Sprinkles

SPECIAL modified

This blog commenced in 2008, when I was in my prime and had the sinewy arms of a Greek god. The average house in Canada was changing hands for $281,133. The US market was melting down. The world wobbled on the brink of a credit crisis.

Thus did my crusade begin. To preach the gospel of diversification to the horny and the impressionable, to sprinkle the seeds of financial knowledge and warn that one day houses would disappoint here, too. People who put all their eggs is one basket, and borrow massively to do so, have no idea what risk they take.

Of course, the world ignored me. Saving and investing went down over the last seven years. Debt and house prices were up. Home ownership rates fell in the States and swelled here. Millennials hatched and immediately lusted for condos. Every year more of our nation’s economy was hitched to real estate. Every year its citizens gambled more on it.

Today the preponderance of middle class wealth sits in a single asset. Your friends, relatives and co-workers have ignored every warning, gorged on cheap mortgage moolah, and dived in. Renters are scorned. Your mom says they throw money away. Women run screaming from guys without nests. And everyone justifies this obsession because it makes good financial sense. Owners have won. Tenants are bugs.

Or not.

As I said, the average Canadian house cost $281,133 in 2008. Today it’s $413,649. That’s a gain of 47.1%. To achieve it, someone would typically put money down, then cover seven years of mortgage payments, property taxes, insurance premiums and maintenance expenses. Plus, there were closing costs when buying and a hefty commission when selling. Despite that, most people think this is fabulous and shoots the lights out when compared with investing in, say, a balanced portfolio.

This conclusion is exaggerated by fear. When stock markets briefly tanked in 2008-9, most people freaked. Those with equity-based mutual funds likely sold in a panic at the bottom and vowed to never again take a risk. They did the same in 2011, when that American debt crisis flared. And now they think oil, or interest rates, or Putin, or Ebola or the rapture, will tank markets.

Let’s compare.

These are the actual returns for a balanced portfolio (60% growth ETFs, 40% safe stuff, like bonds and preferreds) over the last, tumultuous seven years: 2008 -19.75%, 2009 + 23.06%, 2010 +14.89%, 2011 -0.65%, 2012 +10.71%, 2013 +11.33%, 2014 (est.) +10%. So, a hundred grand invested at the beginning of 2008 caught the full brunt of the market crash, but if left invested has now turned into $153,825. That’s an increase of 53.8%, which takes into account the worst market performance in eighty years.

And it still beats the house. Actually, after paying commission to sell the average house bought in 2008, the return is just 39.7%. Factoring in closing costs, it is 38.1%.

Of course, there are mitigating factors. The returns on the investment portfolio are partially taxable (you can shelter money in a TFSA or a retirement plan), but taxes on dividends or capital gains are 50% less than those on employment income. And you can buy real estate with more leverage than with a portfolio – although all interest borrowed to invest in financial assets is tax-deductible, and mortgages aren’t. Plus, the more you leverage a house, the greater the carrying costs. And liquidity’s a factor. An ETF can be sold in seconds. A house can take months. Or longer.

You also need someplace to live. Plus you must factor in risk. The biggest market risk for financial investors took place in 2008-9 as this blog was ramping up. Those who didn’t panic and sell recovered fully and earned 53% even if they missed buying when assets were low. The risk for homeowners is just materializing now, as the commodity cycle ends, our economy slows, rates begin their ascent, house prices peak and debt erupts. As sellers in Calgary are learning this month, liquidity’s a bitch.

So what?

So open your mind. Owning a house is sexy, but even in the greatest real estate boom in our history, and during the greatest stock market plop ever, it’s underperformed the balanced portfolio. Renters who invested have done better than owners who didn’t. It’s that simple. The financial benefits of brick-licking are greatly exaggerated. The risks have been ignored. That may soon change.

As this year winds down, it’s worthwhile reflecting on the balance in your life. Having a house is fine. Thinking it’s a financial strategy is not. Remember my Rule of 90. We’ll review that on Saturday (I’m taking tomorrow off, so talk to your spouse, or something. Good luck.).

141 comments ↓

#1 Triton on 12.25.14 at 4:39 pm

You are the Best Garth.
Enjoy the Christmas season!

#2 Rental Monkey on 12.25.14 at 4:43 pm

Thanks for this pathetic blog Garth. I’ve learned so much over the years. Merry Christmas to you, Dorothy and Bandit. You are a great asset to our great nation. All the best in 2015!

#3 Wet Coast Girl on 12.25.14 at 4:52 pm

First in? Wow!

#4 Alberta Ed on 12.25.14 at 4:52 pm

Excellent words to digest along with our turkey. Urp!

#5 tkid on 12.25.14 at 5:07 pm

8.4% return for me this year, all due to ETFs.

#6 Andy on 12.25.14 at 5:11 pm

Thought I was pathetic when I decided to check for a new blog entry on Christmas Day. But you didn’t disappoint!

All the best in 2015 Mr. Turner!

#7 Herb on 12.25.14 at 5:17 pm

For the sake of comparison, Garth, how did a 40% growth, 60% safe stuff portfolio fare over the same period?

#8 Br on 12.25.14 at 5:29 pm

Garth,

Thanks for sharing your infinite wisdom!
I’ve only recently started to read your blog but I must admit I’m starting to get hooked on it (embarrassed smile)

Thanks to your advice, I have recently moved my TFSA from an online bank account @3% to QT and am in the process of buying the ETF’s frequently mentioned on this blog.

I’ve also opened a family RESP account at the same broker for my two kids 8 and 4 and contributed $5000.

I only wish I had come across your blog back in 2008 but as they say it’s better late than never.

Thanks once again for your relentless effort to educate the masses on financial freedom, something that no school teaches (AFAIK)

Merry Christmas!

#9 Retired Boomer - WI on 12.25.14 at 5:42 pm

Garth my mentor, the turkey is still in the oven.

The year is not yet finished out. The house is paid off. The investment portfolio is reasonably plump, but always could be bigger. We only take what we need from it now that we are both in retirement.

According to the income I told the investment guy I want in retirement, he says we are 100% on track to meet those goals. Does it get better than that?

Just that nasty habit of saving each month, every month to reach that goal. No, not easy. Unemployment bouts, relocations, all the crap that comes with youth!

Thought about “planning” in my 30’s actually a bit later than some. Starting was the toughest part of it all. Learned much over those years, your pathetic blog wasn’t there to keep me out of some stupid crap! Well, we survived the idiocy, and we aren’t the sharpest knives in the drawer! It takes a while, but now we are on track!

Merry Christmas to all, and the BEST for each in 2015.

When the year is done, we shall see how we fared.

#10 Bug on 12.25.14 at 5:45 pm

Merry christmas !

#11 Rob on 12.25.14 at 5:46 pm

If you could stop writing I wouldn’t have to pretend I didn’t read it. Merry Christmas and thank you for all you do!

#12 Sprinkles | Realties.ca on 12.25.14 at 6:07 pm

[…] Source: http://www.greaterfool.ca/2014/12/25/sprinkles/ […]

#13 LessFatOil on 12.25.14 at 6:14 pm

*J*I*N*G*L*E* *J*I*N*G*L*E* *B*E*L*L*S

Thanks SantaGarth the wordsmith for writing today. I hope you received everthing you wanted, including the Plum Pudding and the Harley seatwarmer, for cold winter driving.

The best Christmas present I gave to myself in 2013, was when I “divested” from the “white elephant” I was living in. Now, being a “first time renter” again, makes me feel like I’m 23 and free.

The best Christmas present I gave to myself in 2014, was to upgrade my “Doro Seniors cell phone” from Rogers. (the new version has a camera and flashlight).

