life support and government protection just to get it this far…

#94 Big John on 06.10.14 at 10:52 pm

>>> The unemployment rate just went up and the job stat I referenced is in the link you provided. You were saying? — Garth

I “were saying”, pay attention to the big picture, not month by month changes of 0.1%, which is noise, but look at the graphs of employment and unemployment in Canada over the last 5 years. They go in one direction (rising employment, falling unemployment rate), which is to the good.

#95 Nemesis on 06.10.14 at 10:56 pm

#FeatureAttractions. #FamousLastWords.

http://youtu.be/YZUE4_PtOk0

#96 For those about to flop... on 06.10.14 at 11:00 pm

I am not saying anything silly tonight ,it looks like Garth isn’t taking any prisoners!

#97 Aggregator on 06.10.14 at 11:06 pm

To the tree huggers pushing for more city densification and walkability: you forgot about creative destruction.

L.A. taxi drivers to protest Uber, other ride-share apps at City Hall

Uber Protests Poised to Block Roads From London to Madrid

Uber Technologies Inc., the car-sharing service that’s rankling cabbies across the U.S., is facing its biggest protest yet from European drivers who say the smartphone application threatens their livelihoods.

More than 30,000 taxi and limo drivers from London to Milan plan to cause traffic snarls in tourist centers and shopping districts. They are asking regulators to apply tougher rules on San Francisco-based Uber, whose software allows customers to order a ride from drivers who don’t need licenses that can cost 200,000 euros ($270,000) apiece.

This is big and could cost a lot of jobs and sales for auto manufactures. I won't be surprised if regulators and politicians impose a new law making cash for car rides illegal.

#98 Harbour on 06.10.14 at 11:06 pm

#38 Harbour on 06.10.14 at 8:23 pm
Since 2011, gold has given up 34% of its value
——————————————————
Not a gold bug but just saying…

It took 4 times longer to give up that 34% then make it. lol

http://www.ebullionguide.com/price-chart-gold-last-10-years.aspx

The charted gains are irrelevant if you did not crystallize them, as I urged at the peak. Did you? — Garth

———————————————————

What? lol

Guess that’s a ‘no’. — Garth

#99 Willy2 on 06.10.14 at 11:18 pm

– GDP is overstated and inflation is understated.
– Agree. US interest rates are going to rise. But that’s EXTREMELY deflationary.
– Both Canada & the US are on the same demographic trajectory. And that trend is deflationary.

That was amusing. — Garth

#100 AK on 06.10.14 at 11:21 pm

“Given the US trajectory, there’s a credible case for saying we’re probably in the grip of a secular bull market that has years more to run. ”
===================================
Spot on. We are in a (1982 – 2000) market cycle. Whatever happened to Gold during that timeframe? :-)

#101 Sydneysider on 06.10.14 at 11:25 pm

“stock values are based on corporate profits”

Sounds like a reasonable remark, but if you try to regress stock returns against reported earnings you won’t learn very much.

#102 espressobob on 06.10.14 at 11:34 pm

#89 JSS

Not that you would understand the rebalancing concept with a portfolio like yours! Canada is not the center of the universe! Hit the books!

#103 Retired Boomer - WI on 06.10.14 at 11:41 pm

#58 Teacher’s ASS-istant

Preferreds are a decent alternate for bonds. I hold short term and some intermediate term commercial bonds myself, as well as some convertible bonds.

Currently, I hold no preferreds myself. This might change. Looked at some preferreds but, at that time it was not a good move for me.

Currently, I also own some individual dividend paying stocks as well.

Rebalancing, and your asset mix (stocks vs. bonds) are the key components in my opinion.
As ever, things change.

#104 Spectacle on 06.10.14 at 11:56 pm

Great work & much appreciated Garth.

#67 Timmy on 06.10.14 at 9:55 pm
Listed in on a town hall by Vancouver Mayor Gregor “Paver” Robinson. He is finally saying that they have to take measures to discourage real estate speculation in Vancouver………after 10 plus years of rampant speculation……..”he decides it’s time to crack down on this. What a clever fellow…lol I wonder how his developer buddies–the biggest campaign contributor–will react.

Reply: that’s the new game, and the developers told him to use that plan.

Just like “Agenda-21 ” .
1) Claim failure,
2) act in creating special plans that repay the chosen ones, the BIG developers.
3) the Big developers ( not small guys) will grab all of the “single family detached ” properties because the larger towers in cities, the 300sq ft condos are a dying breed. They are now going for the “ground level” developments. Blow down 8 SFHomes and build a strip of 20 ( or 120 or 200 or 400 ) or so semi-detached homes in their place. A little insider info.

Oh, and UN Agenda-21 is an infection!

Regards all.

#105 Waterloo Resident on 06.11.14 at 12:12 am

Stocks are on an up-trend, that’s for sure, but right now the American indexes have been doing nothing but going straight up. That usually leads to a week or two of heavy selling. I’m not sure if we are at a short term top right now, but it sure looks that way to me (short term as in 2 weeks of falling, then rising again after that).

Wrong. US markets have done little more this year than retain 2013 gains. — Garth

#106 Patience on 06.11.14 at 12:15 am

“…the stockmarket has gained 188 % since 2009…” -Garth

Yes it has. Just one question : did you and your clients cash out in 2007 and re-enter at the bottom ?

Another person who does not know what rebalancing means. — Garth

#107 Nemesis on 06.11.14 at 12:17 am

#Priorities

http://tinyurl.com/p7zugc6

#108 section8 on 06.11.14 at 12:37 am

#16 Seriously, Calgary Real Estate market is insane. No matter how good is a neighbourhood, I will never pay 700,000 for a mere 1400 sq.ft. Bungalow.
——————————————————————————
Where the hell is someone asking 700,000 for a 1400 sq. ft. bungalow? Downtown? I think you’re giving a false picture of the market. Just because one geedy pig is asking for that, doesn’t make it true.

#109 JL on 06.11.14 at 12:42 am

#16 Suzie Q

Enough with the exaggerations. The only 1400 square foot bungalows getting bought for $700,000 are inner city lots zoned R2 where the house is a tear down and will be replaced by a side by side duplex.

The metrics are simple; pay $700,000 for the lot, build 4000 square feet (2000 each) for $150 per foot, total investment is $1.3 million and sell each side for $750,000-$800,000 each. Profit of $200,000 to $300,000.

#110 Tom from Mississauga on 06.11.14 at 1:07 am

Best attribute of an investor? Promptly being able to admit when wrong. The correct path can then be jumped to.
Myself I’ve sold a little S&P 500 to bring my margin down regardless. Never a bad idea to take some profits.

