The fork

FORK modified

It’s time for a refresher course on how to survive what comes next.

If recent events don’t have the little hairs on the back of your neck (little hairs anywhere, actually) standing erect, you’re not paying attention. The job numbers on Friday were stunningly bad. More jobs punted in the private sector than ever before. Eleven thousand positions gone overall. Ninety thousand people becoming ‘self-employed,’ – which means they’re trying hard not to be unemployed. The rate of labour force participation pooping.

Remember what I wrote yesterday about deflation in Europe? This is how it starts. Fewer jobs, less spending, lower profits, then reduced wages, falling prices and even fewer jobs. It’s a cycle, which central bankers are trying to prevent. They may or may not succeed.

Deflation, by the way, is hell. Way worse than inflation. Incomes fall along with prices and asset values (houses are most vulnerable), but debt levels remain static. Suddenly people owe just as much, but they own less and have reduced means to pay. It’s what turned the inflationary, speculative, real estate-horny 1920s into the Dirty Thirties when unemployment in Canada spiraled to 30% and houses could be bought for 10% of previous values.

That’s unlikely to happen, of course. But we might get deflation-lite. That means a few years with scant new jobs, no income growth, rising debt followed by a painful move in house prices.

And there’s more to worry about. The dipstick running Russia, for example. The jerks cutting off journalists’ heads in Iraq and Syria. Terrorist threats against the US, Britain, us. More ice storms, polar vortex, extreme weather and economic consequences this winter. The US elections this autumn. Derivatives. Ebola. Miley Cyrus. It’s a long, ugly list.

That’s why this pathetic blog is always moaning about mitigating risk through diversification and balance. That means not putting all of your net worth into a house (hence the Rule of 90), and not investing all your savings in three or four stocks – no matter how sexy or blue they are. It’s why I wrote about Jason a few days ago buying a $1.6 million house (the offer was accepted yesterday, by the way) with the intention of paying for it with cash, then removing 65% of the equity through a LOC, investing it, and creating a fat little tax deduction at the same time. That’s smart. Happy spouse. Acceptable risk.

Anyway, here’s what ‘balance’ and ’diversification’ mean when you invest.

Since nobody actually knows what’s coming, which fork in the road we’ll careen down, wise people own both debt and equity. In this case ‘debt’ means fixed income assets – safe stuff that pays you regularly to own it. That would include marketable bonds and preferred shares, for example. As I’ve indicated in the past, a good mix for the 40% fixed-income portfolio of a balanced portfolio might be 3% government bonds, 5% corporates, 3% real return bonds, 6% high-yield and 18% preferreds in the big banks.

On the growth side, a mix of commercial real estate (for cash flow) and equity exposure (for capital gains) in the form of exchange-traded funds. The brew here might be 4% REITs, 12% Canadian stocks (8% large cap, 4% small cap), with US exposure at 18% (large cap 8% and the rest spread over medium, small and micro-caps, depending on the portfolio size) plus 17% international (large cap EAFE in US and Canadian funds, and large cap emerging markets), then 5% in cash (a defensive asset) and nine or 10% in alternative assets, such as a completion ETF or sector funds.

The theory is simple: when stocks correct money flows into fixed income, raising values and offsetting equity losses. When stocks rise the fixed income still pumps out interest and dividends. Meanwhile the REITs also offer steady distributions, and potential capital gains. This portfolio should generate close to 5% from the safe stuff – or 3.5% when expressed as a return on the entire portfolio – so the equity gains need not be aggressive to achieve an overall return in the 7% range.

And what of crises? In 2008/9, when stock markets shed 60% of their value, this portfolio dropped 20% – and recovered fully within one year. It took the Dow and the TSX (and equity mutual fund investors) about seven years to get the cash back. Over the last decade, which includes the worst market crash in 80 years, this balanced, diversified account has yielded an average of 7.3%. Build it carefully. Stand back.

Of course, it needs rebalancing every few months, which separates the men from the sheep.

How to do that? Come back on Sunday.

Right now I’m off to buy tuna, toilet paper and ammo.

213 comments ↓

#1 Retired Boomer - WI on 09.05.14 at 6:47 pm

Very good, and helpful advice. BUT, who but the converted will listen? Italians love pasta (and RE) won’t.

So much for diversification, and the Atkins diet.

We NEVER know what lies ahead of tomorrow. Hell, we can’t even see tomorrow yet. What worked yesterday, might not today, and who knows what works to grow your wealth tomorrow?

So much for the toilet paper, ammo and Tuna, all useful, but only one is consumable.

By the way, here’s a riddle:

A home isn’t edible, but I know how one can be ‘consumed’ by one -Guess-

#2 JRH on 09.05.14 at 6:51 pm

Don’t forget a good dog !

#3 #ISISChallenge on 09.05.14 at 6:51 pm

Hey, with interest rates looking like they will rise sometime next year, what is the best play for bonds? Should you stay short or find a medium term, laddered corporate or government bond? If the rate goes up say .25%, what kind of price effect would that have on bonds?
Thanks for the input.

Bond ETFs will ladder for you. — Garth

#4 WornBuffett on 09.05.14 at 6:56 pm

How come no gold Garth?

#5 Ben on 09.05.14 at 7:02 pm

What was the support ratio when unemployment was 30%? If you take into account the drag of all the olds not earning and needing healthcare/pensions I’d say we are heading into a similar place even if unemployment stays around 6%. And that’s before all the boomer plans evapourate because they can’t downsize *and* make a killing farming the kids.

#6 totalinvestor.com on 09.05.14 at 7:05 pm

“Right now I’m off to buy tuna, toilet paper and ammo.”

The first two can still be purchased at low prices.

http://postimg.org/image/goz6rn0ob/

#7 Ben on 09.05.14 at 7:06 pm

ps Garth I’m looking into citizenship. Should have it lined up nicely in time to know whether house prices will tank or not. If they go up more I’ll walk away, not because I can’t afford it but because I know it won’t be a land of opportunity for my kids but rather a re-run of the total mess the UK has become. And I don’t want them to grow up in that stagnation.

#8 TheManWithNoPlan on 09.05.14 at 7:11 pm

I was at the Credit Union the other day and they have a big poster that shows why you should diversify. It has a bunch of different products and how they performed year-over-year. For example emerging markets, bonds, nasdaq etc.

So what I am asking the crowd is there any resource that teaches you what happens to bond prices when interest rates go up or vice versa?

What is the point in investing in different market caps and so forth?

#9 Suede on 09.05.14 at 7:12 pm

Other assets in a balanced portfolio breakfast:

Art
Classic cars (especially the Ferrari that just sold for $33M)
Spouse that pays dividends with awesome dinners
Tickets to champions league finals

#10 El Barto on 09.05.14 at 7:23 pm

Excellent advice Garth!

The only thing I might add (based on information previously posted on this blog), if I was doing in all over again, would be to treat all of my family accounts as one big mutha’ of an account. Put bonds or anything that pays interest in TFSAs (both mine and the wife’s), put the US and international stuff in RRSPs so there’s no tax withholding on foreign dividends, and put Canadian dividend stuff in the taxable accounts once a person hits tilt on their TFSAs and RRSPs. I usually rebalance to bring everything back into whack when the particular asset class deviates more than 2.5% off the target mix, or when the asset goes significantly above or below the 200 day moving average.

I took a little Excel course on line at our local library and built a handy dandy workbook that allows me to track overall networth, monthly spending, income from rental properties, ETF type and price range, MERs, ETF yields, overall asset mix, asset class, has adjustable inflation rate, a linked rate of overall return, inflation rate, and cashflow based on drawdown over a 30 year period. I’d gladly share it as a downloadable google spreadsheet document link if anyone would feel it would be helpful for their own situation… just my way of givin’ back to the blog that’s been so helpful for many of us.

#11 Ole Doberman on 09.05.14 at 7:24 pm

US jobs report was also abysmal yet the DOW went up today.

I think a 1987 style crash could be at hand.

Is anyone else buying gold?

#12 Tudor on 09.05.14 at 7:38 pm

The equity allocation suggested above seems a bit odd. If the goal is to minimize risk, Rick Ferry did a neat effcient frontier analysis betwen US stocks and International stocks:
http://www.rickferri.com/blog/investments/foreign-stocks-for-the-long-run/

For the long term, risk is minimized by allocating slightly more to US funds. Also, why alocate so much to Canadian equity when you mentioned earlier that Canadian stocks represent only about 4% of the global stock offerings?

Currency risk, for starters, plus commodities and a world-class financial system. — Garth

#13 JSS on 09.05.14 at 7:39 pm

“Right now I’m off to buy tuna, toilet paper and ammo.”

If it’s any consolation, tuna and toilet paper are on sale at Superstore this weekend. Just check this week’s flyer.

I’m not sure where the best deal is to get ammo.

#14 Realties.ca » The fork on 09.05.14 at 7:40 pm

[…] Source: http://www.greaterfool.ca/2014/09/05/the-fork/ […]

#15 Natalie Ivenwitz on 09.05.14 at 7:43 pm

The real estate market in Canada will never collapse because the demand by immigrants for housing in world class cities Toronto and Vancouver.

I think it’s pretty good here. Of course I was born in Canada and lived here all my life in Toronto. Toronto is the best city for education, healthcare and advancing your career so I don’t see how American tin foil Alex Jones will impact the economic progress of Canada.

Women in Canada are hotter, smarter, richer and independent than uneducated illiterate women abroad- which is why those 3rd world countries remain poor because the patriarchy oppresses the women.

By 2020, there will be no economic collapse. The poor and misogynist unemployed men can blame women for all of their problems, but Canada’s economy will remain stable.

Prime Minister Stephen Harper is doing a good job in preventing the exploitation of women and focussing more on holding the losers misogynist men accountable for their perverted fantasies on adult prostitutes. Education is the key to success and I trust that Harper will navigate through any man-made recession like he did in 2008.

Trollette. — Garth

#16 Mark on 09.05.14 at 8:03 pm

Mild deflation? After a debt binge and housing price bubble that has no precedent in history?

#17 Guy on 09.05.14 at 8:03 pm

Good stuff. Those are real solutions. Thank you.

Now with a country with the potential of Canada, how do we get back in business?

#18 Mark on 09.05.14 at 8:07 pm

“For the long term, risk is minimized by allocating slightly more to US funds. Also, why alocate so much to Canadian equity when you mentioned earlier that Canadian stocks represent only about 4% of the global stock offerings?”

Over the long term, stock market returns are similar in Canada and the USA (Canada tends to do better in rising rate environments, the USA tends to do better in long-term falling rate environments).

Additionally, Canadian stocks provide tax-preferred dividend income by way of the dividend tax credit for eligible dividends. While US stock dividends are taxed at full marginal rates for Canadians. Since dividends are half of the long-term total return, this can lead to a fairly wide differential in overall tax rates between Canadian and US-based investments.

Diversification internationally is important (and the US is just one chunk of “international”), but having a heavily Canadian portfolio isn’t the end of the world either. Its far more important to be diversified amongst asset classes, than it is to fret about whether you should have 55% or 65% of your equity portfolio invested in Canada.

#19 Ben on 09.05.14 at 8:09 pm

> The real estate market in Canada will never collapse …
> Women in Canada are hotter, smarter

Boy that’s the kinda dumb you can’t teach.

#20 Mark on 09.05.14 at 8:09 pm

“Is anyone else buying gold?”

Nope, and I don’t even own an ounce of the stuff. But gold/silver miners are trading at far less than stated book values, which, themselves, are quite conservative. You can make an awful lot of money over the medium term by buying out-of-favour asset classes, and waiting for them to come back into favour.

#21 Darvinius Jones on 09.05.14 at 8:10 pm

Question for the Greater Fool community:

I live in Washington State, and every time I come to B.C., I am utterly amazed at how:

1) Every truck on the road seems to be from a furniture company, a roofing company or a landscaping company;
2) Every ad on the radio seems to be mortgage or housing related;
3) Every advertising sign I see seems to be from a real estate agent.

This is in shocking contrast to the U.S., and even to the U.S. circa 2006.

My question is: does anyone have any reliable statistics regarding the percentage of jobs in Greater Vancouver that are real estate and/or finance-related? I have seen these data for Canada as a whole, but I’d bet that the numbers are much more shocking for Vancouver.

Thanks very much,
Darvinius.

#22 Nemesis on 09.05.14 at 8:12 pm

#Words’OWisdom… #FromOldManRiver… #&OtherCowboys…

http://youtu.be/X4CvFWCULuI

[NoteToGT: Yep. RedHeads. Character&IntegrityPersonified… Ask any CowBoy.]

#23 dave on 09.05.14 at 8:15 pm

If one believes that real estate in Canada will “never go down” I urge you to look back to the 80’s. It was ugly. And people at that time were likely saying the same thing. 20% interest rates were also not on their radar I am sure. For now, I will continue to rent and make substantial savings every month. And when things bottom out, then I’ll buy.

#24 Furious_In_Fort_MacKay on 09.05.14 at 8:15 pm

‘Course right now with stock prices way higher than justified, inflated thru corporate buybacks and the residue of QE, one of your better strategies will be wait for a significant correction. Perpetual preferreds and bonds? With the threat of imminent rate increases? Please.

Best to rake in the salary and salt it away until the melt is over, then take advantage of market prices after price inflammation has subsided. And if price pressures and inflation subside, like the relevance of places in eastern Canada such as toronto, then Cash in a deflationary environment will be a wonderful thing.

#25 David McDonald on 09.05.14 at 8:16 pm

I wish there was an ETF with a mix of assets like the portfolio you describe.

Common sense dictated a sharp decline in housing prices last winter. Common sense told me the stock market would correct last spring. Having been wrong so often I can now be sanguine about the state of the world as Garth describes it. Things probably won’t unfold according to logic or common sense.