And I also love my half-price “hip hop” shoes.

Merry Christmas to Millineums, Boomers, Silent Generation, and Centurians.
} {

(“fist bump” means the modern handshake)

#14 Gary in Kelowna on 12.25.14 at 6:17 pm

Garth – shouldn’t you be helping Dorothy cook the turkey?
Merry Christmas!

#15 Jimmy on 12.25.14 at 6:22 pm

Dedicated to the dedicated.
A must read even on this blessed day.

Merry Christmas!

#16 Smoking Man on 12.25.14 at 6:25 pm

Do you ever take a God damn day off, I thought I had a problems with this pathetic blog…

Your the worced…

#17 prairie person on 12.25.14 at 6:27 pm

As a blogger who does not blog every day, I appreciate the time and effort you put into this blog. I enjoy sarcasm and wit but also genuine concern for all the people who have no education in finance. People usually do the best they can with what they know but, in my experience, what they know is what they learned from family and friends who don’t know what they are talking about. These advisors usually mean the best but are caught up in their own problems. My father initially got me to become involved in the stock market. He gave me lots of advice on what to buy. He talked a good line. He had a broker who was a cowboy but I didn’t know that. Then, one day, sitting around with a group of guys all of whom were invested in the market, I mentioned investing and he said, “I’m not interested in investing. I want to gamble.” My heart stopped. I went to the computer and sold all those great penny stocks he’d recommended and that everyone around the coffee table were “invested” in. I’d had an expensive lesson. “Buy a house.” “Buy penny stocks.” “Investing and gambling are the same.” All good family advice. Keep providing sensible advice. Keep educating. I would have been much better off with courses in finance than in chemistry and physics. I’ve needed finance all my life. I’ve never used chemistry and physics.

#18 Vince on 12.25.14 at 6:28 pm

“As I said, the average Canadian house cost $218,133 in 2008. Today it’s $413,649. That’s a gain of 47.1%.”

Clearly that’s over 89%. Are you correcting for inflation or something else to get to 47%?

Obviously the numbers were transposed from my first reference. As stated, the 2008 price was $281,133. — Garth

#19 Jimmy on 12.25.14 at 6:30 pm

SM translated: You are the worst.

#20 just say no on 12.25.14 at 6:43 pm

This Blog is all I got for Christmas…thanks!

#21 pinstripe on 12.25.14 at 6:51 pm

DELETED

#22 gary halifax on 12.25.14 at 6:51 pm

Thanks Garth for this pathetic blog..been a fan for a long time..best wishes in the New Year and Merry Christmas.

#23 Freedom First on 12.25.14 at 7:32 pm

Yes, I am pathetic, but upon reflecting on the balance in my life, I feel blessed far beyond what I deserve. And that is priceless. Something that debt just can’t buy:)

Nice surprise seeing your Post today Garth. Thank you. Back to my Christmas visiting now. God Bless.

#24 John Doe doe on 12.25.14 at 7:39 pm

Hi GARTH,
What your not including your calculations is a 100,000 investment in 2008 would of got you a 400,000 house 25 percent down, so the return of your leveraged house and living in it for the last 7 years is a lot higher than a balanced portfolio in the same time period and tax free capital gains !!! And no Landlord!!!! Plus paying down your initial mortgage!
Merry Xmas

Those points were covered. — Garth

#25 Waterloo Resident on 12.25.14 at 7:52 pm

When people hear that mortgage rates are about to rise and the houses they were looking at will soon be priced beyond their reach; do people stop buying homes or do they instead run like mad to the banks to get a mortgage quickly before rates rise and then go on a buying frenzy?

Because most of the time when a buying frenzy happens, prices for houses goes up, and up a lot, often 4 to 12% in a matter of weeks.

So when Canadian mortgage rates threaten to rise, will that be the time when Canadians will get buying homes in a panic, a massive frenzy?

( I won’t, I’m happy just renting.)

Meanwhile, when interest rates rise, stocks and bonds fall. So I’m seriously thinking about dumping U.S. stock ETFs (like SPXL , SSO, UPRO )
and buying Canadian Real Estate ETFs like XRE.TO and U.S. real estate ETFs like DRN.

Stocks do not fall when rates edge higher. Rate hikes signal inflationary expansion, which also signals corporate profit advance. Have more eggnog. — Garth

#26 LH on 12.25.14 at 8:05 pm

Houses in c01 and c02 served me well 2006-2014.
I got the memo Garth, so thenceforth no more houses. Savings will be directed to my underweighting in equities. Thankfully, at 30, I have plenty of time to catch up!

#27 LH on 12.25.14 at 8:33 pm

By the way, Merry Christmas Garth-sempai, and Merry Christmas Smoking Man! You two are the reason I read this blog daily.

#28 Cow Man on 12.25.14 at 8:37 pm

Sir Garth:

Was today’s blog part of a study you are doing to find out just how many of us are truly hooked on your potion? What non addicted person would be checking for a new post?

#29 JO on 12.25.14 at 8:38 pm

Merry Christmas Garth.

While I do expect US rates to rise modestly, there is no guarantee we will follow at all even though we usually do.

The oil collapse along with our severe over reliance on junk RE debt to keep this illusion going may very well allow Poloz to keep rates as is. CAD is likely to drop into the 60 s within 18 months if Poloz does not raise once the U.S. Starts

Canada is in for a very hard few years ahead. We will survive but we need some hard times to teach the muppets a lesson. That lesson will be how NeoLiberal economic systems mutate from “growth” into foreclosure and deviation and eventually a currency crisis and high inflation

Best wishes for 2015 !
Viva Canada !

#30 JO on 12.25.14 at 8:39 pm

Deflation not deviation of course !

#31 Bob Copeland on 12.25.14 at 8:49 pm

What am I doing wrong?

$413,648 minus $281,133 = $132,515 profit.
$132,515 is .32% of $413,648.
.32% divided by 7 years is 2.24% a year before any taxes.
Please have patience, I’m trying to learn!

#32 Rich from Hamilton on 12.25.14 at 8:56 pm

Garth.

Thank you for your post on Christmas. I have been a faithful reader for a long time. I still have your paper newsletters at my Mom’s house near my old race car bed. I have benefitted greatly over the years. After living for close to 15 years in a very modest 1,250 sq ft home near McMaster, we decided to rent it out and buy another home in Dundas. The new place was a bit more than I would have ever spent, but for 525 thought it was still ok. We are doing well with TFSAs maxed in ETFs and individual stocks. Keep up the great work for the next 20 years! Rich in Hamilton(Dundas). PS — Any thought on what the future of Dundas real estate may hold?

#33 Harbour on 12.25.14 at 9:02 pm

I wish my wage went up 45% since 2008.

Hell… I wish it even went up 10%

#34 Greatful on 12.25.14 at 9:48 pm

Great perspective Garth. Thanks for all you do.

#35 Uh Oh Canada on 12.25.14 at 9:50 pm

Garth- you are more pathetic than this blog and all readers tonight are more pathetic than the both of you. Hope you’re paying the Greater Fool editor/researcher/spell checker time and a half today.

Looking forward to learning from you in 2015, especially for our upcoming housing crash, I mean melt.

#36 Question on 12.25.14 at 9:50 pm

When you said, “That’s an increase of 53.8%, which takes into account the worst market performance in eight years.” Did you mean to say eighty (80) years? Either way they would both be correct statements. Agree with it either way. Keep up the great work, it’s greatly appreciated!

#37 omg the original on 12.25.14 at 9:51 pm

#24 John Doe doe
so the return of your leveraged house and living in it for the last 7 years is a lot higher than a balanced portfolio
——————–

Yes ,the gains for real estate in CERTAIN Canadian markets has been spectacular, mainly because of the leverage that people so unwittingly take on when buying a house.