#111 Blaise on 06.11.14 at 1:30 am

A friend of mine was recently bragging that she just bought a house. A couple months ago she was complaining the most any bank would lend her was 200k which won’t buy much of anything in Calgary. Her parents gifted her a bunch of money so she could scrape the 2.5% for her downpayment with her cash back mort. She’s raided her rrsp but thrilled she now owns a house. She told me even with the basement suite she’s going to need $200 more a month in income or reducing other expenses. She needs to rent the basement suite within the first week or she will need to borrow more money from her folks or risk bouncing her car payment and possibly her second mortgage payment
She’s THRILLED not to be paying someone else’s mortgage costs be damned. I can’t imagine what would happen if that tenant causes damage and she needs to renovate the suite because she’s in Calgary where most basement suites were grandfathered in and could take a year or more to get the required zoning permits and approvals if it’s damaged. This is nothing but risk on risk.
If her tenant doesn’t pay rent on time she’s screwed. She has no plans to start repaying her rrsp anytime soon which is the worst kind of debt to have over your head, revenue canada is not known for being forgiving they eventually start garnishing wages pretty quickly and with no mercy but that’s years down the road and she’s being smart by paying her own mortgage instead of someone else’s.

I’m kinda sick of the house hornies giving me grief for renting at half the price. I’d rather have disposable income thanks.

#112 Bob Copeland on 06.11.14 at 3:11 am

Read Garth’s post and every comment. Is it time to buy some gold? Maybe 5%?

Why? — Garth

#113 Roland on 06.11.14 at 3:30 am

Belgium’s mysterious bond buying spree coincided almost exactly with the Fed taper. Why a relatively small country would suddenly conceive a desire for more than a hundred billion worth of US bonds is unclear. At any rate, the net effect is that the “taper” is really only a semi-taper. One unaccountable agency reduced its intervention in the US bond market, and another unaccountable agency took up some of the slack. Maybe all of the unaccountable agencies ofnthe world will pass the bong around and take turns. As Cheech said to Chong, “Man, if that’s Black Lab, I wonder what Great Dane is like?”

The argument about the bifurcated economy is very important. US home values are recovering, but much of the buying is by corporate landlords. There has been some job recovery, but median individual wages are still falling.

It is, in the strict sense, “non-inflationary growth.” Maybe it’s not bad from the rentier’s standpoint. But for most of the people, it sucks.

#114 Montrealer on 06.11.14 at 4:16 am

Should I buy USD today?

#115 MountainRoad on 06.11.14 at 6:48 am

Just as the US government can turn an inconsequential Iraq, Afghanistan, Libya, and Syria into dangerous threats against “the world’s only superpower,” the US government can turn zero jobs growth into 217,000 jobs. It is easy when you have a prostitute media and a gullible public, both of which Washington most certainly has.

But let’s take the government data at face value.

First, consider the news report that finally as of May 2014 as many Americans had jobs
as had jobs in January 2008. That might seem like good news until you take into account that since January 2008 the US has experienced 6.5 years of population growth. Economists seem to have settled on population growth adding 129,000 people to the work force each month. That comes to 10,000,000 people. Where are their jobs? The “jobs recovery” doesn’t provide for the 10 millions who have come of working age since January 2008.

We can conclude from this that the official 6.3 percent unemployment rate is nonsense. The unemployment rate is in the neighborhood of 23 percent as John Williams has established.

Just as the US government claims, falsely, that Russia invaded Ukraine and annexed Crimea, that Saddam Hussein had weapons of mass destruction, that Assad used chemical weapons on Syrians, and so forth and so on, the 6.3 percent unemployment rate is just another government lie.

Second, consider where the claimed 217,000 May jobs are. Hardly any of these claimed jobs are jobs in which university graduates begin their careers. The jobs are in wholesale trade, retail clerks, transportation and warehousing, employment services and temporary help, waitresses and bartenders, and health care and social assistance. In the later category, ambulatory health care services and social assistance account for the majority of jobs.

http://www.paulcraigroberts.org/2014/06/06/phantom-jobs-created-wrong-places/

#116 Dominoes Lining Up on 06.11.14 at 6:48 am

The complacency of those believing that things will revert to norms is astounding. We are truly in very different time, whether it is stocks or gold or real estate or politics.

Iraq is about to explode, bringing the west right back in. Links with extremists across the border with Syria will be devastating, and will involve Israel and Russia in short order, with the US quickly in over its head.

http://www.bbc.com/news/world-middle-east-27789770

Get out of all equities while you can. Gold will be an exceptional hedge against this chaos for those who get in now. Ironically perhaps, real estate in major centres that are still strong, Toronto and Calgary, will be effective safeguards too, so get in while you can. Anywhere else, just buy gold.

1914-2014 summertime – the similarities will soon be more than apparent and the rise of electronic communications and social media will turn this into a world wide calamity with blinding speed. Let’s just hope any violence does not reach our shores.

Doomerism is an industry that never quits. — Garth

#117 saskatoon on 06.11.14 at 6:53 am

#97 Aggregator

yay, freedom!

#118 Ralph Cramdown on 06.11.14 at 6:58 am

Wrong. US markets have done little more this year than retain 2013 gains. — Garth

SPY has a year-to-date total return of 6.3%. VUS, the currency hedged Vanguard US total market fund for Canadians, is up 6% YTD. At 5 1/2 months in, i’d hardly call those numbers flat. Getting greedy, or playing with the crazies in the NASDAQ pool?

Everybody hates this bull market. Does anybody remember when comments here were full of the ominous observation that the S&P 500 had reached the level of the peaks of 2000 and 2008? It’s gone up about 33% since then. The beatings will continue until morale improves.

YTD the Dow is up 3.5% and the S&P is ahead 6.5%. Yes, that’s okay, but pales in comparison with year-ago gains. Most analysts seem to agree markets will probably finish 2014 about where they began, and digest a correction prior. — Garth

#119 PJ on 06.11.14 at 7:19 am

Behind the great US employment/unemployment news, 37% of Americans (116000 000) dropped out of the work force. Every 5 or 6 years we have a recession, and the next one will be worse than 2008, especially in Countries where the debt is higher including the US. Then what? Keep printing and pump more cheap dough into the stock market, increase the debt and rig the stats some more? Yes, that’ll end well.

Yes, if I owned those shiny rocks I’d be bitter, too.

#120 Mr. Frugal on 06.11.14 at 7:39 am

Garth,

I can’t figure out why some people come here every day just to disagree. I took your advise and switched my investments from GICs to a balanced portfolio. Last year was terrific and the future looks bright indeed. It takes a bit of work to learn about investing but it’s well worth the effort. I will probably be retiring a few years early thanks to your wake-up call. Thanks Garth!

#121 OttawaMike on 06.11.14 at 7:55 am

#97 Aggregator on 06.10.14 at 11:06 pm

Agreed the sharing economy has huge potential for disruption to the status quo.

i have been using Air BnB as vacation lodging for a couple of years now and it has been a pleasant experience. Montreal and NYC are working hard to stamp out these types of accommodations as stories pop up of prostitutes and criminals using the rentals to conduct business. I am guessing that much of these tales are hyperbole to discredit the sharing movement.

#122 gwcanuck on 06.11.14 at 7:56 am

‘a mere 1% possess investible assets exceeding $1 million’……Garth, what’s the reference for that nugget of data? I knew I was doing good, but not almost 1%ish good.

#123 pbrasseur on 06.11.14 at 8:45 am

Most analysts seem to agree markets will probably finish 2014 about where they began, and digest a correction prior. — Garth

As an investor in the stock market the first thing you should learn is not to care about what the market is going to do in the future, what others think about it or and what pundits and “analysts” say about it.

The ONLY thing you should care about is the performance of the companies you own, That’s it, period, nothing else matters.

