The cowboy gene

COWBOY modified

Aren’t you happy you didn’t just buy a honking big particleboard McMansion in suburban Calgary? Yeah, it was tempting. The locals swear there’s nothing more secure than fifty feet of Alberta dirt, and lately the numbers have supported that.

The average house in Cowtown had gained 10.2% year/year by last month, to $512,800. Hell, even condos have been sizzling – going for an average of $298,800, a jump of 9.5% from last autumn with a 21% goose in sales.

This has made Calgary the most speculative little line-dancin’ bubblette in the nation. And the burbs have been just as hormonal. In Airdrie, for example, prices popped 8% in a single month – last month.

But all that could be in jeopardy, now that Mr, Market has moved back into town. Oil prices have been pushed into a full-fledged correction – almost a free-fall – by tumbling demand and increasing supplies, which will nail Alberta’s provincial budget as much as it will inflated house values in Fort Mac and Calgary.

On Tuesday alone the price of oil dropped about 4.5% – an unusual event – taking crude to below the $82 mark (you may recall a few weeks ago this pathetic blog said eighty bucks was possible). (Wednesday a.m. update – oil now at $81. Oops.) This means oil has lost close to a third from its recent high, and is now caught in a vice from which there is no easy escape.

As the US dollar rises in value (the world’s safe haven currency) commodity prices are squished. (The loonie this morning dropped a full cent, to just 88 American pennies.) Meanwhile all that fracking south of the border has created more supply and propelled the US onto the path of energy self-sufficiency. Worse, that deflation stuff I’ve been talking about here for the past year has come to pass. Europe’s now an official mess. Germany just cut its growth forecast. The US has missed inflation targets for 28 months. Ebola threatens to freeze local economies and disrupt trade and travel. And demand for oil is dropping along with factory orders.

In short, this doesn’t look like a blip. The TSX sure thinks so. Down another 200 points on Tuesday, and now in official correction mode – thanks mostly to oil.

And even though average incomes in Calgary and Fort Mac beat the national average, so does debt – due to real estate. Alberta households carry $35,000 more debt on average than a year ago, and their debt load is now a staggering 64% higher than the national average, according to BeeMo.

How strong has the cowboy gene been?

  • About 500 homes prices over $1 million have sold in Cowtown this year. That’s ten times the number of a decade ago, and a record. Realtors have been so aroused that one firm (Sotheby’s) hired a helicopter to fly horny buyers over the little faux hills that conveniently connect the freeways.
  • Homes listed over $500,000 are higher by fifty per cent than just a year ago.
  • City Hall claims there are more millionaires in Calgary than anywhere else in Canada. At least, that was last week.

But, it’s all related to oil. Unlike the GTA (six times larger), the Albertan economy swings with crude. When asked why house prices have increased faster than anywhere else in Canada this past year, here’s how BMO economist Bob Kavcic sees it: “It’s a boom-bust economy that lives and dies by oil prices, and the housing market is the same. If you were to say what’s going to drive luxury real estate in Calgary, I’d say just oil prices.”

And that makes Alberta, especially Calgary and Fort Mac, ground zero for deflation’s dump on Canada. Housing values rising at five times the inflation rate are not sustainable. Worse, the buy-now-or-buy-never mentality so prevalent these past two years has blinded people to the dangers of spending big on inflated assets in a one-horse economy.

Oil’s descent may stop. It may not. Already some oil patch development has been curtailed and jobs lost. The newly-minted but well-worn premier is worried about plunging royalties, just days into his new job.

This is a not the first rodeo. Alberta is boom. Alberta is bust. What’s new is a city now packed with seven-figure houses, peppered with debt. At least gas will be cheaper for that drive to the coast.

189 comments ↓

#1 DM in C on 10.14.14 at 7:07 pm

I live in Cowtown, and my company, our software is completely detached from O&G. Won’t have any impact on our company, other than perhaps on spouses who work in the industry. None. In fact, when the YYC economy goes into low cycle, we benefit — our company looks mighty attractive to those looking at layoffs. If you can pass the tests to get hired.

#2 Happy Renting on 10.14.14 at 7:07 pm

Dear blog dogs,

Irvin Leroux is crowdfunding for legal costs to defend the judgment that CRA owes taxpayers a duty of care. Garth highlighted his story in this blog post:

http://www.greaterfool.ca/2014/07/04/the-fight/

If you donated to phase 1 (the court transcript) or would just like to support Mr. Leroux in a fight that affects all of us, here is the link:

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

With three days to go he’s only 10% to his goal, but support from this blog’s readership (I’ve donated to both phases) could make a big difference.

#3 Inflation and deflation on 10.14.14 at 7:09 pm

It was Sheik Yamani’s quadrupling of the price of oil in the 1970s that kicked off rampant inflation, line ups at the pumps and roaring house prices for more than a decade.

Let’s hope falling oil prices do not propel us into the dreaded deflationary spiral.

Alwyn

#4 Vancouverite on 10.14.14 at 7:10 pm

Wait till the us fed panics and starts up another round of QE. Already the media saying rates are Gona be lower longer than anyone ever predicted. Hope you all like crow …..enjoy

#5 Shawn G in TO on 10.14.14 at 7:13 pm

how many boom-bust cycles has it been in Alberta in the past 20 years? surely people’s memory last a bit longer than that?
and what’s going to happen to Alberta’s provincial budget?

#6 Cow Man on 10.14.14 at 7:13 pm

I guess Smoking Man was right all along. Interest rates will be going down not up. Unfortunately for all of us. Oil drives not only Alberta but all of the have not Provinces that get transfer payments.

#7 Nomad on 10.14.14 at 7:13 pm

Yep, light crude hit 81.77 today.
Next coming up, energy companies forecasts will go down.

Could be the Saudis pushing it down, could be China’s slowdown. Whatever it is, oil won’t reverse course for a while. Could be months, could be a year.

Impossible to know.

Likely we’ll read about layoffs in the energy industry before Christmas and right after. That’s when it’s done.
If you are in the last wave of house buyers in Alberta, find greatest of fools to sell your house to.
Rent and work hard.

See this BNN video and smell the anxiety:
http://www.bnn.ca/Video/player.aspx?vid=467278

#8 Cici on 10.14.14 at 7:14 pm

I’m on time today!

#9 Derek R on 10.14.14 at 7:15 pm

I’m glad that I cashed out and rent a nice Calgary house instead. No need to worry about this stuff.

#10 Calgaryrenter on 10.14.14 at 7:16 pm

I was talking to colleagues and friends 2 years ago about the impact fracking was going to have on oil prices, and the impact on the Albertan economy. They looked at me like I was talking Chinese, and loaded up on housing. I don’t understand how noone could see this one on its way.

#11 DaleFromCalgary on 10.14.14 at 7:20 pm

Five years ago when oil went above $50 per barrel, there were end-of-the-world headlines. Now financial advisors who get their news from the mass media think $80 oil is disastrous cheap. In actual fact, oil has been range-bound between $80 and $110 since the Panic of 2008. When it gets too high, it crimps the global economy and demand destruction results. When it gets too low, unconventional oil doesn’t pay, so the shale and bitumin projects cut back, leading to shortages in the market that bring prices back up.

Cowtown petroleum companies have been contracting out to Texas and China for years. As I’ve said before in this blog, the people buying houses in Calgary aren’t petro-executives. The particleboard shacks are bought by the tradesmen building them and others whose paycheques depend directly or indirectly on how much particleboard goes into new suburbs like Seton or Kincora.

It will all end in tears, of course, but not just yet.

#12 Albert on 10.14.14 at 7:20 pm

Why real estate price still keep raising Garth ?

#13 Frustrated Kiwi on 10.14.14 at 7:24 pm

Just curious. Does anyone know if Calgary has an urban growth boundary – an artificial planning line that subdivision can’t happen beyond? There’s a fair bit of evidence that such planning restrictions make booms and busts worse, and do little to actually combat urban sprawl (because people jump the boundary and commute from the nearest town, which is a lot further than the boundary) – also no evidence it leads to densification. Seems to have been a contributing factor in Las Vegas’s bit boom and bust. Just wondering if it’s a factor here or if oil is enough in itself?

#14 Happy Renting on 10.14.14 at 7:25 pm

If oil continues to plunge, Calgary’s economic and RE crash will be like a forest fire: a spectacle if seen from afar, a gut-churning train wreck if viewed up close, and absolutely terrifying if in the middle of it. Hope things moderate a bit (the oft hoped-for unicorn, a soft landing.)

#15 Van Isle Renter on 10.14.14 at 7:26 pm

Had a few beers with a good buddy of mine in Alberta last week. He asked how it is livin’ on the Island versus dukeing it out in Cowtown’s oilpatch (the old home town). I said “Great, but it’s they’re total opposites; in Cowtown, you have to pretend to have money to fit in. On the Island you have to pretend to be broke to fit in.”

He almost fell out of his chair laughing.

#16 Drill Baby Drill on 10.14.14 at 7:30 pm

Dear Pathetic Blog : excuse me a minute while I take another shot of courage. There that’s better. I have been an oil & gas engineer for 35 yrs in Cowtown. I have seen many boom and bust cycles some worse than others but the effects are similar. Many easterners arrive looking for fame and fortune fill up on mortgage debt and then get clobbered when the oil price drops. They move back to eastern Canada where lower oil prices mean that manufacturing picks up because of lower energy costs. The lower oil price means a lower Looney which means Canadian manufactured goods are cheaper for the US consumer Etc. How OPEC pricing goes so does Alberta’s fortunes. Funny though I would not want to be in other province because the cycle always swings back and you have another chance to make it big.

#17 crowdedelevatorfartz on 10.14.14 at 7:39 pm

@#3 Inflation/Deflation

You already posted that on yesterdays blog.

As for “chopper’s swooping in to schmooze buyers”….. Vancouvers realtors should sue for copyright infringement.

#18 crowdedelevatorfartz on 10.14.14 at 7:42 pm

@#5 Shawn in GTO
“…..what’s going to happen to Alberta’s provincial budget?…..”
+++++++++++++++++++++++++++++++++++
Well, if Allison Redford had her way, gold bidets, diamond encrusted doorknobs, and 1st class flights to funerals anywhere Air Canada flies…….