But leverage cuts both ways, a reasonably small correction in housing prices in say TO or YVR will wipe out equity of “last in” buyers. Not a huge deal if you plan to live in the house for the net two decades but if you want to sell your hooped.

And will things correct? Its inevitable, as bubbly markets always revert to the mean. But when – who knows.

We can only hope its a long slow grind down that doesn’t decimate the Canadian economy.

#38 omg the original on 12.25.14 at 9:54 pm

#31 Bob Copeland
What am I doing wrong?

$413,648 minus $281,133 = $132,515 profit.
$132,515 is .32% of $413,648.
————————
Use $281,133 as your base for the “return” number.

So $132K is 47% of $281K

#39 -=jwk=- on 12.25.14 at 10:05 pm

In honor of my fellow blog dogs, we had a HAM today. Came out pretty good!

#40 raisemyrent on 12.25.14 at 10:26 pm

Smokey, I can’t stand my relatives and they’re mine not my wife’s! Reminded me of some of your good stories.
Supper here was last night. Today was pyjamas. Also, there was no Ham! Not that I’d eat meat anyways lol

Ps my engineer buddy turned unemployed (fired) turned realtor told me this week that he thinks west Vancouver and vancouver have peaked and that it won’t last a year. I was like whoa ok you just gained a lot of points in my books

#41 Chickenlittle on 12.25.14 at 10:56 pm

Merry Christmas everyone!

“It is a fair, even-handed, noble adjustment of things, that while there is infection in disease and sorrow, there is nothing in the world so irresistibly contagious as laughter and good humour.”
― Charles Dickens, A Christmas Carol

Garth, you keep many of us here with your wit, humour, and wisdom. Thank you, and a Merry Christmas to you, Sir!

#42 Tony on 12.25.14 at 10:56 pm

Re: #17 prairie person on 12.25.14 at 6:27 pm

The idea with penny stocks on the Canadian exchanges is to take the highest gamble possible by buying up everything at either one cent or at one-half a cent. That’s how to play penny stocks but you don’t read that in a book or see it anywhere. You have to trade penny stocks for decades to figure this out.

#43 Tony on 12.25.14 at 11:11 pm

Re: #28 Cow Man on 12.25.14 at 8:37 pm

He has a book to sell and tomorrow is boxing day. The same can be said for him posting everyday before Christmas.

What book? Hope you enjoyed your final post. — Garth

#44 Terry on 12.25.14 at 11:24 pm

$413,648 minus $281,133 = $132,515

$132,515 divided by $413,648 = .320569

.320569 times 100 = 32%

Average house gain price during past 7 years = 32%
Market gain of $100,000 during past 7 years = 53.8%

Markets win again!!!

#45 Lily Joe on 12.25.14 at 11:30 pm

Pretend you didn’t read a blog on Christmas??
Garth, you may not realize this, but I read your blog every day! You feel like a part of my family!
Merry Christmas!

#46 Armando on 12.25.14 at 11:31 pm

Hi Garth, Love your blog. You’re perfectly correct in your return comparison. However, given the wonderful run up we’ve had in stock prices, the US stock market at least is now about 100% overvalued based on sound historical metrics (Shiller’s CAPE, Total Market Cap/GDP, etc.). So while I agree completely about the potential for housing in Canada to tank, the risk in stocks isn’t negligible either…

Where did I talk about a US stock portfolio? Repeat after me… balanced… diversified. — Garth

#47 Sheik Yerbouti on 12.25.14 at 11:38 pm

Garth

Never mind the loss of the sinewy guns…..there’s always HGH…speaking of which, is QE a form of economic HGH, in which case this QE era might be aptly called, the Rambo-econo-era…

#48 nonplused on 12.25.14 at 11:57 pm

Well normally we go skiing on Christmas but the kids were all sick. I like to ski on Christmas day because the crowds are light whereas for the rest of the break they will be the busiest they are all year. Surprisingly I am not the only one who has figured this out though so there are a reasonable number of other people there, you don’t get the hill to yourself. But this year we played monopoly instead.

#49 kommykim on 12.26.14 at 12:44 am

RE: #25 Waterloo Resident on 12.25.14 at 7:52 pm
Meanwhile, when interest rates rise, stocks and bonds fall. So I’m seriously thinking about dumping U.S. stock ETFs (like SPXL , SSO, UPRO )
and buying Canadian Real Estate ETFs like XRE.TO and U.S. real estate ETFs like DRN.

REITs usually fare poorly in a rising rate environment. Sounds like a money losing strategy to me. Stick with a balanced portfolio instead.

#50 Blair Witch on 12.26.14 at 1:06 am

Don’t worry about the future, enjoy the present day … Short term rate hike next year. I will believe in the changes only when they manifest. In the meantime save and invest wisely, and only then when the house prices are reasonable and affordable the time is ripe to purchase. Like Garth said, there is nothing wrong in buying a home. Scruples…. And lots of it …… And tons of patience ….

Looking forward to a wingding New Year ….

Good riddance to 2014 !

#51 stop lying on 12.26.14 at 2:15 am

“Average house gain price during past 7 years = 32%”

if the price gain was only 32% over 7 years we wouldn’t be talking about a bubble. it’s closer to 3x that much.

#52 Joe2.0 on 12.26.14 at 2:33 am

Why did the turkey cross the road?
Because that’s where the open house was.
Ho Ho Ho.

Thanks Garth
Happy New Year!

#53 David on 12.26.14 at 3:00 am

One can expect a great deal of volatility on the bourses if the energy shakeout continues.

http://davidstockmanscontracorner.com/the-oil-slump-is-going-to-hurt-the-us-too-and-for-more-than-a-minute/

http://davidstockmanscontracorner.com/david-stockman-energy-crunch-will-morph-into-a-replay-of-the-housing-crash/

#54 Honey Dripper on 12.26.14 at 8:08 am

Buy what appreciates in value and rent/lease what doesn’t. Most of your gains will come from developing proper asset allocation within a balanced, diversified tax efficient, low cost portfolio. Learn to discern free advice without having to have it explained in multiple posts. This pathetic blog doles out the best free financial advice on the web, become a good student if you’re ignorant in all things financial. Go Canada Go!

#55 Ontario's Left Coast on 12.26.14 at 10:33 am

I, for one, am glad I took a break from the excess to read this post, so call me happily pathetic! Thanks, Garth, for everything you do and all the best in 2015! Now, back to the festivities…

#56 crowdedelevatorfartz on 12.26.14 at 11:05 am

Thank you ‘uncle ” Garth for all your sage advice.
And on Christmas Day? Did the Amazons burn the turkey?

Yo ! Smoking Man! How’s Alladins Casino in Halifax?

@#21 Pinstripe
Deleted on Christmas Day………..A new low in Blogdom
One hopes your lump of coal was twice as big as last years.

#57 Luis on 12.26.14 at 11:07 am

DELETED

#58 kothar on 12.26.14 at 12:56 pm

How big is this years hate mail posts, single spaced 11 font size?

268 pages. So far. — Garth

#59 StocksSuck on 12.26.14 at 1:10 pm

6-8% stock returns are something of the past. Stocks performed 6-12% from the very beginning till year 2000. Last 15 years, stocks have been returning less than 3% before inflation. After inflation, they have been negative. Sure, if you take a narrow view of history from 2008 till now, you can show decent returns. However, 2008 till now have been abnormal times with record low interest rates. This won’t last forever. If you’re preaching long term investing, one must look at-least last 15 years. Going forward, I feel crashes will continue to happen and western stocks won’t beat more than 3% for long term diversified investors. Short term investors who are good at timing the markets would fare the best. The rest of us, we need something else. Not stocks nor real estate nor bonds.