#26 TEMPORARY® Foreign Prime Minister on 09.05.14 at 8:17 pm

“……The job numbers on Friday were stunningly bad. More jobs punted in the private sector than ever before. Eleven thousand positions gone overall……..”
=========================

Welcome to the Harpocrite ReformaCon (in-)Action Plan.

At least the provinces that are digging valuable dirt, sucking valuable liquids, and hewing valuable wood are doing OK.

For the rest of us, well, there’s always granite, stainless, and MasterCard.

#27 Furious_In_Fort_MacKay on 09.05.14 at 8:20 pm

#13 JSS on 09.05.14 at 7:39 pm

I’m not sure where the best deal is to get ammo.

You don’t ‘get’ ammo. You make it. Or more precisely, assemble components.

That way, it will be better tailored to your particular firearms resulting in more consistency, and you will become a far better marksman, due to all the practise you’ll become enthusiastic to do.

#28 Sheane Wallace on 09.05.14 at 8:21 pm

Putin is very reasonable. He just want to be partner/not servant. Very reasonable proposition.
Just wait for a real cowboy to take over Russia, we have seen nothing yet.

Job loss is due to outsourcing and temporary work permits and visas. Just kick out the 1.5 million plus temporary and illegal workers and the things will get better.

good advice on US, canada, long commodities is good.

we pay now and will keep paying the price of the credit expansion, it is banker’s fault due to greed that caused large investment mis-allocations.

Deflation could be good, does anybody object cheap cell phones, computers, oil…?

#29 TEMPORARY® Foreign Prime Minister on 09.05.14 at 8:22 pm

“….Ninety thousand people becoming ‘self-employed,’ – which means they’re trying hard not to be unemployed…….”
=========================

Have they tried inserting “Temporary Foreign Worker” in their resumes…?

Just a thought….

#30 sideline sitter on 09.05.14 at 8:29 pm

this, very well, could be an amateur question — but how can I get diversified across the pond, or even into the US?

is the only way to do it via purchasing on foreign exchanges?

thanks!

#31 Andrew Woburn on 09.05.14 at 8:30 pm

ASometime you read apparently unrelated stories that suddenly “click” together like Lego.

First there is the fast-food robot that can produce 360 hamburgers per hour, wrapped, with all condiments, with no human intervention.

http://www.businessinsider.com/momentum-machines-burger-robot-2014-8

Then there is this comment I picked up off an article about small town living. Meet “Greyhound Therapy”.

“Jonathan International Falls, Minnesota 20 hours ago

I really feel the same way up here in my hometown. Unfortunately, I’m single, low income and don’t have the help that couples do (pooling their resources) to leave. Most everyone up here stays for one reason – they can’t afford to go anywhere. That’s my concern for the future. The largest cities in the US will be home to the wealthiest, highest educated and brightest while towns like mine, where the land is cheap/useless, there are no jobs, and nobody wants to come here, will be the new ‘housing projects’.

We’ve become a destination for what’s known as ‘Greyhound Therapy’, where we are getting people every week from Duluth, Minneapolis, Chicago; even Buffalo NY and places in California. They’ve either exhausted their welfare or lost their housing in expensive urban areas, and are sent up here where we have a few two-story public housing townhouses (meant for county residents – housing, food shelves and clothing closets are meant for our residents – not for people sent up here who will definitely end up on SSI because there are no jobs, they can’t get welfare, and after they get it, they’ll never leave). I am deeply concerned what the changing demographics of the urban elite and the new rural ghettos – that the big city elite won’t have to see – will say about our nation.

#32 Nemesis on 09.05.14 at 8:32 pm

#MileyCyrus? #HowSoonWeForget…

http://youtu.be/cJjtdzR5Wz4

#33 Renter's Revenge! on 09.05.14 at 8:32 pm

Trollette. — Garth

This one sounds hot!

#34 CPG on 09.05.14 at 8:36 pm

For now, though, it’s an earnings blur, and the money is still flowing. Like the oft-cited famous last words from former Citigroup boss Chuck Prince, back in 2007.

“When the music stops, in terms of liquidity, things will be complicated,” he said. “But as long as the music’s playing, you’ve got to get up and dance. We’re still dancing.”

The same holds true today. The jig isn’t up yet, so let’s keep dancing one.

http://investmentwatchblog.com/former-citigroup-boss-chuck-prince-when-the-music-stops-in-terms-of-liquidity-things-will-be-complicated-but-as-long-as-the-musics-playing-youve-got-to-get-up-and-dance/

#35 Into the wind on 09.05.14 at 8:38 pm

#15 Natalie….There should be more women like you. You’re right on the money.

Garth…really? Acceptable risk? Maybe for a professional with fast fingers and a guaranteed income that will pay the nut if the market craters for a year or three. You don’t get the same rate or terms on a HELOC….repayment is greatly accelerated with a monthly demand loan hanging over your head and no snuggly fixed interest rate to sleep with.

“I wrote about Jason a few days ago buying a $1.6 million house (the offer was accepted yesterday, by the way) with the intention of paying for it with cash, then removing 65% of the equity through a LOC, investing it, and creating a fat little tax deduction at the same time. That’s smart. Happy spouse. Acceptable risk.”

You guys want the ultimate diversity and security….marry a gorgeous professional girl who’s half your age and makes twice your income.

#36 John in Mtl on 09.05.14 at 8:38 pm

“The dipstick running Russia, for example.”

Sorry, I take great offense to what you said Sir.

M Putin is no angel but right now he’s the best example of what a good leader of a country ought to be – “Cool, Calm and Collected”. M Putin does not go around bullying the world and inventing stories like some other leaders we all know, does not seek to expand empire and doesn’t go around killing for energy resources so the ruskies can keep driving to their equivalent of WallMart.

The Ass media does NOT tell it like it really is, it tells propaganda dictated by corporatocracy. The Ass media’s aim is to keep you asleep and at worse, uninformed.

John

#37 wilbur on 09.05.14 at 8:43 pm

I think Vancouver is in for a hard landing…

http://www.theglobeandmail.com/report-on-business/economy/housing/canada-house-prices-to-climb-further-crash-fears-rising/article20258278/

http://blog.besthomesbc.com/category/vancouver-real-estate/

#38 Maggie the Tech Writer on 09.05.14 at 8:45 pm

During the period when Vladimir Nabokov was teaching at a US university, a nun in one of his classes complained that two students in the back row had been “spooning,” a slang term not heard for decades.

Nabokov urged her to be glad that they weren’t forking.

#39 Incredulous on 09.05.14 at 8:47 pm

Hi Garth, reading your blog and learning. Thanks for telling it like you see it.

Any thoughts on what this says about Canadian banks?

http://www.zerohedge.com/news/2014-09-03/presenting-worst-capitalized-central-bank-west-hint-not-fed

The part about “bail-in” sounds scary….

Now why are you drivel like that from a guy who has no idea of which he speaks? — Garth

#40 TEMPORARY® Foreign Prime Minister on 09.05.14 at 8:49 pm

#15 Natalie Ivenwitz on 09.05.14 at 7:43 pm
“……Prime Minister Stephen Harper is doing a good job in preventing the exploitation of women and focussing more on holding the losers misogynist men accountable for their perverted fantasies on adult prostitutes………”
=========================

That is, until it became probable that a few of those regular “losers misogynist men accountable for their perverted fantasies on adult prostitutes” just may have been regular Conservative MP’s.

#41 Blacksheep on 09.05.14 at 8:53 pm

Hey, the prudent among us, HAS ammo, pre fukishima tuna and copious inventories of but wipe.

These recent events have turned G-man and Smoking man into old school doomers!

Just sitting lakeside in Osoyoos, having beers. Hey Vlad, you live like this all the time?

#42 Sheane Wallace on 09.05.14 at 8:58 pm

Now why are you drivel like that from a guy who has no idea of which he speaks? — Garth

Zerohedge is maintained by 5-30 authors and it’s preferred audience is …. the professionals on wall street… Bill Gross is reading zerohedge… Does he read this blog? I highly doubt it.

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

Wow. You’d think five to 30 guys wouldn’t be that collectively ignorant. There is no defence for parading fiction as financial fact. Zero = zero. — Garth

#43 Sheane Wallace on 09.05.14 at 9:00 pm

The actual author is Simon Black,

Garth, what exactly are you objecting in his article? The lack of reserves? The reckless policies? the numbers or the spirit?

Banks will seize customer deposits? Please. — Garth

#44 Sheane Wallace on 09.05.14 at 9:02 pm

So Canada sold 43 tons of gold, most likely at 400-500 dollars an ounce which is now 1250? Loss of 1 billion?

#45 Retired Boomer - WI on 09.05.14 at 9:04 pm

Yesterday’s comments on Deflation.

Never lived through a prolonged period of deflation. Seems there was one, or two months of negative price action, but nothing to get worked up over.

Deflation, when you have NO DEBT, is probably not much of a deal. If you have adequate cash you might score some neat stuff off the misery of others. Not to beggar thy neighbor, but since he might be choking on debt, might as well ‘help’ myself, as well as relieve his burden.

For the debt burdened, well should that be the “Fork” in the road, too many might find they have a “Fork” in their backs.
Stick a “Fork” in ’em they’re done!
Cash is king in a deflationary time. Never seen THIS flick!

#46 Mark on 09.05.14 at 9:09 pm

“The part about “bail-in” sounds scary….”

It shouldn’t. Bail-ins have been the legally prescribed way of resolving failed corporations for at least the past hundred plus years in Canada. Air Canada, for instance, when it went bankrupt in 2003, was the subject of a bail-in, with debt converted to equity. Same deal for the Saskatchewan Wheat Pool also in 2003 when they defaulted on their bonds.

So nothing to be worried about.

#47 Macrath on 09.05.14 at 9:10 pm

#8 TheManWithNoPlan

Garth wrote some of the best, easy to understand and entertaining money books available. Free at our local library. The Defense, After the Crash, Money Road , etc…

They have been the foundation of my plan for many years.

#48 Sheane Wallace on 09.05.14 at 9:10 pm

Wow. You’d think five to 30 guys wouldn’t be that collectively ignorant. There is no defence for parading fiction as financial fact. Zero = zero. — Garth
……………………………
One can get pretty good picture from zero hedge on how the world works.
Much better than from MSM.

They don’t give investment advices, as of lately, smart move, just comments.

#49 Andrew Woburn on 09.05.14 at 9:11 pm

Shoppers celebrate as UK deflation hits highest level in eight years

http://www.belfasttelegraph.co.uk/business/news/shoppers-celebrate-as-uk-deflation-hits-highest-level-in-eight-years-30485365.html

#50 Smoking Man on 09.05.14 at 9:11 pm

Home alone, with no one counting my drinks. My master plan executed with precision.

Bought the kids hotel rooms so the can entertain there honeys with Chinese food and what ever the young like to do.

Wife poo at the price is right with sister.

Tonight, no frends to lie too, no family to complete with. Just me, the dog, and a half bottle of JD enjoying the storm.

The orgasum of having my legs elevated in my lazy boy, the ashtray to the right In the house after a 20 year absence.

Creativity that knows no bounds…

This heaven…. Or as close as you can God damn get to it.

#51 T.O. Bubble Boy on 09.05.14 at 9:22 pm

So, the “Garth Portfolio” has about 14-16 investments:

– 3% government bonds
– 5% corporate bonds
– 3% real return bonds
– 6% high-yield bonds
– 18% preferreds in the big banks
– 4% REITs
– 8% CDN large cap
– 4% CDN small cap
– 8% US large cap
– 10% US medium, small and micro-caps
– 10% international developed
– 7% intl emerging
– 5% cash
– 9%-10% in alternative assets

Garth – what size of portfolio can justify 14+ holdings (rebalanced on a regular timeframe) without wasting too much on trading fees?

#52 OffshoreObserver on 09.05.14 at 9:23 pm

#8 TheManWithNoPlan on 09.05.14 at 7:11 pm
I was at the Credit Union the other day and they have a big poster that shows why you should diversify. It has a bunch of different products and how they performed year-over-year. For example emerging markets, bonds, nasdaq etc.

So what I am asking the crowd is there any resource that teaches you what happens to bond prices when interest rates go up or vice versa?

What is the point in investing in different market caps and so forth?

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

Two Tables showing the decline in value of an investment of 20 and 10 years:

For example: the base case means that you pay $1,000 today for a 20 year stream of annual payments of $30. The Present value is $1,000.

[Bonds pay interest semi-annually, so there are double the periods but half the amount—Canada 20 year yield about 2.14%, so their present value is much lower]

The second table uses the same assumptions but the period is 10 years.

Loss from 3% baseline ($) Loss (%) Present Value Rate Periods (Years) Payment Future Value

$0.00
-$1,000.00 3.00% 20 $30 $1,000
-$71.06 7.1% -$928.94 3.50% 20 $30 $1,000
-$135.90 13.6% -$864.10 4.00% 20 $30 $1,000
-$195.12 19.5% -$804.88 4.50% 20 $30 $1,000
-$249.24 24.9% -$750.76 5.00% 20 $30 $1,000
-$298.76 29.9% -$701.24 5.50% 20 $30 $1,000
-$344.10 34.4% -$655.90 6.00% 20 $30 $1,000
-$385.65 38.6% -$614.35 6.50% 20 $30 $1,000
-$423.76 42.4% -$576.24 7.00% 20 $30 $1,000
-$458.75 45.9% -$541.25 7.50% 20 $30 $1,000
-$490.91 49.1% -$509.09 8.00% 20 $30 $1,000

Loss from 3% baseline ($) Loss (%) Present Value Rate Periods (Years) Payment Future Value

$0.00
-$1,000.00 3.00% 10 $30 $1,000
-$41.58 4.2% -$958.42 3.50% 10 $30 $1,000
-$81.11 8.1% -$918.89 4.00% 10 $30 $1,000
-$118.69 11.9% -$881.31 4.50% 10 $30 $1,000
-$154.43 15.4% -$845.57 5.00% 10 $30 $1,000
-$188.44 18.8% -$811.56 5.50% 10 $30 $1,000
-$220.80 22.1% -$779.20 6.00% 10 $30 $1,000
-$251.61 25.2% -$748.39 6.50% 10 $30 $1,000
-$280.94 28.1% -$719.06 7.00% 10 $30 $1,000
-$308.88 30.9% -$691.12 7.50% 10 $30 $1,000
-$335.50 33.6% -$664.50 8.00% 10 $30 $1,000

— from China Beach in Vietnam

#53 Dr. Talc on 09.05.14 at 9:33 pm

‘The dipstick running Russia, for example. The jerks cutting off journalists’ heads in Iraq and Syria. Terrorist threats against the US, Britain, us. More ice storms, polar vortex, extreme weather and economic consequences this winter. The US elections this autumn. Derivatives. Ebola. Miley Cyrus. It’s a long, ugly list.’