God I love the politicians in this country.
Question:
Whats the difference between Allison Redford and Christy Clark?
Answer: Allison got caught.

#19 takla on 10.14.14 at 7:45 pm

ZIRP{zero interest rate policy}has held steady longer then most would have thought despite continuous threats from central bankers of raising rates.
Without sustainable economic growth this is the new paradigm and the continued blathering about over extended homeowners takeing a bath on their realestate investment is just that …talk…
Without raising interest rates this will continue to be a slow burn down as some at the central bank have recently said they will reconsider quantitive easeing if the economy continues to stagnate

#20 Godth on 10.14.14 at 7:45 pm

Meanwhile all that fracking south of the border has created more supply and propelled the US onto the path of energy self-sufficiency.
———————————————————-

This is the same sort of, ahem, wishful thinking that the house humpers are accused of (rightfully so). This nonsense has been thoroughly debunked and yet you keep pushing it. Why do you do it? Oh yeah…ideology.

#21 LJ on 10.14.14 at 7:46 pm

The uninformed will tell you that the oil patch will be A-OK due to our low dollar.

However, they fail to mention that the sludge that we ship out of Alberta is called “Western Canadian Select” and it is currently trading at about a $15 discount to WTI. So, even with the dollar differential, they are getting well under $80/barrel.

The companies are losing money at these rates and, if it continues, or even sticks at these levels, we are likely to see another “bust” here in Cowtown (and Alberta). For those who have survived the past couple of downturns, it is old hat. But, those new souls to the city, it will be quite eye-opening how fast real estate becomes entirely illiquid in this city.

Buckle up!!!

#22 Oldwrinkledguy on 10.14.14 at 7:47 pm

As an Ex Oil Company employee (Dome Petroleum), been there, done that, have the Tee Shirt, can see a world of hurt coming to a lot of unsuspecting folks. The early Eighties in Calgary were not a lot of fun except on Wednesday’s as a bonavide member of the UIC Ski team you headed to Sunshine. As in ’85 and ’86 a lot of folks headed back East, I was fortunate sold my house to Police Officer and came away with my original deposit.
For some people this will be a tough time.

#23 Mike in the Okanagan on 10.14.14 at 7:52 pm

Well gas is still a rip-off in Kelowna at 125.9. They are quick to crank up the price blaming oil but the reverse is conveniently not true.

I wonder how much of that BC carbon tax is actually getting dumped into general coffers.

#24 bubu on 10.14.14 at 8:00 pm

Nothing will happen to the house prices in Calgary or Edmonton boys. Maybe they will not go up a lot or the worst scenario ..they will go back 10% to the last year level and stay there for a year or two…

#25 gag on 10.14.14 at 8:04 pm

wrong here Garth….world is not about to stop using oil…nice correction but prices will stabilize and back up we go for wintet…seasonality son

#26 Lastline on 10.14.14 at 8:10 pm

Deflation? Bring it. All the monetary shenanigans in the world can’t stop it now. Markets are hooked on stimulus like crack. You can’t be addicted to crack and get off without suffering.

$60 trillion of world debt is becoming impossible to manage. How many more fantastic tricks will central banks wave with their magic wands?

The only way out is capital destruction and a massive debt reset. That way all the crud gets flushed out and a healthy economy can function. Sooner or later it will need to be addressed. But the longer we wait, the more damage will result.

#27 Smoking Man on 10.14.14 at 8:16 pm

Falling RE in cowtown or anywhere, in a few months from now will be the least of our problems.

The machine is falling apart, it’s losing control rapidly . Like any wild animal that gets boxed into a corner, it becomes un predictable and dangerous.

OK, I confess I’ve been peeking at the Veterans Today site. Wow is all I got to say..

Happens everytime you do a bit of UFO research.

I need to find a reputable ufo site without all the geo politics, that stuff don’t interest me.

Anyone have suggestions…

#28 Retired Boomer - WI on 10.14.14 at 8:17 pm

Bring in the DEFLATION!! What is there to lose in that for my generation of savers, with no debt?

The rest, well…. too bad. If you are a millennial, or Gen X and couldn’t ‘afford it’, why the hell did you buy it?

If you are a broke BOOMER, I feel your pain, but is it really MY problem?

There, now you know where I stand. Alone maybe, but I stand accused.

#29 benchwarmer on 10.14.14 at 8:25 pm

Albertans debt load is now a staggering 64% higher than the national average!
Yahooo!!! Winning!
That pretty much sums up the attitude of 90% of the people in this province.

#30 JSS on 10.14.14 at 8:30 pm

Where is Edmonton in this analysis? No mention.

#31 Drill Baby Drill on 10.14.14 at 8:30 pm

#13 Frustrated Kiwi
There is no city in Canada that restricts it’s urban sprawl. Cowtown to the south west has a native reservation as a restricting boundary otherwise their are no others. Calgary has actually increased it’s density in the downtown core over the past 5 yrs because of the commute times. Thus the condo craze a la Brad Lamb were have been experiencing.

#32 Drill Baby Drill on 10.14.14 at 8:32 pm

#29 Yahoo Winning

What are you winning ?

#33 Nathan on 10.14.14 at 8:33 pm

Garth, have you been out here? Gas prices don’t go down, at least not significantly, regardless of what oil does…

#34 Drill Baby Drill on 10.14.14 at 8:34 pm

#30 JSS
First the engineering and exploration jobs in Cowtown the blue collar fab shop jobs in Edmonchuck.

#35 Ole Doberman on 10.14.14 at 8:39 pm

Wait a minute there Gartho – I’ve been a reader here for years and you have always said O&G is not what keeps the Calgary market going.

Now you are showing how low oil prices is a death knell for the city – so which one is it?

Exaggerate much? — Garth

#36 crowdedelevatorfartz on 10.14.14 at 8:47 pm

@#24 bubu
“Nothing will happen to the house prices in Calgary or Edmonton boys. Maybe they will not go up a lot or the worst scenario ..they will go back 10% to the last year level and stay there for a year or two…”
+++++++++++++++++++++++++++++++++++

Ummmmm
Perhaps you should change yer name to BooBoo, cause you just made one with that statement………
Apparently you dont remember the early 80’s, and 90’s

Unbelievable, 500k for a house in Cowtown …. it aint sweetgrass them cowpokes is smokin’

#37 Observer on 10.14.14 at 8:49 pm

Assette needs a little deflating. This is one lady overdue for an extended weight loss regimen. Propped up far too long by the central bank.

#38 William Bell on 10.14.14 at 8:58 pm

A much needed correction !! I’d rather see those truck balls sitting stationary on dealership lots than roaming around speeding in school zones.

#39 Sheane Wallace on 10.14.14 at 9:03 pm

https://ca.news.yahoo.com/canada-condo-boom-rolls-buildings-fall-apart-051254182–sector.html

wonderful and boring banking system giving loans to people with no money at taxpayer;s risk to buy crappy million dollar bungalows or condos with falling glasses.

System that had to be bailed out with 125 billions in under the table purchase of bad mortgages.

#40 112 on 10.14.14 at 9:07 pm

Oil is still about 90$ CAD

#41 james on 10.14.14 at 9:10 pm

#10 Calgaryrenter

Two years ago I was renting a house in Toronto from a guy who worked in the oil and gas industry. He lived there before I moved in, and I used to get his oil, gas and mining magazines delivered to the house (never bothered to update his address).

Right there, in the trade magazines, they were talking about the new oilfield developments in the USA. A couple of articles even talked about the implications for Canada.

Poof. Apparently no one in the Alberta government bothered to read the trade publications of the industry that powers the province. That would have been too much to ask, to distract them from embezzling public funds and hiding their malfeasance (e.g., Redford).

Same thing. People looked at me oddly when I mentioned this. Canadians can be very insular.

#42 bubu on 10.14.14 at 9:12 pm

@#36 crowdedelevatorfartz

I don’t think you can compare 80s to now.. the interest rate was up to 18% also at that point so the oil price was only a piece of the puzzle… now, we have only the oil down a little bit… you will see….

#43 SWL1976 on 10.14.14 at 9:12 pm

Boots on the ground here in the oil patch, maitenance at one of the big sites, no panic yet but one small department that had a few vacant positions, a guy who quit and one got fired is the first casualty I know of as that department is now no longer required.

I feel bad for some as I can see they are starting to worry, I know an apprentice who just bought a new house in cow town this spring for over 500k didn’t add up to me, but not my deal

Hopefully things don’t get too bad, but if they do I wont look so silly for being prepared. I am sure there are bean counters working steady on who is needed and who is not, good decision or not when money gets tight people go home

#44 james on 10.14.14 at 9:12 pm

#24

“Nothing will happen to the house prices in Calgary or Edmonton boys.”

If ANY prediction is bound to be false, it is that prices will stay the same. You’d have better odds of saying that they will rise in the next two years than saying that they will stay stable.

Why? Because history teaches that real estate markets go through cycles. A brief glance at the data from any market in history should be enough to convince you of that.

#45 Tony on 10.14.14 at 9:16 pm

Re: #5 Shawn G in TO on 10.14.14 at 7:13 pm

Property taxes will go through the roof and all the backwoods hillbillies will walk and leave the keys in the door.

#46 Drill Baby Drill on 10.14.14 at 9:18 pm

#44 James
What the &(&% are you talking about ?

#47 Terrier on 10.14.14 at 9:18 pm

It just doesn’t matter anymore … Dubya, Dubya 3 already started.

#48 bubu on 10.14.14 at 9:21 pm

@# 44 james

And what do you predict? 10% down? We’ll be back to last year… is that better for you? Why you didn’t buy last year then?

#49 JSS on 10.14.14 at 9:26 pm

Hey, did anyone out there buy shares of TransCanada Pipeline today, at a 5.5% discount?

#50 JohnG on 10.14.14 at 9:28 pm

I did a double take driving by this new development near Winnipeg appropriately titled ‘on the edge’ ! I’ll try to swing out there and take a pic of the sign.

http://ontheedgeofheadingley.com/About.html

Yikes!

J

#51 stop lying on 10.14.14 at 9:33 pm

Don’t know about Calgary but this will make for a good spring market in the GTA. Maybe that will be the peak?