You do that, be patient, be resilient and you will make a bundle.

Buying individual equities is not a recommended strategy for most people who have less than seven figures to invest. BTW, what is the dollar value of your market exposure, on which you are making a bundle? — Garth

#124 bk on 06.11.14 at 8:48 am

“Would you still suggest to the millenials out there to wait a little before getting into the equity markets via etfs etc as was stated in the May 15th blog entry?” – Reply 33

Answer the question Garth! Us Millenials are listening to you…poor souls. I’ve been sitting on piles of cash that was supposed to be for a down payment.

In a balanced portfolio of 60% growth and 40% fixed income, the US equity portion would be something in the range of 15%-18%. If US markets correct by 12% (seems to be the consensus) then recover, your overall temporary portfolio dip would be in the range of 2%. If you’re sitting on piles of cash earning nothing afraid of this ‘volatility’ you’re a bigger wuss than I suspected. — Garth

#125 Renting in the GTA on 06.11.14 at 8:56 am

My plan is to retire a lot earlier than I thought possible with Garth’s advice.

All on quite an average salary I must add.

Most of the people around me make a lot more than I do, but if you are focused to have money work for you instead of you working for money, then you my friend will be ok.

#126 Big Brother on 06.11.14 at 9:01 am

#26 Smoking Man on 06.10.14 at 7:28 pm
Have a Beaty post in my head. The warped mind of a Liberal..
Went to doc last week for my annual… And sure enough i picked up the bug from hell.
Can’t type,, good night.. Hope I wake up..

…………………………………………………………………………
Dont worry Smoking Man we are MKULTRA and that was an anal check up for you. Its not the bug from hell but rather our new programming. Sleep well.
By the way William Ledbetter Huddies songs were covered by the following perfomers not just Led Zepplin.
Robert Plant says
“He was one of the main movers when I was a kid.”

Brian Wilson, Delaney Davidson, Tom Russell, Lonnie Donegan, Bryan Ferry (“Goodnight Irene”), The Beach Boys (“Cotton Fields”), Creedence Clearwater Revival (“Midnight Special”, “Cotton Fields”), Elvis Presley, Abba, Pete Seeger, The Weavers, Harry Belafonte, Frank Sinatra, Ram Jam, The Animals, Jay Farrar, Johnny Cash, Bob Dylan, Tom Petty, Dr. John, Ry Cooder, Davy Graham, Maria Muldaur, Rory Block, Grateful Dead, Gene Autry, Odetta, Billy Childish (who named his son Huddie), Mungo Jerry, Paul King, Led Zeppelin (“Gallows Pole”), Van Morrison, Michelle Shocked, Tom Waits (“Goodnight, Irene”), Scott H. Biram, Ron Sexsmith, British Sea Power, Rod Stewart, Ernest Tubb, Nick Cave and the Bad Seeds (“Black Betty”), The White Stripes (“Boll Weevil”), The Fall, Hole, Smog, Old Crow Medicine Show, Spiderbait, Meat Loaf, Ministry, Raffi, Rasputina, Rory Gallagher, the Sensational Alex Harvey Band, Deer Tick, Hugh Laurie, X, Bill Frisell, Koerner, Ray & Glover, Red Hot Chili Peppers, Nirvana (“Where Did You Sleep Last Night”, “They Hung Him On A Cross”, “Ain’t It A Shame”, “Gray Goose”), Meat Puppets, Mark Lanegan, and WZRD (“Where Did You Sleep Last Night”), among many others.

#127 pbrasseur on 06.11.14 at 9:11 am

Buying individual equities is not a recommended strategy for most people who have less than seven figures to invest.— Garth

Not recommended by who?

Warren Buffet, Stephen jarislowsky, Peter Lynch and Ben Graham disagree with you.

Own companies which grow 10% a year and over time you will average 10%.

It’s that simple.

Of course it isn’t. Most people with an overweighting in individual equities (hence, those with smaller than 7-figure portfolios) cannot stomach volatility and invariably sell the dips. You may not be human. They are. — Garth

#128 Ronaldo on 06.11.14 at 9:12 am

#100 AK –

”Spot on. We are in a (1982 – 2000) market cycle. Whatever happened to Gold during that timeframe? :-)”

Whatever happened to precious metals prices after that? Did you get in on that bull market? Probably not.

#129 TheManwhoStaresatSheeple on 06.11.14 at 9:15 am

RE #75 Big John
Note the steady rise of total employed in Canada, from 16.8 million to 17.8 million over 5 years.
=====================================
“I hate to interrupt your anecdotes with more meaningful stats, courtesy of Stats Canada, but for those who want to see the big picture….” :
CANSIM table 051-0005 – population Canada (Ontario)
Q1,2008 – 33,049,761 (12,813,807)
Q1,2009 – 33,427,285 (12,931,917)
Q1,2013 – 34,940,975 (13,474,940)
Q1,2014 – 35,344,962 (13,598,676)
Now employment figures CANSIM table 282-0011
Total “Employed”
Mar,2008 – 16,791,100 (6,560,800)
Mar,2009 – 16,501,100 (6,406,400)
Mar,2013 – 17,348,300 (6,740,800)
Mar,2014 – 17,548,000 (6,803,900)

Private sector:
Mar,2008 – 10,803,100 (4,275,100)
Mar,2009 – 10,489,500 (4,149,800)
Mar,2013 – 11,021,200 (4,330,000)
Mar,2014 – 11,228,900 (4,442,700)

Public sector:
Mar,2008 – 3,409,100 (1,292,800)
Mar,2009 – 3,395,600 (1,263,400)
Mar,2013 – 3,622,900 (1,360,500)
Mar,2014 – 3,628,300 (1,310,100)

So what was the population increase and what is the corresponding increase in “employed” (BTW not sure if you are aware but if you are laid-off and participate in one of the many courses offered by HRDC or the many non-profit agencies “qualified” to offer these courses you will be counted as “employed / self-employed once you “graduate”), the real private sector employment and the plum upper class public sector (http://www.macleans.ca/economy/business/the-new-upper-class)

#130 Derek on 06.11.14 at 9:18 am

Food for thought.

http://www.theglobeandmail.com/report-on-business/economy/housing/gap-grows-between-building-permits-number-of-new-homes-built/article19113701/

Housing is stabilizing it seems. I predict a slow melt up in price in the long run.

#131 Old Man on 06.11.14 at 9:45 am

I have analyzed the political style of Hudak and its that of a preacher man addressing his flock. The body language and speech alone gives him away in this regard. That is his real calling in life and can hear him saying pass the plate again and let us pray.

#132 Bobbo on 06.11.14 at 9:56 am

The markets will drop when the oligarchy decide to pull the rug out but only when they figure there are enough saps to rob. Some things never change.

Sounds like you have already locked in your losses. — Garth

#133 Tony on 06.11.14 at 10:09 am

Re: #123 pbrasseur on 06.11.14 at 8:45 am

You are living proof of the old adage tell a big enough lie and everyone will believe it. That’s Wall Street’s plan and you fell for it. I hope you have plenty of capital gains from previous years to write-off future losses against if you’re Canadian.