And here’s how I handle it.
If it’s on MSM and starts with:

A new study finds…
The Prime Minister says..
This just in…
University Researchers have found…
Our sources say..
A new report..
NATO forces..
Insurgents…
Militants…
Terrorists..
Freedom Fighters…
Islamists..
Extremists…
A major bank..
The IMF…
The WHO..
The CIA..
A new study..
Experts warn..
The majority of Canadians..
William and Kate…
Geraldo Rivera is at the scene..

etc.. etc..

I just ignore what comes after the dots.
And ask myself “when did they start telling the truth?”

#54 Realtor on 09.05.14 at 9:43 pm

Like I said many times before
Unemployment is a better bet to cause a housing correction than interest
Rises.

Variable rates will once again become
More popular.

With precious metals in the dumps
And oil around 93$ even with all the political unrest
Canada will need to devalue the dollar

I was surprise to read that we would need a few
Years of bad employment data bedew the correction
Would final come

Joblosses m/m will keep rates lower

#55 OffshoreObserver on 09.05.14 at 9:44 pm

And this from Max Keiser:

http://youtu.be/yBfbBjEisD4

#56 Gregor Samsa on 09.05.14 at 9:44 pm

I’m with #45 Retired Boomer: I don’t see going through a period of deflation as necessarily a horrible thing.

I think there is an economic fallacy at play here by central bankers: and that’s the fallacy that things MUST always go up, that there MUST always be GDP growth, and that any means necessary must be taken to artificially hold things in this state. Any natural system is going to be subject to rises and falls. By holding things to one side, we turn economies into “zombie economies” where they are dead inside, but kept animated by external forces. I say let it die, as nature intended.

In fact, many argue (and I agree) for the concept of “creative destruction.” That’s when losses and bad economic times help to purge away the things in our society that are not working. Bad companies and bad ideas go under, and new, and better things come to replace them. But intervene to stop the destruction, and you end up stagnating.

I’ve seen this at play in my own life, where bad events (like losing a job) have allowed me to deal with things I would otherwise be too busy to, cut loose things that are dragging me down, and refocus my life to end up in a vastly improved situation from when I started.

PS: Garth, if you want to find dipsticks running countries, I would suggest looking in Ottawa and Washington first: http://www.unz.com/mwhitney/obamas-catastrophic-defeat-in-ukraine/

#57 Nemesis on 09.05.14 at 9:45 pm

#ForOffShoreObservers…

http://youtu.be/Jts9suWIDlU

[NoteToOffShore: If you see anything in the sand… Just don’t kick it. Ok?]

#58 Son of Ponzi on 09.05.14 at 9:47 pm

When I come to a fork in the road, I just pick it up and add it to my collection.

#59 Goldie on 09.05.14 at 9:47 pm

“Right now I’m off to buy tuna, toilet paper and ammo…”

Don’t forget about the gold Big G if you really wanna join the club.

#60 Coho on 09.05.14 at 9:49 pm

Yes, lots of negative things happening all at once. I’d wager that sooner rather than later the affordability of housing will be irrelevant.

NATO is the aggressor and pushing Russia to engage. There are no good guys and bad guys. It all bad. War is evil…period…no matter how many drums they beat and perfume they spray on it. It is foul as hell. It’s not about liberty. It’s not about democracy. It’s all about world domination. It’s all about oppression and tyranny over the masses. We won’t benefit if NATO ‘wins’. The citizens in Russia and China will not benefit if they ‘win’. There will be no winners…and certainly no freedom or future for 99.99% of us regardless of who ‘wins’.

If it wasn’t for that ‘dipstick’ in Russia showing immense restraint from NATO and the West’s incessant baiting for him to engage in an all out war, our stainless steel wishes and granite top dreams would be turned into dust.

Have a good weekend!

#61 greyhound on 09.05.14 at 9:51 pm

“The theory is simple: when stocks correct money flows into fixed income, raising values and offsetting equity losses. ”
OK — but what if bonds “correct” at the same time?

Lower bond prices would make them more attractive. — Garth

#62 Macrath on 09.05.14 at 9:53 pm

Daniel Park posted on the subject of NO Canadian bank capital and the bail in before ZH, the source is some blogger named SOVEREIGN MAN

http://www.sovereignman.com/finance/presenting-the-most-pitifully-capitalized-central-bank-in-the-west-hint-its-not-the-fed-14950/

It caused some controversy so she talks about it again today

http://jugglingdynamite.com/2014/09/05/more-on-capital-risk-in-banks/

Not to worry your preferred shares will be wiped out before the Poloz bail-in empties your accounts.

There will be no seizure of depositors’ money in Canada if a bank goes down. More importantly, a major bank never will. — Garth

#63 Son of Ponzi on 09.05.14 at 9:53 pm

The only reason that Gold is not going up is that no one is having gold teeth anymore.
I think I’ll hoard some.
Every fad comes back eventually.

#64 Mark on 09.05.14 at 10:01 pm

“Canada will need to devalue the dollar”

That’s going to be almost impossible to achieve, especially with housing-sector led debt deflation. More likely is the CAD$ effectively doing a moonshot to the 1.3-1.5 range, as the US starts down an inflationary path while Canada spends the next 5-7 years in deflation.

Profoundly painful, of course, if one is overly indebted, as it will be extremely difficult for individuals to earn their way out of debt. But excellent in terms of keeping the cost of capital for Canadian businesses low.

#65 Smoking Man on 09.05.14 at 10:03 pm

If there is one God damn thing I hate is tribes.

Blacks, whites, Jews, Muslims, Christians, syclops.

So I’m writing a manifesto, the rise of the individual..

It hits me. EventuallyI tribe would develop a hhearty, a system of control, the alpha in the tribe would rule to his advantage..

The horror…

There is only one escape for me..

The Lonnie bin….. The crazy have no way of forming on of these….

Ya… That’s where I’ll be happiest…..

#66 van guy on 09.05.14 at 10:04 pm

Garth,

Why are u so conservative? Man im 100% in equities! Times like this wont last forever. Load up big and hit the home run!! US equuties rock, hop on the train now. This party wont last forever. When it ends, hop on the bear side and make more money!!

#67 Figmunt Sreaud on 09.05.14 at 10:19 pm

“The dipstick running Russia, for example.”
__________________________

Hmmmn, … I always believed that it is the job of the intellectual to remain independent of his or her community’s ideologies and biases, be they political, religious or ethnic. Only by so doing could he or she defend the critical thinking that underpin civilization.

Sans that, … your today’s post gives sound advise!

F.S. – Calgary, Alberta.

#68 W on 09.05.14 at 10:27 pm

Seems like it would be expensive to rebalance all those different categories of etf’s, preferred’s etc even at 10 bucks a trade every few months. What size portfolio would be necessary for it to be worthwhile?

#69 economictsunami on 09.05.14 at 10:32 pm

The BoJ, ECB PBoC BoE BoC etc have kept rates low for long and the effects have greatley diminished, hence the ECB went negative but even that has it’s limits.

The CBs are attempting to do their part but extraordinary monetary policy (QE) fails to accomplish much for the real economy.

The BoJ and government are also spending and reforming their business policies; consumption tax increases were not implemented effectively enough.

Both of these policies (low rates/QE) are ineffective in creating demand with credit impaired/debt bloated consumers; the largest contributors of western economies.

It’s hard to tell banks to lend but caveat their loose policies at the same time. You can only borrow so much from future demand and that’s where we now find ourselves.

How bad our elected representatives decide to let it get before creating the fiscal policy to supplant the retreat of private demand is anyone’s guess.

You can tool around with definitions and data but it’s all about productive money velocity baby…

Desperately seeking economic health in the era of free money:

http://www.cbc.ca/news/business/desperately-seeking-economic-health-in-the-era-of-free-money-don-pittis-1.2756004

#70 NostyVlad the Snugglebombed on 09.05.14 at 10:33 pm

“When you come to a fork in the road, take it.” — Yogi Berra

As mentioned eons ago, the cycles are changing rapidly now and will never be stopped, but that is neither fiscal or RE.

You wrote, “The dipstick running Russia, for example. The jerks cutting off journalists’ heads in Iraq and Syria. Terrorist threats against the US, Britain, us. More ice storms, polar vortex, extreme weather and economic consequences this winter.”

Russia. You forgot to mention the bigger dipstick in Israel (Noddin’ Yahoo) who has been warning of a nuclear-armed Iran since the mid-1990s, except that Israel, with Dimona is the one and only nuclear power in the MEast. Bad Alliances.

However, if Yellowstone and Mt. St. Helens have a farting match, the northern hemisphere will be gonzo baby!
*
#118 bill on 09.05.14 at 1:23 pm — “however if you spelled it ‘studebaker hoch’….. he would be the ‘fantastic new superhero of the current economic slump”?

I was smitten with Ethel, Billie’s wife (a tiny tree growing off of his shoulder), until the day when Ethel ran off with Zubin, yelling “Zubin, let go of your pickle and don’t eat the yellow snow!”

I was brokenhearted, and to this day, I don’t fully understand what she meant. What a gal! Slim, trim and scrumptious! Yellow snow has lots of protein, doesn’t it?

BTW, is Studebaker running the US Fed now?!

#41 Blacksheep on 09.05.14 at 8:53 pm — “Hey Vlad, you live like this all the time?”

Other than I don’t smoke, eat junk food or drink anymore, the answer is “Mais Oui!” Odgmaggit, it’s great being retired and debt free!
*
Brothels are good for business, Pitbull This is the asteroid I mentioned a couple of nights ago, Israel bans fluoride, Argentina There isn’t much they can do, EU Monsanto just won’t quit, Shrinkflation and Long Wars That’s about all for the west.

#71 Chris Scott on 09.05.14 at 10:33 pm

@#42 Sheane Wallace

Yes, we know Zerohedge here now take your seat. good boy.

#72 crossbordershopper on 09.05.14 at 10:43 pm

garth talking diversified portfolio again. i spent the past weekend on Saturday at the hamilton food bank helping out. trust me, tuna is in water no oil, and in the hamper you get one only.
garth talking bank prefs for div tax credit, and i talk to people whose only bank they know is the food bank.
and toilet paper for the record is not allocated at the food bank. your on your own for that.
i still dont understand why people give cereal to a food bank but no one ever gives powdered milk. what do people eat the cereal with?
the truth of the two canada’s thats obviously emerging quickly.

#73 dave on 09.05.14 at 10:47 pm

This portfolio mix is only suitable for investors with a brokerage account of around $100,000. It’s a nicely diversified portfolio.

I don’t see how interest rates can rise in the environment of deflation that you are forecasting.

In a future article, I would be interested in hearing your thoughts on dollar-cost-averaging vs making a lump sum investment now or waiting for a correction.

Rates have to rise to curb the growth of the credit bubble. A foregone conclusion. But not yet. — Garth

#74 Freedom ?5 on 09.05.14 at 10:52 pm

#10 El Barto

Sure, provide the link.
Thanks

#75 Godth on 09.05.14 at 11:01 pm

60 Coho

Yup. Evidence is good. Hyperbolic assertions are…not tuna, nor ammo.

#76 Godth on 09.05.14 at 11:03 pm

#65 Smoking Man

If you’re lucky you could take up bonsai, with the aid of pharmaceuticals too.

#77 Casual Observer on 09.05.14 at 11:04 pm

Bail-ins have been the legally prescribed way of resolving failed corporations for at least the past hundred plus years in Canada. Air Canada, for instance, when it went bankrupt in 2003, was the subject of a bail-in, with debt converted to equity.

The difference being that Air Canada is not a deposit taking institution like the banks.

Deposits are considered liabilities of the banks.

Even though there is almost zero chance that any deposits would be touched, to my knowledge there is nothing in the legislation specifically saying that customer deposits are off-limits in the event of a bail-in.

That is what people are worried about. If the intent was to make deposits un-touchable, then it should have been made part of the legislation.

Having said that, it’s not something that I worry about. I keep my money in the bank(s) as well as my brokerage account.

In reality, there is very little one can do to insure against the risk of confiscation by bail-in that doesn’t open your money up to other risks that are more likely to occur.

What a nonsensical debate this is. The legislation clearly does not reference deposits. How can folks be thus gullible? — Garth

#78 Casual Observer on 09.05.14 at 11:22 pm

Rates have to rise to curb the growth of the credit bubble. A foregone conclusion. But not yet. — Garth

Up until recently, I would have agreed, but are there any Central Bankers anywhere in the developed world that have raised rates to fight a credit bubble?

Just like Canada will not be different when it comes to housing bubbles, I fear things will not be different when it comes to dealing with credit bubbles either.

Besides, the BoC would not want the currency to appreciate as a result of interest rate increases.

#79 Danby on 09.05.14 at 11:27 pm

To: #56 Gregor Samsa
I agree. Well put.