#52 Sheane Wallace on 10.14.14 at 9:36 pm

#40 112 on 10.14.14 at 9:07 pm
Oil is still about 90$ CAD

It won’t fall bellow that, the CA dollar will fall with oil.

?Ca for 70 cents US?

#53 Tony on 10.14.14 at 9:41 pm

Re: #30 JSS on 10.14.14 at 8:30 pm

Edmonton real estate tanked the summer of 2007. Seven years later prices are still lower and resale condos and apartments are still about 40 percent lower. I guess real estate will crash from a lower level there. Property tax increases over and above the inflation rate will flatten all Alberta real estate.

#54 siter on 10.14.14 at 9:42 pm

Just sub-let the whole oil patch to the Japanese for 50 years… They are looking for alternatives to nuke energy since the tsunami…..they will no doubt devise a technology to make it feasible to transport the goop over there…..

#55 not 1st on 10.14.14 at 9:54 pm

Garth, your posters don’t really get it. They are focused on the price of oil when they don’t realize its a stranded asset now. Doesn’t matter if oil goes to $200/bbl. The US has their own supply now and they said no to our pipelines so no new market there.

And our pipeline projects to the east and west coast are DOA. China won’t wait for our politics to resolve so they will give Putin a call.

On top of that solar is expanding like nuts.

Its game over for the oil patch. Been a nice ride.

#56 Big Shadow on 10.14.14 at 10:04 pm

Re #27 Smoking Man:

Check out The Paracast. Best ufv podcast and website by far with very active discussion forum. Low tolerance for flakes. Be sure to go back into the archives and listen to the David Biedney episodes. Classics.

#57 Goldie on 10.14.14 at 10:05 pm

Just to repeat , as I often do to whoever will listen, US oil sufficiency, if it ever happens, will only be temporary. Then we’ll be back to worrying about oil again.

#58 TEMPORARY® Foreign Prime Minister on 10.14.14 at 10:07 pm

“….here’s how BMO economist Bob Kavcic sees it: “It’s a boom-bust economy that lives and dies by oil prices, and the housing market is the same…..”
=========================

So do its premiers.

I remember a certain folksy, gosh ‘n shucks, Rob Ford-like premier, walking into a Calgary shelter, announcing his disdain for the unemployed homeless, tossing cash at their feet, all the while chastising his hard-working “Eastern Bums” to go back home, though quite happy to mask his own provincial financial incompetence with oil royalties.

I’m guessing newly-minted Alberta Premier Jim Prentice is about to throw the same football pass as his Don Ghetty predecessor.

Not every Alberta premier gets to choose his own election at high tide.

#59 Not an economist on 10.14.14 at 10:12 pm

“This is a not the first rodeo. Alberta is boom. Alberta is bust. What’s new is a city now packed with seven-figure houses, peppered with debt. ”

What’s new is young Canadians that have invaded Alberta in search of a decent job, and they haven’t been around long enough to have any memory of the last time Alberta went bust in a big way. It’s sort of a job bubble, if you will.

You’re been around the block a few times, Garth. What is unexplored history to the horny is real life memory to you.

You might want to read this:
http://business.financialpost.com/2014/10/13/saudi-arabia-to-oil-market-wed-accept-us80-oil-for-extended-period-to-protect-market-share/?__lsa=2979-9835

It seems Saudi Arabia is ready to keep oil prices at around 80 dollars for “an extended period” aka indefinitely. Since the last time OPEC decided to flex their muscles, things have changed. Almost all petro states have grown fat on unearned money, and have structured their economies in a way that’s increasingly reliant on oil, and need a big price to keep their books balanced and their populations from revolting. Except for Saudi Arabia, who has been diversifying furiously for over 10 years, and good for them.

http://www.economist.com/blogs/graphicdetail/2014/10/daily-chart-7?fsrc=scn/tw/te/bl/dc/blackgolddeficits

In the above link you can find an article that The Economist published today. It details what the break even point is for petro states as far as oil prices go. If oil stays at 80 bucks, and Saudi Arabia keeps pumping, most petro states will be financially destabilized in a big way, including Russia.

The oil&gas sector in Canada has been less than 10% of GDP, but it was touted as our economy’s saviour. Even as temporary foreign workers marched in and displaced Alberta tradespeople, we constantly heard the refrain that welding stuff or fitting pipes is where the jobs are at. Just move a few timezones away from your family and dig deep for living arrangements. We were told that we could become a petro state if we ignore the environment and pretend cancer has no causes. Aren’t we glad we don’t have even more of our GDP tied up in that business? It’s boom and bust. And the bust has to come, because we’ve been booming for a while. It’s just a matter of when, and it looks like that time is now.

#60 JL on 10.14.14 at 10:12 pm

#35 Ole Doberman.

Thank you! You are 100% correct, Garth has consistently argued exactly that. When oil prices are high, Garth says they won’t help keep prices high, a small percentage of Calgarians work in the patch… blah blah blah. But now that prices are falling. Watch out! Oil prices drive Calgary’s economy now.

Buyer and seller perceptions drive markets. Good luck with that. — Garth

#61 Nemesis on 10.14.14 at 10:15 pm

#NotOurFirstRodeoEither… #OperationPenhold[CFB]… #LockUpYourDaughters,CowTown…

http://youtu.be/Dx7T1jYymCI

#62 PeterfromCalgary on 10.14.14 at 10:20 pm

It is the perfect storm. US oil production is up over 3 million barrels per day. China is not growing like it use to and US oil consumption has peaked. Saudi which cut production drastically in the 80s and early 90s only to see other OPEC countries increase their production does not want to lose market share.

The only thing that is saving us from $50 oil is ISIL being near Baghdad. Alberta’s prosperity is now dependent on a bunch of crazy terrorists taking over Baghdad. Something which could happen because Obama is too stupid to stop them.

This cowboy is going the Florida Keys this Christmas. You can find me by looking for the guy with his head buried in the sand. I’ll be on a Key near the solar powered Christmas tree.

http://keysweekly.com/42/the-elves-strike-again-revelers-festoon-tree-on-7-mile-bridge/

#63 Smoking Man on 10.14.14 at 10:22 pm

Buyer and seller perceptions drive markets. Good luck with that. — Garth

What is this, after gazillions of posts on herd dynamics, the Oracle of wisdom, the spiritual guru of Greater fools finally understands.. It’s not price to income…

But what the schooled belive that counts….

#64 Arfmooocat on 10.14.14 at 10:23 pm

Worked with a an Indian immigrant today that bought a 2 bdr 3 story walk up condo in Calgary… you know the kind that used to be 800 sq ft rentals. There’s 12 suites per floor x 3 floors = 36 apartments.

He drank the kool-aid and bought it 4 months ago for $180,000 with 5% down

Bottom sludge are the first to feel the bubble pop.

#65 45north on 10.14.14 at 10:32 pm

Albert : Why do real estate price still keep raising Garth ?

well Albert let’s take an example:
Overall, though, the average sale price of residential properties was $356,915, a 3% increase compared to the same time last year, according to the Ottawa Real Estate Board.

http://www.ottawasun.com/2014/10/13/house-sales-down-but-sellers-raking-it-in

okay 3% increase is not very big but it is an increase, isn’t it?

maybe not. real estate markets are separated by price so suppose the middle and lower end of the market take a drop in sales but the upper end holds steady then the average price will rise but no house will increase in value. So if we looking at a 3% increase in average price then maybe that’s just because of a change in sales mix.

Mark says the average price is up because of the change in sales mix.

#66 Nemesis on 10.14.14 at 10:33 pm

#BudweiserMischief… #SmokingMan… #ItAllBeginsHere:

http://youtu.be/mNAkFRNPrvU

#67 Calgary facing a world of hurt on 10.14.14 at 10:54 pm

You can feel the anxiety from worried realtors, mortgage brokers and greater fools from Calgary here. Oil @$80 or less equals horrible financial pain, bankruptcy and of course loss if their home. People will learn a very hard lesson and it is WEEKS away. You can deny it all you want but it is lights out in Calgary.

#68 Calgary facing a world of hurt on 10.14.14 at 10:55 pm

Looks like someone already turned the lights out.

#69 nonplused on 10.14.14 at 10:59 pm

#13 Frustrated Kiwi

Calgary does have a sort of urban boundary, it’s called Carma. They have a lot to do with the rate at which farmland is converted to subdivisions but they’ve been doing it for years and years. Them and city hall.

It’s hard to explain why there would be a shortage of property in a city surrounded on 3 sides by wide open prairie. Plus now that the LRT actually goes somewhere there are plenty of opportunities for high density condos. Those are being built but it takes time.

#70 Arfmooocat on 10.14.14 at 11:01 pm

#64

Forgot to mention the $250 a month condo fee with that walkup

#71 Calgary Car Guy on 10.14.14 at 11:07 pm

Re/#58 by TEMPORARY® Foreign Prime Minister
I can’t let this total misrepresentation of that night’s event slide by without comment. Over the years the original truth of what happened that night has morphed into this big slam on Ralph that you are spewing here. Do you really think that Ralph asked his driver to stop there that night near Christmas so he could go inside and berate homeless people? Ralph was always a man of the people and very much respected the joe-average citizen and blue collar workers. Ralph had good intentions that night but he was drunk for sure. He asked his driver to stop so he could chat with some downtrodden homeless people he saw there and perhaps brighten up their Christmas. Maybe it was a misguided thought but his heart was in the right place. What he got from them was anger and insults and he reacted poorly by throwing a few bills at them. That was it—nothing more, nothing less. Ralph had his faults to be sure and you can make hay if you like with the ones that are truly told. Your misrepresentation of this one is an insult to Ralph who will always be one of and possibly the best, most down to earth and honest politicians this country has ever had. It always seems that only Albertans really know how fortunate we were to have had Ralph Klein for the time we did.

#72 Economic tsunami on 10.14.14 at 11:17 pm

An economic tsunami is coming for Canada debt / housing bubble and it’s going to hit Cowtown first and spread across Canada east and west. All that oil money that will be lost will effect every part of the Canadian economy. Toronto financial district will be feeling a lot of pain as many will be laid off. Will Canada and Canadians feel a similar economic shook like the one that crushed the US housings bubble ? Word is US hedge funds with more money then anyone have completed their big bets against Canada. These big boys run the world and they say Canada will have a monster economic fall out and housing crash. You think the big boys in the US would sit there and allow Canadians to thumb their noses at the big US? Many of you Canadian will wake up very soon.

