Lessons

DOOR modified

I’ve been a financial journalist, editor and media entrepreneur. A politician for nine years, too, in part running Canada’s tax system. I’ve written 17 books on personal finance. Spent almost a decade on the road across the nation, speaking repeatedly on investing, real estate and the economy. I’ve produced over a hundred television shows on business and investing for the networks. Written thousands of columns and articles for major newspapers and 2,054 pathetic blog posts. I also help hundreds of middle-class families with their finances.

So, what has all this taught me?

(a) People buy when others are buying and sell when everyone sells.
(b) The greatest motivator isn’t profit, but fear.
(c) We all misinterpret risk. It’s not losing money but lacking it.
(d) Nobody invests when stuff is cheap.
(e) Financial illiteracy is the norm.

It’s no surprise, then, that most Canadians have a one-asset financial strategy (their house), believe this is wise (because everyone’s doing it) and that real estate will rise without end (because it’s “low risk”). The flip side is one I’ve shown you often. Debt is epic, the savings/investing rate has plunged, most people now fear retirement and a majority live paycheque-to-paycheque.

We crave simple. We really, really, really want to pay off a mortgage and believe that’s enough to be secure. Like in the past. People don’t trust what they don’t understand, which includes the stock market, bonds, taxation and anything non-Canuck. Like China. And this: the hardest thing for anyone to do is trust someone else with their money. Spouses included.

All of this has resulted in the current situation. Most of our money is in GICs and bank deposits earning less than inflation. Over 90% of all tax-free accounts, where things grow fastest, are not full. RRSPs are dying, even when 70% of us have no corporate pensions. Your relatives think the stock market, which reflects the economy, is a casino. They believe houses bought at historic highs with 95% leverage using adjustable-rate mortgages, are rock safe.

Plus, almost everyone, I have learned, invests with their pants. They’re incapable of preventing emotion – greed or fear – from overwhelming logic. Events of the past few days involving Greece, China and market volatility have once again proven my life’s observations to be correct. Sadly.

Yesterday a dude named Noman gave us a taste, as stock markets shed 2% of their value after hitting record highs.

“Buy and hold strategy combined with buy the dips seems to be the answer from the financial community. IMO if your broker or wealth advisor is telling you ”no worries” I am afraid that is exactly why you should start worrying. The TSX is looking horrific as multiple support levels are broken and this time we could be facing a long term bear market that could last for years. Bear markets are powerful and have a habit of creating dead money for investors. Sorry Garth but I believe there are times when cash is king and I believe we are in one of those times. To hell with growth versus risk how about just plain old preservation of capital.”

On Thursday US stock markets gained ground, while the Chinese market had the biggest one-day surge since 2009. For the past 12 months the Dow is ahead 5.78%. The Toronto market, plagued by our weak economy and oil, is down slightly – 3.2%. The Chinese market (Shanghai) has a year/year gain of 86.2%.

The American economy continues to grow, and a rate increase by the end of the year is still on deck. The Greek government is has blinked and will likely stay in the European Union. We’ll know for sure by the weekend, but the worst is already factored in. The Chinese authorities will not allow a stock rout to continue. Global growth is glacial, but things continue to creep forward. And emotional investors, like Norman, mistake every market hiccup, correction or bump for the apocalypse.

Here are a few things Norm should remember as he stockpiles skids of Cottonelle and Chicken-of-the-Sea:

  • Corrections are normal. There have been 72 since 1945 and yet only 10 bear markets (a drop of 20% or more). Therefore 88% of the time a temporary dip is just a dip.
  • Corrections usually last a month. Bear markets average 18 months and are almost always caused by recessions. There’s no recession in the US. In fact, healthy expansion.
  • There have been only 12 recessions in the last 70 years.
  • Balanced, diversified portfolios are designed to mitigate equity declines by including fixed income and broad geographic exposure. When the TSX lost 55% in 2008-9 and took seven years to recover, this portfolio lost a fifth and bounced back in a year.
  • We need corrections. Markets can’t rise forever or dangerous bubbles will develop, with far worse outcomes down the road.
  • So maybe, Norman, you should worry more about your house.

163 comments ↓

#1 Joe2.0 on 07.09.15 at 6:20 pm

Traders in China told that they can’t sell?
It’s a corrupt system.
TD bank wants to dump rates more.
Fed can’t up rates too big a back lash.
It’s about derivitives.

#2 calgaryPhantom on 07.09.15 at 6:21 pm

“I also help hundreds of middle-class families with their finances.”

Just this would have been enough for Norm.
You played all your Ace hands just like that.

#3 Spectacle on 07.09.15 at 6:24 pm

Wow::

Today’s post is pretty much the outline for your next Epic Book Mr.Turner . It is time. Tap pity tap-tap….

Re: young gent in saskatchewan, pole wire puller, a few posts ago, asking what he should do with his financial plan. Your welcome…..

Ps: Reminds me of how important risk management is. It’s not squirrelling away money in a mattress . It’s thinking/planning further moves down the road to plant investment ( TFSA) money, which in turn reduce the risk of not gaining from the longevity of the market. Which reflects the good things of the economy.

Be a part of that Economy.

#4 Sean on 07.09.15 at 6:26 pm

Does look like Canada is in, or close to, recession territory.

Scotiabank economists (the latest to comment) say no. And no rate drop next week. — Garth

#5 Spectacle on 07.09.15 at 6:29 pm

….and on mother note.

A G.Turner fact:
Corrections are normal.
1) There have been 72 since 1945 and
2) yet only 10 bear markets (a drop of 20% or more).

Therefore 88% of the time a temporary dip is just a dip.
Corrections usually last a month. Bear markets average 18 months and are almost always caused by recessions. There’s no recession….
3) There have been only 12 recessions in the last 70 years.

————

Well put: do the Math, any gambler would gladly place everything on black , going long term! And I’m not a mathematician, nor gambler.

#6 DR. WAYNE on 07.09.15 at 6:37 pm

JEEEZZZ … you are one smart dude!!!

For the life of me I simply can’t understand why you are wasting your time trying to educate people who, for the most part, do not wish to be educated on matter of your expertise, but rather would live life by :
a)
b)
c)
d)
e)

… then fail terribly as a result of their faulty decisions.

Apart from the massive size of your brain tissue, you MUST be an eternal optimist. WELL … I collect guitars, and you feed people information that is, basically, ignored … each to his own I suppose.

#7 family beagle on 07.09.15 at 6:41 pm

“Your society has no work ethic. Soon they’ll be hanging doors backwards on airplanes, skytrains, metros and public exits. Due to neglect, your corporations will poison innocents enmasse, more oil trains will explode at the hand of experts, governments will whore out citizens and their resources. Factories will collapse, towers will fall. Toronto and Vancouver will become wastelands filled with blood sucking narcissists. I foresee doom, and I care not about money. An apathy courses through the veins of North American youth (probably due to guilt for past crimes against humanity and the environment) and your children with lay down and accept the fate inherited from psychopathic criminal ancestors. Good riddance,” is what buddy at the coffeeshop said when I laughed and showed him today’s blog photo.

#8 rampant inflation on 07.09.15 at 6:48 pm

1. today, US stocks were down 200 points from the pop in the morning. classic dead cat bounce. we’re due for more pain ahead.

2. you don’t know if this is a correction, or beginning of a bear market. US stocks are breaking below their 200 day Moving Averages. that’s also not a good sign.

bear markets are caused by Recessions, yes. stock markets move ahead of the economy.

3. 12 recessions in 70 years. that’s an average of every 5.8 years. the last recession ended in 2009 + 6 years, is 2015. sorry. we’re due for another one soon.

#9 Godth on 07.09.15 at 6:52 pm

“The five marks of the Roman decaying culture:

Concern with displaying affluence instead of building wealth;

Obsession with sex and perversions of sex;

Art becomes freakish and sensationalistic instead of creative and original;

Widening disparity between very rich and very poor;

Increased demand to live off the state.”

― Edward Gibbon

#10 Shawn on 07.09.15 at 6:53 pm

In Violent Agreement

I agree with all that, although

So, what has all this taught me?

(a) People buy when others are buying and sell when everyone sells.

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

I’d modify that a bit as technically what is happening is that people are bidding price up in good times and bidding prices down at other times.

Obviously, in all cases buys precisely equal sells every day, every minute, every month, every year.

Obviously someone is buying when prices are low but the thing is they are enticed to buy by the low prices.