#80 Setting the Record Straight on 09.05.14 at 11:28 pm

Mr. Turner conflates a crackup with price reductions that stem from increased productivity. He ignores the disease –central banks and their policies– and concentrates on symptoms.

Turning to more prosaic items, in recommending an allocation to US companies either by etfs or individual stocks he ignores the risks of a successful constitutional challenge (now underway) to Canada’s cooperation with the US government pursuant to Fatca.

If successful there is a risk all customers of Canadian banks that own US property could take a 30 percent haircut on income or sales. It seems to be a very murky area.

#81 Casual Observer on 09.05.14 at 11:36 pm

What a nonsensical debate this is. The legislation clearly does not reference deposits. How can folks be thus gullible? — Garth

It doesn’t specifically mention deposits, it mentions liabilities, and deposits are liabilities.

The point I was making was that it could have been made crystal clear by having language that excluded customer deposits from those liabilities.

It doesn’t exclude safety deposit boxes either. Quick, tell Zero! — Garth

#82 Casual Observer on 09.05.14 at 11:41 pm

It doesn’t exclude safety deposit boxes either. Quick, tell Zero! — Garth

I agree that this is becoming a nonsensical debate. As I said before, I’m not worried about it.

#83 Barry in Pickering on 09.05.14 at 11:45 pm

Garth: The brew here might be 4% REITs…, then 5% in cash.

——-
Ha! All of those articles you’ve devoted to the subject of the benefits of REITs, and also endless comments belittling cash (“orange guys shorts”). And it turns out you have more cash than REITS.

In any event, 4% REIT allocation is just too tiny.. why bother at all?

#84 bill on 09.05.14 at 11:49 pm

#70 NostyVlad the Snugglebombed on 09.05.14 at 10:33 pm
she was hot -thats for sure .it ended badly for her as I recall -made into an ironing board..or was it a broom?
Zubin ,however became a famous conductor of orchestras.
-is Studebaker running the US Fed now?!
no he is retired….after the poodle bite he was never the same.
say -have you considered running for the job? outside chance of getting the job ,I admit but…new blood and all that!
btw -I have eschewed ‘yellow snow’ since early childhood…

#85 Dd on 09.06.14 at 12:17 am

Let’s talk job creation – US

June 267,000
July 212,000
August 142,000

Anybody see a trend here? Don’t believe the TV #HappyTalk

#86 Larry1 on 09.06.14 at 12:19 am

— Garth, when interest rates rise, which of the asset classes you mention has the most sensitivity to interest rate increases (aka modified duration)? I forget the details by I think preferred are pretty sensitive as are any big divy payer.

#87 Nemesis on 09.06.14 at 12:23 am

“But not yet.” — Hon.Garth

“Give me chastity and continence, but not yet.” – Saint Augustine of Lunenburg Hippo

#88 Karlhungus on 09.06.14 at 12:49 am

All the students go back to school and your worried about a decline in jobs? Stat picking at its finest

#89 Setting the Record Straight on 09.06.14 at 12:59 am

http://www.zerohedge.com/news/2014-09-05/whats-point-hiding-it-any-longer

“From the Chicago Mercantile Exchange 2012 10-K:

Customer Base
 
Our customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers and governments.
And from the Chicago Mercantile Exchange 2013 10-K:

Customer Base
 
Our customer base includes professional traders, financial institutions, institutional and individual investors, major corporations, manufacturers, producers, governments and central banks.”

#90 Mark on 09.06.14 at 1:14 am

“The difference being that Air Canada is not a deposit taking institution like the banks.”

I disagree. Air Canada, just like Canada’s chartered banks, borrowed money from various participants in the capital markets. Air Canada invested said borrowed money in, among other things, aircraft and other facilities. Air Canada went bankrupt, and experienced a bail-in as company debt was converted to equity, and the previous ownership was wiped out.

This is no different than Canada’s banks which borrow money from various participants in the capital markets, and invest in, among other things, various loans, mortgages, and other assets. If they experience insolvency, then, just like Air Canada, a bail-in procedure, conversion of debt to equity, will occur.

The “mistake” in your thinking is that you think that a ‘deposit’ is something other than a loan to a bank. Under our current banking system, a ‘depositor’ is merely a lender to a bank, much like an Air Canada bondholder was a lender to Air Canada.

#91 Mark on 09.06.14 at 1:19 am

“The point I was making was that it could have been made crystal clear by having language that excluded customer deposits from those liabilities.”

Why would they want to do that? A ‘deposit’ is a loan to the bank. You are lending the bank $x at a term of “y” years (“y” can even be indeterminate), and are paid a mutually agreed-upon rate of interest. Everyone who deals with banks should understand this.

If you are stuck in the paradigm of a ‘bank’ being a place that takes your money and literally puts it in a vault for safekeeping, then I think you need to do some research on what exactly modern banking is. A ‘deposit’ is a loan, not a trust arrangement for safekeeping. As such, a ‘depositor’ is an unsecured creditor, as a ‘depositor’ receives no pledge of collateral from the bank. CDIC/FDIC’s rules ensure that, if a member banking institution is ever subject to resolution, that the first $100k of such loan is considered a senior liability of the bank.

#92 Mark on 09.06.14 at 1:28 am

“Seems like it would be expensive to rebalance all those different categories of etf’s, preferred’s etc even at 10 bucks a trade every few months. What size portfolio would be necessary for it to be worthwhile?”

In the practical sense, much of Garth’s recommendations can be implemented using 10 different ETFs or less. You can get $1 trades from at least one broker in Canada, and some even have free trades under certain circumstances. In any event, a good quality financial planner will structure an investment plan, including rebalancing, so that transactional costs aren’t burdensome.

Additionally, many investors find that, during the accumulation phase, they don’t even need to make many trades to rebalance, but merely re-direct their contributions and dividends to the asset classes that are out of favour at a given time. Its not necessary to literally have everything in balance to the precise percentage.

Personally I use the Microsoft Excel SOLVER add-on, to optimize where new money should go. Occasionally it might be necessary to sell if things get seriously out of balance, but with modern dividend yields, and new contributions, typically there’s naturally a significant amount of cash flow available to do rebalancing without decreasing tax efficiency.

#93 fisheman on 09.06.14 at 1:31 am

Landed tuna price this year went as low as $1.20 & is now around $1.40/lb. This is for FAS (Frozen At Sea) sushi grade (-32C core temp). Last year was $2.40-$2.60/lb. This is albacore tuna around 15 to 25lbs. Same thing with the big sockeye run, $1.40- $1.60/lb to the fisherman. Around 1/2 of previous year. FAS Springs $3.50-4.50/lb. Around $2.00/lb less than last year. Herring this spring didn’t cover the fuel costs. Now we are talking deflation. The last time I saw this much of a crash was the summer of 1980. Then in early 1981 rates went from 10% to 18% & the banks pulled 140,000 loans from small Canadian business. We were young then & extended & we got crushed. Wholesale fish prices a leading indicator? Rates going from2.75% to5.0%. A repeat of 1981. I guess we’ll find out early 2015. Probably rates will stay the same but there’s hard times a coming in coastal B.C.

#94 Happy Renting on 09.06.14 at 1:32 am

Misery Week never really ends around here, but thank you for the road map on how to prepare for the impending storm. We can’t stop it from happening but we can try to stay relatively dry.

#95 Mark on 09.06.14 at 1:32 am

“I don’t see how interest rates can rise in the environment of deflation that you are forecasting. “

Rates can rise because of increased risk aversion against specific out-of-favour assets.

In the 1930s Great Depression, for instance, loans were often very hard to obtain and/or very expensive for ‘consumers’ because bankers simply feel confident in lending as collateral was decreasing in value. You could say that credit that is difficult or impossible to obtain, is expensive credit. Policy rates during the Great Depression were low, but that didn’t matter to a significant number of ‘practical’ borrowers who couldn’t take advantage. Those who could take advantage, of course, did spectacularly well in acquiring the productive capacity and industry that ultimately became extremely valuable during the next decade.

#96 Tony on 09.06.14 at 1:37 am

Jason will feel like he’s gotten divorced even before he gets divorced. Half (or more) of his money will evaporate when homes in Vancouver crash in price.

#97 Andrew Woburn on 09.06.14 at 1:38 am

#42 Sheane Wallace on 09.05.14 at 8:58 pm
Zerohedge is maintained by 5-30 authors and it’s preferred audience is …. the professionals on wall street… Bill Gross is reading zerohedge… Does he read this blog? I highly doubt it.
========================

If ZH is really written and read by the brightest minds on Wall Street, why do the commenters always sound like drunken frat boys trading fart jokes? However, if these are actually the people steering the world’s economy, it could explain a lot.

#98 devore on 09.06.14 at 1:55 am

#48 Sheane Wallace

They don’t give investment advices, as of lately, smart move, just comments.

Of course they don’t. All the guys who stocked up on gold bars in their survival bunkers are probably looking for some pitchforks about now. Besides, all their writes who actually knew anything already left or were run off for not being doom and gloom enough. Is that Reggie guy still posting?

#99 Happy Renting on 09.06.14 at 2:00 am

#151 Waterloo Resident on 09.05.14 at 8:58 pm

Hey WR, sorry to hear you were in an accident. You didn’t mention any injuries so I hope that means everyone is all right.

You’re being almost unreasonably nice about the whole thing. Makes me concerned you’ll get the short end of the stick, somehow. Has your car been thoroughly examined for damage (not just cosmetic?) I’d get the at-fault driver to cover any accident-related repairs to damage that may impair your car’s function in the medium-term, until you get your new car. Your heart’s in the right place, everyone could use a break now and then.

#100 Ll on 09.06.14 at 2:38 am

The same people who blamed the anemic first half on “weather” now call Aug jobs report an “anomaly.” The clinical name for this is #denial.

#101 trugman on 09.06.14 at 2:51 am

Garth

Do you prefer 9 Lives or Whiskas tuna?
Which colour of wine to pair with these?

#102 SealTeam0 FU (super secret dude. not even sure if i exist) please check with zerohedge on 09.06.14 at 3:12 am

Wow, there is always the collection of know it alls and conspiracy theorists but I don’t get why this particular post got them so wound up. There again looking back at a number of posts since those couple of polls just confirms for me that they’re a bunch of liars anyhow or just really incredibly lucky because the posts infer no brilliance.

#103 Rexx Rock on 09.06.14 at 3:17 am

Where I work ,housekeeping and food services cut wages by $3 a hour.All staff lost 11 liue days and all on call lost their benefits.Its the sign of the times.Families are really going to suffer in the coming years.Lets all sing O Canada.

#104 Rabid Mangy Cur #35 on 09.06.14 at 3:37 am

How do you find an honest money manager who charges 1% fixed annual fee? Yellow Pages? BBB? Are these guys like covered under some kind of collective insurance like CDIC, Investment Dealers Brokerage Funds etc? Several high profile cases of Money Managers stealing customer money in Victoria recently.

#105 Suburbanguy on 09.06.14 at 5:08 am

Sorry Garth,
Deflation isn’t hell. It happens to be our North American Saturday pastime. Everyone cheers and fights to get those things that are on sale. No one complains when televisions get better and cheaper each year, and cars, and everything else technology related. We still buy them. We don’t all wait for Boxing Day or next year’s better model. Why? Because we want instant gratification. We don’t want to wait and wait.
No, the only people who don’t like deflation are bankers because the value of the assets that they hold as collateral, fall in price.
Furthermore, we have this weird view that houses appreciate. In fact they depreciate. They wear out. Have you ever changed a light fixture in a 1960’s bung? I have. The rubber insulation is brittle from the fixture’s heat. Short of re-wiring the house, I carefully wrapped black electrical tape around the cracked insulation being careful not to bend the wires which would have caused the insulation to fall completely off. ….and I haven’t even got to changing styles, like garages that stick out the front or 8 foot ceilings or big unused living rooms or….. old places with flooding basements like here in Boreington. I don’t have several sons and I don’t have the time and energy myself to properly look after an 80 x 150 lot.
If house prices were set at their true values, decreasing each year, bankers would be up the proverbial creek.

Houses go up because of our debt-based fiat money supply, backed by nothing, creating inflation. ….and inflation is government sanctioned theft.

Signed.
Another person waiting for the great reset.

#106 whateVer on 09.06.14 at 6:10 am

Yes kiddies, diversify your portfolio because that worked out so well for everyone in 2008. LOL. This ain’t your grandpa’s stock market. It’s all manipulated, centrally planned, gamed by HFTs that “provide *cough* liquidity” (except in flash crashes), propped up by PPT’s with as much tax payer $$ as possible, and sold to you as where to put your money because if you don’t inflation will eat away at your savings. BTW, deflation is only bad for central banks and other central planners alike. Consumers love deflation. Falling prices is what everyone intuitively searches for, so don’t let guys that use diversification strategies that equate to “throw as much as you can at every wall you can find, because probability is that something will stick”.

Heck, even the demi-god’s these guys worship like Mr. Buffett say that if you want to become rich, you gotta put all your $$ into few asset classes that YOU understand. If you don’t understand it, don’t invest in it, and handing over your cash to some commission hungry investment planner that doesn’t give a rats patotey about your portfolio, except for that 1 visit a year where they try to convince you to put in even more money, is a sure way to at best have average returns (you know like the -60% in 2008) and at worst, have both inflation and mediocre returns eat away at your hard earned savings.

The balanced PF survived 2008 handily. But obviously you don’t have one. — Garth

#107 ronh on 09.06.14 at 6:19 am

Over on the website JSMineset.com, (yes I know about the gold on the site) he has a formula. He starts it with a decline in the auto industry. We can start it for us with real estate. Downward economic spiral. Its coming.
Prepare.