#73 Kenchie on 10.14.14 at 11:37 pm

This is well said:

http://viralfury.com/if-this-video-doesnt-convince-you-to-put-down-your-phone-nothing-probably-will/

#74 Observer on 10.14.14 at 11:38 pm

BIS warns on ‘violent’ reversal

The global financial markets are dangerously stretched and may unwind with shock force as liquidity dries up, the Bank of International Settlements has warned.

http://www.telegraph.co.uk/finance/economics/11162217/BIS-warns-on-violent-reversal-of-global-markets.html

#75 Lillooet BC on 10.14.14 at 11:39 pm

The drop in oil prices will only be temporary, maybe a month or two. Saudi Arabia’s oil production hit peak and has been in decline for many years. They have to inject upwards of 70% sea water into oil wells to force the remaining oil out of the ground. All around the world the cheap, easy-to-get oil is gone and oil companies are having to drill deeper in more remote locations (The Gulf etc) and use more expensive technology and more energy to extract the oil. So the cost of producing a barrel of oil keeps rising relentlessly. In 1998, the price of a barrel of oil was $10. Now $80/barrel seems “cheap”. Just a momentary correction on the bumpy road of Peak Oil.

Fracked wells/shale oil requires much greater investment and they have a shorter producing life than conventional oil. As the price of oil slides to $80, various producers will scale back production, taking product off the market in the coming weeks and months, eventually driving up the price again. Now is a good time to buy cheap oil stocks. I’ve been investing in oil stocks for 17 years and have seen many ups and downs. Oil ALWAYS comes back up. Everywhere you go it is being consumed by everyone. Now is a buying opportunity.

#76 Kenchie on 10.14.14 at 11:41 pm

As is this one:

https://www.youtube.com/watch?v=ZS9Wte1gX9g

#77 Kenchie on 10.14.14 at 11:45 pm

Both of the links above are poems/songs about the problems of social media and smartphones. The second one is probably more enjoyable for boomers.

#78 Saudi Arabia on 10.14.14 at 11:46 pm

We will not limit production. We want Oil around $70/barrel.

This will shelve future projects and other national self-sustaining strategies.

This will decrease future supply.

Then a few years later, we will also restrict supply.

Then we will make some money $$$ after Oil shoots to $120 again..

#79 chapter 9 on 10.14.14 at 11:49 pm

“King Ralph” did something that politicians only campaign on “paying down debt and living within their means”. Dumping the $23 billion in debt was a first in North America. He’s probably turning over in his grave with the bunch of spendaholics in power today!!

#80 SWL1976 on 10.14.14 at 11:50 pm

Well just got though the posts from yesterday, and wow some good thoughts going on here. I think this pathetic blog and its blog dogs could manage world affairs better than our current leadership, but here we are

Great post again yesterday Garth, you seemed to get people thinking, and while I am doing my best to solve the basic problems of keeping pumps running and product following here in oil country, I am really just dreaming about living my simple life on the coast. I love going to sit in the ancient forest there, a forest that has not yet been logged is a magical place, while they are few and far between, when you are in them the seem to go on forever, but when you look at a map its a pin point, I will never take them for granted

Thanks to everyone who makes this site what it is

#81 prairie person on 10.14.14 at 11:53 pm

Oil is deliberately being driven down in price. Not the time of year. Putin was planning on holding Europe hostage for his oil and gas. However, he needs foreign currency. The lower oil prices go, the more desperately he needs to sell his product. He won’t be able to shut off the fuel he supplies to Europe. Lower price, has to sell more product. Not much has changed, there is even danger of oil disruption from West Africa. Yet no move up in the price of oil. The move down is being staged on a grand scale. Canada is a bit player.

#82 Ronaldo on 10.14.14 at 11:57 pm

#57 Goldie – is this what you’re talking about?

http://www.zerohedge.com/news/2014-05-22/us-shale-oil-miracle-disappears

#83 Mr. Big on 10.15.14 at 12:12 am

#13 Frustrated Kiwi

Calgary cityhall enacted an anti-development agenda immediately following the 2008 crisis. While there are still subdivisions rapidly filling out on the periphery it is now coming to an end. No new roads, no new sewer/water/services tie ins, no rubber stamp on suburban sprawl. Blue collar is forced out into the satellite towns and the Calgary inner city is demolished wholesale as gentrification becomes an unstoppable trend.

http://www.theglobeandmail.com/globe-debate/heres-the-plan-calgary-leads-us-all-to-a-greener-future/article787063/

#84 Bloefeld on 10.15.14 at 12:14 am

What astonishes me is that people in Alberta have repeatedly seen these boom/bust cycles in real estate and simply refuse to believe that house prices have any trajectory but up. I sold my place in Edmonton a few years ago, made a nice profit, moved to Calgary and rent at about 1/5 the cost of owning the lovely house I live in. The money I made on the house is doing quite nicely in a conservative portfolio. I will deploy that for a house when the market is down to 25% of what it is now.

#85 Christopher Lackey on 10.15.14 at 12:21 am

If we could only all have Mr. Berman’s job at ROB. Look around at daily and weekly market developments, and write with incredulity that nobody anticipated them. I realize its a good living and someone has to do it, I’m not attacking him personally, but he essentially promotes lemming-like investor behaviour by writing every day about what asset class you should have switched into last week.

There are hundreds like him. And thankfully, some of the 100% of us not in possession of crystal balls who didn’t go all in cash the day the TSX peaked have learned to buy more or at least stay calm.

Oil going straight to zero? Not likely, but if it is hopefully you weren’t all in.

#86 Nemesis on 10.15.14 at 12:27 am

#PartingShots… #OrWakingShots?… #It’sATimeZoneThang,SaltierDogz… #ToParaphraseMagnanimousHosts… #BewareTheSnakeOilSalesMen/TrollsRainmakers…

http://youtu.be/XE8qwsz84rs

#87 Oracle on 10.15.14 at 12:33 am

Garth

You have been saying for some time now that mortgage rates are set to increase and that the bond market sets rates.

Given the yield declines in bonds so you still feel as strong about interest rate increases?

Of course rates will normalize. But a slagging economy could delay the move – which is, sadly, worse for real estate than higher mortgage costs. — Garth

#88 observer01 on 10.15.14 at 1:13 am

If Calgary’s and Edmontons Real estate crashes
and CMHC defaults starts to occur

How long will it take to bankrupt CMHC, Glenworth and all those high risk mortage lenders?

#89 martin lazi on 10.15.14 at 1:35 am

(you may recall a few weeks ago this pathetic blog said eighty bucks was possible)—

After the war anyone can be a partizan !

#90 Vancouverite on 10.15.14 at 2:29 am

I think we need to focus more on the price of aluminum foil because with the amount of doomer nonsense drivel posted here daily makes me wana buy some shares in rio tinto. Oil can go as low as 65us and the sands will be happy a few established projects can goto as low as 35. All you haters will have to wait for another event to feel vindicated for renting a basement suite for the last ten years while buying gold maples. Get a life

#91 Retired GenXer on 10.15.14 at 2:36 am

Oil, gold and the CAD are going into the crapper.

Bond yields too.

#92 Nemesis on 10.15.14 at 2:40 am

#BonusBreakFastMischief… #JustFor… #TEMPORARY®ForeignPrimeMinister…

http://www.marketwired.com/press-release/canadian-union-of-public-employees-cupe-bc-campbell-flips-paramedics-the-bird-983423.htm

Worse… TheDenouement:

http://www.straight.com/news/former-bc-premier-gordon-campbell-officially-appointed-canadas-high-commissioner-uk

#93 #58 TEMPORARY® Foreign Prime Minister on 10.15.14 at 3:10 am

#71 Calgary Car Guy on 10.14.14 at 11:07 pm
“…..Your misrepresentation of this one is an insult to Ralph who will always be one of and possibly the best, most down to earth and honest politicians this country has ever had. It always seems that only Albertans really know how fortunate we were to have had Ralph Klein for the time we did……”
=========================

Nice try. I lived as an ‘Albertan’ for 20 years beginning in the early ’80’s and witnessed the colossal waste and hypocrisy of every Conservative government that got elected and re-elected without any sort of effective opposition to hold them accountable.

Klein’s abuse of government aircraft was no different than that of Redford’s:

“….The government’s executive fleet of four aircraft, the largest in Canada, costs Alberta taxpayers more than $3.5 million a year to operate……During the spring sitting of the legislature last year, the Opposition Liberals hammered Klein over his personal use of the government planes, which included a side trip to an exclusive golf course in Nova Scotia.” – Canada.com, March 2 2005.

Klein’s (almost Harperesque) response?

“…..An angry Klein responded by threatening to cut off access to flight records…….”

#94 Jane24 on 10.15.14 at 4:11 am

The difference between the upcoming ALB recession and those that have gone before is consumer debt. Never before have ordinary families on ordinary incomes been half a million in debt. Plus an economy based on folk selling houses to each other for higher and higher prices makes no sense whatsoever.

Got a sister in Edmonton with a hubby in oil up north but she doesn’t seem to understand macro economics. At least they rent.

#95 Spiltbongwater on 10.15.14 at 5:33 am

If oil prices go too low and transfer payments get lower, who will the welfare provinces like Ontario, N.B. N.S. etc survive?

#96 Palebird on 10.15.14 at 6:14 am

#71 Yeah Ralph was a good guy. I lived in Calgary for a few years when King Ralph was in power and, even though I have no real love for cowtown, I liked Ralph. He used to drink beer downtown in the old beer parlours which are long gone now. We definitely need more politicians along those lines. Too bad the latest crop ripped the heart out of downtown Calgary. That was a mistake.

#97 I'm stupid on 10.15.14 at 6:29 am

My fight with CRA.

After being audited by CRA, they rejected my deductions and asked me to pay 27k back in taxes for the 2013 tax year. This is not the first time they did this to me. I hired a lawyer and won my case for the exact same thing in 2009. I told the people at CRA this and they said my ruling is no longer valid. What a load of BS.