#11 Visitor Number 9 on 07.09.15 at 7:07 pm

“The poor complain, they always do,
but that’s just idle chatter.
Our system brings rewards to all,
at least to all who matter.”

~Gerald Helleiner, Canadian development economist

#12 omg the original on 07.09.15 at 7:07 pm

TWO BOOKS any investor should read.

1) Stocks for the Long Run, Jeremy Siegel

2) What Works on Wall Street, James Oshaughnessy

Both are readily available in public libraries so you don’t even have to spend money.

Basically these show what GT is talking about.

Both give a detail long-run analysis that demonstrates that long term investing in equities ALWAYS has paid off over the last 100 years.

#13 Victoria's Secret on 07.09.15 at 7:13 pm

Ron Neal’s Candid Thoughts on the Victoria Real Estate Market for June 2015

Posted by Ron Neal on Tuesday, July 7th, 2015 at 12:45pm.

Click HERE to watch Ron’s interview on Victoria’s CHEK 6 TV News

The weather is hot, but our real estate market is even hotter! Our market is on fire, the busiest we’ve been since before global financial crisis of 2008. There were 910 sales reported by The Victoria Real Estate Board for June 2015, an increase of 33% over 680 sales in June 2014. The number of available listings for sale is also down to just 4,003 at the end of June from 4,695 at the end of June 2014. That translates to just a 4.4 Month overall supply which = “A Seller’s Market”. Our team, The Neal Estate Team, had 12 accepted offers for our buyers and sellers last week, about as many as a typical month for us over the past few years (and double the average agent’s annual production) and by the way…….We’re looking for experienced good help, both sales and admin!

The deflated Canadian Dollar resulting from the low price of oil is fueling export and tourism in addition to attracting significant investment to our region. Our home prices are low on an international scale and we offer an amazing lifestyle in a safe haven. Furthermore, interest rates are low and some say they’re likely to go even lower by fall to stabilize our dollar against the US Dollar, unless they raise rates first in the USA which they’re very resistant to doing on the eve of an election.

It’s a great time to buy in Greater Victoria and Southern Vancouver Island. We’re a relative bargain and welcoming increasing numbers of relocating newcomers who are cashing out of Vancouver and the Lower Mainland and also those escaping the harsh winters of the prairies and Eastern Canada. Wealthy immigrant buyers are discovering Victoria and starting to drive the upper end of our market too.

#14 betamax on 07.09.15 at 7:13 pm

#7 family beagle: “[long rambling doomer quote]”

Wow, you remembered that verbatim? Impressive. However, your buddy failed to mention the Four Horsemensch of the Apocalypse, cats sleeping with dogs, and how a nickel ain’t worth a dime anymore. Shame.

#15 waiting on the westcoast on 07.09.15 at 7:20 pm

Looks like another pundit crosses the line in near CDN$ territory…

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/david-rosenberg-just-got-a-whole-lot-more-cautious-on-the-canadian-dollar&pubdate=2015-07-09

#16 espressobob on 07.09.15 at 7:20 pm

#6 DR. WAYNE

Many subjects in life are a work in progress. Garth sets the bar and most can’t soar above the mark. What a shame?

Those who choose to educate themselves might find a different path? That sounds like fun.

#17 Llewelyn on 07.09.15 at 7:22 pm

I was interested in your observation that the stock market reflects the economy. Last time I checked the economy of a country reflected production and consumption not the perceived value of equities at a given point in time.

All any stock market can reflect is the level of confidence participants in the market have in individual companies. This confidence may, or may not, be based on economic fundamentals but confidence alone does not establish an economy.

Even if the TSX Composite rose to 15,000 tomorrow I would not consider the Canadian economy to be healthy. The TSX Composite or the Dow Jones Industrial Average were created to establish confidence that equities represent a sound investment not to reflect the state of an economy..

James Madison said it best

“The circulation of confidence is better than the circulation of money.”

#18 yunker on 07.09.15 at 7:24 pm

We can fly to the moon and create new living DNA configurations in a garage but debt and war continue on.

The economic globalization of systemic debt today that cannot be paid back is not cyclical. It is a singular unprecedented reality.

All countries signing on to a new multilateral global currency in 2010 is not cyclical. The imf will be announcing it this fall.

The pope issuing an encyclical this September on sustainable living is not cyclical.

The whole world is entering a new concentrated conjoined state of being that will be announced in the coming months.

#19 Jane Hasseldorf on 07.09.15 at 7:25 pm

What is stated above in this Lessons blog is probably true but many people have different life circumstances that make it difficult to trust market risk.

I got divorced 16 years ago after 8 years of marriage. I am 46 now and I was scared for my me and my daughter’s future.

My ex never paid any child support and is deceased 8 years now so it would not matter much anyhow.

All I got in the divorce settlement is a 5 year old paid off car and $10,000 which was half on our savings in a bank.

My daughter is 16 years old now. As the only breadwinner in the household, I think I did a pretty good job of having only $27,000 left on the mortgage and no other debts, no credit card debt, no auto loan debt, nothing.

The house is worth $285,000 and I have been saving aggressively for awhile now. I have $165,000 in RRSP’s, $44,000 in TFSA’s, $25,000 in RESP’s and $30,000 in short term savings, GIC’s for access when needed.

I do not have stocks, ETF’s, REIT’s, mutual funds. My best defensive right now is not getting a low 2.5% or 2.75% GIC’s or rates that still not matured at 3.25% to 3.5% but saving $3,000 a month and by making sure to keep my taxes lower and reinvesting tax refunds with RRSP’s and TFSA’s, RESP’s.

If GIC rates fall more, I can always take some extra contract work on the side and save another $6,000 a year.

#20 Tedee and bemoo on 07.09.15 at 7:26 pm

It is sad that Canadian government let these housing bubble to grow to these levels, everybody is going to be hurt.
In 2009 we went to bmo and with a 100k dual income would get a 400k mortgage. Today i went to td and with a 130k income we could get a 600k mortgage.
In real net moneyz we were making 6000 per month and now 7500 an increase of 25% while the mortgage allowance jumped 50%. Difference now is that we have kids and less actual extra $$$, still renting!
Stock market is becoming illiquid too, mostly because all the moneys are centralized to couple of banks and the real investing firms are going to fight for the crumbs… It is that simple.
The economy is less liquid check any retail near you targeting middle class…
I thought that i will buy the house at a low price high interest rate but i have a feeling it will be at low price low interest rate.
Recession is coming but the new outlet mall @yvr is packed… Some new boss at CRA is required

#21 Daisy Mae on 07.09.15 at 7:27 pm

#6 Dr Wayne: “I collect guitars…”

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

What does that do for the community at large?

#22 Srsly on 07.09.15 at 7:36 pm

you do realize that the Chinese stock market appreciated only because the government threatened to arrest people who were aggressively shorting and basically everyone it was shorting any significant positionsgot out right?

if the Chinese stock market has recovered some of those games in a week or two then you can make the statement that you made. Until then you’re claiming victory when it’s completely unwarranted.

Sorry today’s Chinese rebound messed with your theory. Maybe you need a new one. — Garth

#23 Ray on 07.09.15 at 7:41 pm

Shangai market is going to be volatile in the short term. I’m not sure why all the attention is on Shangai market and why people are so concerned of Chinese govt pumping money into it. Japan did the same thing and their market has been up by 150% from the lows.

It will become a bubble at some point but it doesn’t seem to be a bubble right now. It is still below its 2008 high. I believe GS may be right this time where market may starts going up as govt is doing everything to make it happen.

Plus Garth yesterday it seemed like you were calling Shangai performance a bubble and today you are boasting about it. What’s up with that?

I offered no opinion, just reported returns. Deal with it. — Garth

#24 Karma on 07.09.15 at 7:43 pm

Greece “capitulates”…

http://www.theguardian.com/business/2015/jul/09/greece-debt-crisis-athens-accepts-harsh-austerity-as-bailout-deal-nears

#25 ben on 07.09.15 at 7:45 pm

Having written so much why don’t you ever talk about actual solutions to land prices? Yes we get it people are paying too much for land. Yes it can’t go on.

But that’s because it’s a positive feedback loop in a system that creates money by lending against land, to be paid back by future income. The largest component of new money creation is domestic mortgage lending.

What are your thoughts on actually solving this? It’s clear there are root causes beyond “Canadians are idiots” as it’s happened all over the world since the abolition of full regulation / limits on bank money creation.

Why not spend some time on this instead of yet another post on how people react from the gut? If you have opinions on this I’m sure people would be very interested to gain a deeper understanding.