No. There is not a downward economic spiral coming, just a spanking for those who thought the spiral would be ever-upwards, and behaved as such. — Garth

#108 economictsunami on 09.06.14 at 7:15 am

Fed Economists See Financial Stability Risk From Low Rate:

http://www.bloomberg.com/news/2014-09-05/fed-economists-see-financial-stability-risk-from-low-rate.html

Japan’s bond market: Quantitative freezing: (must register)

http://www.economist.com/news/finance-and-economics/21614221-japanese-bond-traders-say-central-bank-stifling-their-market-quantitative?fsrc=scn/tw_ec/quantitative_freezing

Low rates/ loose credit was meant to ‘hoover’ up the remaining chum and QE to put a floor under asset prices.

Implementation of either for too long produces a nasty distortion and/ or breakdown in the pricing mechanism.

We are here…

#109 basement dweller on 09.06.14 at 7:23 am

With commodities at relatively low prices and the CAD at
93cents It appears that the BoC will not be raising rates anytime soon (add weak employment data)

My guess that the BoC will wait for the US overnight rate to be at 1% or the CAD to be at 88cents before they move the rate.

The CAD is effected more by the prices of commodities

#110 Sheane Wallace on 09.06.14 at 7:29 am

What a nonsensical debate this is. The legislation clearly does not reference deposits. How can folks be thus gullible? — Garth
…………………………
I agree it is nonsense, nobody should worry about their deposits at the banks.

Legislation however is clear – all uninsured creditors could be screwed and uninsured creditors include deposits over 100 k.

At some point german short term treasuries had negative interest rate. Explanation? it seems some prefer to keep their money in short term treasuries paying for that than to keep them in the banks.. beats me why…

There is nothing in the legislation even hinting that retail depositors will be included in a bank bail-in, which is never going to occur anyway. I will not be posting any more comments repeating this urban myth. — Garth

#111 Cow Man on 09.06.14 at 7:42 am

# 25 David MacDonald

Your wish is answered ZMI

#112 T.O. Bubble Boy on 09.06.14 at 7:54 am

Meanwhile… as many are losing their jobs, the high earners in Ontario get the Wynne tax retroactively applied to their paycheques:
http://www.moneysense.ca/must-read/payroll-tax-hike-hits-ontarians-earning-150k-or-more

#113 CATALYST on 09.06.14 at 9:06 am

Always remember folks, bulls and bears make money, and pigs go to slaughter.

#114 T.O. Bubble Boy on 09.06.14 at 9:19 am

@ #109 basement dweller on 09.06.14 at 7:23 am
With commodities at relatively low prices and the CAD at
93cents It appears that the BoC will not be raising rates anytime soon (add weak employment data)

My guess that the BoC will wait for the US overnight rate to be at 1% or the CAD to be at 88cents before they move the rate.
———————————-

I think the CAD will hit $0.88 before the year is done.

#115 Gavrilo Princip on 09.06.14 at 9:27 am

Don’t be blind to history, or the present.

War is coming. The economy, everything will change.

You can count the days.

Estonia IS part of NATO.

http://www.cnn.com/2014/09/05/world/europe/estonia-russia-abduction/index.html?hpt=hp_t2

#116 eddy on 09.06.14 at 10:19 am

China’s Incredible Ghost Cities Will Make Your Jaw Drop

https://www.youtube.com/watch?v=GpnoPhY1f70

Steely Dan – The Last Mall (pictures of China’s ghost cities)

https://www.youtube.com/watch?v=OG9yg1waqvA

#117 OttawaGal on 09.06.14 at 10:25 am

#36 John in Mtl: Bravo! Agreed with every word. I am glad to know not everyone is brainwashed by the Western mainstream media shameless propaganda.

#118 Smoking Man on 09.06.14 at 11:01 am

#36 John in Mtl on 09.05.14 at 8:38 pm

Aggreed, our leaders, the international community, sacrifices it’s own randomly to sell a story. The build consensus to execute a political objective.

The problem, the ones controlling the leavers of the machine are void of IQ. Violence against its own citizens is the only play the dumb have.

They are morally out of control.. Building 7, MH17, ISIS.

almost desperate.

The above post influenced by just viewing, Divergence…

Amazing flick… Going to read the book…

#119 Funny that on 09.06.14 at 11:04 am

#85 Dd on 09.06.14 at 12:17 am
Let’s talk job creation – US

June 267,000
July 212,000
August 142,000
+++++++++++++++++++++++++++++++++
Agreed. Job creation is clearly collapsing. Down almost 50% in three months.
Reminds me or Toronto housing prices.

#120 };-) aka Devil's Advocate on 09.06.14 at 11:13 am

There are four well known families in Kelowna who control the bulk of the commercial real estate here. None of them started out with quite so much but each has invested in land. None of the land they own is for sale and it’s very unlikely any of it ever will be. I don’t know about their financial investments but one of that group once told me “Only invest in stocks what you are prepared to lose. You can’t control what stocks do. Land is where it’s at. When you are far from your land you are near your loses.”

I am quite sure I felt a piece of the sky fall upon my shoulder yesterday. But I can’t be sure as I had my head buried in the sand at the time.

#121 Not Metroman in Calgary on 09.06.14 at 11:16 am

@#15 Natalie Ivenwitz:

The smart man would do one thing when encountering this type of woman: Run!

This is an example of a pretend man: Female body parts, xx chromosome and everything that is wrong about a woman.

It’s like those women that think their reproductive organs are violated by the act leading to pregnancy and the birth canal is only for birthing the child not the preceding act(what a psycho idea).

Men and women both hold power. They are different and valuable.

I do agree that women in Canada are hotter. As there are many to choose from, those with attitude can be discarded by selective males such as the poster #15 natalie wannabemale. Some women forget that all women possess the same durable reproductive organs and so the deciding factor is the woman’s brain and attitude and unfortunately with some women that has been corrupted and is best avoided.

#122 Daisy Mae on 09.06.14 at 11:16 am

In response to #42 Sheane: “Zero Hedge was founded in January 2009. Posts are signed “Tyler Durden,” a character in the Chuck Palahniuk book and movie Fight Club reflecting the news site’s activist posture. Despite speculation that “Tyler Durden” is a pseudonym of Daniel Ivandjiiski, who was penalized for insider trading in New York in September 2008…”

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

Not very impressive…

#123 Retired Boomer - WI on 09.06.14 at 11:35 am

Why does the US’s politicians ALWAYS have to be an active mouthpiece in every international incident?

One might hope their countries ruling bodies would just shut-up and take in things before commenting out their poop chute. (or, so it seems to me).

One can never understand an issue in 5 minutes. Sometimes it is frustrating to view the folly of leadership.
Recent times have provided what seems far more folly than leadership.

Oh well, can’t trust the media outlets for much either.
What is truth asks the retired boomer…

#124 Cocoabean on 09.06.14 at 11:49 am

“This is how it starts. Fewer jobs, less spending, lower profits, then reduced wages, falling prices and even fewer jobs. It’s a cycle, which central bankers are trying to prevent. They may or may not succeed.”

Let’s hope they don’t, because it is government involvement, manipulation and regulation of the economy that started this in the first place. Chiefly central banking…

Perhaps your sentence should read: “This is how it starts. Less saving, more debt, less productivity, fewer jobs and reduced wages.”

Misallocated spending and excessive debt are the problems – not “falling prices”. Garth, you’re the one constantly bewailing high house prices, after all…

#125 Panhead on 09.06.14 at 11:49 am

#93 fisheman on 09.06.14 at 1:31 am
Landed tuna price this year went as low as $1.20 & is now around $1.40/lb.

That’s bummer news … how about the price of halibut? Saw a guy put a few crabs in a sack at the wharf at Steveston and charged over $200.00. Used to buy jumbo pacific prawns in Bella Coola for a treat while sport fishing but they quit selling them because the locals could no longer afford the “world price.” Sure do miss them …

#126 T.C. on 09.06.14 at 11:56 am

I am curious. What kind of ammo do you buy?

#127 crowdedelevatorfartz on 09.06.14 at 12:44 pm

Personally I prefer Maple syrup flavoured beans over tuna, LOTS of toilet paper (the new paper currency in a post apocalyptic world) and, of course, bullets ( to protect my hoard of currency).

everything else is just fartz in the wind………

#128 rosie "moving forward" in the knowledge that, "this won't end well" on 09.06.14 at 12:52 pm

A reasonable explanation for the contrarian mindset. Also a good explanation for the persistent idea that,” a man without land is a nobody,” that real estate whores continue to sell.

http://www.theguardian.com/commentisfree/2014/aug/05/neoliberalism-mental-health-rich-poverty-economy

#129 sovereigninternational on 09.06.14 at 1:24 pm

“Wow. You’d think five to 30 guys wouldn’t be that collectively ignorant. There is no defence for parading fiction as financial fact. Zero = zero. — Garth”

Hey, Garth below is a great article posted on ZH you might have hard time dissing. Inside there is a quote from Mark Twain that perfectly addresses your frequent “this will never happen” comments. In case you don’t have time to read it:

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

http://www.zerohedge.com/news/2014-09-05/oaktrees-howard-marks-explains-difference-between-volatility-and-risk

you may also like not so pro Gold opinion from Martin Armstrong:

http://armstrongeconomics.com/2014/08/31/gold-at-2000/

or this excellent read:

http://www.salientpartners.com/epsilontheory/

#130 Mark on 09.06.14 at 1:24 pm

“None of the land they own is for sale and it’s very unlikely any of it ever will be. “

Land is always for sale at the right price. And for that matter, owners get old, die, the offspring often wants a different lifestyle. Land hoarding isn’t forever. If opportunity costs start to increase in other investments, such as stocks and bonds, plenty of land owners have been known to sell at least some of their land to take advantage.

#131 Flawed on 09.06.14 at 1:45 pm

#122 Daisy Mae on 09.06.14 at 11:16 am
In response to #42 Sheane: “Zero Hedge was founded in January 2009. Posts are signed “Tyler Durden,” a character in the Chuck Palahniuk book and movie Fight Club reflecting the news site’s activist posture. Despite speculation that “Tyler Durden” is a pseudonym of Daniel Ivandjiiski, who was penalized for insider trading in New York in September 2008…”

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

Not very impressive…

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

Yes because the 100 BILLION in fines the NY banks have been fined for money laundering terrorists and drug dealers means nothing.

I just can’t get over how “Non Bank People” always get crucified on blogs but no one ever says anything about the criminals causing the real damage……amazing. I guess that’s why they call it brain washing.

#132 Flawed on 09.06.14 at 1:51 pm

I do agree that women in Canada are hotter. As there are many to choose from, those with attitude can be discarded by selective males such as the poster #15 natalie wannabemale. Some women forget that all women possess the same durable reproductive organs and so the deciding factor is the woman’s brain and attitude and unfortunately with some women that has been corrupted and is best avoided.

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

Clearly you’ve never been to Brazil or Uruguay. The women there are hot hot hot. Hot in Canada? Okay….maybe after you remove the 50% of overweight ones here. That was the most disturbing part of coming back to Canada. Obesity everywhere. Yuck.

#133 jess on 09.06.14 at 1:51 pm

BIGNESS
…”that even a small % of a big number = big number.
“And a mere 1% of derivative contracts gone wrong could cause some $7 trillion in losses. …”

China’s reserves exceed $3.6 trillion
Fed’s balance sheet — $4 trillion
daily FX turnover — $5 trillion
Federal debt outstanding — $17 trillion
globally managed assets — $80 trillion; and the downturn notwithstanding,
notional value of global derivatives has risen to $700 trillion.
… a 10% change in China’s holdings generates $360 billion of sales — and another $360 billion of purchases. A 5% rise in US interest rates will add (over time) $850 billion to the US budget deficit — annually. A 3% shift in global asset preferences triggers more than $4 trillion in securities transactions. And a mere 1% of derivative contracts gone wrong could cause some $7 trillion in losses. …”
FRom :Systemic risk and the investment professional
Speech to the New York Society of Security Analysts, NYC May 1, 2014
By Robert Jenkins, FSIP
http://www.bettermarkets.com/reform-resources/systemic-risk-and-investment-professional#.VAtGs1deWxc

… “a 10% change in China’s holdings generates $360 billion of sales — and another $360 billion of purchases. A 5% rise in US interest rates will add (over time) $850 billion to the US budget deficit — annually. A 3% shift in global asset preferences triggers more than $4 trillion in securities transactions. And a mere 1% of derivative contracts gone wrong could cause some $7 trillion in losses. …”
FRom :Systemic risk and the investment professional
Speech to the New York Society of Security Analysts, NYC May 1, 2014
By Robert Jenkins, FSIP
http://www.bettermarkets.com/reform-resources/systemic-risk-and-investment-professional#.VAtGs1deWxc

#134 saskatoon on 09.06.14 at 2:20 pm

#116 eddy

good video.

thanks.

#135 Blacksheep on 09.06.14 at 2:25 pm

fisherman # 93,

18% rates in 1981 was Volker saving the US $ after Nixon dropped the gold standard. As repeatedly pointed out here, deflation is now the risk , any substantial rate increases will only kill an already struggling economy.

My family loves salmon as it used to be a weekly meal. Since Fukishma, its become a treat once in blue moon, and even then its only a small quantity of the smoked stuff. Paranoid? Maybe, but I know of other family’s doing the same thing, so ya, unfortunately your screwed.

Paranoid? Yes. — Garth

#136 Nemesis on 09.06.14 at 2:34 pm

#SpeakingOfToiletPaper…. #Quote’OTheDay:

“You can’t have 1,500 people not able to go to the bathroom.” – Marsha Hierbaum, President of the Bel Air Crest Homeowners Assn.

[LAT] – In Bel Air, the luxury of disaster readiness

…”The shed represents one piece of a years-long effort to ensure all residents of this gated community are ready when the “Big One” hits. In a city populated by people expecting — but many ill-prepared to handle — a major earthquake, it is the affluent and organized hillside neighborhoods that have taken emergency preparedness to the extreme. A 6.0-magnitude earthquake that rumbled through Napa last month underscored for some how important their effort is.