I filed an appeal paid my accountant $1500 to do this. Well it turns out the guy at CRA that’s handling my appeal is switching departments, rather than giving my file to someone else he denied it and said I have to file another apeal. So that means I need to pay another fee to my accountant to do it over.

I’ve spent $11000 to date fighting CRA.
Got to love the tax man!

#98 };-) aka Devils Advocate on 10.15.14 at 6:37 am

#192 Holy Crap Wheres The Tylenol on 10.14.14 at 2:11 pm

Thank you for the affirming response to my post the other day. I hear what you are saying and wholeheartedly agree.

#99 Millenial on 10.15.14 at 6:38 am

Hey Garth,

A 2nd healthcare working in Texas has tested positive for ebola. Moreover, a friend of the 1st infected healthcare worker (Nina Pham) reported last night that Nina was treating the original African ebola patient in a hazmat (spaceman) suit.

Even if we get through the coming months ok, I don’t think it’s unreasonable to suggest ebola will become endemic to West Africa, and it’s just a matter of time before it takes a foot-hold over here and wrecks havoc. May take a few years, but it’ll happen. And when it happens we’ll all be like, “remember the good old days when the thing to be concerned and angry about was Toronto gridlock and housing prices?”

#100 Ronaldo on 10.15.14 at 7:09 am

#90 Retired GenXer on 10.15.14 at 2:36 am

”Oil, gold and the CAD are going into the crapper.

Bond yields too.”

Actually, in Cdn $’s, gold is $1391.10…(u.s. $1223.90)so not so bad since as our dollar declines in value, the price in Cdn dollars rises. Same applies to all other stuff priced in U.S. dollars.

#101 Ronaldo on 10.15.14 at 7:21 am

#75 Lilooet BC –

”Oil ALWAYS comes back up. Everywhere you go it is being consumed by everyone. Now is a buying opportunity.”

Absolutely agree.

#102 };-) aka Devils Advocate on 10.15.14 at 7:28 am

Doomsday economists

’This correction (prediction) is no more than one person’s perception of where things should be.’ – Dan Banov

#103 bigrider on 10.15.14 at 7:29 am

Seriously people, with markets posting declines day after day without a bottom in sight and media stirring the stew with its repertoire of euphemisms to describe the ‘crash’ in stocks, is it any wonder Canadian ‘rabbits’ run for cover in their precious RE.

After all , RE prices don’t drop with such severity and speed, do they ? Just saying

The S&P is down 7% after rising 28% in a year. The TSX is down 10%, after a 27% advance. Surely a big, brave biker like you can handle a correction, which normally occurs every 18 months. Or are you a wuss? Time for a Vespa? — Garth

#104 Luc on 10.15.14 at 7:32 am

Are you part of the world’s millionaire top 1% club? How much do you need to be considered a member? How many reside in Alberta? Well according to Credit Suisse report, you need…

http://www.ctvnews.ca/business/richest-1-own-nearly-half-of-global-wealth-report-1.2053285

#105 crowdedelevatorfartz on 10.15.14 at 8:42 am

@#103 bigrider

Every Oct the markets have a “dump”. This one’s just a bit bigger than the last few. Oct 1987. Now THAT was a toilet plugger!

The kids don’t even remember. Many advisors were in Huggies. — Garth

#106 bigrider on 10.15.14 at 8:48 am

#103 bigrider on 10.15.14 at 7:29 am
Seriously people, with markets posting declines day after day without a bottom in sight and media stirring the stew with its repertoire of euphemisms to describe the ‘crash’ in stocks, is it any wonder Canadian ‘rabbits’ run for cover in their precious RE.

After all , RE prices don’t drop with such severity and speed, do they ? Just saying

The S&P is down 7% after rising 28% in a year. The TSX is down 10%, after a 27% advance. Surely a big, brave biker like you can handle a correction, which normally occurs every 18 months. Or are you a wuss? Time for a Vespa? — Garth
———————-

One of your funniest responses Garth BUT:

I never feel too big or too brave on a bike especially when a little old lady in a Buick can take you out quite easily. I do my best to stay safe and have up until now with a few emergencys dealt with successfully, but can’t control it all. Very humbling actually.

Exactly how I feel about these markets. I can’t control all the externalities that can hurt me bad. Neither can you.

#107 crowdedelevatorfartz on 10.15.14 at 8:52 am

@#42 bubu
Yes I agree interest rates were much higher in the early 80’s .
But the issue then, as now, is affordability. Can consumer afford to pay that mortgage, that car loan, that line of credit….if interest rates bump up even a small amount?
People then weren’t leveraged to the hilt( 160% debt load now vs 70% debt load then).
We’ll see what the Spring and rate hikes do to the housing market.
Nothing goes up forever.

#108 Mike in Toronto on 10.15.14 at 9:01 am

#107 crowdedelevatorfartz

Affordability? People could save for a downpayment in the 80’s. They even got interest on their savings.

Today saving for a downpayment is a fool’s errand.

#109 obviously on 10.15.14 at 9:06 am

obviously, the US economy is belly up just like Europe. if there is deflation, stocks wont go up, they will collapse lower. no two ways about it. the only safe place to be will be government bonds. all else will not make it through.

Unleash the Chicken Littles! Amazing what a normal market correction will do. — Garth

#110 james on 10.15.14 at 9:11 am

http://m.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/canadians-debt-payoffs-rise-as-mortgage-principal-payments-targeted/article21097573/?service=mobile&cmpid=rss1&click=sf_rob

Contrary to what you are saying, Canadians are doing fine with debt.

Says an employee of a mortgage-granting institution. Be careful what you swallow. — Garth

#111 Smoking Man on 10.15.14 at 9:24 am

Teranet house index
Toronto
Y/Y change up 7.41%
M/M change. 68%

Other than that, coming to a mortgage broker near you.
5 Y fixed rate 2.5%

Yeilds getting crushed again as predicted by your favorite alcoholic nut job, the one and only, often imitated
The Great:

SMOKING MAN

#112 NoName on 10.15.14 at 9:30 am

#99 Millenial on 10.15.14 at 6:38 am
Ebola is bad but to expect uncontrollable speed like what is going on in Africa is unrealistic it is already on NA so there is no point saying it will come our way, but it want be as deadly as we are perceiving that will be.

Dr. Paul Farmer and Google.org:

Ebola – http://youtu.be/lb11QbP3tOg

#113 };-) aka Devils Advocate on 10.15.14 at 9:31 am

The S&P is down 7% after rising 28% in a year. The TSX is down 10%, after a 27% advance. Surely a big, brave biker like you can handle a correction, which normally occurs every 18 months. Or are you a wuss? Time for a Vespa? — Garth

SHIFT happens in ALL markets, not just real estate. That said given the same occurrence in real estate Garth, why is it I suspect you would be singing quite a different tune?

Equities move rapidly. Real estate moves slowly, with swings far more ingrained and illiquidity a constant threat in declining markets. Oh yeah, and houses come with massive debt. Hardly an equal contrast. — Garth

#114 Italians love real estate on 10.15.14 at 9:32 am

#105 crowdedelevatorfartz on 10.15.14 at 8:42 am
@#103 bigrider

Every Oct the markets have a “dump”. This one’s just a bit bigger than the last few. Oct 1987. Now THAT was a toilet plugger!

The kids don’t even remember. Many advisors were in Huggies. — Garth

———–

Now that is my kind of humour !!…lol

Only kind if toilet plugging occurring in the RE market is the toilet plugging occurring from all the people walking through houses in a multiple bidding circumstance..lol

#115 Kenchie on 10.15.14 at 9:34 am

Benji Tal in the G&M:

“The Bank of Canada bases its estimate of the mortgage debt service ratio on the assumption that the average amortization period is 25 years. Mr. Tal suggests that in the current environment the average is probably closer to 20 years. If he’s right, that means that Canadian households are making $11-billion more in principal payments per year than the bank’s official estimate.”

http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/canadians-debt-payoffs-rise-as-mortgage-principal-payments-targeted/article21097573/#dashboard/follows/

#116 Sheane Wallace on 10.15.14 at 9:44 am

stock market crashes, dow bellow 16 k, gold jumps.

is today the day?

You don’t know what a ‘crash’ means, do you? And gold is up 0.49%. — Garth

#117 Daisy Mae on 10.15.14 at 9:48 am

“Ebola threatens to freeze local economies and disrupt trade and travel….”

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

Why aren’t government putting in place, a worldwide quarantine to protect its citizens? Oh, right…greed, disruption of trade and travel.

#118 bdy sktrn on 10.15.14 at 10:02 am

14% drop in 10yr yeild!

holy shit.

mtge rates to drop a lot more.
QE 4 is assured

#119 gc on 10.15.14 at 10:09 am

http://pesn.com/2014/10/10/9602543_Apocalypse-Revealed–The-Four-Horsemen_of_Andrea-Rossis_E-Cat/
check this out: 1 gram of nickle produced 1400 c of heat energy for one month, tested and verified by other, this is brand new technology…
new source of power, appears to be a nuclear reaction, using nickle/lithium/hydrogen, paper just published, if true say good bye to Nukes…..

#120 NoName on 10.15.14 at 10:09 am

#99 Millenial on 10.15.14 at 6:38 am
Ebola is bad but to expect uncontrollable speed like what is going on in Africa is unrealistic it is already on NA so there is no point saying it will come our way, but it want be as deadly as we are perceiving that will be.

Dr. Paul Farmer and Google.org:
Ebola – http://youtu.be/lb11QbP3tOg

#121 saskatoon on 10.15.14 at 10:11 am

#112 NoName

who is “we”?

#122 gc on 10.15.14 at 10:15 am

could this be true, no radiation waste
quote:

For those who are not aware, the E-Cat or Energy Catalyzer is the invention of Andrea Rossi, a businessman, engineer, scientist, and industrialist. He came to America as an immigrant from Italy and immediately entered the energy sector. Only several years ago, he developed a technology that allows for massive amounts of heat to be produced from safe nuclear reactions involving common elements on the periodic table, such as nickel and hydrogen. The reactions provide all the benefits of nuclear power – such as massive power density – with none of the drawbacks, the most obvious being radiation. The E-Cat uses no radioactive materials, produces zero radiation that escapes the reactor, and produces no nuclear waste. Just as importantly, it can produce dirt cheap power from a device that can fit on a table top.