#26 Brian Ripley on 07.09.15 at 7:46 pm

“We need corrections.” Garth

Our Canadian net balance of trade latest print is still correcting to the downside:
http://www.chpc.biz/household-debt.html

The chart also includes Foreigh Direct Investment which in the late 1990’s flipped poles and Canadians decided investing outside of our borders was a better investment bet.

Also plotted are Canadian household and mortgage debt which continues to expand.

If net balance of trade is important to investors of Canadian assets, it looks to me like the correction actually began in 4Q 2008 and by 2015 a new leg down has sent the correction into overtime.

One would think this will affect employment and incomes at the household level, but we have to wait and see because average earnings (there is a 2 month reporting lag) across Canadian households are still in an uptrend: http://www.chpc.biz/earnings-employment.html

#27 Victoria Real Estate Update on 07.09.15 at 7:56 pm

#13 Victoria’s Secret

Ron Neal is a local Re/Max realtor.

What else do you expect a realtor to say?

Realtors make their living from the sale of houses. Given the opportunity, they always try to convince others that it’s a good time to buy.

The whole piece that you cut and pasted was simply realtor drivel.

He wrote: “Our market is on fire…”

This is simply a false claim.

SFH sales are slower than in 2007 and 2007 was an average year for SFH sales in Victoria.

“Wealthy immigrant buyers are discovering Victoria and are driving the upper end of our market too.”

He offers nothing to prove that claim. Last year 1.6% of sales in Victoria were to international buyers.

“Our home prices are low on an international scale.”

Is that why you can buy 4 or 5 comparable houses in many US states (Florida, Arizona, etc.) for the price of one Victoria home?

Pure realtor drivel.

#28 Victor V on 07.09.15 at 8:01 pm

Curious to see what the masses outside this pathetic blog think of recent moves in the real estate and stock market? Just check out the conversation on this Facebook post:

https://www.facebook.com/theglobeandmail/posts/10153379857808904

#29 JSS on 07.09.15 at 8:09 pm

As people cry about their stocks, bonds, ETF’s, etc. drop in value, there are some behind the scenes who are buying.

Look at the bloody sales on stocks these days…EVERY Canadian bank, utilities, pipelines, insurance co’s, food (Saputo), US stocks like Walmart

Hell, look at Shell (RDS.A), giving 6.75% annual dividend. Check out Exxon, and Chevron.

Stop crying and go buying!

#30 Mister Obvious on 07.09.15 at 8:13 pm

#7 family beagle

Toronto and Vancouver will become wastelands filled with blood sucking narcissists
———————————-

Prediction or synopsis?

#31 gut check on 07.09.15 at 8:14 pm

Is it just my imagination – or maybe my locale? – but is the real estate community getting even TIGHTER with their info?

ALL info on Sold listings is scrubbed immediately. I keep a very close eye on this stuff and have for years so I have a good idea that in general prices are coming down – but I cannot be sure how much. Even when I ask for comps I get stonewalled.

How can buyers make good choices now? Is there a way to compel this info BEFORE I make an offer – I mean for example I saw a potential property the other day but it is a MESS. I know how long the other homes in the area have sat on the market and I’ve watched their prices. This one is too high. Period, it is too high. HOWEVER when I ask frankly for numbers there is no such info forthcoming.

I am left completely in the dark about what the other homes in the area have actually sold for – the only thing I have to go on is the last asking price.

My current realtor will go only so far as to ask the selling agent whether or not there is room to negotiate and that always comes back as a no and basically without actual data I cannot press the issue.

I guess I should just wait and let nature take its course but the thing is, eventually these places will sell and probably at a discount but if I haven’t got an agent who will fight for me what hope do I have of being that buyer?

I am a negotiator by nature but I’m pissing in the wind over here without the data.

anyone else get the feeling that the RE boards are circling the wagons and that there is no longer any such beast as a Buyer’s Agent?

#32 NoName on 07.09.15 at 8:16 pm

Normisms

https://www.youtube.com/watch?v=HPqPAKqzx7M#t=41

#33 Mf on 07.09.15 at 8:21 pm

Great article Garth.

This was needed. My three month old portfolio is down big time and I will be honest, it hurts. I guess I bought at the top a few months ago in April. Figured you can’t time markets so why not jump in. Particularly hurts because I have to hear about how good real estate here in the GTA is at the exact same time. Thankfully this is only a “correction”. Kinda sucks I don’t have as much to buy on this dip but so it goes. Still 100% committed like a rock though. I’m considering this an early lesson. Might tweak a few things in terms of my approach come rebalancing time but man the buy and hold is boring during times like this.

Mf

#34 Rebecca on 07.09.15 at 8:27 pm

Are people really panic selling in this environment? Mind status: blown. The Chinese stock market is experiencing a necessary and normal correction, and the Greece problem, dramatic as it is, won’t blow up Europe, let alone the world. This will barely show up as a blip on five-year averages.

If this is enough to make poor Norman sweat, no wonder people lost so much dosh in 2008.

#35 Squatter on 07.09.15 at 8:29 pm

“They’re incapable of preventing emotion – greed or fear – from overwhelming logic.”
—————————
ooops, little mistake in today’s blog!!!! emotion and logic are reversed.

No, as written. — Garth

#36 -=jwk=- on 07.09.15 at 8:29 pm

Paying down a mortgage in a low interest rate environment is still a good move If it is expected that rates will rise.

Your interest savings are not just the current low rates, but an average of all the rates you would have paid interest on that dollar. Sure, you only save 2.9% this year, but if you expect to renew at 5%, you also save that amount in future years.

Right?

Nope. — Garth

#37 Really Rich Pete the Stock Picker on 07.09.15 at 8:33 pm

The Immortal Words of the Intelligent Investor-Ben Graham

“1. It requires strength of character in order to think and to act in opposite fashion from the crowd and also patience to wait for opportunities that may be spaced years apart.

2. If a company was so sound that its stock carried little risk of loss, the company also must present excellent chances for future gains. It is easier for a company to build a profitable empire on a solid foundation than on a shaky one.

3. Never buy a stock immediately after a substantial rise or sell one immediately after a substantial drop.

4. Experience teaches that the time to buy stocks is when their price is unduly depressed by temporary adversity. In other words, they should be bought on a bargain basis or not at all.

5. People who habitually purchase common stocks at more than about 20 times their average earnings are likely to lose considerable money in the long run.

6. On the other hand, investing is a unique kind of casino – one where you cannot lose in the end, so long as you play only by the rules that put the odds squarely in your favor.

7. In market analysis there are no margins of safety; you are either right or wrong, and if you are wrong, you lose money.

8. It remains true that sound investment principles produced generally sound results.

9. The disciplined, rational investor neither follows popular choice nor plays market swings; rather he searches for stocks selling at a price below their intrinsic value and waits for the market to recognize and correct its errors. It invariably does and share price climbs. When the price has risen to the actual value of the company, it is time to take profits, which then are reinvested in a new undervalued security.

10. Never mingle your speculative and investment operations in the same account, nor in any part of your thinking.

11. The determining trait of the enterprising investor is his willingness to devote time and care to the selection of securities that are both sound and more attractive than the average. Over many decades, an enterprising investor of this sort could expect a worthwhile reward for his extra skill and effort in the form of a better average return than that realized by the passive investor.

12. Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble to give way to hope, fear and greed.

13. The stock investor is neither right nor wrong because others agreed or disagreed with him; he is right because his facts and analysis are right.

14. An investment is based on incisive, quantitative analysis, while speculation depends on whim and guesswork.

15. The intelligent investor is a realist who sells to optimists and buys from pessimists.

#38 bigtown on 07.09.15 at 8:34 pm

When David Rosenberg previous economist at Merril Lynch states the loonie is in for a serious move south…he is a formidable professional and extremely credible so I hope Mr. Poloz at the BoC is heeding Mr. Rosenberg’s thoughts.

Being out of a job like many of our relatives out in the oil patch in Calgary might want a laugh to keep them going should view JIM CAREY’S remake of FUN WITH DICK AND JANE. We are a capable bunch in the land of the frost. When you think how poor Jim Carey was as a kid it is easy to see where he gets his depth of creativity.

There seems to be so many condo rentals in all the nice suburbs of Toronto. Kind of weird to see your typical two storey Georgian house out in the burbs and the basement is up for rent starting at $1,000. Is it possible we don’t know the number of rentals due to the fact that they are basement or investor condos? Sure looks like a lot on MLS and kijiji.