#134 Calgary Rip Off on 06.11.14 at 10:12 am

This is why people buy houses in the ripoff that is Calgary: http://www.calgaryherald.com/business/Average+rent+rises+cent+Calgary+vancy+rate+remains/9928072/story.html Rents are more expensive than mortgages, if you can find a rental.

Taxes, gas, water, sewer, its all a ripoff!!!
Soon the mayor wants to have people pay to park in front of their residence!!

Don’t come here unless you bring cash/have high paying job.

#135 willy2 on 06.11.14 at 10:14 am

– Both the EUR/Yen & EUR/USD are dropping. The MOST bearish sign EVER. (think “CRASH”).

#136 Doug in London on 06.11.14 at 10:16 am

The rear view mirror now tells us that was an outstanding time to buy into equities and dump metals. But, everyone did the opposite.
—————————————————————–
Well, not everyone. Mid summer 2011 was an AWESOME time to buy stocks or funds that invest in them. I was travelling then, and even took it upon myself to submit buy orders using the frustratingly slow internet terminal on the ferry to Newfoundland. Well worth it, despite the frustration. I figure Newfoundland must celebrate Christmas in late July or early August, as I scooped up some great Boxing Week sales back then!
So if another 2011 comes along, will you have the stones to wade in when others are fleeing? As Pierre Trudeau once said : Just watch me! The governor is fully tuned up, and the servo is ready to ram the throttle wide open if another speed drop occurs.

#137 broadway skytrain on 06.11.14 at 10:17 am

Most analysts seem to agree markets will probably finish 2014 about where they began
——————————————–
but since none of those analysts called the 50% drop in 08/09 we can conclude their calls are equivalent to a monkey with darts

Quite wrong, actually. There were clear warnings. As with the housing market now, most were ignored. — Garth

#138 JA on 06.11.14 at 10:24 am

Hi Garth. Love the blog, it has saved me from more financial trouble than I care to think about.
Just curious, do you still have your press credentials? Ever consider going to the Poloz party tomorrow to ask a few pointed questions? Or have you simply moved on from that part of your life?
Best,
J

You think they’d let me into anything in Ottawa? — Garth

#139 rosie "moving forward" in the knowledge that, "this won't end well" on 06.11.14 at 10:32 am

“This is a shared problem and you need to work together to solve it.” Personally I see this as a bank/ taxpayer problem. The deadbeats don’t see a problem. They’re not even looking.

http://www.dailyrecord.co.uk/lifestyle/property/homeowners-warned-over-debt-risk-3673837

#140 Daisy Mae on 06.11.14 at 10:39 am

#120 Mr Frugal: “I took your advise and switched my investments from GICs to a balanced portfolio.”

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

One of our council members fancies herself an ‘accountant’. We have the bulk of our contingency fund in 3-year term deposits earning 2.4%…. *sigh*

#141 broadway skytrain on 06.11.14 at 10:47 am

rosie “moving forward” in the knowledge that, “this won’t end well”
————————
you may consider changing your handle to something a little less foolish if you want ppl to look at your posts.

#142 Godth on 06.11.14 at 10:53 am

Quite wrong, actually. There were clear warnings. As with the housing market now, most were ignored. — Garth

It was all just conspiracy theory fear mongering.

There are clear warnings that manipulated markets detached from fundamentals are more dangerous than ever. Along with too bigger to fail, too bigger to jail.

There are clear warnings that neoliberal economic/political policies are disasterous to societies, ecology and the future in general.

There are clear warnings that there’s growing unrest/uncertainty with attendent militarized police to maintain order.

There are clear warnings that debt can’t grow forever.

There are clear warnings that it’s everyone for themselves.

There are many clear warnings that go unheeded until they can’t be ignored.

#143 broadway skytrain on 06.11.14 at 10:57 am

You think they’d let me into anything in Ottawa?

—————————–
try these!
http://zanyhat.com/index.php?main_page=index&cPath=71

#144 broadway sky train "moving forward" in the knowledge that,"this won't end well " on 06.11.14 at 11:06 am

#141
How’s this handle?

#145 Nomad on 06.11.14 at 11:08 am

So much easier to find value on the stock market than in Toronto housing. Just made a 25% US capital gain on a big Apple buy in 6 months (Bought at a PE of 12 when doomers where shorting it).

Moving half the money into a Europe ETF (VGK) and a US financials ETF (VFH). With the european stimulus it should be a good ride.

And buying ZPR preferred shares ETF everytime it dips. Nice stable 4.5% income stream, like Garth says.

#146 bdy sktrn on 06.11.14 at 11:44 am

#141
How’s this handle?
————————
much better but still really dumb :(

#147 brainsail on 06.11.14 at 11:44 am

“You may soon get financial advice from a machine”

http://www.cnbc.com/id/101747606

#148 pbrasseur on 06.11.14 at 11:52 am

Most people with an overweighting in individual equities (hence, those with smaller than 7-figure portfolios) cannot stomach volatility and invariably sell the dips. You may not be human. They are. — Garth

People can’t stomach volatility because they don’t understand it. What you need to do is explain it instead of saying it’s dangerous. Stock market volatiliy is normal and harmless if you own good companies for the long run. You then exchange short term volatility against long term gain and stability. Volatility is not evil unless you’re trying to avoid it by timing the market or by seeking refuge in low yied or cash. In fact volatility is good, it gives your companies investment opportunities (including buying their own shares), it gives you the chance to re-invest dividends at lower prices. It also gives you opportunities to dump bad stocks at lower prices to move elsewhere while minimizing capital gain impacts or sometimes by accumilating losses to prevent paying taxes on future gains.

No need to be ET to understand those things, people just need explaining.

Now you’ve done it. So they’ll be fine. — Garth

#149 Setting the Record Straight on 06.11.14 at 11:59 am

Anyone collecting CPP or social security which was funded while they worked is not dependent on today’s workers for that income. This is the wages of capital.

No its not. You have no contract with the sovereign, let alone capital. SS is not funded. It owns US treasuries which are not counted as debt. this is one of the unfunded liabilities of the US government.

#150 sciencemonkey on 06.11.14 at 12:00 pm

I’m a millenial and I recommend jumping in ASAP. I started investing in mid 2012, and in 2012 and 2013 I made 8% annually with a mostly CDN balanced portfolio.

This means I missed out on a lot of US growth, which is why I stress the importance of having an equity portion equally balanced across CDN, US, developed international (ex-US), and emerging markets equity.