#123 not 1st on 10.15.14 at 10:29 am

Oil is done…

http://www.businessinsider.com/andrea-shalal-lockheed-nuclear-fusion-breakthrough-2014-10

#124 liquidincalgary on 10.15.14 at 10:33 am

fear not calgary, let’s talk differential. WTI vis a vis WCS. halfway through the article, amina beecroft speaks to this.

http://www.theglobeandmail.com/report-on-business/top-business-stories/collapse-in-oil-prices-could-whack-canadas-resources-provinces/article21045772/

#125 liquidincalgary on 10.15.14 at 10:49 am

#55 not 1st on 10.14.14 at 9:54 pm

Garth, your posters don’t really get it. They are focused on the price of oil when they don’t realize its a stranded asset now.

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

not a stranded asset. more oil moving by rail than ever before! 200 000 bpd. yes, majority is exported by pipeline; however, rail is growing

#126 James on 10.15.14 at 10:49 am

Uh oh…2008 over again in the market.

Drop in US equities in 2008-9: 55%. Drop today: 8%. Grow a set. — Garth

#127 Kenchie on 10.15.14 at 10:57 am

Dichotomy of interests show in these two different articles on the same report:

The Star:
http://www.thestar.com/business/real_estate/2014/10/15/national_home_sales_drop_in_september.html

The G&M:
http://www.theglobeandmail.com/report-on-business/economy/existing-home-sales-rise-106-outpace-expectations/article21105802/#dashboard/follows/

#128 NorthOf49 on 10.15.14 at 11:10 am

https://ca.news.yahoo.com/september-home-sales-down-august-first-monthly-decline-130811627.html

‘The increase came as prices rose in six of the 11 metropolitan markets surveyed including gains in Calgary, Vancouver, Toronto, Halifax, Winnipeg and Quebec City.

Prices were flat in Edmonton and down from the month before in Hamilton, Montreal, Ottawa-Gatineau and Victoria.’

#129 Doug in London on 10.15.14 at 11:27 am

@Lillooet BC, post #75:
I think you’re right, that’s why the cowboy gene in me has driven me to scoop up XEG at dirt cheap prices lately. I thought the Black Friday sales didn’t come until after the American Thanksgiving, but this year they started (at least for stocks, especially energy stocks) before the Canadian Thanksgiving!

@Nathan, post #33:
It depends on where you are. In London the prices have been in the $1.15 to $1.17 per litre range, and was a low as $1.11 recently. Earlier this year prices were close to $1.30.

@JSS, post #49:
I haven’t scooped up any TRP yet, but scooped up PPL at $40. Yes, the Black Friday sales are on now!!!!!!!!

#130 Dom on 10.15.14 at 11:40 am

Economic tsunami on 10.14.14 at 11:17 pm
An economic tsunami is coming for Canada debt / housing bubble and it’s going to hit Cowtown first and spread across Canada east and west. All that oil money that will be lost will effect every part of the Canadian economy. Toronto financial district will be feeling a lot of pain as many will be laid off. Will Canada and Canadians feel a similar economic shook like the one that crushed the US housings bubble ? Word is US hedge funds with more money then anyone have completed their big bets against Canada. These big boys run the world and they say Canada will have a monster economic fall out and housing crash. You think the big boys in the US would sit there and allow Canadians to thumb their noses at the big US? Many of you Canadian will wake up very soon
—————————————————————–

I know a couple of bankers in Toronto who are looking at their “models” and poo pooing their pants. Why else have Tal come out and outright tell us stories? Look for more fictional story telling from bankers.

#131 liquidincalgary on 10.15.14 at 11:44 am

#68 Calgary facing a world of hurt on 10.14.14 at 10:55 pm

Looks like someone already turned the lights out.

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

back so soon, shawn??

#132 Son of Ponzi on 10.15.14 at 11:53 am

Funny, how Shawn and the other bragsters have disappeared now that the markets are tanking.

How can serious people call an 8% correction on the S&P a ‘tank’? — Garth

#133 Italians love real estate on 10.15.14 at 11:54 am

#103 bigrider on 10.15.14 at 7:29 am
Seriously people, with markets posting declines day after day without a bottom in sight and media stirring the stew with its repertoire of euphemisms to describe the ‘crash’ in stocks, is it any wonder Canadian ‘rabbits’ run for cover in their precious RE.

After all , RE prices don’t drop with such severity and speed, do they ? Just saying

The S&P is down 7% after rising 28% in a year. The TSX is down 10%, after a 27% advance. Surely a big, brave biker like you can handle a correction, which normally occurs every 18 months. Or are you a wuss? Time for a Vespa? — Garth

Hey Bigrider, you losing your lunch past few weeks and today ?

Shoulda listened to nonno

#134 calgaryPhantom on 10.15.14 at 11:58 am

Buy Buy Buy equities, slowly. Yummm…..
Sell the bonds, slowly…

#135 Bottoms_Up on 10.15.14 at 12:00 pm

#97 I’m stupid on 10.15.14 at 6:29 am
—————————————
Sounds like it’s time for you to sue the CRA. a $500 letter from your lawyer might be a good start. You can also do a free ‘access to information’ on your file to see how they’ve handled it (these documents could be very useful in court).

#136 Panhead on 10.15.14 at 12:01 pm

#63 Smoking Man on 10.14.14 at 10:22 pm
Buyer and seller perceptions drive markets. Good luck with that. — Garth

I’ve always said … “it’s not what you do that counts, but what people think you do.”

#137 old gringo on 10.15.14 at 12:02 pm

Ugly day in the oil patch.
Hey, someone just put Alberta up for sale on e-bay.
No bidders yet as they are waiting for a better deal.
Time to buy Allied Van Lines as soon there will be a lot of people moving.

#138 G on 10.15.14 at 12:08 pm

As a recent newcomer to Calgary (one year ago from BC), I actually came with Garth’s preachings in mind. I sold in BC, and rented in Calgary, investing all the equity in a balanced portfolio.

I had seen the stories of the US becoming oil independent through fracking, I had seen the wild eyed first time buyers accompanied by their boomer parents (funding the down payment and co-signing) to open houses.

Whenever I mentioned this exact scenario as Garth illustrated playing out, the prevailing thought from locals was that new growth economies would always need oil. This time it was different. No bust was coming.

I am very grateful for the flexibility I have. If the oil company I work for ends up laying me off, I’ll just look for another opportunity elsewhere.

And if I do actually manage to stick it out through this downturn, I will be able to buy at a normal price.

But I do feel bad for many young immigrant families who among the highest percentage of first time home-buyers (my observations). They will probably be hit the hardest in my view, all in an attempt to live the Canadian dream.

#139 Cato the Elder on 10.15.14 at 12:10 pm

Here’s what’s going on:

-US has pressured Saudi Arabia to drop price of oil
-This alleviates the consumer in preparation for the US elections
-This also puts pressure on Russia who was showing a little bit too much independence for the Empire’s liking

The US is not recovered at all. Inflation running at 10% a year, and 25% unemployment.

Strength in the US dollar comes from one thing and one thing only: military might. They can boss around smaller countries and FORCE them to trade in US dollars. Libya, Afghanistan, Egypt, and Iraq are all testaments to that. Now, Liberia and Syria are feeling the pressure.

The foundations of the US economy are VERY poor. Over 100 trillion dollars in obligations. 500 BILLION dollar trade deficits each year. These are only sustainable when you can force yourselves around the world with your military.

But the Chinese are not going to take it for much longer. See, their economy, while not perfect, is MUCH better than the US. They manufacture almost everything the world needs. They have SAVINGS. They have all the world’s gold and silver now.

You can ignore the markets, but the markets won’t ignore you. Even the US military can’t stop what the market is demanding, and that is the allocation of the world’s capital to China.

Alberta will make the wrong decisions because the government is full of people that believe the wrong thing: that government has something to do with wealth creation. If they are concerned about the loss of oil royalties on the budget, then they should SLASH THE BUDGET. Oil doesn’t have to be the biggest industry in Alberta – if they make the governmental environment conducive to business, ALL SORTS of industries will flock there.

The amount of brainwashing and gullibility is absolutely staggering to me. I suppose that’s what all those years of schooling are for – to wipe out any independent thought. Fortunately, I never liked listening to teachers. I always grasped concepts well ahead of the class and got bored by their inability to understand.

Garth points out the BRAGGING that is occurring about the price of real estate going up in Alberta. How is that a good thing? They’re admiting that the cost of an asset is increasing without it’s productivity increasing – not to mention it has suffered wear and tear. That makes NO ECONOMIC SENSE whatsoever. A massive liability that costs money to repair, costs money to finance, costs money in taxes, and earns NOTHING for society is increasing in price and that’s a good thing? WE ARE RUN BY IDIOTS!

#140 bigrider on 10.15.14 at 12:26 pm

#133 Italians love real estate on 10.15.14 at 11:54 am
#103 bigrider on 10.15.14 at 7:29 am
Seriously people, with markets posting declines day after day without a bottom in sight and media stirring the stew with its repertoire of euphemisms to describe the ‘crash’ in stocks, is it any wonder Canadian ‘rabbits’ run for cover in their precious RE.

After all , RE prices don’t drop with such severity and speed, do they ? Just saying

The S&P is down 7% after rising 28% in a year. The TSX is down 10%, after a 27% advance. Surely a big, brave biker like you can handle a correction, which normally occurs every 18 months. Or are you a wuss? Time for a Vespa? — Garth

Hey Bigrider, you losing your lunch past few weeks and today ?

Shoulda listened to nonno
————

You are an @$$hole. You epitomize the archaic thinking among the group.

A house humping, brick licking freak is what you are.

Too bad your relatives didn’t settle in the U.S, say Florida or Texas and pursue the same RE obsession as they did here.

If they had, you would have been in a soup line somewhere

#141 bigrider on 10.15.14 at 12:28 pm

One thing is for sure, you can lose a whole lot more money, much faster than you can ever make ,with the same speed.

Same as a casino smoking man.