Local residents have long understood that living on winding, narrow roads means they could be on their own when disaster strikes. So they have taken safety into their own hands.”…

http://www.latimes.com/local/la-me-adv-bel-air-disaster-20140905-story.html

#137 young & foolish on 09.06.14 at 2:43 pm

I know a few “gold bugs” …. there is no use trying to convince them that the world won’t collapse.

Garth’s portfolio suggestion has a little bit of everything under the sun. You won’t get rich … just tread water.
How do you “make money”? Well, you do/make something useful for people.

Foolishly simple, eh?

I would not call an annual 7-8% return when inflation is 2% and savings pay 1%, ‘treading water’. Most people are happy to have it. — Garth

#138 };-) aka Devil's Advocate on 09.06.14 at 3:07 pm

#121 Not Metroman in Calgary on 09.06.14 at 11:16 am
@#15 Natalie Ivenwitz:

Women ultimately have ALL the power to get and have EVERY and ANY thing they want. Women are complex and men are simple. It always amazes me how many (most/almost all) women miss this fact. Men are real simple and ultimately after one thing and will give to a woman EVERY and ANY thing she wants if they believe it might lead to him getting that one thing.

Again, men, even the most intelligent men, are extremely simple and can easily be led around by a woman who knows how to use her assets.

http://tinyurl.com/mcv3m3d

#139 young & foolish on 09.06.14 at 3:15 pm

Question: Why do wealthy people own RE?

Answer: Cash flow, and leverage

#140 Mr Happy on 09.06.14 at 3:55 pm

…..I will not be posting any more comments repeating this urban myth. — Garth…..

Since I do not see my previous post, I assume you also delete truthful posts that you don’t like?

Ce la… it’s your blog….

I deleted nothing of yours. But with that attitude I’ll be sure to in future. — Garth

#141 Retired Boomer - WI on 09.06.14 at 3:56 pm

#137 Young & foolish

Garth is quite right. That 60/40% split portfolio has been delivering that 7-8% quite well (with gusts higher) for quite a while.

I recently sold off my individual stocks, and went to a 60/40 index equity/ fixed income split. I will be quite happy to get 7-8% YOY.

That’s more than we will need to supplement our retirement. Having said that, there are new roofs, newer vehicles, who knows what else to cross a retired guy’s threshold every once in a while.

Garth, I’ll even admit to having recently hired a pro to manage it. (We’ll see how well he does)

#142 fisheman on 09.06.14 at 4:38 pm

As far as Fukishima radiation, the University of Washington has been testing albacore for a decade & this years results saw no measurable increase from historical levels. If your paranoid you’d be better off worrying about the naturally occuring mercury in big old fish. I eat a lot of fish & my mercury level is good. But I do stay away from the big oldtimers on top of the food chain & I don’t eat any skin. Sockeye spend three years at sea & are plankton eaters& albacore are eating a little higher up the food chain and run from 5-8 years old. Saw lots of Japanese stuff on the grounds this year,up around Alaskan border, west coast Charlottes. Wheels,cans,floats, seats,floating stuff with Japanese writing. The greenies are gathering & testing so I figure if the geiger counter goes off you’d hear their screams as far as Pickering.

#143 eddy on 09.06.14 at 5:27 pm

@#134 saskatoon

you’re welcome. for those who have not connected the dots-

Agenda 21 will heard everyone into cities. All farmland
will be corporate. The food supply most likely GMO. The prices very controlled. It’s already happening.

You sound GMO yourself. — Garth

#144 Freedom First on 09.06.14 at 5:29 pm

#92 Mark

Great post! I couldn’t have explained it better myself.

It is so good to see all of the people who post comments on Garth’s Blog. There is people who are very well informed, and people who are not so well informed, but the great thing is, it is a good place to learn from Garth, and from all the people who post and help each other to learn more. We all win, of course minus the various Trolls and Trollettes who infect all comment sections on the web. Very informative Blog, while amusing, witty, and entertaining at the same time.

#145 Ronaldo on 09.06.14 at 5:35 pm

DELETED

#146 Ronaldo on 09.06.14 at 5:37 pm

#141 Retired Boomer-WI

”That’s more than we will need to supplement our retirement. Having said that, there are new roofs, newer vehicles, who knows what else to cross a retired guy’s threshold every once in a while.”

Sometimes a new wife.

#147 Blacksheep on 09.06.14 at 6:06 pm

Paranoid? Yes – Garth.
——————————–
A little heathly paranoia, has saved my life more than once.

#148 Kenchie on 09.06.14 at 6:14 pm

#7 Ben on 09.05.14 at 7:06 pm
“ps Garth I’m looking into citizenship. Should have it lined up nicely in time to know whether house prices will tank or not. If they go up more I’ll walk away, not because I can’t afford it but because I know it won’t be a land of opportunity for my kids but rather a re-run of the total mess the UK has become. And I don’t want them to grow up in that stagnation.”

The UK will never have superior living standards than Canada. The UK is way too crammed with people and too many useless blokes wearing track suits and with shaved heads, and too many unintegrated foreigners to deal with.

The Canadian market, even if it crashes, will only be down and out for 3-4 years, just like in the early 90s. Then the economy will be fine and competitive again. Stagnation will be short-term and your kids wouldn’t notice it.

In the UK, the inequality is cultural and lingual. In Canada, social mobility is significantly better. No one is prejudice about the regional accents in Canada. Your kids, depending on the school they go to in the UK, will not be so lucky. Better pony up for private school and elocution lessons if you live in a non-posh neighbourhood.

#149 Kenchie on 09.06.14 at 6:37 pm

#15 Natalie Ivenwitz on 09.05.14 at 7:43 pm
“The real estate market in Canada will never collapse because the demand by immigrants for housing in world class cities Toronto and Vancouver.

I think it’s pretty good here. Of course I was born in Canada and lived here all my life in Toronto. Toronto is the best city for education, healthcare and advancing your career so I don’t see how American tin foil Alex Jones will impact the economic progress of Canada.”

Natalie, you are either a) unaware of history, b) intentionally misleading other people, c) arrogant as hell, d) ignorant as hell, or e) all of the above.

How in the world are you qualified to say that “real estate market in Canada will never collapse”? Also, Vancouver and Toronto are hardly world-class cities. I’ve lived most of my life in Van and now currently live in TO. In between, I lived in HK and London (aka world class cities). Vancouver’s a “village” to the commercial property professionals in London, it doesn’t even register on their radar. Toronto’s more recognizable, of course, and it’s getting some respect as a financial capital. But it still suffers from terrible weather, which keeps plenty of high-paid immigrants from targeting Canada. So we don’t get the cream-of-the-crop immigrants.

With the end of the immigrant investor program, by your favourite PM, Vancouver’s high-end market will continue to weaken until they introduce a new and more exploitative program. When the upper-end of a market starts to fall, the rest of the market will trend lower, naturally of course.

The only part of your diatribe that I wouldn’t dispute is that you were born in Canada and lived all your life in Toronto.

PS: don’t flatter yourself with thinking you’re hotter, smarter and richer than other women outside of Canada. It’s unbecoming and petty.

#150 maxx on 09.06.14 at 6:49 pm

#13 JSS on 09.05.14 at 7:39 pm

” “Right now I’m off to buy tuna, toilet paper and ammo.”

If it’s any consolation, tuna and toilet paper are on sale at Superstore this weekend. Just check this week’s flyer.

I’m not sure where the best deal is to get ammo.”

Cute.

Best sort of ammo of course, is cash, cash, cash. Liquidity is both mobility and security.

#151 Retired Boomer - WI on 09.06.14 at 7:24 pm

#136 Ronaldo

A new wife could be a good thing. A replacement for one that left, and presumably took 1/2 of everything might not be such a good thing. Lightning CAN strike twice!

A prenup might be a smart move the 2nd time ’round.

As the old saying goes, life is like a deck of cards,
All you need at the beginning are two hearts & a diamond, but at the end you wish you had a club & a spade!

#152 Daisy Mae on 09.06.14 at 7:33 pm

#105 Suburbanguy: ‘Deflation isn’t hell.’

Definition of ‘deflation’:

GARTH: “Fewer jobs, less spending, lower profits, then reduced wages, falling prices and even fewer jobs. It’s a cycle, which central bankers are trying to prevent.”

#153 Smoking Man on 09.06.14 at 7:54 pm

#140 Mr Happy on 09.06.14 at 3:55 pmSince I do not see my previous post, I assume you also delete truthful posts that you don’t like?

Ce la… it’s your blog….

I deleted nothing of yours. But with that attitude I’ll be sure to in future. — Garth
……

Great name by the way… I’ve been hanging out here for around 5 years….

Gartho, has mood swings, sometimes you get away with murder.. Other times.. He’s a mad Deleter….

It’s his show, can do what he wants.

#154 Piccaso on 09.06.14 at 8:22 pm

#93 fisheman on 09.06.14 at 1:31 am
Landed tuna price this year went as low as $1.20 & is now around $1.40/lb.

……………………………………………………………………….

It’s .89 cents a can at your local grocers and a toasted tuna sandwich is great.

Also a lot more tuna in that can then your $8.99 Subway tuna gives ya.

#155 Sinful Man on 09.06.14 at 8:48 pm

#65 Smoking Man, “Muslims, Christians … etc”. Yah they are just the same aren’t they. You should join Justin you’re so politically correct.

#156 OK BOOMER on 09.06.14 at 9:06 pm

“There are four well known families in Kelowna who control the bulk of the commercial real estate here. None of them started out with quite so much but each has invested in land. ”

And they are all full patch members of the Hells Angels.

#157 noplused on 09.06.14 at 9:07 pm

Don’t buy tuna, Garth, it’s all radioactive. Go for Atlantic salmon.

“The dipstick running Russia”? Well first off he doesn’t run it anymore than the golfer runs the USA. But secondly what would you think if you neighbor pointed a bunch of high tech weaponry at your house and then every so often tried to move it a bit closer and add a few more automatic rocket launchers?

Much of the rest of what you say is true. In fact, I don’t see how we can keep the economy on the up if we don’t solve the energy crisis. We have effectively lost both cheep oil due to depletion (which is why Russia is in the crosshairs) and nuclear since Fukashima. We need to figure this $hit out before Japan needs to be evacuated leaving the rest of their spent fuel pools unsupervised. A “chain reaction” of nukes in uninhabitable places means the end of life without even setting of the bombs.

And don’t get me started on the war with Russia thing. You might survive for a while with nuclear tuna, toilet paper and ammo, but it will be in a world where you wish you had been under the bomb when it went chain.

I read an interesting article some while back on why it seems the universe is devoid of other intelligent life (or I would say any intelligent life). One theory was that there is some sort of “filter event” that most intelligent life cannot pass. I think I know what it is. Nuclear technology in the hands of a society that not so long ago was shooting arrows and hacking each other with swords.

#158 Sean on 09.06.14 at 9:26 pm

Off topic.. and sure to offend.. but this is for the average troll, who bothers to troll.. I have lived many places, and traveled many more.. and I have to say that Toronto is a shockingly lame and boring city. The climate is appalling, and quite frankly, I can’t think of a developed world city, of its size, that has less character, and less to offer. The very fact that, amidst this bubble, people can possibly trumpet and boast about the wonders of a city like Toronto, is proof in itself of the delusion at work.

#159 Smoking Man on 09.06.14 at 9:31 pm

At Fallsview getting my son’s girl friend hammered..

I’m the best wing man ever…..

This place sucks, machines programmed to rape.. I never play here.. Took the 4 k I made at Seneca this afternoon.. Left in in my room here….

Wynne the commi will not get once cent of it..

My wife is another story….

#160 Sean on 09.06.14 at 9:44 pm

#46 Mark on 09.05.14 at 9:09 pm
“The part about “bail-in” sounds scary….”

It shouldn’t. Bail-ins have been the legally prescribed way of resolving failed corporations for at least the past hundred plus years in Canada.

=========

Investing in corporate bonds, a bail in may be appropriate and in fact generous… if you are stupid enough to lend your money to a company that goes bankrupt, you probably deserve to lose your money. On the other, a BANK DEPOSIT is not something to be pissed away by the the bank in its attempts to goose profits.. it should probably be viewed as criminally negligent by the bank. Defending “bail-ins” in this context is is simply ignorant.

No, ignorance is believing deposits are prone. It’s hard to believe gullible nature of people. Say it often enough on the Internet and they’ll believe anything. Whoops. — Garth

#161 Panhead on 09.06.14 at 9:49 pm

#154 Piccaso on 09.06.14 at 8:22 pm
It’s .89 cents a can at your local grocers and a toasted tuna sandwich is great.

——————————————————————
Please send somma that .89 cent tuna out west … where it came from … taint none out here any more.

#162 Ronaldo on 09.06.14 at 9:59 pm

Irvin needs our help once again.

https://www.indiegogo.com/projects/road-to-justice-and-accountability-phase-ii

#163 Sean on 09.06.14 at 10:03 pm

For all the ZH dissers here, I invite you to browse a few of their articles… once you are honest with yourself and accept the fact that you are unable to understand the vast majority of what is written… at least reserve judgement. I will concede they are overly doomer… that is their schtick… but to suggest to are ill informed, or poorly researched, is ridiculous.

The Zero posts on Canadian banks are ill-informed, poorly researched, factually incorrect and embarrassing. — Garth

#164 Smoking Man on 09.06.14 at 10:03 pm

Observing humanity from my couch at Club 365 at Fallsview, I’m shot between the eyes, a new bullet of knowledge.

These things, people, all go out of there way to mask their flaws..

I put mine on display… I’m the happiest out of the lot..

Yes JD helps…. They clap their hands to a shit band.