How can I keep yammering about a balanced and diversified portfolio, and so few people seem to get it? — Garth

#60 jess on 12.26.14 at 1:53 pm

wash trades and RBC

RBC to pay US$35 million over US regulator’s ‘wash trading’
business.financialpost.com/…/rbc-to-pay-us35-million-over-u-s-regulator…
Dec 18, 2014 – Royal Bank of Canada has agreed to pay US$35 million to resolve a lawsuit by the U.S. Commodity Futures Trading Commission, accusing it of

#61 nancy on 12.26.14 at 2:01 pm

“Ps my engineer buddy turned unemployed (fired) turned realtor told me this week that he thinks west Vancouver and vancouver have peaked and that it won’t last a year. I was like whoa ok you just gained a lot of points in my books”

You’re absolutely right:

2990 Palmerston Ave – asking $14.998 m, sold for $10.2 m.

This $10 m sale in West Vancouver looks good, until you take a closer look.

Tax assessment is $12.522
Price reduced from $18.8 m
Selling since 02/13
Lot size is over 37,000 sq ft
House size is over 14,000 sq ft

I’m not saying this is a bargain basement steal, but you think this seller isn’t thinking the same thing?

#62 drydock on 12.26.14 at 2:03 pm

‘brick-licking’

It sounds hideously perverted.

#63 Nemesis on 12.26.14 at 2:21 pm

#BoxingDayMischiefForSaltierDoggiez…

#”Ooops”… #JustDon’tSay,”HAM”

[UK Guardian] – Londoners miss out as homes built as ‘safe deposit boxes’ for foreign buyers: 10 investors own sites for 30,000 homes, data shows, with interest from Abu Dhabi and China in Hyde Park site

…”The control of plans for tens of thousands of new homes in London is now in the hands of foreign investors who are increasing their grip on the capital’s prime property assets, figures obtained by the Guardian have revealed.

Sites for close to 30,000 homes are owned by just 10 investors in Hong Kong, China, Malaysia, Australia, Singapore and Sweden, sparking warnings from politicians and housing industry experts that too many are being built to act as “safe deposit boxes” for international investors rather than for Londoners in housing need.”…

http://gu.com/p/44bq9

#MindTheGAAP,Or… #NoSexPlease,We’reBritish?…

[UK Telegraph] – Britain edges past France on world stage: UK economy, boosted by the inclusion of sex and drugs in national accounts, overtakes France by a whisker to become the world’s fifth largest economy

…”The Centre for Economics and Business Research (CEBR) said Britain’s acceleration was also boosted by the inclusion of sex and drugs to UK growth. While the addition of prostitution and illegal drugs form part of new pan-European accounting standards, France has refused to comply with EU rules because it does not consider them to be “voluntary commercial activities”. “…

http://www.telegraph.co.uk/finance/economics/11313327/Britain-edges-past-France-on-world-stage.html

#ScientistsHailRevolutionaryMedicalTriumph,Or… #SmokingMan’sLongShotBioStartUpScoresBigTime…

[BBC] – New vaginas…and other medical stories of 2014

…”On a slightly different note, four women have had new vaginas grown for them in the laboratory.

A biodegradable tubular scaffold was designed to be the right size and shape for each woman.”…

http://www.bbc.com/news/health-30312624

#InternNation… #WhatCouldPossiblyGoWrong?

[NYT] – Driver Wanted for Obama Motorcade. Novice Welcome.

…”Volunteers with no special training are a link in the middle of the fastest, and highest-profile, chain of vehicles in the country. They are cheaper than the Secret Service personnel or local police officers who surround them on the road. And their cargo of lowly staff members and reporters is apparently less precious.

The White House declined to comment on the practice. The Secret Service defended it, saying it has been standard since at least the 1980s. Volunteer drivers “are briefed by the Secret Service agent responsible for the motorcade prior to any movements” about what to do in case of an emergency, like an attack, a spokesman for the agency said.”…

http://nyti.ms/1CHEzIW

#64 Mike L on 12.26.14 at 2:31 pm

I own a house but far more of our equity are in CDN and US balanced portfolios.

But the one thing I have to say about owning a principle residence home in Canada is what you make is tax free when you sell. That’s a pretty big incentive vs stocks.

Merry Christmas and Happy New Year to all.

Capital gains taxes are low – the maximum rate in Canada is 25%, most people pay half that and money borrowed to invest is tax-deductible. Meanwhile all mortgage interest, property taxes, maintenance, insurance payments, closing costs and commissions on real estate are non-deductible, and must be subtracted from capital gains for an accurate comparison. — Garth

#65 Russ L on 12.26.14 at 2:39 pm

Maybe this can help:
http://www.costofliving.welcomebc.ca/CostOfLiving.aspx

I checked for Nanaimo… default income of $50K, small house, 2 car & 30Km daily and $500 a month pub & motorcycle expenses (note. no line item for the yacht :)

At 20% down & “owning”, the couple is 3 grand underwater
the renter has 7 grand going into the portfolio. woo hoo!

#66 Ogopogo on 12.26.14 at 2:42 pm

Diversification is a beautiful mantra. I doubt I’d take as much pride in a house than I do in my portfolio. And no gutters to clean or toilets to unplug.

Long live diversity, in every sphere of life. What’s so difficult to understand about this, mob of maliciously angry, bitter realtors?

#67 Retired Boomer - WI on 12.26.14 at 2:59 pm

Garth reports “286 pages of hate-mail posts 11 pt font size” (deletes obviously) thus far in 2014.

Wow, that is a LOT of hate, misunderstanding, or whatever.

All because a guy makes sense of a rather senseless run-up in the perceived value of RE. Sure, years ago one might have speculated in RE for a while. At todays prices, and interest threat, not a good bet. That opinion is from an American at a far distance for Toronto, or Vancouver, but such a far distance from Thunder Bay, or the Peg.

As for me, the money is “invested” in businesses, and fixed income, as the blog writer suggests at 60/40 percentages.
So far, I have been well pleased, but you do as you see fit.

#68 LP on 12.26.14 at 3:39 pm

#65 Mike L on 12.26.14 at 2:31 pm

But the one thing I have to say about owning a principle residence home in Canada is what you make is tax free when you sell.
***********************
IF, when you sell, the market is up such that you clear a profit (after expenses) above what you paid.

#69 ronh on 12.26.14 at 4:09 pm

From your friends @ Blackrock. Read all pf page 15.

https://www.blackrock.com/corporate/en-us/literature/whitepaper/bii-2015-investment-outlook-us.pdf

Something about corporate earnings.

#70 crossbordershopper on 12.26.14 at 4:23 pm

Money is like everything else. In life. Hang out with people who only talk about sports and you will know everything about sports. all this details about interest rates up a point is the same as listing to all that sports stats. I have one buddy who knows every stock symbol and another guy who knows all sports stats. Even stuff i thought they dont even keep track of. i honestly have not met anyone who rents and has a million dollar portfolio except for one old guy who sold his place and couldnt look after it anymore. How can you go to a party do u impress them with your portfolio. hay look what dollarama or facebook stock i own. People are impressed with shinny things like hardwood floors and granite countertops. The theory of rent vs own is flawed. Garth premise is only based on financials. Humans make bad decisions every day. Drugs alcohol eating too much bad friendships etc. Garth will have half the families in a position in 3 generations not needing to go to work anymore. Garth was in politics he should know you gotta keep people poor how else do u control them.