#142 obviously on 10.15.14 at 12:34 pm

Unleash the Chicken Littles! Amazing what a normal market correction will do. — Garth
_______________________________________

you are the one arguing for DEFLATION. if that happens, watch the DOW plummet to 5000…

either that, or the FED will panic again, and start printing tens of trillions to stem the decline.

there is no happy medium any longer.

Stop thinking in extremes. Unwise and unprofitable. — Garth

#143 TS on 10.15.14 at 12:39 pm

The last hope of higher interest rate is gone.

#144 r1200c on 10.15.14 at 12:45 pm

The end of the world began not with a bang, but with a flight from Cleveland…
I’m thinking to put a “short sell” order on airline stocks in the very near future…
http://gawker.com/new-ebola-patient-flew-from-cleveland-to-dallas-two-day-1646628351

#145 Kenchie on 10.15.14 at 12:49 pm

This is a story that Cato The Elder would be proud of, since self-interest (owner) clearly trumped the interests of the collective (everyone else, including old ladies).

G&M “Greed, Neglect behind deadly Elliot Lake mall collapse”:

http://www.theglobeandmail.com/news/national/elliot-lake-report/article21104270/#dashboard/follows/

#146 None on 10.15.14 at 12:59 pm

#139 Cato the Elder on 10.15.14 at 12:10 pm
Fortunately, I never liked listening to teachers. I always grasped concepts well ahead of the class and got bored by their inability to understand.

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

Blah blah blah, I’m smarter than everyone, I have all the answers, etc. Give your head a shake man. Unfettered capitalism is not a good thing.

I’m curious, what do you do for a living?

#147 Cato the Elder on 10.15.14 at 1:01 pm

Re: #143 TS

Central banks only have 2 things they an do:

1. Print money
2. Print money faster

That’s it. Both lead to an increase in prices or a decrease in the size of consumer packages/quality.

They never intended to increase rates. They can’t. The interest on the debt would consume the budget. The US is a dying empire and their day of reckoning is coming. If they DO ever raise interest rates, it won’t be voluntary. It won’t be the leaders coming to their senses and realizing they’re destroying the middle class with low interest rates. No, it will be the market FORCING it on them.

Unfortunately, our idiot leaders haven’t insulated us from it at all. We ought to slash government spending and taxes and let the free market provide wealth to our citizens. We ought to divorce the US and marry China. All voluntarily of course, preferential treatment towards different countries is what got us into this mess (NAFTA, etc.). Free trade with all nations. End foreign intervention.

#148 Godth on 10.15.14 at 1:06 pm

Ruh-Roh.
Looking forward to today’s post Garth. The junkie economy can’t taper off it’s addiction apparently.

#149 Italians love real estate on 10.15.14 at 1:07 pm

#140 Bigrider

Yup that’s me ! A brick licking house humper.

I’m also a garage grinder, roof rubber, stone stroker, copper eavestrophe cupper , vinyl window wanker, flagstone fornicator and anything else related to the housing obsession you or anyone else can come up with.

I am NOT losing any money in this stock market ” correction” however … Lol

Because you’re not dumb enough to sell, right? — Garth

#150 Capt. Obvious on 10.15.14 at 1:09 pm

TSX and S&P500 down over 2% today.
We’re almost flat for the year on the TSX. I don’t know about you, but I’m looking forward to doing some buying at more reasonable levels as this correction plays out.

#151 Godth on 10.15.14 at 1:16 pm

btw, it will be interesting to see how resiliently the shale fracking paper ponzi bubble holds up to these low oil prices…not unlike the tar sands in terms of production costs but with more paper reserves than real ones. This could be an interesting week.

#152 Mixed Bag on 10.15.14 at 1:22 pm

Canadians paying down mortgages faster than thought: CIBC

http://www.ctvnews.ca/business/canadians-paying-down-mortgages-faster-than-thought-cibc-1.2054216

Says the mortgage-lender. — Garth

#153 jess on 10.15.14 at 1:26 pm

“texas” gene and the southwest solution

I don’t think you can compare 80s to now..

10,000 of THOSE humans went to jail ( see- reasons for savings and loans failures )

https://www.fdic.gov/bank/historical/s&l/

Condominium Destruction
Dallas Morning News; Staff Photo by Ken Geiger

http://www.federalreservehistory.org/Events/DetailView/42
http://en.wikipedia.org/wiki/Savings_and_loan_association

#154 calgaryPhantom on 10.15.14 at 1:27 pm

Lol, Garth you were so right. I remember few weeks ago you warned everyone about crying babies once the markets correct.

#155 bdy sktrn on 10.15.14 at 1:41 pm

Stop thinking in extremes. ” – G

———————-
-425dow does encourage that kind of thinking

who shorted?

look at the us markets since the 80’s.\three peaks.

if this follows the trend, dow9.9k is on the way.
it’s just a tad early to be buying, i think. like by 12months.
start buying at 12k.

#156 Nomad on 10.15.14 at 1:48 pm

“Alberta’s prosperity is tied to the oil industry”
http://www.bnn.ca/Video/player.aspx?vid=467923

Yes. Yes it is.
Learn how to program, not how to drill.

#157 Cato the Elder on 10.15.14 at 1:49 pm

Re: #146 None

Why are formerly third world countries developing and growing their economies at multiples higher than ours?

Why are formerly third world countries now RICHER than we are in only a few short decades?

They adopted capitalism. They adopted private property rights. They adopted impartiality of law. They adopted strong contract enforcement.

That’s it. While they have been doing that, our middle class has been shrinking for decades. It’s been shrinking because we’ve been going in the OPPOSITE direction – more government. The average Canadian now works from January until JUNE for the government before they get to get to keep a single penny. 6 months.

Where does that money go? Overpaid salaries, pensions, benefits, overpriced goods (like electricity), burdensome regulation enforcement, policing of voluntary consensual activities (like smoking and drinking) etc.

Get the government back to what it SHOULD be doing. After a few years of that, we can have a vibrant middle class again. A single head of household will be able to afford to raise a family of 4-5 kids, have 2 cars, a house, plenty of leisure time, on a SINGLE income again (just like in the 50s). No reason it can’t happen again.

Quit voting for socialists. Socialism is evil. It isn’t moral to steal from people no matter what your intention. Business owners are much more charitable than they will ever be – they provide JOBS and pay people so they can LIVE. They also enrich the lives of their customers by providing them with things they value.

I think you will find that your ‘unfettered’ capitalism isn’t really capitalism – it’s cronyism/fascism masquerading as capitalism. Hong Kong, Singapore, Dubai, Switzerland, are all richer than us. WHY? They’ve embraced capitalism more than we have. They have smaller governments and where the government IS needed, they’ve decentralized and delegated to the local level as much as possible. Adopt those policies, and we will be wealthy. Don’t, and we will continue on the same path we have for 30 years. Isn’t 30 years enough time to admit that ever increasing government intervention doesn’t work? Isn’t 3000+ years of human civilization enough to admit socialism beyond the immediate family doesn’t work?

#158 robert james on 10.15.14 at 1:51 pm

#151… Don`t worry about the nice clean shale oil,, it will still be worth more than the filthy sludge from the tar pits..That sludge sh*t might be needed 500 years from now but in the mean time it is cheaper to store it in the ground ..

#159 Mike S on 10.15.14 at 1:55 pm

I think by now it is about 10% drop from top in all markets
This sums to an official correction that Garth predicted

I wonder how long will it continue this time?

#160 obviously on 10.15.14 at 1:58 pm

How can serious people call an 8% correction on the S&P a ‘tank’? — Garth
_________________________________

the DOW has broken it’s up trend from the 2009 lows, has broken below it’s 200 day moving average, and is making lower lows… it’s make 4 nominal peaks in the last 15 months, each at diverging and lower momentum and volume.

this will be much bigger than you think.

#161 Holy Crap Wheres The Tylenol on 10.15.14 at 2:01 pm

#97 I’m stupid on 10.15.14 at 6:29 am
My fight with CRA.
After being audited by CRA, they rejected my deductions and asked me to pay 27k back in taxes for the 2013 tax year. This is not the first time they did this to me. I hired a lawyer and won my case for the exact same thing in 2009. I told the people at CRA this and they said my ruling is no longer valid. What a load of BS.
I filed an appeal paid my accountant $1500 to do this. Well it turns out the guy at CRA that’s handling my appeal is switching departments, rather than giving my file to someone else he denied it and said I have to file another apeal. So that means I need to pay another fee to my accountant to do it over.
I’ve spent $11000 to date fighting CRA.
Got to love the tax man!
___________________________________________

No you don’t have to love him! But you do have to work with them. Been there, done that years ago. It was a good thing my wife has a Masters Degree in Mathematics and taught High School Calculus for years. She was in with my accountant and myself when we had the “you own us $$ BS routine.” I wont say how much $$ but lets just say they made a big mistake. My wife said you have made some major mistakes in your calculations based on the numbers we had provided. They said we don’t make mistakes and we used our own estimated numbers to get the figures we showed you. She proved them wrong! We had the paper work trail going all the way down to the penny and there was no room to become creative with the accounting end at our side. We already were audited by the US military before and adhere to some very strict accounting procedures.
Needless to say I spent a ton of money and you are too. But if your right, your right! Stick to your guns and beat the crap out of them. Send the pencil pushing geeks back to Ottawa and tell them to go after all the of the illegal drug money and Islamic terrorist groups laundering cash here.

#162 Tbone on 10.15.14 at 2:02 pm

Garth, I’m buying a bunch of TSX EFT today, large and small cap. Agree?

#163 Godth on 10.15.14 at 2:02 pm

Some good news on a dark day:
Italy lifts out of recession thanks to hookers, drugs
https://uk.finance.yahoo.com/news/italy-lifts-recession-thanks-hookers-125450203.html

#164 bdy sktrn on 10.15.14 at 2:04 pm

look at the us markets since the 80’s.\three peaks.”
————————–
actually , i take that back. the first two peaks were pre-qe.

turn the presses back on and equities can rise again!

#165 Retired Boomer - WI on 10.15.14 at 2:16 pm

Nothing like FEAR in the markets. Today’s rout should make any real estate buyer call their brokers real fast!

Tomorrow they lose their job, right after they sign the offer to purchase.