Me, got the buds on….. Cash, nothing sounds better with a small or big buz going….

#165 gladiator on 09.06.14 at 10:09 pm

Re: paranoia: a joke:

2 cows discuss:

cow1: it seems like all humans need from us is our milk for a while, then they kill us for our meat.
cow2: oh, you again with your conspiracy theories. Just relax! Have you ever suffered from their actions?… That’s right – never!

I would be quite careful stating that we are in no danger from the powers to be. We are all cattle. Sorry, Garth. We love ya.

#166 Sean on 09.06.14 at 10:11 pm

No, ignorance is believing deposits are prone. It’s hard to believe gullible nature of people. Say it often enough on the Internet and they’ll believe anything. Whoops. — Garth

======

C’mon Garth… read carefully post #46, which I was responding to, before you jump down my throat. And if you believe uninsured deposits will magically be made whole in an actual bailout scenario, then you might want to self examine for gullibility.

Uninsured is uninsured. Has nothing to do with a bail-in. — Garth

#167 Smoking Man on 09.06.14 at 10:16 pm

#155 Sinful Man on 09.06.14 at 8:48 pm

What the hell you taking about…

My point is, and will always be, your community, weather it be, Jews, Christians, Muslims, and one eyed worm eaters.

Are all bastards.. They want to control you…

They want to take away your free spirt..

They want you unhappy..

Community’s are demented…..

I love my mirror and no one else… OK my wife too.

#168 surprised on 09.06.14 at 10:21 pm

Thank Garth for this post.

?Any ETF that allow us diversify preferred shares instead of buying individual ones?

If this type of ETF does not exist, which is the best way to buy preferred shares?
Thanks in advance for any advice

#169 Smoking Man on 09.06.14 at 10:25 pm

Re my last post, watch a Buddhist take me to the human rights commission cause I didn’t include them on my insult….

I hate humans…

#170 Sean on 09.06.14 at 10:28 pm

Uninsured is uninsured. Has nothing to do with a bail-in. — Garth

———–

Deposits are deposits… has a lot to do with a bank. Surely some of the blog dogs have more than $100k in the bank.

No deposits, insured or uninsured, are subject to bail-in action. This convo is done. — Garth

#171 Sean on 09.06.14 at 10:30 pm

The Zero posts on Canadian banks are ill-informed, poorly researched, factually incorrect and embarrassing. — Garth

———-

Zero Hedge is not in love with Canadian banks.. I agree.

Love the blog… don’t mean to degenerate into a tit-for-tat.

Then merely agree with me. Simple. — Garth

#172 Mark on 09.06.14 at 10:33 pm

“Investing in corporate bonds, a bail in may be appropriate and in fact generous… if you are stupid enough to lend your money to a company that goes bankrupt, you probably deserve to lose your money. On the other, a BANK DEPOSIT is not something to be pissed away by the the bank in its attempts to goose profits.. it should probably be viewed as criminally negligent by the bank. Defending “bail-ins” in this context is is simply ignorant.”

A “deposit” is just a loan to a bank. Nothing more, nothing less. When you take money to a bank to ‘deposit’ it, you are loaning the bank your money. If you loan an untrustworthy bank money, and they become insolvent, than shame on you for making a bad loan.

The CDIC/FDIC exists so that us mere mortals don’t have to go through an extensive research process to ensure that the first $100k of money we loan to an insured bank doesn’t have meaningful credit risk. But if you have more than $100k, it really behooves you to do some research on the bank, ask questions of its management, and perhaps consider diversifying your exposure more broadly.

Banks have a duty to their shareholders to maximize profits while remaining a solvent and viable concern. Nothing is going to change this. But those who are worried about ‘bail-ins’, really, are worrying about a bunch of nothing. The bigger risk, as Garth repeatedly points out, is being stuck in a GIC for the next 20 years barely keeping up with inflation (if even, after-tax), while people who invest in a diversified portfolio of real business interests and other asset classes achieve a positive after-tax, after-inflation return, reaping the rewards of their savings.

#173 Sean on 09.06.14 at 10:51 pm

Then merely agree with me. Simple. — Garth

———

You are nothing if not consistent.. lol. Buenas noches amigo.

#174 Smoking Man on 09.06.14 at 11:23 pm

How the fk can I still type on a consistent, error free way after consuming what I’ve consumed.

Paradox is what I’m thinking

#175 [email protected] on 09.06.14 at 11:45 pm

Since CDIC was created in 1967, 43 member institutions have failed. – See more at: http://www.cdic.ca/WhereInsured/FailureHistory/Pages/default.aspx#sthash.erZnHAze.dpuf

43 from 1970 to 1996

Question No. 1: Why were so many banks allowed to fail?
Question No. 2: What is the definition of “failure”?

#176 will on 09.07.14 at 12:26 am

To #36 john in mtl

yup. agreed. putin is a first class statesman. all the same, let’s leave garth alone on this one.

-w

#177 Steve French on 09.07.14 at 12:33 am

“It’s like a novelist writing far out things. If it makes a point and makes sense, then people like to read that. But if it’s off in left field and goes over the edge, you lose it. The same with musical talent, I think.”

– Smoking Man, quick– who said that?

#178 Tony on 09.07.14 at 1:05 am

Re: #172 Mark on 09.06.14 at 10:33 pm

The failure rate presently is low for corporate bonds in part because of low interest rates for people chasing yield. An Air Canada bond was paying 11 percent at the start of January this year. Knowing that the price of oil could only fall in the future in about 7 years you’d break even with inflation (if they stay afloat). For banks and credit unions you just don’t want to be holding the first one to go bankrupt. The most likely would be credit unions in British Columbia or something like Hubert Financial which is a lender of last resort for people with poor credit.

#179 Steve on 09.07.14 at 2:00 am

We don’t know which fork we will careen down?

Don’t we?

Always put your money on the black horse.

#180 Kenchie on 09.07.14 at 2:02 am

#133 jess on 09.06.14 at 1:51 pm

“And a mere 1% of derivative contracts gone wrong could cause some $7 trillion in losses. …”

What is a derivative contract gone wrong?

Last time I checked, derivatives are zero-sum games. One person’s lost is another person’s gain. So in aggregate, the losses are offset.

Also, just because one counterparty is the loser on a transaction with notional value of $100 million, the losses will be in the $10’s of thousands, not $1 million.

For example, company borrows $100 million at 4% fixed, does a fixed-for-floating swap at LIBOR + 3% (assuming libor is 1% at beginning of period) on a $100 million notional value. Next quarter, LIBOR rises to 1.25%. The company would be worse off by 0.25%/4 = 0.0625% this quarter. Meaning they would pay $1,062,500 in interest instead of $1,000,000 this quarter. Overall, for the year, it would be $250,000 worse off. But chances are that the risk would be offset with another swap.

#181 Kenchie on 09.07.14 at 2:10 am

#139 young & foolish on 09.06.14 at 3:15 pm
“Question: Why do wealthy people own RE?

Answer: Cash flow, and leverage”

Super wealthy don’t own a large share of their net worth in real estate. They have portfolios of equities, bonds, private equity (inc. VC), and alternative asset classes (i.e. hedge funds, real estate, infrastructure, commodities, etc.)

Alternatives usually aren’t more than 15%…

#182 TRT on 09.07.14 at 4:40 am

Garth, nothing comes next.

Why are leading these people astray?

FYI, your brain is wired for a politicians. That is why you became a successful MP. As such, you should realize what deviousness naturally resides in there. Without it, you would never have been in Parliament.

I am serious. Do not take this comment lightly or as an insult. It is for you to realize why you have online “enemies”.

Cheers.

#183 Dr. D. E. Leted C.F.O.S. on 09.07.14 at 5:34 am

“Then merely agree with me. Simple. — Garth”

You did learn something from the right horrible prime minister.

Oh by the way I wanted to start a circular argument that makes no sense. I have links from Jessie Ventura to back my arguments up, I have made up a bunch of numbers right out of thin air. The numbers have all been charted on several graph variations. How can I include those coloured graphs in my comment?

#184 Steve French on 09.07.14 at 6:38 am

Nick Hanauer is a rich guy, an unrepentant capitalist — and he has something to say to his fellow plutocrats: Wake up! Growing inequality is about to push our societies into conditions resembling pre-revolutionary France. Hear his argument about why a dramatic increase in minimum wage could grow the middle class, deliver economic prosperity … and prevent a revolution.

http://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming

#185 drydock on 09.07.14 at 7:03 am

“The dipstick running Russia”

Does that mean glorious leader and golf boy are super geniuses?

#186 drydock on 09.07.14 at 7:07 am

#15 Natalie Ivenwitz on 09.05.14 at 7:43 pm

Yawn.

#187 rosie "moving forward" in the knowledge that, "this won't end well" on 09.07.14 at 7:39 am

Control fraud. What is the bonus structure for mortgage origination in Canada. The banks and government will simply blame the borrowers when the time comes it seems.

http://www.salon.com/2014/09/07/finally_wall_street_gets_put_on_trial_we_can_still_hold_the_0_1_percent_responsible_for_tanking_the_economy/

#188 Waterloo Resident on 09.07.14 at 10:23 am

Well, I fixed my car myself, good enough that I don’t need to fix any more of it. The car was hit hard enough to push it 2 feet sideways but the only damage was a HUGE dent to the rear door and the front of the rear wheel arch being pushed in about 2 inches. I took off the door myself at home, put a 1 foot long 1×6 into the inside of the door where the dent was and pounded out the pushed-in dent with a very large dead-blow hammer (a large plastic sledge hammer). After about 6 large blows the dent is mostly gone and the door’s almost as good as new. I took some black spray paint I got from Canadian Tire to match the car’s black color and painted the silver scrapes. (the dent was 2 ft long, 1 ft wide in size, pushed in about 2 inches, even bending the inside door reinforcing bar. But now it’s pretty good and I can easily drive it now without being embarrased to be seen in it. Having the car taking in for repairs would not really result in it looking much better, and they put BONDO on the body and that stuff usually peels off after a year or two and it looks worse that the way it looks right now, so I’m just going to leave it the way it is.

The car’s 8 years old with 300,000 kms and I was going to drive it through the winter salt and buy a new VW Golf 1.8T in the spring, so I just need a winter beater for a few more months, and the way the car is now it’s fine for winter.

Having the car in the shop for a week would mean I need to rent a car to get to work and the expense and the time to do all of that is just not worth it since I was able to fix it myself. I also got a 4 wheel alignment and yes the rear wheel was knocked out of alignment and needed to be adjusted quite a lot.

I didn’t get hurt myself in the accident, the only thing i was worried about was to follow the law where any accident with over $1000 combined damage had to be reported to an accident collision center within 24 hours, so told the other guy about that. He got angry at me, so said: “Okay, if that is the way you want it, SEE YOU IN COURT !”, then he got into his car and sped away. All I got was a photo of his car’s licence plate number and a photo of his car’s insurance slip. He did not want to show me his driver’s license, he was getting more angry at me by the minute as we were talking. The main thing that stuck me was that if most guys are like him then OH MY GOD, I feel so SORRY FOR WOMEN who are trying to find a nice guy because living with a hot head like him would be pure Hell.

Anyways, $100 for alignment, $6 for a can of black spray paint, a few swings with a hammer, and the car is 90% fixed and good to go through another winter so I can buy the new car in the spring. No problems.

#189 T.O. Bubble Boy on 09.07.14 at 10:41 am

@ #168 surprised on 09.06.14 at 10:21 pm
Thank Garth for this post.

?Any ETF that allow us diversify preferred shares instead of buying individual ones?

If this type of ETF does not exist, which is the best way to buy preferred shares?
Thanks in advance for any advice
————————————————

There are several. Just google “Preferred Shares ETF”, or check out articles like this one:
http://www.milliondollarjourney.com/top-canadian-preferred-share-etfs.htm

CPD is the most well known, but there are many similar ones.

#190 saskatoon on 09.07.14 at 10:48 am

#184 Steve French

sorry to say dude…but this guy is NOT a capitalist.

furthermore, raising minimum wage doesn’t create prosperity–in fact, long-term, it only functions to make rich people richer.

why do you think mcdonald’s favours an increase in minimum wage?

if raising minimum wage works so well…why not push it $10-$15 higher? why not $30-$50 higher?

#191 David Hawke on 09.07.14 at 11:05 am

Spot on #36, the tyrant pretending to lead Canada could learn a lot from Putin!

Like what, exactly? – Garth

#192 Pitfield on 09.07.14 at 11:07 am

“……The job numbers on Friday were stunningly bad. More jobs punted in the private sector than ever before. Eleven thousand positions gone overall……..”
Putin is very reasonable. He just wants to be partner/not servant.
“….Ninety thousand people becoming ‘self-employed,’ – which means they’re trying hard not to be unemployed…….”
_________________________________________
How can an economy, like Canada, create new jobs when:
1. 250000 immigrants enter legally yearly (only an estimate)
2. 250000 immigrants enter illegally yearly (only an estimate)
3. 250000 temporary power workers yearly (only an estimate)
That’s 750000- 1000000 low dollar job entrants into the country diluting the old workforce that had good earnings. I made $12/hr in 1978 at Dominion. Today Metro pays the same amount.
Imagine Europe with all the 3rd world landings daily.
Corporations will do anything to get rid of the high cost guy and replace him with the low cost guy and corporations rule so this will continue until a revolt or an all-out WAR. Only WAR has solved it in the past.
As with Russia, you can only take so much from the machine.

Blaming newcomers (vastly fewer than you estimate) for your own lack of success is sad. — Garth

#193 crowdedelevatorfartz on 09.07.14 at 11:18 am

@#15 natalie Ivanwitz

Geez I can’t believe I missed the latest installment from Ayn Rand.
Her delusional misandristic prattling of the superiority of the uberfemale that lives (and apparently doesnt breed) in Toronto.