#71 pravchaw on 12.26.14 at 4:33 pm

“Of course, the world ignored me”.
Garth, you were early, now is the time – the dominoes are starting to fall. Yesterday at christmas dinner, I shared your blog with my “brick licking”, “house horny” nieces and nephews. Hope they read it and stay safe and diversified.

#72 triplenet on 12.26.14 at 4:36 pm

#44 Terry

The hypothetical average home increased by an average amount of 6.71% per annum over the 7 year period.
Notwithstanding, so what?

#73 Pooh on 12.26.14 at 5:11 pm

All valid, however the dangerous elephant in the room remains. Leverage.

A lot easier to leverage market gains on the full (likely heavily mortgaged) value of a house versus a fraction of that amount on a diversified investment portfolio.

I’ll take the latter in the present, but the reality is that most do not.

Merry Christmas Garth. Appreciate and enjoy all your hard work.

#74 Smoking Man on 12.26.14 at 6:58 pm

Did everyone OD on turkey, where is everyone..

I spent the day, watching the sun rise, to its fall. Thinking, yes finally pease, tranquillity. It’s writing time. Not one damn sentence.

Killing a few boxes of wine with my son and his wife in Halifax watching the sun.

O well getting a buzz at this thing they call a casino..

#75 RealistvsExtremist on 12.26.14 at 6:58 pm

#70 ronh on 12.26.14 at 4:09 pm
From your friends @ Blackrock. Read all pf page 15.

https://www.blackrock.com/corporate/en-us/literature/whitepaper/bii-2015-investment-outlook-us.pdf

Something about corporate earnings.

+++++++++++++++++++++++++++++

Agreed. Saying for 3 years that the fed will “raise rates” only to have them go up 0.5% is nothing. They can’t raise rates. Too much debt. Unless of course destroying the entire financial system is part of some plan. Who knows.

#76 RealistvsExtremist on 12.26.14 at 7:08 pm

Stocks do not fall when rates edge higher. Rate hikes signal inflationary expansion, which also signals corporate profit advance. Have more eggnog. — Garth

++++++++++++++++++++++++++++++++++

Inflation = expansion of money supply.

Rates near zero

Money Printed by Fed = 4,000,000,000,000

Whoops !!

So……zero rates. 4T in newly printed cash. How much Zimbabwe cash gets printed when rates rise?

#77 TheLaughing(e)CONomist on 12.26.14 at 7:12 pm

Merry Christmas to the blog dogs with very appropriate song:

https://www.youtube.com/watch?feature=player_embedded&v=lU37ka_Yjjc

And not sure if this post will be allowed, graced with the “DELETED” label or simply dissapear in the cyberspace but:

Gold price in CAN$ was around the C$910 for the whole 2008 and it is today C$1390.
This also looks to me as > 50% return.

Greetings.

#78 Gary on 12.26.14 at 7:18 pm

It won’t be long before we start seeing foreclosures in Calgary. In 2008, 10% of mls listings in Calgary were foreclosures. I checked today http://calgaryrealestate.ca/mls-listings/foreclosures/ and there are none. We will see how long it takes for the foreclosures to come back.

#79 Mark on 12.26.14 at 7:54 pm

“if the price gain was only 32% over 7 years we wouldn’t be talking about a bubble. it’s closer to 3x that much”

House prices in Canada were already in a bubble circa 2008. And 32% is a lot when inflation, compounded at 2% over 7 years, is only 15%.

#80 crowdedelevatorfartz on 12.26.14 at 8:05 pm

@#75 Smoking Man
I knew you’d sniff out that pathetic attempt at a casino.
But, seriously, is it THAT much worse than Seneca?
At least you can toss your empty JD bottles in the harbour and “single finger salute” the sunrise……..

Halifax……So many drinking establishments, so little time……..

#81 Rabi Dmangycur on 12.26.14 at 8:31 pm

I believe there are TWO distinct steps to achieve financial independence in the current situation. Each step by itself seem to require more fortitude than most of us are capable of.

The first is to be able to sell your house or condo, or refrain from purchasing one.

The second is to have the guts to invest in a balanced portfolio.

The odds of doing both within a short time seems overwhelming. Being able to do at least one deserves merit.

#82 My Life is a Pile of Shit on 12.26.14 at 9:08 pm

There is a benefit to owning your home without financing and without paying the bubble prices of big cities — you are forsaking the uncertainties of financial markets for the absolute certainty of not having to pay rent.

And the absolute certainty of paying interest. And property tax. And insurance, maintenance, utilities, land transfer tax and commission. Did I miss anything? — Garth

#83 Piccaso on 12.26.14 at 9:26 pm

#80 Mark

House prices in Canada were already in a bubble circa 2008. And 32% is a lot when inflation, compounded at 2% over 7 years, is only 15%

I will agree with you there, I went through a divorce 11 years ago and had to sell my house, it was like the day after I had to cash in that the prices just started to rocket up. I couldn’t believe it

#84 45north on 12.26.14 at 9:36 pm

Nemesis : Londoners miss out as homes built as ‘safe deposit boxes’ for foreign buyers: 10 investors own sites for 30,000 homes, data shows, with interest from Abu Dhabi and China in Hyde Park site

“built” means the homes exist but “sites” implies that they don’t. Which is it?

knowing almost nothing of municipal planning in London England it’s my impression that it’s very heavy influenced by local councils. Maybe that’s the point of the article, investment in sites may not pay off big but at a minimum the interests of the investors will be respected so in that sense it’s like a safety deposit box.

#85 Bill Gable on 12.26.14 at 9:37 pm

Thanks for your wise counsel, and this incredible blog, Mr. Turner.

I know it must be a ton of work – THANK YOU!

I hope Boxing Day has been relaxing….

Happy New Year!

Cheers!

#86 Nemesis on 12.26.14 at 9:46 pm

“Did everyone OD on turkey, where is everyone…”… HommeDuTabagisme

Ok… You really, really, really… want to know?

http://youtu.be/z58hYF44cEI

Well… There it is.

[NoteToGT: Just for fun: http://youtu.be/PXQh9jTwwoA NoteToSaltierDogz: Keep ‘Smelling the Roses’, as it were… Trust me. It works. Your HollyWoodEndings may occasionally be delayed, but you’ll get there in the end. I guarantee it… Speaking of which, and just in case, “Bonne année, mes amis!”]

#87 Obvious Truth on 12.26.14 at 10:07 pm

99 % of people think buying stocks is akin to gambling to try to make money. Yes they have no idea what an etf is and think you could lose all your money in the stock market.

They won’t ever get it.

They should however be able to understand debt and saving.

Obviously most are failing there. Congrats to all the youngsters out there who are learning about building themselves a more secure future.

My dad always said that you’ve got to build your own house. No one will do it for you. Of course he didn’t mean building an actual house.

Choices.

#88 Red Deer Rob on 12.26.14 at 10:12 pm

Thanks Garth for your altruistic dedication to teaching the ignorant, myself included. I learn something new here everyday and have been taking action to correct my investing mistakes.

This spring will be a difficult time for many in the oil field. I expect to feel the financial pinch. At least I am without a mortgage and mobile; so if worse comes to worse I can always move. Now if I can only solve another problem of finding, for myself, a talented amazon with her head on straight.

#89 Harbour on 12.26.14 at 10:13 pm

Did I miss anything? — Garth

Ugrading…

Because the wife wants that wall blown out and bigger kitchen and nicer cupboards and the rug replaced with hardwood flooring.

#90 Kris on 12.26.14 at 10:19 pm

And it still beats the house. Actually, after paying commission to sell the average house bought in 2008, the return is just 39.7%. Factoring in closing costs, it is 38.1%.