#39 Unhinged Loon on 07.09.15 at 8:34 pm

@rampant inflation

We have an interesting situation developing. This will test to what extent American corporations are exposed to Chinese equity markets.

Economic performance is still strong for most of the major US index firms, so there is no reason to assume this is a prelude to a recession. The Dotcom bubble popped so dramatically because equity prices were determined by stock ratings rather that corporate performance.

Technical analysis people make me laugh.

#40 Freedom First on 07.09.15 at 8:38 pm

My name is Freedom First, and I endorse this message.

I like cash, cash flow, income streams, owning as many different- assets/asset classes- as possible, always balanced and re-balanced, and no debt.

I relax, and know this works. Allows me to enjoy every day without the worry caused by having expectations of either the good the bad or the ugly.

Learn how to manage your emotions, or they will handle you. No exception.

#41 DON on 07.09.15 at 8:39 pm

Garth.

SM has a point with the herd. The herd can be irrational until thumped on the head. Young families driving around in new cars, a good share low end luxury Retirees (or close to) driving around with a new truck, camper/trailer, boats etc.

The herd is comprised of many different segments, but the euphoria the herd provides is the deciding factor. How many times do you have to warn people that a tsunami is coming.

Thanks for all the knowledge, good reading, and interesting comments sections. (I read all comments…always good to know what crazy is thinking).

Keep up the great work…a notable mention in the history books of the future.

By the way…I give my dog fresh water continuously, but he still likes to lick the water of the cement stairs – after the plants have been watered – but won’t touch his clean dish – well only a last resort. I don’t have much faith in the herd changing direction until faced with a big friggin cliff.

DON.

#42 Renter's Revenge! on 07.09.15 at 8:42 pm

Re: People buy when others are buying and sell when everyone sells.

Given that there are a small number of rich people and a large number of poor people in the world (power distribution of wealth), the above statement is a reasonably accurate description of peoples’ behavior.

The number of buyers does not always have to equal the number of sellers at any given moment.

When the market is overvalued, a large number of poor people could be buying investments from a small number of rich people, and conversely, when the market is undervalued, a large number of poor people could be selling their investments to a small number of rich people. This would explain, at least in part, why the “rich get richer”.

To wit: Tweedy, Brown Company note that in a study of purchases of Canadian stocks by insiders between 1968 and 1972:

“The authors found that insiders who were also directors of a Canadian bank had an average excess return
above a risk adjusted market index of 7.8% per year.

The excess return for officers and directors who
were not also directors of a Canadian bank was 3.8% per year.”

https://www8.gsb.columbia.edu/sites/valueinvesting/files/files/what_has_worked_all.pdf

#43 ShawnG in TO on 07.09.15 at 8:42 pm

i thought the name is Bob?

Wow the naysayers are out in force today. enough are out here today to make me think this is a short term bottom. getting ready to hit that buy button.

i would like to make an modification to the observations:
(a) People buy *after* others have bought and sell after everyone sold.

if the avg can actually time the market then it would be very impressive. unfortunately, they are just sheeple, to be fed to the market players.

#44 Andrew Woburn on 07.09.15 at 8:47 pm

#21 Daisy Mae on 07.09.15 at 7:27 pm
#6 Dr Wayne: “I collect guitars…”

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

What does that do for the community at large?
======================

Provides employment for itinerant luthiers.

You’re obviously not a musician. It’s a bit like asking why anyone needs a Harley.

#45 Chris Nucks on 07.09.15 at 8:50 pm

Hi Garth.

What is happening with ZPR.TO? It’s tanking. WHY?!?!? Did I made a mistake on this.

#46 Smoking Man on 07.09.15 at 8:56 pm

DELETED

#47 Freedom First on 07.09.15 at 8:56 pm

#6 DR. WAYNE

Welcome back DR. WAYNE.

I am sorry though to see that you are still fighting mental health.

#48 Pump and dump on 07.09.15 at 8:58 pm

Smoking Man are you still holding BBD?

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/transportation/bombardier-inc-shares-plummet-to-lowest-level-in-nearly-22-years-on-review-of-business-jets

#49 Sheane Wallace on 07.09.15 at 9:00 pm

#15 waiting on the westcoast

I am not David Rosenberg but I have been saying for quite some time that the loonie is going to decline significantly, probably since the .97 levels and have been moving out of Ca dollar and related investments very successfully.

CAD is going to go down bellow .6 and potentially bellow .5 into the .4 area in not that distant future.

If US really increases interest rates (very likely) and we have to decrease the rates because of our credit bubble and declining economy (very likely) loonie is going to tank bit time and that very soon.

To be on par in terms of house prices, we are looking potentially at loonie in the .35 – .4 range but the debt and CMHC can make situation much worse.

My mind can not comprehend people holding loonies in bank accounts at close to zero nominal and strongly negative real interest rates. its is safe bet that are going to lose big chunk of their savings and that fast.

For Christ’s sake, the loonie has lost over 20 % in less than a year, I would be insane not to demand interest rates north of 6-8 % here. Just move your money into s stable currency. If BOC want to be serious, then give me a decent interest rate and stop the government supported credit folley!

By the way US is becoming more and more attractive with people making much more money in rapidly appreciating currency. Who will stay here? The loosers.

And then they will try to explain the big difference in productivity.

#50 Bobby on 07.09.15 at 9:09 pm

#25 Victoria Real Estate update,

I read the earlier post about Ron Neal’s market assessment. I laughed, what do you expect from a realtor? I just received a market update about a house in Broadmead, a rancher listed at $729k and now offered at $645k. Still sitting empty. How’s that for hot?
Sadly, most most realtors believe heir own hype.

#51 Freedom First on 07.09.15 at 9:10 pm

#23 ben

Stop commenting. Start reading this Blog from the beginning. Everything you bring up has already been answered. No charge ben. You’re welcome.

#52 Oracle on 07.09.15 at 9:16 pm

Garth,

I live in Vancouver and am of Indian decent.

I truly believe that the next wave of foreign buying will come from India, and make what the Chinese have done to Vancouver’s real estate market look like child’s play.

When (not if) the BoC lowers rates next week, watch the market rocket even higher.

I have to agree with Smoking Man on the reaction of The Herd.

If you are ever in Surrey let me know.

#53 Mark on 07.09.15 at 9:16 pm

“CAD is going to go down bellow .6 and potentially bellow .5 into the .4 area in not that distant future.”

Bizarre. You really don’t have any idea what deflation does to the value of a currency, now do you?

#54 Smoking Man on 07.09.15 at 9:17 pm

#48 Pump and dump on 07.09.15 at 8:58 pm
Smoking Man are you still holding BBD?

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/transportation/bombardier-inc-shares-plummet-to-lowest-level-in-nearly-22-years-on-review-of-business-jets
……

Ya, got a thing for aviation, and flying sausers.

#55 Sheane Wallace on 07.09.15 at 9:18 pm

#53 Mark

I have a very good idea what overblown credit bubble that can not deflate as everyone will go bankrupt can do to the value of currency, have seen it several times first hand.

How is that USD short-selling going?

#56 Smoking Man on 07.09.15 at 9:24 pm

#53 Mark on 07.09.15 at 9:16 pm
“CAD is going to go down bellow .6 and potentially bellow .5 into the .4 area in not that distant future.”

Bizarre. You really don’t have any idea what deflation does to the value of a currency, now do you?
….
Bizarre
You arrogant idiot, a dude posts his stuff, and you trash him.

You have no right to do it with your calls.

Only I have that right…

Been into the JD tonight , lets go mark.

Chicken shit… You won’t dare take me on coward.

#57 ben on 07.09.15 at 9:27 pm

FreedomFirst – not that helpful – I’m to read every post on a blog that publishes every day? Try searching “Garth Turner money supply land” – it turns up stuff like “supply and demand” – nothing to do with the ideas of someone like Henry George.

I have read this blog for a couple of years and I don’t recall him addressing the root causes. It’s more advice about how to play the system which isn’t going to work as playing the system actually makes it worse.

I commented again – I guess nobody made you god.

#58 OttawaMike on 07.09.15 at 9:30 pm

JD? Really Smoking Man?

There are many better choices than that fiery toilet water.

#59 Sheane Wallace on 07.09.15 at 9:33 pm

#56 Smoking Man

Thanks SM,

Mark, buddy, you need to be damn good to afford to be arrogant, otherwise it just looks plain stupid on you.

How is that deflation thingy going?