It was only in Feb 2014 that I bought US and a smaller weighting of emerging markets. Since doing so, US is up 3.36% and emerging markets is up 9.17%. I wish I had bought equal weighting of emerging markets…

Then again, there’s always next year’s rebalance. I’m continually changing my mind on the exact mix I’d like, but here is my latest. Equal weightings in the following, with the entries at the top in open accounts:

CPD CDN preferred shares
ZDV CDN dividend equity
ZCN CDN equity
VUN US Equity (not hedged)
XEF Non-US Developed Equity (not hedged)
XEC Emerging Markets Equity (not hedged)

#151 Josh in Calgary on 06.11.14 at 12:12 pm

“You are wrong. The job loss count for the US in total was 8.8 million. With the 2.4 million replaced in the last year alone, the losses have been restored. The labour participation rate, in both Canada and the States, however, has declined. Regardless of our macro musings, the stock market has gained 188% since 2009. Did you participate?” — Garth

This seems to be a sensitive topic for you Garth. Back in 2009 I did not have a lot of cash sitting around to throw at the markets. Now I do. My goal is to get to a nice 60/40 balance as you have always suggested. However with the equity markets looking “toppy” why should I not wait for them to pull back? I’m not univested. I’ve got all my Fixed income exposure. I’ve got some equity exposure. It just seems like the greater fool thing to do to get all my cash into equities at this point. If housing is a bad investment because it went too high too fast with no fundamentals to back it, why are equities different? From most things I’ve read a lot of the “earnings” and “revenue” gains are per share numbers that execultives are juicing by buying back shares using cheap debt to cash their next big bonus. Any comments?

No. You apparently have it all figured out. — Garth

#152 Buy? Curious? on 06.11.14 at 12:14 pm

This won’t end well. This won’t end well. This won’t end well. This won’t end well.

What won’t end well? Tell us, please! WHAT WON’T END WELL?

Stop using that phrase. It’s so stupid it makes my eyes bleed.

https://www.youtube.com/watch?v=HMxwcRck9TI

#153 Old Man on 06.11.14 at 12:16 pm

Smoking Man there is a big event taking place at 6:00 PM tonight located at the San Remo Bakery 374 Royal York Road just in your neighbourhood. Get out your camera to get a photo taken with a star for a posting on your blog. Its not often I would give you an inside tip for your photo collection, so you better hurry as the crowds will be there.

#154 Capt. Obvious on 06.11.14 at 12:33 pm

@#148 Josh in Calgary

If you have a chunk of money you wish to invest and are leery of committing it all at once, I suggest value averaging. Basically it’s a variation on dollar cost averaging where you adjust your periodic investment in dollars to maintain a trend in overall invested dollars. In other words, if markets fall you commit more in the next period, and less if markets rise, to maintain the trend. Theoretically it is at odds with the general observation that markets rise over time (and more specifically that a large portion of the long run return from equities come from a small percentage of the trading days) so the best time to invest is today, but it may make you sleep better.

#155 Mountain man on 06.11.14 at 12:34 pm

What’s the outlook for Edmonton? Prices keep rising. Many people say houses are overvalued and will come down, but they’ve been saying that for 5 years and they’ve always been wrong.

#156 Smoking Man on 06.11.14 at 12:35 pm

Old man, I’m fighting a cold from another planet..

I’ll be counting sheep with intermittent volleys of violent coughing spasms at 6pm

Go on my behalf, take the photo, and I’ll photo shop me in.

#157 Mountain man on 06.11.14 at 12:39 pm

When interest rates increase, the logic is house prices will drop somewhat. So, wait for rates to rise and subsequent drop in house prices before buying? Is that logical…sure, you’d probably get a house for *maybe* 10% less, but your mortgage rate would be higher, so the benefit of waiting to buy a cheaper house would be rendered somewhat less beneficial due to the higher interest rate on your mortgage. I’m curious on others take on this.

#158 SE Asian Expat on 06.11.14 at 12:39 pm

Looks like an uptrend for both China H and A shares recently after years of dismal returns.

#159 Capt. Obvious on 06.11.14 at 12:41 pm

@ #147 pbrasseur

A small portfolio is more subject to catastrophic loss, which an investor may not have time to recover from. Even Buffet is quick to point out that most people are best served by indexing the market at lowest possible cost.
Personally I believe it is very difficult for an individual selecting stocks to do better than an index over a very long period of time.

#160 dontcallmeshirley on 06.11.14 at 12:41 pm

Garth,

I want to retire this year, and require a $3500 per month cash flow (after tax) to do so.

How much money would I need to have in a portfolio, managed by you folks on King St, to get the cash flow I need?

#161 Ralph Cramdown on 06.11.14 at 12:46 pm

No correction.

I know, that’s a really stupid call to make, because corrections are thought by most people to be completely unpredictable (the standard deviation of the time between them is more than the average of the time between them…)

But hear me out. If I could sum up sentiment in one phrase, it’s “low expectations.” Sure, most investors are bullish, but there’s plenty of cash in investors’ accounts and in corporate coffers. Companies are just now starting capex after years of running below capacity, so we’re told. And the S&P has already hit most analysts end of 2014 estimates from last December, see here). What are they going to say now? We was wrong on the low side? We was right, and the market will be flat between now and the end of the year? Nope, they’ll say “down, then up” even though this seems less likely than the alternatives.

Back in March, an NBC News/Wall Street Journal poll of American adults found that 57 percent still think the economy is still in recession. As you point out, their economy has been generating about double the number of jobs needed to keep up with population growth for over a year, and this is widely expected to continue, yet morons like Paul Craig Roberts manage to convince gullible people that this isn’t good news. Among the optimists who have so far been sitting out this bull, an increasing number are waiting for a correction to get their money in. Since the market is good at making fools of the greatest number of people, no correction for them.

Josh Brown has an interesting theory called the relentless bid. All those Bogleheads, indexers and people in fee accounts aren’t trading, they’re just buying the market. Low volatility, low volume and a slow but relentless upward march ensue. And what about the 1%? They’re apparently getting the lion’s share of wealth increases, and a lot of that probably goes into stocks.

Every emerging market crisis, every war and rumour of war, every fine calibration by the ECB to figure out the minimum possible action and then do a little less than that, all moves international money to the US as the least bad option. Every bond market rally causes rebalancers to move more money into stocks. And sooner or later, Americans are going to start buying new houses again.

Look at all the bad news — some of it even true — spouted by doomers on this blog and elsewhere, and look how little it has affected US stocks. There’s been plenty of stuff to trigger a correction, were the market so inclined.

#162 Johansen on 06.11.14 at 12:49 pm

The rise in stocks is all paper gains. Can everyone sell at once? Only realize the gains when sold and when is that supposed to happen if you buy and hold?

Sounds like a Ponzi scheme to me where those that get in first try to manipulate others to buy later.

RE wealth is proven over millennia.

#163 bk on 06.11.14 at 12:53 pm

“If you’re sitting on piles of cash earning nothing afraid of this ‘volatility’ you’re a bigger wuss than I suspected. — Garth”

damn it…I was just following your advice! Thanks for the reply though.

The advice is not to buy nothing in a balanced portfolio because you are concerned about one or two assets. — Garth

#164 Alex on 06.11.14 at 1:22 pm

Garth … I’m 35 with 40k invested only in Bank of America with a 5-7 year hold plan. Not all of us young cats are wusses. See ya at $33 a share with a $1.25 div paying in US dollars. Don’t bet against Uncle Sam and it’s recovery

Everything in one stock? That’s gambling, not investing. — Garth

#165 Ralph Cramdown on 06.11.14 at 1:34 pm

#156 Mountain man — “…sure, you’d probably get a house for *maybe* 10% less, but your mortgage rate would be higher, so the benefit of waiting to buy a cheaper house would be rendered somewhat less beneficial due to the higher interest rate on your mortgage.”