Time to update the schlock talk. Its gettng a tad stale. Toronto women the” mostest brilliant and beautiful in the know universe”…..”men are stupid grubs to be trampled on in your endlest quest to prove superiority of the species”…..blah blah blah……yawn

Time to travel across Canada and see some other Cities. There’s a wonderful neighborhood in East Vancouver with lots of Wymmin’s shops and cafes that may appeal to you…… but,for your own personal safety, hold off on the “Toronto women are the best and brightest” or a 350lb woman with a crewcut and wearing a mackinaw may knock your head off……. Just sayin’

But, You go girl.

#194 Basil Fawlty on 09.07.14 at 11:35 am

“The dipstick running Russia, for example.”

Putin had nothing to do with the overthrow of the democratically elected government of the Ukraine, it was the same crew who have destroyed Afghanistan, Iraq, Libya and Syria.
In addition, he is a chess and judo master.

He may be aa bad as many other politicians, however he seems to acting quite reasonably given the US sponsored coup in Kiev. Which is conveniently ignored by your “consensus opinion”.

#195 Smoking Man on 09.07.14 at 11:48 am

#177 Steve French on 09.07.14 at 12:33 am“It’s like a novelist writing far out things. If it makes a point and makes sense, then people like to read that. But if it’s off in left field and goes over the edge, you lose it. The same with musical talent, I think.”

– Smoking Man, quick– who said that?
….

Didn’t even have to Google that one… Same dude who coined Ring of Fire…

#196 maxx on 09.07.14 at 11:57 am

#24 Furious_In_Fort_MacKay on 09.05.14 at 8:15 pm

“‘Course right now with stock prices way higher than justified, inflated thru corporate buybacks and the residue of QE…”

Good point. The fiscal contortionism undertaken by public and private companies as well as central banks practically defies imagination.

So does the inevitable and unfolding result of painting the real economy into the ugliest of corners. We’re just beginning to live it now, with more to come.

Cuts, cuts and more cuts, along with vaporous fiscal back flips do not a healthy balance sheet make.

Cash is and will continue to be King.

Waste not on msm barf, want not.

#197 Nemesis on 09.07.14 at 12:57 pm

#SundayMischief… #AroundTheWorldInEightyMinutes…

#ASloganOnEveryEnvelope

[SCMP] – Chasing riches led China down the path of corruption, say party elders’ children

http://www.scmp.com/news/china/article/1586874/chasing-riches-led-china-down-path-corruption-say-party-elders-children

#HootMan!ScottishPrinciples?

[SCMP] – Courting the dragon: How Scotland is seeking to woo China

http://www.scmp.com/magazines/post-magazine/article/1585089/courting-dragon

#StinkTanks?

[NYT] – Foreign Powers Buy Influence at Think Tanks

http://www.nytimes.com/2014/09/07/us/politics/foreign-powers-buy-influence-at-think-tanks.html?hp&action=click&pgtype=Homepage&version=LedeSum&module=first-column-region&region=top-news&WT.nav=top-news&_r=0

#BailIns?Bailins?WeDon’NeedNoStinkin’BailIns…

[WaPo] – Stop and seize: Aggressive police take hundreds of millions of dollars from motorists not charged with crimes

http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/?hpid=z1

#IsSirReadyForHisForkingYet?

[UK Guardian] – Sun, sea and silver service: what’s it like crewing on a superyacht?: Working on a superyacht is the dream job for many young Britons. Their life below deck is surreal, funny and sometimes downright disturbing.

http://www.theguardian.com/lifeandstyle/2014/sep/07/crewing-on-superyachts-wealth-careers

#198 crowdedelevatorfartz on 09.07.14 at 1:18 pm

@#191 Basil fawlty

Lets not pretend that Putin is a “nice guy’ shall we?
Former colonel in the KGB.
Estimated to be worth over $1 Billion US ( on a salary of 400k per annum, no bribery there…….)
Journalists critical of him have been murdered.
Sat for two terms as the leader of the country. Stepped down as per the constitution. Nominated a lackey to replace him for 1 term. Sat as the #2 while pulling the puppet strings. Stepped back in as leader( his election opponents were a neo-nazi and a former wrestler). Nice.
Democracy at its most blatantly craven.
Make no mistake .
Putin is a ruthless dictator who will stop at nothing to stay in power. His first two terms as leader were a breeze. The economy was growing. Now the economy has stalled and the population needs something else to focus on ….. Even if it means war. World war. So be it.
I dare say he will eventually end up like Hitler. Either committing suicide or put to the sword by his own people. A “war crimes” trial at the Hague isnt in his vision of retirement.

#199 crowdedelevatorfartz on 09.07.14 at 1:27 pm

Perhaps Putin is only finishing what Churchill and Patton recommended to Harry Truman.

When Churchill was told of the bombing of Hiroshima his comment was “Bomb Moscow”.
When Patton was told of Germany’s surrender he replied, ” Give me 20 tank divisions and I’ll be eating Christmas dinner in Moscow”.

Both those men knew that eventually the west would fight a war with Russia.

I wonder what China will do after Nato and Russia slug it out? Decimating each others militaries…..Pick the cherries and plums from Russia’s far east? Nothing like free oil and gas to make their economy boom.
Nah. They’ll just sit back and hope Russia regrows its military……..

:)

#200 Stephen Phillips on 09.07.14 at 1:58 pm

Garth, if deflation is on the way you should wait a week or two and the tuna, tp, and ammo will all be a little cheaper! ;)

#201 Mark on 09.07.14 at 2:07 pm

“The failure rate presently is low for corporate bonds in part because of low interest rates for people chasing yield. An Air Canada bond was paying 11 percent at the start of January this year. Knowing that the price of oil could only fall in the future in about 7 years you’d break even with inflation (if they stay afloat). For banks and credit unions you just don’t want to be holding the first one to go bankrupt. The most likely would be credit unions in British Columbia or something like Hubert Financial which is a lender of last resort for people with poor credit.”

I personally believe Credit Unions generally are over-exposed to uninsured RE and small business lending. The local credit union was advertising 0% down loans far after the CMHC outlawed insurance against them. The local credit union has its billboard literally plastered on almost every new multi-family construction project when it is apparent that overcapacity reigns supreme. While the big-5 banks were divesting their overvalued real estate locally and moving to leased premises, the local credit union significantly expanded and modernized its building.

Once everything is said and done, I believe that a number of credit unions are going to fail, and will be acquired by the big-5 for practically nothing. The Credit Unions are basically Canada’s cowboy lenders. The Credit Unions are the institutions for which people need to be more fearful of being subjected to a debt to equity conversion (sometimes called a ‘bail-in’), not the big-5.

#202 BillyBob on 09.07.14 at 2:19 pm

@ Devils
“#121 Not Metroman in Calgary on 09.06.14 at 11:16 am
@#15 Natalie Ivenwitz:

Women ultimately have ALL the power to get and have EVERY and ANY thing they want. Women are complex and men are simple. It always amazes me how many (most/almost all) women miss this fact. Men are real simple and ultimately after one thing and will give to a woman EVERY and ANY thing she wants if they believe it might lead to him getting that one thing.

Again, men, even the most intelligent men, are extremely simple and can easily be led around by a woman who knows how to use her assets.”

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

What tired old crap.

Each gender certainly has their strengths, and their value – like it or not – is measured differently. For women, it tends to be their physical attributes, which generally decline over time. For men, it tends to be their status as measured in wealth and power, which generally increase with time.

Fair? Not at all.

The world is absolutely loaded with examples of which I speak, particularly here in Dubai. Rich ugly old men with beautiful young foreign women. Each exchanging what they have for what they don’t.

Sucking up to women by pretending they have some advantage they don’t is weak. Next he’ll be quoting Seinfeld jokes.

#203 Millenial on 09.07.14 at 2:38 pm

Hey Garth,
I bought $25 of lottery tickets for this past Friday’s $50million Lotto Max draw. I was excited to hear yesterday that there was a winner, ticket sold in Ontario. Just checked my tickets and it wasn’t me. :(

#204 Snowboid on 09.07.14 at 3:08 pm

On the lighter side, here’s a FSBO in Calgary that comes furnished. I especially like the hot-tub in the basement rec room.

If this is a business I can surmise what type of services may be provided – as a bonus it’s across the street from the massive RRDTC clinic!

http://propertyguys.com/property/index/id/75896

It’s amazing that this fantastic property is only $600K!

#205 devore on 09.07.14 at 4:16 pm

#135 Blacksheep

My family loves salmon as it used to be a weekly meal. Since Fukishma, its become a treat once in blue moon, and even then its only a small quantity of the smoked stuff. Paranoid? Maybe, but I know of other family’s doing the same thing, so ya, unfortunately your screwed.

Every greenie and their rescue dog is testing every scrap of land, water and fauna between here and coast of Japan. Yeah, you’re beyond paranoid. Meanwhile, I’m enjoying a prime selection of fresh seafood at great prices.

#206 Bill Gable on 09.07.14 at 4:25 pm

One word to describe today’s missive: Sobering.

#207 Detalumis on 09.07.14 at 4:32 pm

#192 is not all far off the mark, 258,000 immigrants in 2013, 105K of them refugees and family class. 137K additional temporary foreign workers added that year on top of whoever was there the previous year.

I worked in IT and have seen the wage rates ratchet down significantly in the last ten years. It’s not a career anymore. This hasn’t affected you personally so you can play the Kumbaya-game, all immigrants are good for the country. As long as teachers and police don’t see any change to their entitlements all is right with the world.

We are going to have a huge problem trying to pay for all the retirees, the numbers are going to explode over the next ten years, when you have fully half the country earning less than 30K and paying little taxes. But like you said all those millions of people earning so little have a “lack of success” because they are stupid and make bad decisions, not because we import 400K+ of new workers to compete with them. If you said it then it must be true.

#208 Retired Boomer - WI on 09.07.14 at 5:06 pm

Looking At Deflation… Could it happen??

Seeing the Europeans announce bottom lending rates, plus buying asset based assets Hmmm… To Stave off Deflation in an era where we see increased mfg pressures, and increased population pressures that will most certainly harm the environment, which we are all dependent upon, maybe having an outbreak of negative growth (deflation) is precisely the treatment needed.

Yes, the indebted will get squeezed, crushed even. Too bad, nobody set them up except themselves. Cheap rates sometimes have consequences.

In the meantime, mature economies have weak job growth, crappy income growth, yet prices remain high.

So, for the old fartz who have cash bring on a bit of deflation! Continuos growth obviously have limits, are we there yet?

#209 maxx on 09.07.14 at 5:30 pm

#54 Realtor on 09.05.14 at 9:43 pm

“Like I said many times before
Unemployment is a better bet to cause a housing correction than interest
Rises.

Variable rates will once again become
More popular.

With precious metals in the dumps
And oil around 93$ even with all the political unrest
Canada will need to devalue the dollar

I was surprise to read that we would need a few
Years of bad employment data bedew the correction
Would final come

Joblosses m/m will keep rates lower”

Blah, blah, blah……..then you’ll have to work a hell of a lot harder to sell, sell, sell, wont you.

Sorry.

Not.

#210 Steve French on 09.07.14 at 6:13 pm

Saskatoon wrote: “raising minimum wage doesn’t create prosperity–in fact, long-term, it only functions to make rich people richer.”

– what a load of toss.

If minimum wages are so evil, why does Ontario have one at all? Why not pay people $2 per hour, or less, if it’s only the rich that benefit from higher wages?

Sorry Saskatoon, your defunct right wing ideology is the problem. And I have no idea why you are defending the interests of the super-rich.

I say let’s hang the super-rich.

#211 Incredulous on 09.07.14 at 8:07 pm

Thanks for everyone who chimed in in response to my question (#39).

But like Lord Voldemort, “I confess myself disappointed.” :-) At the risk of angering the flame gods, it would have been better to get some analysis instead of what looks like arm waving.

Please consider:

* Accounting 101 tells us that deposits at a bank are a liability against the bank. Hopefully we can all agree on that.

* The “Economic Action Plan 2013” includes the language about a “bail-in” regime for “systemically important banks.” See pages 144-45 of http://www.budget.gc.ca/2013/doc/plan/budget2013-eng.pdf. Again, hopefully we can agree it says that.

* Does “Economic Action Plan 2013” have the force of law or is it a proposal?

* Even if it’s law, “Economic Action Plan 2013” says that “The Government proposes to implement a “bail-in” regime for systemically important banks,” which sounds like a proposal. Has it gone into effect? Ditto language like the “regime will be designed …” (suggests that it had not been designed at the time of writing).

* The provision says the “bail-in” regime works through “conversion of certain bank liabilities into regulatory capital.” What are “certain bank liabilities”? It seems that Garth and several others assume (no analysis has been provided) that it does not include deposits, but the Zero Hedge article author seems to assume (again, no analysis) that it does. Basically “he said, she said.”

* What/which are “systemically important banks”?

* Assuming the “bail-in” would include deposits, would one be better off depositing with banks that are not “systemically important banks” (presumably can’t use “bail-in”)?

* How do the CDIC provisions work with in the “bail-in” regime (if deposits are fair game)? Seems like they can be inconsistent.

Inquiring minds want to know …

#212 };-) aka Devil's Advocate on 09.07.14 at 9:01 pm

#202 BillyBob, on 09.07.14 at 2:19 pm

What was it you missed? Was my syntax that bad? I think we are talking about the same thing and in agreement

The world is absolutely loaded with examples of which I speak, particularly here in Dubai. Rich ugly old men with beautiful young foreign women. Each exchanging what they have for what they don’t.

The only difference being women want lots of things and me are after essentially one thing };-)

#213 David Hawke on 09.08.14 at 1:26 pm

#191 “Like what, exactly?” Garth

Like how to lead a country, like how to stand up to the US, for a start.