#60 Nosty, etc. on 07.09.15 at 9:39 pm

#181 bdy sktrn on 07.09.15 at 3:32 pm — “the 604 is for the first time i can remember starting to get low on water.”

Ain’t NAFTA grand! Courtesy Brian Baloney.

#9 Godth on 07.09.15 at 6:52 pm — History rhymes and repeats, here and here.

#61 Leo Trollstoy on 07.09.15 at 9:39 pm

Bizarre. You really don’t have any idea what deflation does to the value of a currency, now do you?

Bizarre. You don’t really have any idea that there’s no deflation, now do you?

#62 Leo Trollstoy on 07.09.15 at 9:41 pm

How is that USD short-selling going?

Quite badly apparently.

#63 Scumop on 07.09.15 at 9:42 pm

(d) Nobody invests when stuff is cheap.

Bargains abound right now.
I am, of course, broke.

Therefore, (d) remains true.

#64 kc on 07.09.15 at 9:52 pm

The China bubble is slowly deflating and the repercussions are catching up to our industry. The lumber industry in BC has had a good run at it the past decade, but as all good things must end, so does a building boom.

Our place has vast quantities of stock piled material to be shipped off shore. We have been running at reduced shifts for a few months now and it is getting tighter for the guys with families to keep ahead of things.

The implosion is starting here in BC and I feel this one will be a long hard blast from the past. Who remembers when Japan’s boom ended and Canada’s resource sectors were slain?

http://www.vancouversun.com/business/Recovery+forestry+sector+hits+rough+patch/11195705/story.html

cheers

#65 Rory on 07.09.15 at 9:52 pm

Norman has a point in that:
1) 1945 is not necessarily a good starting point. I would choose the year the FED came into existance – 100 years ago. Corrections are normal when the FED is not doing QE.
2) It is a falacy to assume recessions cause bear markets. It is more likely that bear markets cause recessions. Anyway the correlation between the economy and the “market” is weak at best. If anything, it has been negatively correlated, especially in China.
3) We are not in 08′ 09 with just one asset class in a major bubble. We are coming to an end of a 35 year bond bull market. Therefore, it is not inconceivale that bonds and stocks go down simultaneously over a bear market period. i do agree with geographical diversity.
4) Bubbles are the result of cheap money and are not restricted to Canadian real estate.

Asserting that the economy and the markets are not correlated extinguished everything you had to say. — Garth

#66 ben on 07.09.15 at 9:56 pm

So let’s try a thought experiment. I’m going to make one assumption: Garth is always right. It’s written by a lot of fawning posters on here over and over. Shouldn’t be that many that disagree with me so far.

Next let’s hop into a time machine and head back to 1997.

Garth has more hair and less of a waist. He decides to start writing a blog. Because he’s always right he advises his readers to go balls deep into debt and keep compounding that, riding the housing market up and up.

Fast forward to today. Hey Garth was right.

But for Canada it was wrong.

So now today we follow the advice to play the system. Doing this individually makes sense. But since 1997 it’s killed Canada.

So what’s going on? Wasn’t this the promise of capitalism? That individuals serving their own self-interest make the whole better.

This is why we need to look at the root causes such as how money is produced (by banks to lend against land).

Feels like people on this blog, if they could get in at 1997 prices would simply use it to extract as much wealth from the young as they could. What then for your children?

I have more hair now. So much for your theory. — Garth

#67 DON on 07.09.15 at 9:59 pm

#50 Bobby on 07.09.15 at 9:09 pm

#25 Victoria Real Estate update,

I read the earlier post about Ron Neal’s market assessment. I laughed, what do you expect from a realtor? I just received a market update about a house in Broadmead, a rancher listed at $729k and now offered at $645k. Still sitting empty. How’s that for hot?
Sadly, most most realtors believe heir own hype

********************
YUP!

also the realtors leave the “few” SOLS signs up for at least 4- 6months. I have noticed that there are more listings and reduced signs than sold in Vic. Buddy at work just bought a house because he was having a baby. He will be paying for it the rest of this life. Oh well! University critical thinking degrees not being utilized anywhere but at work…and in some cases not even at work.

Oh well…liquid, mobile…..better chance to chase down future opportunities.

#68 Washed Up Lawyer on 07.09.15 at 10:04 pm

Dreary.

The real estate stats from the Muskeg, Blackfly & Taiga Real Estate Agency, LLP.

http://www.fmreb.com/sites/5098200ae7e1b41bc50042de/content_entry50bf9565e7e1b41bc501133d/559ed8c32c1cc418e30056c6/files/June_2015.pdf?1436473541

Fortunately, mobiles with land are holding up strong.

On a negative note, Royal Dutch Shell needs $80 oil to proceed with Pierre River, Carmon Creek and Jackpine oil sands projects. (Source -Financial Post).

Teck Resources says the commencement of construction of the Frontier Mine is pushed back 5 years from 2021 to 2026. (Source – U of G). That is if they receive regulatory approval. Too damn much red tape.

Clearly, it is a conspiracy from oil company executives to depress the real estate market in Fort McMisery so they can retire here in splendor. Wake up people.

I have been approached by a lawyer up here to apply for an opening in his department. I will come to the dogs for advice soon for resume writing, interview skills and grooming tips for boomers.

Dr. Smoking Man, can you help?

#69 Jane Goodall on 07.09.15 at 10:09 pm

DELETED

#70 ben on 07.09.15 at 10:14 pm

I meant on your head Garth not your ears.

You see what I mean though? Just chasing the yield one by one is taking us collectively over a cliff. I’m all for a meritocracy I’m not a socialist who wants equality regardless of effort/ability.

But I do see that the way we are producing money is detached from wealth generation. And until those two are on track in a capitalist system you are simply going to see living standards fall and fall. I don’t think that’s hard to grasp as a concept.

Perhaps some might care to check out this short blog post from the Bank of England’s official blog:

http://bankunderground.co.uk/2015/06/30/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters/

It’s about how banks simply create money when lending on their main activity: lending against land.

Not some conspiracy blog. The Bank of England.

If you don’t understand why the money supply has increased enormously and why asset prices are so high take 10 minutes for the short read.

http://www.tradingeconomics.com/embed/?s=unitedkinmonsupm2&d1=19820101&d2=20151231&h=300&w=600&ref=/united-kingdom/money-supply-m2

#71 the Jaguar on 07.09.15 at 10:17 pm

Billy Bob:
I can’t stop thinking about Billy Bob’s musings on human intuition and warning signals from yesterdays blog. I have a lot of experience with this, but not a lot of understanding or explanation. I just put it away when the subject comes up because it troubles me.
Wasn’t there a book called ‘Fate is the Hunter’?
While it might be true that some can be saved by listening to their inner voice, not sure all have that inner voice. Or it is being drowned out by the relentless sound of other forces..

#72 Smoking Man on 07.09.15 at 10:19 pm

Tax farm fans

I’m going to be late..

I want to fight mark..I’m awaiting.

Drinking to oblivion bitch.

Got a Smoke hanging for my lose tooth,, waiting for supper star Mark.

Let’s go bitch….
Where are u

#73 Nelly Numbers on 07.09.15 at 10:20 pm

Garth

What’s the magic number? Lots of blog dogs waiting in the wings to get the word from you when to stop renting and purchase real estate after the big correction. So how much does it have to drop? 10, 20, 30%??? When is it going to happen??

#74 Retired Boomer - WI on 07.09.15 at 10:21 pm

Typical Thursday lottery night aug the Vault (local pub).
My friend Mark won the pot tonight $700. Good for mark.

My relatively balanced portfolio 70/30% now stock/ bond
is currently underwater. Am I worried? Hell no.

Temporary bullshit. I might rebalance later not now.
I don’t mess with Forex, or much besides utes and oils where I have been handed my Ass (temporarily).

So it goes. at least I have the dividend streams that pay more than those bullshit bonds.

At 63, I am NOT going back to the world of work. Wife turned 64 today, she isn’t going back to work either.
We have “enough” no debt, no mortgage.

Stock tremblers come, then they go. I might look to take out something in January next year not before. As stated, we have “enough” from pension, and U.S. social security presently.

No changes presently. This will pass as it always does…

#75 will on 07.09.15 at 10:23 pm

hey, llwelyn #17,

Well put!

#76 AK on 07.09.15 at 10:27 pm

TD: $51.80

Dividend Yield 3.94% P/E 12.8x

Will the sale continue.