In the US, with a mortgage rate fixed for 30 years, that makes more sense. Here, having to renew every five, wouldn’t you rather have a payment more likely to go down at renewal than one more likely to go up, especially if you’re near the limit of affordability and not expecting big salary increases?

As well, you can pay off a mortgage faster by making extra payments. This works a lot faster on a smaller mortgage at a higher interest rate than it does on a larger one at a lower rate.

That, and I’m not a big believer in a minor correction. Should one start, there will be lots and lots of layoffs in construction and finance, and things will snowball.

#166 Alex on 06.11.14 at 1:37 pm

Investing on a huge American recovery and the biggest bank represents that.

#167 Rabbit One on 06.11.14 at 1:54 pm

>#164 Ralph Cramdown

It would be nice to have lower house price and low mortgage rate, but definately beneficial to get lower (realistic) house price first.

With house cost, for example, 15 times your household income, you probably cannot accelarate your payment anymore, even historical low mortgage rate, you are at the edge already. The best you only can cruise, or keep refinancing to keep up with ownership cost.

If you buy, for example, 5 times household income house with high mortgage rate, say 10%, tight cash-flow maybe, but you still have a room to make reasonable and efficient pre-payment sometimes or accelerate payment during the amortization period.

My belief at this point of the market, is not about cash-flow (= mortgage rate) , but it will matter more about dollar amount you are paying against the assets.

#168 Victor V on 06.11.14 at 1:58 pm

Mortgage wars heat up as Oliver defends ‘hands-off’ approach

https://ca.finance.yahoo.com/blogs/balance-sheet/joe-oliver-called-hands-off-approach-mortgage-wars-154847058.html

The race for cheaper rates began again in March, on the cusp of the crucial spring selling season, when the Bank of Montreal dropped its 5-year rate below 3 per cent for the first time in a year. The last time the bank made that move, then finance minister Jim Flaherty was critical calling for “responsible lending” amid worries it would heat up an already precarious housing market.

New finance minister Joe Oliver has taken a more hands-off approach, saying he wouldn’t intervene in the recent rate sale.

It’s a decision Sun Life Global Investments Inc. chief investment officer Sadiq Adatia is calling a “mistake.”

“The old finance minister never would’ve allowed mortgage rates to go down,” Adatia told Bloomberg News. “He would’ve stepped up to do his part. The new one is more hands-off, and that’s actually a mistake.”

He said the housing market is poised for a correction, citing high consumer debt and an unemployment around 7 per cent.

“We need deleveraging to happen,” Adatia told Bloomberg. “You need rates to go up to slow down purchasing and for people to realize we’re in a rising interest rate environment. We’ll see a pullback in real estate of 10 to 15 per cent, but if we see rates stay low, we could see an even harder landing next year.”

#169 Kevin on 06.11.14 at 2:02 pm

@R (#30)

The information available from most banks (re:TFSAs) is woefully inadequate at best

Hogwash. Every one of the major banks has an easily found page that fully explains TFSAs, and every one of them very clearly says that you can hold not just cash, but the same types of stocks, ETFs, and equity instruments that you could hold in an RRSP.

Just Google for things like “Scotiabank TFSA FAQ” or “BMO TFSA FAQ” or “Royal Bank TFSA FAQ.”

Don’t say the information available is “woefully inadequate.” It’s not. It’s thorough and trivially easy to find. The problem is people are lazy.

#170 no sandwich for lunch on 06.11.14 at 2:35 pm

A collapse is wanted by the media to stem the boredom, the likelihood of a collapse happening is no where on the horizon. There will have to be a capitulation to the upside…the same as a capitulation to the downside when the markets implode…so far that has not happened…barely any retail investors are in the market…hence low volume…hence no fresh meat for the short ssssssellers.

Sure…everyone wants a lower entry point…woulda shoulda coulda…….wahhhhhhh…but it ain’t gonna happen….same whine with real estate….the slowest losers are the loudest cry babies. As G has just pointed out…the internals of the market are on a tear….don’t fight the tape.

Canadian energy co’s…..should be thanking Al Qaeda in Iraq for the latest upswing in oil prices…..after the Libyan/Egyptian debacles we’re back to being the only safe game in town….. so money is flooding in. Obama can’t keep us out as he has planned to do for the sake of underwriting Buffets 15 billion foray into bird killing wind turbines. Canadian oil is getting out and we’re profiting from the expansion. ….buy CDN energy co’s….we ain’t seen nothing yet.

I have always thought that Canadian investors are held back by the lack of positive media coverage of our strengths…..the leftists only want to focus on what they can do to wreck the economy. The probate on our dearly beloved ex finance minister is a case in point that delves deep into the mindset of civil servants……they have no incentive to save. And because they top brass don’t understand saving…it is reflected in legislation that harms us all.

http://news.nationalpost.com/2014/06/11/former-finance-minister-jim-flahertys-will-reveals-relatively-modest-net-worth/

#171 Ralph Cramdown on 06.11.14 at 2:41 pm

I own too many different stocks. Alex doesn’t have that problem.

I also own a few passively managed funds, meaning I undoubtedly own some no-hopers, some frauds, some wildly overpriced companies and some that are going to zero. Alex doesn’t have that problem, either.

There’s few better ways to guarantee underperformance than to halfheartedly analyze a security and finish up with “and if it doesn’t work out, it’s only 3% of my portfolio.” Alex probably doesn’t have that problem, either.

Warren Buffett said most people would probably be better investors if they got a lifetime ticket to punch every time they bought a security, an it could only be punched twenty times. Concentration concentrates the mind! I can think of a few companies I’d be willing to own if I could only own one, and I’d feel safer that way than if all my assets were invested in one house with a mortgage payment higher than I could rent it for.

All you indexers out there, keep in mind that it’s people like Alex who set the prices on all the securities you own, and you’re just along for the ride.

#172 Shawn on 06.11.14 at 2:49 pm

How Much Do I Need?

Dontcallmeshirly at 129 asks:

I want to retire this year, and require a $3500 per month cash flow (after tax) to do so.

How much money would I need to have in a portfolio, managed by you folks on King St, to get the cash flow I need?

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

Well, it depends…

Are you willing to have the portfolio deplete over time to zero at say age 90?

How many years away is that?

Is the money in an RRSP and therefore taxed at margineal rate, in this case you need more.

What will your marginal tax rate be? depends on province and other income you have.

BYou probaly need somewhere between half a million a nd $1.4 million.

4% yield on something taxed at 25% and with no drawdown of principle will need $1.4 million.

What difference what you need? If you want to retie this year then instead look at what you have or can get and calculate what it can produce.

The market does not care how much you “need”.

#173 OttawaMike on 06.11.14 at 2:55 pm

#160 Ralph Cramdown on 06.11.14 at 12:46 pm

Difficult to rebut.
A very convincing editorial Ralph.

#174 Josh in Calgary on 06.11.14 at 2:55 pm

“No. You apparently have it all figured out.” — Garth

Thanks! Unless of course you were being sarcastic … which I’m inclined to believe you are. Seriously though, I’ve been grappling with the idea about turning more cash into equity exposure, but even the GREAT Garth is seemingly becoming little b bearish. It’s just starting to seem inevitable that the markets let off a little steam and soon. I know it’s a mugs game to predict tops and bottoms, but I do want to try not to get suckered in to buying during the euphoria stage of a market. Smart money invests when a 2008 type crash happens so you get that 188% you spoke of. Rather than investing heavily in 2007 to wring the last 10% out of a bull market.