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

Yeah, but try buying equities with 5 % down.
And, no cmhc for stock investing…lol

Leverage cuts both ways. Could soon be a real bad idea. — Garth

#91 JamesA on 12.26.14 at 10:23 pm

hey, great blog, thanks for all the work and patience.

Does anyone know what percentage of the income of the big 5 Canadian banks comes from interest payments? I don’t know how to get the docs (prospectus?) yet.

Say interest rates go up in the next couple of years, but not so much to blow up the CND economy (I am assuming there are people in Toronto & Ottawa that can pull on “levers” to adjust it a bit). I am guessing that will hurt all the real estate owners (less money to buy stuff), but will that help the banks?

If interest is a big source of income to them, do they go up in value? Or does the money just wind up the CND central bank?

TL;DR:
In rising interest rate environments, is owning a bank ETF (XFN or whatever) a good thing?

(In general, I have a lot of different ETFs, as per the diversified mantra, not just one sector)

#92 lee on 12.26.14 at 10:49 pm

You don’t even need to be diversified or balanced. Aslong as your yield is 3.2 to 3.3, and you don’t run during a downturn, you can just buy canadian/u.s./europe/int. div growth etfs and you’ll be fine. When equities are flying high (more than 10 percent up) you might put some yearly contribution into a pref etf. Otherwise, equities etfs should be your focus.

#93 My Life is a Pile of Shit on 12.26.14 at 11:26 pm

From #83:
There is a benefit to owning your home without financing and without paying the bubble prices of big cities — you are forsaking the uncertainties of financial markets for the absolute certainty of not having to pay rent.

And the absolute certainty of paying interest. And property tax. And insurance, maintenance, utilities, land transfer tax and commission. Did I miss anything? — Garth

If you own your home without financing, you pay no interest. Even with the other costs of ownership accounted for, my money still has to make 5.3% every year (yes, every year, not just on average) to be better than renting. (Annual cost of ownership is $3300; annual rent is $9600. The difference, $6300, has to be made up by after-tax investment return on $138k, the cost of a home with land transfer tax and closing costs included.) The financial markets can guarantee no return. Despite good years in the past, it takes only one or two disappointing years for a person with the means to buy a home without financing to abandon the rent-and-invest option. When financial markets are uncertain (or worse, disheartening), folks will welcome the absolute certainty of not having to pay rent.

Now, where did you buy a house for $130,000? — Garth

#94 TurnerNation on 12.26.14 at 11:35 pm

The Why-must-I-press-One-for-English and
KJV-S&W-AU crowd must be chumming in their winter survival huts.

#95 nonplused on 12.27.14 at 12:12 am

No boxing day post? You lazy….. (Just kidding! Garth gets a day off now and again.)

We made the ski day happen today and it was cold with no wind and sunny so on the whole good. And the crowds were still very tame. Wouldn’t want to be there tomorrow though! From the 27th to the day before the kids go back to school is very good days for ski hill operators. Even New Year’s doesn’t offer good relief because so many people chose to spend it on the hills.

New year’s is in my opinion the better holiday than Christmas, because you get to do what you want with who you want, no family obligations. So a lot of people go skiing.

That said, if you can get on the hill New Year’s morning it’s pretty good. But by about noon the hangovers are mostly dealt with and we are back to a prime time day. I only made it out in the morning once or twice but I believe it still holds true.

#96 Millmech on 12.27.14 at 1:39 am

#94,you forgot about the lost opportunity on the 138,[email protected]% which is about 9660/yr.In ten years with modest returns should be about 275,000,@7% should be producing almost 20,000/yr,in twenty years nest egg should be worth around 550,000,@7% that will be close to 40,000/yr.Remember compound interest is the eighth wonder of the world.

#97 Rabi Dmangycur on 12.27.14 at 1:44 am

Gondo Hell

The first step to financial freedom for condo lusters and owners might be effected by reference to this article by Macleans:

http://www.macleans.ca/society/life/condo-hell/

Basically says condo ownership is fraught with hidden terrors.

#98 My Life is a Pile of Shit on 12.27.14 at 1:53 am

Now, where did you buy a house for $130,000? — Garth

You can’t buy a house for $130k. But one can buy an apartment for $138k in BC’s Fraser Valley (Abbottsford and Chilliwack). In big cities like Metro Vancouver, there can be no argument for home ownership. Although rent is more expensive there, home prices are disproportionately more expensive.

#99 Zoronqueen on 12.27.14 at 2:14 am

Thanks Garth for your x’mas wisdom…

Didn’t listen to your advise in 2008 and upgraded….Now living in vancouver and renting but still have a house in Edmonton….

Learnt a lot from fellow bloggers.. Esp that moneymustache guy….

got to hear you in Surrey one year…

happy new year… Hope Edmonton can stay the course and we’ll get our 3% rate of return per year…

#100 stop lying on 12.27.14 at 3:25 am

“House prices in Canada were already in a bubble circa 2008. And 32% is a lot when inflation, compounded at 2% over 7 years, is only 15%.”

I go by my own market, the GTA. TREB says from 2008 to 2014 the average sale price has gone up 67%. That however averages out the substantial savings you could have had at the end of 2008 when there was a price dip and that number would even be higher. It also averages in condos which haven’t been nearly as good an investment. If you bought a detached home in the GTA during the dip in 08 or any time in the mid 2000s or before, you’ve doubled your money or come close.

Besides land, HST, labour, materials, development charges ect have increased more than 15% over that time period as well. Everyone wants their pound of flesh from the ‘rich’ homeowners. We’ll see how long it lasts…

#101 Honey Dripper on 12.27.14 at 8:40 am

Rent a place to live in, lease your ride, stay liquid, balanced and diversified with your investments. The only people who hate this advice still wallow in debt.

#102 Ronaldo on 12.27.14 at 8:40 am

”Now, where did you buy a house for $130,000? — Garth”

Heck, here’s one you can buy for a fraction of the above on a nice private lot in a small community. A real mortgage beater.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=14009748

#103 Ronaldo on 12.27.14 at 8:54 am

And here’s one on 2 acres that you could snag for the cost of a closet in one of those Toronto condo boxes in the sky.

http://www.realtor.ca/propertyDetails.aspx?PropertyId=14600627

Yeah, sure. Broad Valley, Manitoba. No bathroom. — Garth

#104 Tony on 12.27.14 at 9:49 am

DELETED

#105 brydle604 on 12.27.14 at 10:16 am

#89
Can give you some pointers regarding looking for the perfect wife
http://www.dailymotion.com/video/x2cayek_life-science-the-wife-hack-clean-version_tech
Lol

#106 crowdedelevatorfartz on 12.27.14 at 12:41 pm

@#63 Drydock
“‘brick-licking’

It sounds hideously perverted.”
++++++++++++++++++++++++++++++++++++

Not if you’re the Brick.

#107 Mister Obvious on 12.27.14 at 12:46 pm

#101 stop lying

“If you bought a detached home in the GTA during the dip in 08 or any time in the mid 2000s or before, you’ve doubled your money or come close”
————————————–

Not quite.

You’d also have to sell and pay all fees. Your next task would be to do something wise with the proceeds. At this point in history that would probably not include buying another house in the GTA.

More likely it would involve investing the money and seeking out a good rental. That’s the only way to turn paper gain into real gain. Until then, its mostly smoke and mirrors.

#108 joblo on 12.27.14 at 1:13 pm

Here we go, try this when dumping your shack!

http://www.stuff.co.nz/life-style/home-property/64487644/New-breed-of-real-estate-agent-charges-by-the-hour

#109 Keith in Calgary on 12.27.14 at 1:52 pm

Yesterday was Boxing Day………..short of retailers attempts to spin Black Friday, it is the biggest Canadian shopping day of the year.