#77 Guy Willoughby on 07.09.15 at 10:35 pm

Good article Garth! I’ve been investigating the new silk road project proposed by Xi Jinping. It looks very promising. There are some railroad construction companies in China that look very promising and the price is good.

The thing with the Chinese stock market is that a stock market is relatively new to China so the investors are not as savvy as they are in the west. What happens is that emotions go to extremes in both directions. As it is said, when there’s blood in the streets, there is money to be made.

#78 Mark in Guelph on 07.09.15 at 10:35 pm

“The American economy continues to grow, and a rate increase by the end of the year is still on deck.”

Little shift in your prediction once again Garth? I guess the September rate hike has gone the way of the June hike, and the March hike, and the 2014 hike, etc.

No hike this year, and none next. Bet on it.

#79 Nora Lenderby on 07.09.15 at 10:50 pm

#71 the Jaguar on 07.09.15 at 10:17 pm
Billy Bob:
I can’t stop thinking about Billy Bob’s musings on human intuition and warning signals from yesterdays blog. I have a lot of experience with this, but not a lot of understanding or explanation. I just put it away when the subject comes up because it troubles me.
Wasn’t there a book called ‘Fate is the Hunter’?
While it might be true that some can be saved by listening to their inner voice, not sure all have that inner voice. Or it is being drowned out by the relentless sound of other forces..

Interesting. As I understand, conscious thoughts are somewhat serial, now- and event-driven. There also seem to be a number of other parallel processes going on that can be brought to conscious attention but only if you are lucky, mad, trained, or in a quiet environment. For example, people often report that they “sleep on” a problem and then wake up with the solution, or wake with good ideas in the middle of the night.

Some of those background processes are very good at complex tasks, and seem to be cleverer than the conscious mind (at least in my case).

It might be worth keeping a notepad and pen by your bed and recording your thoughts immediately upon waking. Or maybe not :-)

#80 Moogie Mctavish on 07.09.15 at 10:53 pm

#58 OttawaMike on 07.09.15 at 9:30 pm
JD? Really Smoking Man?

There are many better choices than that fiery toilet water.”

Have to agree on this…the guy basically loses all street cred when he confesses to drinking that rotgut….but with the falling loonie, maybe Macallan single malt is beyond his budget now!

#81 Investorz on 07.09.15 at 10:58 pm

The TSX may be weak technically but I don’t care for those who draw lines with fat pens on charts and look at the insides of birds to decide on investments.

Bought DHX at 8.80
Magna at 70
Some ZEQ ETF (europe)
Some ZEO at 11.50 (cad oil industry)

#82 Nora Lenderby on 07.09.15 at 10:58 pm

Spot o’ nasty weather heading for Shanghai:

http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=3038

Let’s hope the real problem of the day isn’t too bad for people in that city.

#83 Sean L on 07.09.15 at 11:31 pm

Here’s a simple way to invest… but often, sell rarely, look at the books every month, not every day. I sold all my mutual funds in the spring of ’09 and bought a bunch of index funds and individual stocks. My IRR is now hovering around 20%.

#84 Lardily on 07.09.15 at 11:32 pm

Garth,

How about tweaking the yank Sanctuary city concept into Canuckistan zeitgeist, and rather than focusing on immigrant-friendly zones, have instead real estate Ham-free sanctuary cities where only Canadians can buy….might keep the prices down…

#85 sockeye sam on 07.09.15 at 11:44 pm

Even the Chinese are saying their stock market is a casino. Read the comments.

http://www.economist.com/blogs/freeexchange/2015/05/chinas-stockmarket

#86 TRT on 07.10.15 at 12:08 am

Stock markets are rigged.

Case in point: look at China. Artificial pumping, control, intervention.

#87 JSS on 07.10.15 at 12:09 am

#76 AK on 07.09.15 at 10:27 pm

If you’re gonna be in the game for the long term, this is a golden opportunity to buy some shares of TD and RBC.

Canadian bank stocks have gotten the shit beat out of them, risk is off the table. RBC trades at ~ 11.7x earnings, and TD at 12.8x. Great dividend around 4%, history of distribution increases, and hey nearly everyone’s got a mortgage these days with a higher rate waiting upon renewal.

$$$$

#88 millenial1982 on 07.10.15 at 12:19 am

After reading this blog faithfully for almost a year, here is what I enjoy the most:

a)Smoking man’s posts.
b)Garth ripping on blogsters needing a head shake or attitude adjustment with a plumber’s wrench.
c)Reading the dark cloud posts from sorry assed blogsters. Where the hell do they come from anyway?
d)Garth’s investment advice, insights and regular tune ups.
e) Real estate obsession posts from lunatics.

Hope you can keep up the pathetic blog posts you old fart, great work thank you!

#89 Mister Obvious on 07.10.15 at 12:22 am

#73 Nelly Numbers

“What’s the magic number? Lots of blog dogs waiting in the wings to get the word from you when to stop renting and purchase real estate after the big correction.”
———————————–

Interesting comment. Made me think a bit.

How much would the price of residential real estate have to fall here in Vancouver to prompt me to pull my money out of the excellent investments in which it now sits and put it into something with high carrying costs, no income and limited upside potential?

After 5 years of freedom from home ownership I can’t imagine what sort of drop might motivate me. Life is so sweet now it would seem like a huge step backward to confine my wealth inside an RE equity cage.

#90 readilzor on 07.10.15 at 12:34 am

Garth

Did you see this?

http://nypost.com/2015/07/09/soaring-vancouver-home-prices-spur-anger-toward-chinese-buyers/

#91 Jon B on 07.10.15 at 12:40 am

Thanks for another great post. Enjoying the discussion.

#92 Victoria Real Estate Update on 07.10.15 at 12:41 am

# 67 DON

Liquid and mobile. No better way to be when the Canadian economy is struggling the way it is, despite record stimulus spending and 6 years of emergency rates.

As rates rise there will be nothing to hide the underlying debt problems of most Canadians. It will all be exposed in time.

#93 Oceanside on 07.10.15 at 12:50 am

Interesting the diverse opinions of what the market in Victoria is doing, I have a relative who has been a realtor in Victoria for 22 years. After years of easy living the last 3 years had been his worst until this spring. Big turnaround financially this year, lots of sales.

Many young people are moving to Nanaimo and the Comox Valley as it is a little less expensive.

That rancher in Broadmead for $645k is likely a 1970’s that needs a total gut. No surprises there. Broadmead homes look a lot better from the outside as you can’t see the pink bathtubs and shiny blue tiled kitchens……..

#94 Victoria Real Estate Update on 07.10.15 at 12:53 am

# 50 Bobby

Again, good to see you contribute.

How long has that rancher been listed at $645 K?

If it’s the one I think it is, the assessed value (July 1, 2014) is $657 K.

#95 Waterloo Resident on 07.10.15 at 1:07 am

Stock experts always talk about how the Transport Average shows the true health of the market and if the Dow and the Transports begin to verge away from each other then that shows that the market is running on fumes and its best to lighten up on any long positions (sell some of your stocks).

I don’t know if any of that is true or not but look at these two charts and notice the divergence that started some time around the end of March ?

The first chart kept going up, while the second chart (transports) started a falling trend. Its really weird to see it, I just hope its not a precursor to a fall that the experts are warning about.

http://stockcharts.com/h-sc/ui?s=$INDU&p=D&yr=1&mn=0&dy=0&id=p95696037966

http://stockcharts.com/h-sc/ui?s=$TRAN&p=D&yr=1&mn=0&dy=0&id=p95696037966

—-

Usually the stock markets fall first, and then a few months later we see a recession coming along. And when a recession comes house prices usually fall. That is exactly what we need right now to cure high Canadian housing prices = a big fat recession.

#96 kommykim on 07.10.15 at 1:07 am

RE: #72 Smoking Man on 07.09.15 at 10:19 pm
I want to fight mark..I’m awaiting.

I think your sharp wit popped his casing, causing him to deflate. Pffftt!

#97 kommykim on 07.10.15 at 1:12 am

RE: #45 Chris Nucks on 07.09.15 at 8:50 pm
Hi Garth.
What is happening with ZPR.TO? It’s tanking. WHY?!?!? Did I made a mistake on this.

If you bought it for the dividend yield in a taxable account and plan to hang in there, then no mistake.
If you bought it instead of a bond ETF for the fixed income part of a balanced portfolio, you made a big mistake.