#175 Josh in Calgary on 06.11.14 at 2:59 pm

#153 Capt. Obvious,
Thanks for the advice … I would point out that the opposite is actually true as well. A large portion of all loses can be traced back to a few trading days as well. I’ve heard it phrased that your biggest “gains” come from avoiding the big drops rather than predicting the big rallies. Lots of people advocate waiting out the top of the market (even a year or two too soon) so you have lots of dry powder to invest when markets crash.

#176 devore on 06.11.14 at 2:59 pm

#53 RealCanadianSavings

There is a lot of market timing on this blog, how about some dollar cost averaging for a change?

Hmm? Maybe you are refering to some of the comments of wannabe daytraders?

Garth is highlight long term trends, which are always changing, and which you need to consider in order to balance your portfolio to take advantage of and not be under the bus. This is something a financial adviser is doing for you (ideally). If you want a hands off passive approach, go to Canadian couch potato, pick a model portfolio, and be done in 5 minutes. A hands off investor will be leaving lots of money on the table though, vs a deliberate active manager. You can believe the claptrap about a monkey throwing darts at a market index outperforming most funds and managers, or you can open your eyes and consider all options available to you.

#177 Shawn on 06.11.14 at 3:02 pm

Canadians Invest a pile in houses

A statistics Canada report today indicates that in 2013 Canadians invested $106 billion into the housing stock (new builds and renovations of single and multi-family housing.).

Meanwhile $3 billion of houses were torn down.

And the esxisting stock of houses suffered $42 billion in depreciation. (Depreciation is not something that most home owners and real estate investors would admit is a real cost as it can often be more than fully offset by a rise in market values)

The value of all the housing stock at year end 2013 was estimated at $2096 billion. (By compariuson you the value of all the stocks on the TSX is about $2500 billion).

Statistics Canada:

http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0300002&paSer=&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

It’s interesting too think about the housing “stock”. The economy has a stock of housing and a stock of infrastructure that is far far larger than total debt.

#178 Shawn on 06.11.14 at 3:06 pm

Leverage on Houses

Is a house a leveraged investment?

That depends…

If bought with a small downpaymeent and then sold within a few years it is certainly a leveraged investment.

The equity in the house will be leveraged up or down in a dramtic way if the house value changes by say 25% up or down.

If a house is bought and then paid off over 25 years then ultimately that was not a leveraged investment.

For boomers with a paid off house where most of their equity gain is unrealised (they did not previously realise gains on past houses but stayed put and paid off a house) there was ultimately no leverage in the house investment. There was for a while but eventually the debt was paid off. No more leverage.

#179 NotAGreaterFool on 06.11.14 at 3:07 pm

Quotes today in MSM re: Joe Oliver:

Joe Oliver’s hands-off stance on mortgages a ‘mistake’ in overheated market, warns Sun Life

“I don’t think it’s the role of the government to set mortgage rates” said Joe Oliver

Let’s wait and see what the Poloz says tomorrow.

Me thinks: It’s getting very difficulat to engineer the (desired) soft landing. If things correct, it will be much steeper than the modest 10% Bank economist predictions. Look out below!

#180 pbrasseur on 06.11.14 at 3:08 pm

@Alex

BAC is a good pick (and you’re likely to succeed) but a safer strategy would to get 6 or 7 good stock within S&P 500.

Warren Buffett said— ‘Diversification is protection against ignorance. It makes little sense if you know what you are doing.’

The question is do you really know what you are doing?

#181 Shawn on 06.11.14 at 3:10 pm

Understanding Debt

The average reasonably successful plebe sees debt as something to pay off.

Corporations see debt as something to be “rolled over” and something that will increase as the corporation grows and that will never be paid off.

Countrys see debt as the same way, as something never to be paid off.

Many rich entreprenuers got rich through leverage, another bunch went broke.

Poor people would like to pay off debt but can’t and face society’s highest interest rates.

Is it then any wonder that the average plebe does not understand why countries and corporations do not even try to pay off their debt?

#182 devore on 06.11.14 at 3:20 pm

So… buy gold and sell stocks?

Just because gold happens to be down at the same time as equities are high, does not mean what you are saying. Even a cursory glance tells us gold does not move with equity cycles. It is a purely speculative asset subject to completely different forces.

#183 pbrasseur on 06.11.14 at 3:21 pm

Everything in one stock? That’s gambling, not investing. — Garth

If it’s an excellent company how is it worse than an entrepreneur using all he or she has to start a business?

Either way it is good to remember this: Only businesses create wealth, no other entities can do that. This is why they will alway be the best investment.

Your dumbest comment to date. An entrepreneur controls his enterprise and destiny. A person putting his whole wad into the stock of a company he has zero influence over (in another country) is gambling. — Garth

#184 gyga on 06.11.14 at 3:22 pm

Not sure if it’s been posted

http://www.ctvnews.ca/business/canadians-vulnerable-to-correction-in-overheated-housing-market-oecd-warns-1.1863647

#185 Basil Fawlty on 06.11.14 at 3:26 pm

“The charted gains are irrelevant if you did not crystallize them, as I urged at the peak. Did you? — Garth”

You urged selling gold at $900. Some peak!

$1,900 actually. I gave you that advice. — Garth

#186 devore on 06.11.14 at 3:28 pm

#84 vancouverthunder

Layoffs at Bank of America Corp’s mortgage business will amount to about 2,100 positions, a source told Reuters on Monday, in response to weak refinancing activity.

They know something you don’t. Americans refinance, because a) they can, b) it is tax advantageous to do so, as mortgage interest is tax deductible. But what has been the theme recently? Low rates not getting any lower, and US households deleveraging, not taking on more debt that will get rolled into the mortgage next year.

#187 Big D on 06.11.14 at 3:29 pm

Hey Garth, I’ve asked the question below a few times, but you haven’t commented and would really like your opinion.

If I have $50,000 in cash, should I max out my TFSA first and put the rest in a Non-registered account to invest? (43 years old, based on total portfolio of $230,000, with $15,000 in TFSA, balance in RSP of DC Pension)

Or should I max out the RRSP and take the proceeds from the tax deduction and then max out the TFSA?

Max the TFSA then start a non-registered account. — Garth

#188 Old Man on 06.11.14 at 3:41 pm

There is an opportunity of a lifetime for those that have portable occupations. Blow off the $1 million plus home and look at the tax free net for travelling money. Lets assume $600,000 for get away loot and move to a small town environment that has it all including an equal home for $250,000. You pay all cash with no mortgage leaving $350,000 to invest – enjoy the good life because this can be done.

#189 gyga on 06.11.14 at 4:15 pm

#187
Same here
If you have a SDH in GTA consider it a lottery winning, sell, get the money and run))
Let those greater fools deal with it
Invest, travel, enjoy life
Buy something cheap 2-3 hours drive from this GTA village

#190 Shawn on 06.11.14 at 4:21 pm

RRSPS Rock

Max the TFSA then start a non-registered account. — Garth

***************************************
I must disagree. TSFA is probably first but is followed closely by RRSP and RESP is also great if applicable.