As I sit here this morning I do not see any headlines in any Canadian media that boxing day sales records were broken, I do not see any articles about the massed throngs going crazy yesterday……..in fact….I do not see anything at all.

My wife and I went to Chinook Centre, Cross Iron Mills
and South Centre mall to check things out in the afternoon. We were able to park near the doors (a shocker in itself) and once inside the malls we noticed that the amount of people we expected to have to push our way thru seemed to be down by 50%.

Interesting……..

#110 Snowboid on 12.27.14 at 2:19 pm

#103 Ronaldo on 12.27.14 at 8:40 am…

Thank you for bringing a bit of humour to my otherwise quiet day!

However, if I wanted to go back to my prairie roots from the 1950s I would prefer a town larger than 235 souls, where the current temps were above -21C.

Come to think of it, moving anywhere east of BC and west of New Brunswick is no longer on my bucket list!

#111 Robert on 12.27.14 at 2:36 pm

The significance of oil down 50% seems to be eluding many! The majority respond oh don’t worry it will be back above $70 in six months. The question of layoffs have not even reached the front pages as again it seems all are in total denial that we have a problem. All this while the estimates for spending cuts keep rising as the announcements continue. The latest numbers I have seen floated is 5 billion dollars in cuts. So if correct or perhaps even conservative what impact would this have on the employment scene? What if the price of oil continues to slide and we revisit the $30 level? Could we been in for another credit squeeze? In the end time will be the teller of all truth and that truth will begin to emerge when the mutual fund statements begin to arrive in early January. Any fund tied to the tsx will be at risk and there is no doubt that many will be discovering in the new year that their net worth has taken a huge hit. These series of questions are not fear mongering IMO as each and every scenario I have addressed is absolutely possible. Last but far from least how could anyone think for a second that this will-not impact the Real Estate Market in Canada? If one had to make a reasonably intelligent guess the first place to look would be based on supply and demand. Again IMO I believe that the supply side is on the move while the demand side is waning everywhere one looks.

#112 Republic_of_Western_Canada on 12.27.14 at 3:18 pm

#98 Rabi Dmangycur on 12.27.14 at 1:44 am

Gondo Hell

The first step to financial freedom for condo lusters and owners might be effected by reference to this article by Macleans:

http://www.macleans.ca/society/life/condo-hell/

The problems there are primarily behavioural and structural. But if those are appropriately resolved, living in a concrete beehive is actually a good deal. Advantages of scale, such as distribution of land price and service infrastructure over many units, are a definite plus.

But – what the hell are are bunch of screeching kids and barking dogs really doing in a highrise building? Why not bring in a bunch of chickens and pigs too, to be slaughtered on the balcony every few weeks as fresh food? All of that completely conflicts with ultra-dense population living. Destructive ‘parties’ with irresponsible guests tearing out the lighting fixtures are equally obnoxious and intolerable; that kind of problem goes way beyond noise.

The solution is clear – group people with similar behaviour and expectations into the same buildings. Regardless of any politically-correct horseshit. Expand the bonafide necessary list of implicit and explicit restrictions on behaviour a little higher than it might be for detached buildings.

If for example you like to have Friday-night soirees with friends, and introduce friends to new friends, without getting some resentful anarchists showing up to damage property, or having neighbors dropping by to complain about their disturbed kids, then find an adult-only singles building which encourages socializing and has good security. OTOH, it might be a good idea to keep the balcony doors closed after midnight.

Or, if you want a building where you can let your kids run up and down the halls all day without worrying about them, or screech all night for the milk-bottle without having neighbors complain when they have to get up a 4:00 a.m. for work, then just make sure you are in a building full of people with kids. OTOH, just make sure you don’t flush too many diapers down the toilet to plug up the sewers for everybody else.

First-world countries such as Japan or Switzerland, with dense urban population arrangements, have existed for centuries. They have developed conventions for living in close quarters without people constantly getting on the nerves of neighbors. Some of their less-draconian rules and attitudes could be very useful in modern Canadian contexts.

The second big deal is constructing buildings which are properly made for low maintenance and longevity. There’s no valid reason why some stick-frame detached house should stay habitable for decades longer with minimal maintenance, than a big building built of vastly superior materials such as steel, concrete sandwich panels, and glass.

#113 TS on 12.27.14 at 4:00 pm

Yeah

The problem is Garth is that nobody is going to lend the average Canadian $300,000 with 5% cash at an Interest rate of below 3% to invest in the stock market.

But they will give you that much to invest in your house…

The investor who puts $100,000 in the stock market will see better returns, but the individual who bought a $400,000 house made more money. He had 4 times more chips on the table.

I get your general point. The rule of 90 makes total sense and it pays to be diversified.

But in the last 10 years in most of Canada, you were better off in Real Estate

Where did I tell you to invest in the stock market? BTW, your last statement is wholly incorrect. — Garth

#114 Spectacle on 12.27.14 at 5:02 pm

It’s an old short story that….

” Intelligence is knowing what to do…while, Wisdom is doing it”.

This blog is mostly about sharing that “wisdom”. Or not.

The following are psychological stories about why people do not take in this wisdom.

Ps: ( If link doesn’t work, it really is a nice read if you cut and paste it into your own search box, for later reading.)

48 Psychological Facts To Know About Yourself – Business Insider

http://www.businessinsider.com/48-psychological-facts-you-should-know-about-...

Apr 6, 2012 – People see what they want to see. … 48 Psychological Facts You Should Know About Yourself.

Why You Can’t Resist Paying Attention to Food, Sex, or Danger….or this blog !

#115 Smoking Man on 12.27.14 at 5:30 pm

Wynee meets Smoking Man

http://dyslexicsmokingman.blogspot.ca/2014/12/wynne-meets-smoking-man.html

Went out to pay my respects to those poor souls that perished on Swiss Air 111.

This Christmas was weird, I’ve always been an advocate of when family gets together for these things, it should be about love. Not things, not embellishing
our success.

Death of a loved one this year did it. Lots of hugs, exchanges of real feelings, no one bragged no one lied. Everyone cared for each other.

Be careful of what you wish for dogs..

I was like a tortous on its back in a scorching desert sun.. Trapped…

I survived…. It was good, I made it.

#116 Kalergie on 12.27.14 at 6:01 pm

Where did I tell you to invest in the stock market?… — Garth

Love your blog. But sometimes you puzzle me.

#117 TurnerNation on 12.27.14 at 6:31 pm

If you haven’t heard a rumour by noon, start one.

Burger Thing’s takeover of Grim Hortons.

Who shall then Dollarama and Canadian Tire?

Some chatter on the wire over premium assigned to CTC over CTC.A

#118 prairie person on 12.27.14 at 8:04 pm

Ronaldo can find near derelict homes that will sell for very little money. However, the reality of country living in Manitoba is houses 300,000 to 900,000. Sometimes, they come with an acerage or they are on or close to a beach but a search for a well built modern house will turn up many places like this.
http://www.interlake.mb.ca/real-estate/display,property/18733215/399-chalet-beach-road

#119 im really disappointed in you sir on 12.27.14 at 8:33 pm

DELETED

#120 Steve French on 12.27.14 at 9:14 pm

Happy new year blog dawgs…

https://www.youtube.com/watch?v=zjBmah8OE7U

Flying through a firework show with a DJI Phantom 2 and filming it with a GoPro Hero 3 silver. The quad was not damaged.

Published on Dec 16, 2014
BE SURE TO WATCH IN HD!