#98 nubbers on 07.10.15 at 4:17 am

A while ago, we were told to ‘Buy America’. Presumably, the way things are going, at some point it will become a good time to ‘Buy Canada’. How can we know when and what? I would not want to jump in too early. Perhaps a subject for a future blog post?

#99 Investorz on 07.10.15 at 6:34 am

For those investorz out there, since the TSX is a bit weak, it’s a good time to measure your tolerance to risk. Some good rules:

– only buy a stock if on the next day you would sleep just fine if it dropped 25%

– dividend paying stocks are easier to hold because 4 times a year they put cash into your bank account

– if you can’t buy 40 canadian stocks because you don’t have enough cash or don’t know what to pick, buy $ZCN ETF.

– for US, buy ZUE ETF

– for europe and Japan buy ZDM

– for emerging world, buy ZEM

#100 Llewelyn on 07.10.15 at 7:54 am

One aspect of the austerity promises present by the Greek government seemed counter intuitive from a Canadian perspective.

Over the past seven years Canadian citizens have been told that low, or in some cases no, corporate taxation was essential for economic stimulation. Any attempt to increase corporate taxes would result in a mass exodus to jurisdictions with lower tax rates or if the companies decided to stay they not have the money necessary to expand and hire additional workers.

In 2010 large businesses that were not Canadian controlled were required to pay 28% of their income as corporate taxes in Ontario. In 2015 the combined corporate tax rate in Ontario has been reduced to 25% of income. The justification for this reduction was to stimulate the Ontario economy. For small businesses the combined rate was reduced to 15.5% of income.

The Greek government on the other hand has proposed that the corporate tax rate be increased from 26% to 28% and anticipates that this increase will generate a portion of the income necessary to service long term debt.

Somebody in this scenario seems to be telling porky’s!!!

I have not been able to trace the reduction of corporate taxation in Ontario to any measureable improvement in our economic health however I have noticed a substantial increase in corporate profits and the value of corporate shares since the reductions were made.

Will the proposed increase in corporate taxes in Greece generate additional revenue or will it drive another nail in their economic coffin. I must admit the issue of corporate taxation has become a bit of a puzzler these days. If the Greek government and the EEC turn out to be right I hope the government in Ontario is taking notes.

Unemployment rate Greece: 27%. Unemployment rate Ontario: 6.5%. Sure, no benefit whatsoever to lower corporate taxation here. — Garth

#101 jess on 07.10.15 at 7:55 am

“correction” punishment to correct a fault.

“A reporter poses as a Russian government minister to investigate London’s property boom. The sheer criminality that she uncovers is shocking, even by the standards of race-to-the-bottom Londongrad.”

http://www.channel4.com/programmes/from-russia-with-cash/on-demand/60105-001

TOP estate agents in London have been caught out offering to help foreign criminals launder money through Britain’s most expensive properties.
Corruption On Your Doorstep: How Corrupt Capital Is Used to Buy Property in the UK

http://www.transparency.org.uk/publications/15-publications/1230-corruption-on-your-doorstep

The son of former Kyrgyz President Kurmanbek Bakiyev lives in a £3.5 million mansion in the Borough of Reigate and Banstead in Surrey, despite being convicted in his homeland of the attempted murder of a UK citizen and corruption. The anonymous company that is being used to hide the ownership of the Surrey mansion can be linked to the alleged money-laundering scheme used to get the funds out of Kyrgyzstan.

https://www.globalwitness.org/reports/surrey-mansion-used-hide-suspect-funds/
“Blood Red Carpet”, asks where the money used to buy the Surrey mansion came from, and highlights the worrying lack of regulation of hidden foreign ownership of UK property.

https://twitter.com/hashtag/FromRussiaWithCash?src=hash

Report / June 20, 2012
Grave Secrecy

How does a dead man set up a company?
https://www.globalwitness.org/campaigns/corruption-and-money-laundering/anonymous-company-owners/grave-secrecy/

#102 Herb on 07.10.15 at 8:03 am

#60 Nosty, etc.

forget the conspiracy theories, old comrade. If you look for a pattern, you’ll always find one because your mind tries to understand what it perceives by imposing sense and order, i.e. a pattern, on it. Doesn’t mean a pattern is there, only that you posit one, and it sure as hell is no indicator of future events.

What makes your links particularly weak is the language they use. In the absence of facts, they use vehemence to support their arguments, a sure sign of weak legs. People, corporations, governments, states – everyone – pursues what they perceive to be the greatest good for themselves. When these pursuits collide with another force seeking its own good, shit happens, and one or the other force – sometimes even both – is inadequate and loses. At the international level, war results from such pursuits, what A.J.P. Taylor called an “industrial accident”.

There are no grand conspiracies or designs, and one doesn’t have to posit one to understand what’s going on. Just ask the ancient cui bono? realistically, and situations make sense on the basis of fact. Use Ockam’s razor and you won’t need tin foil.

#103 Danforth on 07.10.15 at 8:10 am

I had a little surprise money come in yesterday, and by sheer circumstance, today is my semi-annual meeting with my financial advisor.

Can’t wait to plunk all that money in the market….when timing allows, buy on the dips! Everything we’re seeing sounds like its a buying opportunity now.

#104 pbrasseur on 07.10.15 at 8:18 am

Why the CAD is going down according to David Rosenberg. I used to disagree a lot with the guy but on this one I with him totally. The era of the Canadian Peso is upon us! (Mark get used to it!!!)

http://business.financialpost.com/news/economy/david-rosenberg-just-got-a-whole-lot-more-cautious-on-the-canadian-dollar

#105 Rational Optimist on 07.10.15 at 8:48 am

No big news either way in the jobs report: full-time work slightly up; part-time jobs slightly down. Not much there to help justify another silly rate cut.

#106 jess on 07.10.15 at 8:51 am

Ministry of Commerce: “Made in China 2025” to link with European upgrading strategies
(People’s Daily Online) 09:59, July 09, 2015

Premier Li Keqiang’s third visit to Europe had contributed a lot in promoting “Made in China 2025” and combining it with Germany’s “Industry 4.0”, “The New Industrial France”, and UK manufacturing 2050 — all of these strategies are focused on transformation and upgrading….During Premier Li’s visit, multiple financial agreements had been signed, and deals also had been made to make good use of the 700 billion RMB exchange mechanism.
Shen says that with China investing 4.211 billion dollars in Europe and more countries joining the AIIB, the economic cooperation between China and Europe is even more promising. During Premier Li’s visit, multiple financial agreements had been signed, and deals also had been made to make good use of the 700 billion RMB exchange mechanism.

In addition, China also proposed strategies like interconnection between Asia and Europe, new Eurasian Continental Bridge, the combination of Chinese Internet and European digital market, and smart cities etc.
=

“Mr Wang said his country had offered to bankroll the stretch of railway through Burma in return for a share of the country’s lithium stores….We would actually prefer the other countries to pay in natural resources rather than make their own capital investment.”

http://www.independent.co.uk/news/world/asia/burma-election-china-tries-to-woo-opposition-leader-aung-san-suu-kyi-ahead-of-poll-10308569.html

#107 Rational Optimist on 07.10.15 at 8:52 am

7 family beagle on 07.09.15 at 6:41 pm

Get new buddies; don’t surround yourself with that kind of pointless negativity. It’s just a funny picture.

#108 fixie guy on 07.10.15 at 9:13 am

” believe …that real estate will rise without end”

The most fascinating belief. Most intrinsically understand every pay day that buying power tracks inflation and hasn’t increased without end, yet appear too terrified to ask how buyers for infinitely appreciating homes will pay. It’s such trivial arithmetic the analysis doesn’t rise to the complexity of math, so obvious and straight forward I have no sympathy for those inevitably caught in the correction.

#109 George S on 07.10.15 at 9:15 am

I saw a television show about 10 years ago where they took a look at those stock picking contests where they would have pigeons, monkeys, untrained children, random darts, etc. competing against highly trained business and economic experts. The stocks were followed for one year and the pigeons, etc. always won with substantially higher returns.

What the show did was follow the same stocks as the contest picks for 3 years. At the end of 2 years the expert choices had caught up with the random choices and at the end of 3 years they were far ahead.

The moral of the story: For the short term, random always gets better returns, that is why people (especially real estate agent and mutual fund salesman types) can look like an expert, sound like an expert and make extravagant claims and have a little data to back them up but for the long term you want to look at all the details that highly trained economic and financial experts like Garth and Mark use to make their investment choices.