Low income should avoid RRSP but that won’t be an issue sine they will seldom be able to max the TFSA.

Almost no one still working would have any money left for non-registered after doing TFSA, RRSP and if applicable RESP. But if they do, then, by all means.

One huge advantage of RRSP is it will usually be treated as untouchable until retirement. TFSA will get spent nine times out of ten well before retirement.

He said his other wealth is in a group RRSP. Having all his money registered is a big fail. And so is your advice. – Garth

#191 devore on 06.11.14 at 4:23 pm

Of course it isn’t. Most people with an overweighting in individual equities (hence, those with smaller than 7-figure portfolios) cannot stomach volatility and invariably sell the dips. You may not be human. They are. — Garth

Neither do they have the knowledge, skills or time to do the research, analysis and forecasting to pick individual stocks, then to keep tabs and follow up regularly.

#192 Inglorious Investor on 06.11.14 at 4:32 pm

#181 devore on 06.11.14 at 3:20 pm

“Just because gold happens to be down at the same time as equities are high, does not mean what you are saying. Even a cursory glance […] subject to completely different forces.”

Not that I totally agree with you, but I was being facetious, as we all know how much Mr. Turner loves to hate gold.

#193 Alex on 06.11.14 at 4:36 pm

I feel that if America is dead then so is my investment. In general putting all your eggs in one basket is not a winning formula but there are exceptions that prove the rule.

#194 Alpin Weiss on 06.11.14 at 4:37 pm

Buy and hold will work. Patience is key and drip the dividend on the BLUE CHIP.
Bristol Myers Squibb…Held 11 years, no regrets.
Bought CSCO 2 years ago and dripping away for the “Internet of Everything “. Plan to hold till I die.

#195 Teacher's Ass-istant on 06.11.14 at 4:38 pm

#103 Retired Boomer – WI

Thanks for your opinion. Appreciate it.

#196 Yogi on 06.11.14 at 4:40 pm

#160 Ralph Cramdown

Look at all the bad news — some of it even true — spouted by doomers on this blog and elsewhere, and look how little it has affected US stocks. There’s been plenty of stuff to trigger a correction, were the market so inclined.

Look at all the bad news — some of it even true — spouted by real estate doomers on this blog and elsewhere, and look how little it has affected Vancouver/Calgary/Toronto housing prices. There’s been plenty of stuff to trigger a correction, were the market so inclined

#197 Inglorious Investor on 06.11.14 at 4:44 pm

#176 Shawn on 06.11.14 at 3:02 pm

“(Depreciation is not something that most home owners and real estate investors would admit is a real cost as it can often be more than fully offset by a rise in market values)”

Real estate investors know that depreciation is real. The structure depreciates and the land (usually) appreciates. This is why IMO individual condo units are not true ‘real estate’––they have no land.

#198 Inglorious Investor on 06.11.14 at 4:47 pm

#177 Shawn on 06.11.14 at 3:06 pm

“[…] there was ultimately no leverage in the house investment. There was for a while but eventually the debt was paid off. No more leverage.”

Just because the debt was eventually paid, does not mean there was no leverage.

#199 Shawn on 06.11.14 at 4:49 pm

Disagree

He said his other wealth is in a group RRSP. Having all his money registered is a big fail. And so is your advice. – Garth

*****************************************
No group RRSP here, two self directed RRSPs worth $1.2 million out of $130k invested. RRSPs were started 1989.

Also have (very) fat RESP

Also have unregistered money in a corporate account to shelter that.

Had little left for TFSA at this time.

If that’s a fail, more people should fail.

Also have major insecurity that you have to broadcast your wealth on a blog. — Garth

#200 Old Man on 06.11.14 at 4:50 pm

I know of a small town gem 50 miles from Toronto with a population of 12,000 that has it all. I took a look and at any price there are virtually no listings as you could count them on your hands. What does that tell you? No listings as all are happy in paradise, but there are others as know of dozens.

#201 Capt. Obvious on 06.11.14 at 4:57 pm

@#161 Johansen

You apparently do not understand what a stock is. A stock falls towards zero before being halted (subsequently followed by the company going into bankruptcy protection) precisely because everyone understands that once a company is no longer a going concern there will be no earnings available to the stock holders. Everyone IS trying to sell in that scenario. This isn’t difficult to understand. If a company has positive net earnings, or people believe it will have, people will want to own shares to have a claim on those earnings.

The only argument for not owning stocks is you believe the economy will not grow over the long run. If you believe that, well, prepare for a lot of unemployment and stock returns will be the least of most people’s problems.

#202 Shawn on 06.11.14 at 5:03 pm

Also have major insecurity that you have to broadcast your wealth on a blog. — Garth

Maybe so, but in a discussion of how to build wealth it seems relevant to know what a person has accomplished.

#203 TheCatFoodLady on 06.11.14 at 5:04 pm

#168 – Kevin:

Our bank – CIBC is deliberately vague about TFSAs. They give you a nice list of what you can buy, (their products of course):

https://www.cibc.com/ca/investing/tfsa.html

then, if you go to their FAQ question about what you can invest in TFSAs; they respond thusly:

***Eligible investments that you can place in your TFSA portfolio include cash deposits, GICs and mutual funds (similar to what’s available for RRSPs).***

No mention of equities, etc. Ask the question & you’re beamingly steered towards their equity mutual funds – preferably managed.

#204 eddy on 06.11.14 at 5:22 pm

Led Zep plagiarized seventeen songs, including their not-so classic Stairway To Heaven (lawsuit currently underway)
—-

And it took 43 yrs for the ‘composer’ to act?
If it’s the guy from ‘Spirit’ it’s a stretch, there is a distinction between riffs, licks, scales, etc and songs.
I read that Willie Dixon sued Page and won.

apparently all songs are the same:
Can you imagine 30 million youtube views?

http://www.youtube.com/watch?v=5pidokakU4I

#205 Shawn on 06.11.14 at 5:49 pm

Insecurity Explained

It seems biological.

In order to impress females, the male is programmed to show off the size of his relevant asset(s) (and a house, car, income or portfolio may be a relevant asset these days, among others).

#206 bdy sktrn on 06.11.14 at 6:14 pm

#172 OttawaMike on 06.11.14 at 2:55 pm
#160 Ralph Cramdown on 06.11.14 at 12:46 pm

Difficult to rebut.
A very convincing editorial Ralph.
——————————
yes, brilliant, ol’ralphie knows his stuff. he should be on cnbc, he makes more sense than anybody else there.

now how to we get him to share his stock pics?

you could do worse than b of a. outside of financials i like costco, coke and jnj, with a splash of google.

#207 Joe2.0 on 06.11.14 at 6:20 pm

Garth a little confused why you deleted yesterday’s post.
I had previously included a Government document News release.

Regarding the New Immigration Pilot program that’s coming in the near future, the following numbers are just regarding Chinese investors.

Does it not make sense that if there are 17000 listings in Vancouver and if the program lets in 30-40 thousand wealthy Chinese investors(2013 stats) and 30-40 thousand students 2013stats) that housing prices and rental prices will go up in desirable city’s like Vancouver?