#121 Andrew Woburn on 12.27.14 at 9:27 pm

About 70% of Canadians own their dwelling place. Only about 40% of Germans do. Here’s why.

http://qz.com/167887/germany-has-one-of-the-worlds-lowest-homeownership-rates/

#122 NigelM on 12.27.14 at 9:38 pm

Should the rental expense not get factored in here also? I agree with what you’re saying in principle but home owners would argue that the saved rent should be included in the returns they earn from buying a house. Just so it’s an apples vs apples comparison. I know they aren’t investing in a diversified portfolio at the end of the day which is what you’re getting at but you are comparing returns.

If you include imputed rent, then counter that with the lost opportunity cost of the downpayment or equity in the home. It’s an eye-opener. — Garth

#123 Smoking Man on 12.27.14 at 9:48 pm

In a blues bar with my son in Halifax, let him read my book.. He thinks it’s amazing… So he shares some of his stuff, I nearly drop to my knees. He’s damn good too.

This is his five minute thumb typing I need to share..

I did good I think.. Enjoy

Before a man can go to war, he must first declare it on his vanity. Otherwise
what greater good is he truly serving? The value of our lives should not be measured
monetarily,nor judged by a code of morals and ethics. Our lives must be measuered in
silent contributions,anonomus restitutions, and secret absolutions. The weight or worth
of a man must be mesaured by his word and his opinion. The real truths become
the past to fast. They then are passed on through a broken telephone and altered through
misunderstanding. We cannot defeat our vanity, this is the biggest tragedy in human nature.
Love is the biggest triumph, but it is to love and not to be loved which is the most admirable
of all human nature.

#124 NigelM on 12.27.14 at 9:49 pm

“If you include imputed rent, then counter that with the lost opportunity cost of the downpayment or equity in the home. It’s an eye-opener. — Garth”

Fair point! Thanks.

#125 Porsche on 12.27.14 at 10:19 pm

If you include imputed rent, then counter that with the lost opportunity cost of the downpayment or equity in the home. It’s an eye-opener. — Garth

……………………………………………………………………….

The percentage of middle class that owned a home the last 10 years and made money has far surpassed any other type of investment made by middle class bar none.

End of story on that topic

And most don’t have enough income to retire on. End of story. — Garth

#126 Porsche on 12.27.14 at 10:43 pm

And most don’t have enough income to retire on. End of story. — Garth

………………………………………………………………………

Does your average middle class shmuck that didn’t buy a house have enough to retire on?

No, he doesn’t even have stock portfolio that he could sell and retire on.

The only valid point is that every sensible person should strive to be diversified. At the end, we all need income. And love. Shelter will come. — Garth

#127 kommykim on 12.27.14 at 11:02 pm

RE: #117 Kalergie on 12.27.14 at 6:01 pm
Where did I tell you to invest in the stock market?… — Garth
Love your blog. But sometimes you puzzle me.

Yes, I don’t know why Garth always says this when he typically advocates investing 60% of your portfolio in the Canadian, US, and International stock markets via ETFs.

Buying an entire diversified index, not trying to pick individual stocks, means you are investing in an economy. There is a world of difference. — Garth

#128 M on 12.28.14 at 2:20 am

Good old canadian banks :)

https://www.youtube.com/watch?v=9K_N0uOXkQA

Can we laugh now ? :)
First to go: Scotia

#129 kommykim on 12.28.14 at 2:35 am

RE #128 kommykim on 12.27.14 at 11:02 pm
RE: #117 Kalergie on 12.27.14 at 6:01 pm
Buying an entire diversified index, not trying to pick individual stocks, means you are investing in an economy. There is a world of difference. — Garth

I guess that’s where the confusion lies for many readers here. To me, “investing in the stock market” means choosing a bunch of index ETFs that mirror the CAD, US, & International stock markets.
To others it means trying to beat the market by stock picking.
Maybe slightly different wording would alleviate the confusion.

#130 Mark on 12.28.14 at 2:43 am

“I go by my own market, the GTA. TREB says…..”

Well there’s your problem…believing a word that the TREB says.

But anyways, the point made was that houses have significantly outrun inflation in a significant and rather unsustainable way.

#131 Ronaldo on 12.28.14 at 5:44 am

#119 prairie person on 12.27.14 at 8:04 pm

”Ronaldo can find near derelict homes that will sell for very little money. However, the reality of country living in Manitoba is houses 300,000 to 900,000. Sometimes, they come with an acerage or they are on or close to a beach but a search for a well built modern house will turn up many places like this.

http://www.interlake.mb.ca/real-estate/display,property/18733215/399-chalet-beach-road

Holy crap, there’s enough room in that sucker for the inlaws and the non-launchers and their illegitimate kids with still a lot of space left over to store everyone’s ‘stuff’.

#132 Kalergie on 12.28.14 at 6:42 am

Buying an entire diversified index, not trying to pick individual stocks, means you are investing in an economy. There is a world of difference. — Garth

Thank you! The world is making sense again. :)

#133 brdy sktrn on 12.28.14 at 1:34 pm

The supply of land in core 416,604 has been shrinking for decades
SOmething like 50 % gone from the peak
Not even god can make new land
Demand rises daily and will past the lifetime of your great grandchildren

new stock issues and etfs happen weekly and require nothing more than a stroke of a pen

own both

#134 brdy sktrn on 12.28.14 at 1:36 pm

Where; land=land with a house on it

#135 crowdedelevatorfartz on 12.28.14 at 1:42 pm

@#124 Smoking Man

Hmmmm, sounds like Halifax isnt the backwater, boring, purgatory that you expected…..
And the live bands are usually not all that bad either….

#136 TurnerNation on 12.28.14 at 1:44 pm

Smoking man’s Christmas tree:

http://imgur.com/DirEKsj

#137 David W on 12.28.14 at 9:59 pm

Garth,

Keep up the great work, never stop writing. Many in this country would be lost without you.

#138 Flip on 12.29.14 at 2:07 am

Are you kidding me!!!? A charlatan!!?
Here’s s charlatan Garth. Bob at http://www.321gold.com
You’ve been right about a lot. This piece of S##t has been calling for the apocalypse for 15 years. The U.S. dollar is used toilet paper he says. Pumping his collapsing gold stocks.
That’s a charlatan. Just go buy some US &is with your csnadian. The resource boom collapsed. Maybe Canadian realestate will take it on the chin now??!
He said Garth has no clue. Ahhhhhh funny.

#139 Flip on 12.29.14 at 2:18 am

went to the computer. In washinton US $ a gallon
Is $2.18. It’s $4.18 us gallon in my town in Canada. Who’s face do I pound in BC on the rip off we are getting. There’s near .07 cents a liter carbon tax in BC. That’s a SCAM in its self. The only place in Canada getting screwed andaybe the world. Carbon tax what a F$$$&$$$ SCAM!!!

#140 Mick on 12.29.14 at 10:06 am

$413,648 minus $281,133 = $132,515

$132,515 divided by $413,648 = .320569

.320569 times 100 = 32%

Average house gain price during past 7 years = 32%
Market gain of $100,000 during past 7 years = 53.8%

Markets win again!!!

Terry, you need to divide $132515 by $281133, which gives 47%

#141 simon jeanotte on 12.29.14 at 3:33 pm

One other point that has not been addressed is many homes in my region Victoria BC at $385,000 + have in law suites which can be rented for $1200 per month. That equates to a $250,000 mortgage payment. Factor that in. I own lots of investment real estate and recently bought 3 condos in Duncan BC, one for $62,000 rents for $647 month, $124 condo fee the others were 85,000 and rent for $800 with $140 condo fee. I INVEST, not speculate. I can put a 15 year mortgage on these and have them service the debt. I ask you to find a mutual fund or stock beat these kind of investments