No doubt the financing WILL be approved.

LOL

#166 Mike S on 10.15.14 at 2:23 pm

Also as balanced portfolio goes, some numbers from mid day today

VCN: -2.41%
VAB: 0.67%
XPF: -0.2%

Don’t want to draw conclusions based on one day (although a special one), but it shows some negative correlation between bonds and stocks, but not so much for stocks vs. preferred

So besides some Canadian tax benefit, doesn’t holding big portion of fixed income in preferred exposes you to a greater volatility than just 40% bonds?

From the other side, the bonds being this low, will they have enough negative correlation to protect you from a significant drop in the market?

The preferred ETF is down two-tenths of one per cent and gives you a yield in the 5% range, and you’re concerned? — Garth

#167 Son of Ponzi on 10.15.14 at 2:26 pm

#150 Capt. Obvious on 10.15.14 at 1:09 pm
TSX and S&P500 down over 2% today.
We’re almost flat for the year on the TSX. I don’t know about you, but I’m looking forward to doing some buying at more reasonable levels as this correction plays out.
——————-
Care to share what you’re looking forward to buying?

#168 nobody on 10.15.14 at 2:30 pm

Drop in US equities in 2008-9: 55%. Drop today: 8%. Grow a set. — Garth
____________________________________

An 8% drop on my portfolio would come to 120K. No thanks. I’ll stick to 10 year government bonds paying a measly 3.5%.

“Grow a set?” Seriously? Sounds like you’ve got the cowboy gene as well.

The comparison was to 2008. There is none. Only sellers lose in a decline, which is a lesson DIY investors never seem to learn. — Garth

#169 Italians love real estate on 10.15.14 at 2:35 pm

Really disappointed you deleted last one. Shows me you’re not as open to opinion as you want us all to believe

Many of your posts are adolescent tripe. They will be published at my discretion. — Garth

#170 Italians love real estate on 10.15.14 at 2:37 pm

My apologies Garth you posted it. Not good with an iPhone just a backhoe. Kudos to your openness

#171 Rational Optimist on 10.15.14 at 2:49 pm

166 Mike S on 10.15.14 at 2:23 pm

“Don’t want to draw conclusions based on one day (although a special one),”

Every day is special and should be cherished.

I’m pretty sure that’s what you were driving at. You quoted one day results, so I didn’t read the rest of the post. (Sorry.)

#172 Rexx Rock on 10.15.14 at 3:04 pm

Canadians can handle the truth.Mr Poloz should come out and say the government and central bank planned this ponzi scheme. We want Canadians to be highly indebted.We lowered interest rates and raised amortization periods to create speculation in return the government receives more revenue from property taxes and the banks win with higher mortgages.We succeeded but you lose.We will devalue your currency so everything is more expensive but good for exports.

#173 Mister Obvious on 10.15.14 at 3:20 pm

#168 nobody

“An 8% drop on my portfolio would come to 120K. No thanks. I’ll stick to 10 year government bonds paying a measly 3.5%.”
—————————–

Enjoy your 3.5%. Myself, I never took the large rise in my portfolio over the last two years all that seriously. I have been expecting this correction a long time. It’s almost a relief.

I’m not elated when markets get ahead of themselves. I prefer slow, calm and predictable growth based on measureable parameters.

I’ve been through this many times and I’ve finally learned. I don’t check my portfolio daily and sweat about the markets. I pay other people who are much more skilled to do that on my behalf. That’s been working for me these past 15 years. I have more reasons than not to expect it to continue.

#174 Villagemoron on 10.15.14 at 3:21 pm

http://www.reuters.com/article/2014/10/14/us-usa-housing-foreclosures-insight-idUSKCN0I30BU20141014?feedType=RSS&feedName=businessNews

#175 Habs76-79 on 10.15.14 at 3:37 pm

Human history is pock marked with the way crap hits the fan. Those who try to control the message and the levers of power, money and economics will when dark skies approach spin words to say that troubles can be softly landed or even avoided. That they have the vision, wisdom and powers to make sure that when the proverbial train derails that the impact of such will be nice and soft into a big pillow so to speak. BUT! that is not how human history really goes.

THINGS GO BANG!!!

Bubbles burst, not softly deflate.
Panic in the herd happens and does not see said herd just quietly walk to the exits.
Money created to stop falling and failing economies is sucked up and away like into a vacuum.

There are no real examples of troubles in all aspects of life including social, economic and monetary that see these troubles nicely clean up and just go away. To believe such can be, is just being niave.

When the crap hits the fan people generally panic, troubles on the horizon then come fast and open up as a storm, not as a spring time shower.

Those who try to deny such will suffer most. Those that live beyond there means, live feeling entitled and believe the spoon fed crappola of MSM, governments, bureaucrats and central bankers will suffer most.

Those that reign in expectations, build proverbial walls to shelter better against the storm, live life more reasonably and know that LIFE AIN’T FAIR! will suffer least.

HEED THE GROWING STORM CLOUDS FOLKS! Venturing onto a boat on a lake or climb to the top of the hill when a lightning storm releases is very dangerous.

#176 bigtown on 10.15.14 at 3:40 pm

Who imagined there would be a fairy tale finish to the REFLATION TRADE? Highly educated MBA’s working for central bankers living large under the auspices of Big Oil….Oil price range is swinging bigger.

#177 Suede on 10.15.14 at 3:41 pm

Shawn, get your ass back here. Markets are correcting and you go offline.

Come on now, what companies are on the radar!?

#178 Omg the original on 10.15.14 at 3:42 pm

THIS IS ONE OF THE HARDEST THINGS I DO

I am buying equities.

As I have on every major correction since 2000.

Even though I have been doing this for 15 years I always have to force myself to buy during times like this.

Don’t listen to the static. Turn off CNBC and BNN, don’t read the Yahoo Finance headlines, just keep your head down and push the buy button. The MSM brings out all the hyper bears during times like these – don’t listen to them.

Could this be the bottom or could we go deeper? Nobody knows for certain but over the long run the odds are heavily stacked in favour of the market recovering and going higher.

Bought some brand name dividend payers today.

#179 Cato the Elder on 10.15.14 at 4:03 pm

Man, Garth is right, you guys are getting all worked up over short term fluctuations.

What you guys should be concerned about, and what you are obviously ignoring, are the long term trends.

Like, how about the fact that we don’t really have a ‘market’ anymore? Most of these stocks are propped up by stock buybacks that big companies are buying with MASSIVE amounts of debt. Debt supported by artificially low interest rates.

These prices aren’t going up because the companies are investing in capital equipment, increasing productivity, delivering better goods and services to more and more customers. They’re going up because of government induced MANIPULATION. And to top it all off, our central banks are buying equities and bonds and putting it on their balance sheets. They’re buying it with printed money, money that will inevitably enter the economy and chase goods, thus leading to increases in prices for things we need to live like food and energy.

We’re becoming communist and nobody cares. It’s creeping up faster day by day folks. When this whole thing unfolds, and our Chinese masters issue demands in exchange for their support, our weak-willed ‘leaders’ will obey. That means less civil liberties. It’s already happening – constant surveillance, politically correct self-induced muzzle on free speech, and more and more people advocating that TORTURE is OKAY because they see it on tv.

Quit being so narrow minded. Start looking long term at what is developing. And quit being so tribal. It’s not about US vs THEM, it’s about all of humanity vs totalitarian statists. Who will win? Well, they’re better organized, and they’ve already conquered many of your minds. It’s not looking good – but you can start demanding change TODAY!

#180 Joe2.0 on 10.15.14 at 4:18 pm

Watch the markets strategically and systematically drain your portfolio.
Trillions of paper that has to be accounted for. Manipulation, just like with the metals and libor..

#181 Rifles on 10.15.14 at 4:31 pm

“At least gas will be cheaper for that drive to the coast.”

And what, exactly, will they do when they get here? Jump in?

#182 Mike S on 10.15.14 at 4:55 pm

“The preferred ETF is down two-tenths of one per cent and gives you a yield in the 5% range, and you’re concerned? — Garth”

Not concerned. In fact I would be happy for it to drop more, as I am 32 years old with positive saving rate (always new cash to invest)

Just wanted to point out that unlike 60% stock / 40% bond portfolio, the one you described before (less bonds, more proffered) might turn out to be more volatile at times, because of less negative correlation with stocks

I do hold preferred, but mainly because I have to hold some portion of my portfolio in taxable account (no more TFSA room etc), and because my time horizon is long

#183 Kenchie on 10.15.14 at 5:14 pm

You can’t make this stuff up…. just read the first couple paragraphs!

http://www.vancouversun.com/news/world/demon+destroy+Chinese+cult+members+executed+McDonald+murder/10292240/story.html

#184 Name unavailable at this time 404 error on 10.15.14 at 5:24 pm

After reading these comments all I can say is I knew Cowboy Gene and most of you, sirs, are no Cowboy Gene. Also some of you should really quit visiting the conspiracy theory section of the internet. Oh yeah and Warren Buffet.

#185 Mike S on 10.15.14 at 5:25 pm

“I’m pretty sure that’s what you were driving at. You quoted one day results, so I didn’t read the rest of the post. (Sorry.)”

Not really, my points were:
– proffered more volatile than bonds
– rates too low so historical negative correlation between stocks and bonds might change at some point

#186 NoName on 10.15.14 at 5:59 pm

#121 saskatoon on 10.15.14 at 10:11 am

who is “we”?

people that live in my head. :-0

#187 Manning Smoke on 10.15.14 at 6:02 pm

Hey, what’s happening with the markets? Can’t the CB maestros prop this thing? It seems like a classic “pump and dump”. What a scam.

#188 Bill Gable on 10.15.14 at 6:37 pm

Today’s posts, are a microcosm of what goes through the mind of investors when we hit an ‘air pocket’.

Minor moves, in the scheme of things, and people are freaking out.

Turn off BNN, and have a cup of tea.

#189 Cici on 10.15.14 at 6:59 pm

Canadian existing home sales fell from a four-year high in September (TNBHICY%), the first decline in eight months, led by Calgary and Edmonton in oil-rich Alberta:

http://www.businessweek.com/news/2014-10-15/canada-home-resales-post-first-fall-in-eight-months