You were doing so well until you lumped me in with an Internet troll. — Garth

#110 Sosuke Aizen on 07.10.15 at 9:28 am

This may not be a market top, but it sure isn’t a market bottom. If you think you can get 7% return from anywhere near a market top, well then, as your friend Benny Tal would say, “Good luck with that!”

In a balanced portfolio half the expected return comes form fixed income, while the rest comes from a basket of growth assets, from REITs to equity markets in North America, Europe and Asia. Large-cap stocks in New York can crest, but this does not mean the same is happening in Toronto or Paris. This portfolio is balanced and diversified for a reason. You should try the same. — Garth

#111 jess on 07.10.15 at 9:29 am

79 Nora Lenderby
https://ianqrowan.wordpress.com/2015/06/21/inceptionalism-astounding-images-produced-by-neural-network
============

satire and fake news gets more views (click pay) than the retractions hum…do ya think the donald knows that?

http://www.independent.co.uk/news/science/websites-can-create-outrageous-lies-just-for-clicks-but-why-and-how-is-this-legal-10379088.html?origin=internalSearch

#112 Holy Crap Wheres The Tylenol on 07.10.15 at 10:10 am

#80 Moogie Mctavish on 07.09.15 at 10:53 pm

#58 OttawaMike on 07.09.15 at 9:30 pm
JD? Really Smoking Man?
There are many better choices than that fiery toilet water.”
Have to agree on this…the guy basically loses all street cred when he confesses to drinking that rotgut….but with the falling loonie, maybe Macallan single malt is beyond his budget now!
_________________________________________
Jack Daniel’s is only for getting loaded real quick to forget your troubles. Been there, done that.
My choices.
The Balvenie 30-Year-Old Speyside Single Malt #1
The Macallan Fine Oak 21-Year-Old Highland Single Malt #2
Lagavulin 12 Year Old Islay Single Malt Scotch Whisky #3 for everyday sipping.
My wife is from Ireland and their single malts are also quite nice. She took me on a trip the Islands five years ago, did Ireland, Scotland, Wales, England did the tours but the best were the distillery tours in Scotland. That is where you can really get an appreciation of single malts.
Perhaps we need to get Smoking Man out more often to a location that serves up such wonderful nectar of the gods?

#113 Willy2 on 07.10.15 at 10:14 am

– No, the FED WILL NOT raise (short term) rates anytime soon. To see when the FED is going to raise rates, one only has to look at one chart for the US 3 month T-bill rate:

http://stockcharts.com/h-sc/ui?s=$irx

If the line in that chart goes above 2.50 and stays there then you can bet on the FED will start to raise rates. Not before that.

#114 Llewelyn on 07.10.15 at 10:52 am

Garth this was exactly the point I was trying to make.

Will increasing corporate taxes in Greece from 26% to 28% in an attempt to increase revenues result in an increase in unemployment as you indicate it probably will.
Does it make sense to you that the Greek government proposed to increase corporate taxes during an obvious economic crisis.

I will not dispute that the enemployment rate in Canada has declined from 7.5% in 2011 to 6.5% in 2015. However when you analyze where the additional jobs were created I found that big business outside of the food, hospitality and retail sectors were noticeably missing in action.

Canada seems to be replacing goods producing jobs with service producing jobs so it would prudent to ask whether a lower corporate tax across the board is having the stimulating impact on our economy that our government hoped for.

Corporate profits are nice but additional dividends to shareholders will not reduce our escalating debt.

The corporate tax rate in Germany exceeds 30% across the board and yet their enemployment rate is only 4.7%.
There seems to be more to economic stimulation than our governments are willing or prepared to investigate.

#115 Daisy Mae on 07.10.15 at 10:54 am

#25: “Why not spend some time on this instead of yet another post on how people react from the gut? If you have opinions on this I’m sure people would be very interested to gain a deeper understanding.”

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

Garth expresses his opinion with every single blog he presents. People just don’t listen.

#116 Keith in Calgary on 07.10.15 at 10:55 am

Hmmmmm………let’s see…….the US government has flooded the markets with printed money for almost a decade in order to keep shares afloat………and there are also now several market triggers to stop trading if reality starts to bite again.

China has stepped in with utterly ridiculous measures that should make any investor over there lose total faith in the stock markets all together. There is around 50% of the market that is not trading at present, and once those companies open up again, reality will bite once more.

Don’t get me started on the Euro weenies.

Like a coin that spins faster and more frantically when it first hits the floor, creating an illusion of growing speed until it suddenly stops…….world markets are now in their final phase for the coin has dropped.

#117 Grantmi on 07.10.15 at 11:20 am

Lol.. can’t even trust a referendum in Greece! Younger Greeks just got sold down the river!!

http://bit.ly/1LWg52k

Tsipras Sells Out Referendum ‘No’ Vote Ahead Of Weekend Deadline

Ultimately, Tspiras has submitted the same proposal that Greeks, at his behest, voted against last weekend. The PM will use a shrewd political maneuver to secure parliamentary support and new FinMin Euclid Tsakalotos will attempt to close the deal on Saturday. And although that would mean selling Greek “no” voters down the river, it’s once again a nearly impossible choice because as Bloomberg reports, citing Dutch newspaper Het Financieele Dagblad, the ECB “will terminate emergency liquidity assistance (ELA) to Greece as of 6am on Monday morning if Greek reform proposals are deemed too light and if Greece is unwilling to cooperate with withdrawal from the euro zone.”

Here’s Commerzbank’s Markus Koch summing things up: “The ‘No’ in the referendum appears to be turning into a ‘Yes’ from Tsipras.”

#118 Bobby on 07.10.15 at 11:20 am

For #93 Oceanside,

Rancher at $645k in Broadmead was built in 1990. Sorry no purple bathtubs. It’s not far from the foreclosure listed at $699k.

What’s a hot market, lots of sales or rising prices?

#119 Don Derc on 07.10.15 at 11:21 am

“We need corrections. Markets can’t rise forever or dangerous bubbles will develop, with far worse outcomes down the road.”

Tell that to Poloz and The Fed – QE weakens your argument Garth, especially when gov’t debt levels, like personal debt/mortgage levels are at an all time high and are NOT BEING DEALT WITH! The “bubble” burst in 2008….we’ll get what we deserve in 2016 on cdn real estate, but when will the Chinese/amercian casino burst? 86% increase on the Chinese stock market? Whatever.

#120 Herb on 07.10.15 at 11:33 am

Unemployment rate Greece: 27%. Unemployment rate Ontario: 6.5%. Sure, no benefit whatsoever to lower corporate taxation here. — Garth

That throw-away line is beneath you, Garth. If corporate tax rates were such a determinant, the USA and Germany would be in worse shape than Greece. As far as I know, they’re not.

Hardly an offhand comment. Corps with more after-tax income spend more on expansion. Take your leftie blinkers off. — Garth

#121 Sayed Rajinalash on 07.10.15 at 11:44 am

To jwk #36

You can get investments that pay higher than 2.9%. These are government to corporate zero coupon bonds in the 3.4% to 4.7% for RRSPs, RESPs, TFSAs.

Like pointed out in this blog, there are investments that payout or can be reinvested at 5% and higher dividend yields as well.

It is better to pay what your mortgage requires and invest the difference.

This is especially true because compounding of interest, returns in tax free, tax deferred accounts.

#122 Nagraj on 07.10.15 at 12:02 pm

for #79 NORA LENDERBY

In any fight between gut instinct, intuition, sixth sense, etc., and reason, reason always loses out. If you succeed in forcing a decision on the basis of reasoning when the subconscious is opposed, the subconscious will exact a commensurate revenge.

Example: there is no such thing as a marriage of convenience, that’s an arrangement, not a marriage. Re the stock mkt and investing: don’t get married to the mkt if you can’t FEEL it.

What I know from reading the biographies of great traders, all of them highly respect intuition, atmospherics, even dreams. And technical analysis.

SAFE INVESTING is an oxymoron. Which is not to say that GT’s investment advice is to be ignored, au contraire; but there’s a caveat: the unexpected.

Going directly to C.G.Jung: if the attitude of the psyche as a whole is unfriendly towards your conscious lifestyle, you’ll be plagued with a mess of little mishaps, bad luck; if it’s hostile, you’ll get stopped dead in your tracks via disease or accident.

Religion dismisses the subconscious and substitutes divine will, rationalists substitute common sense. Fear and greed in the mkts will trump all other considerations all the time.

#123 Jeff in Moose Jaw on 07.10.15 at 12:08 pm

Smoking Man – I just started reading Hunter Thompson – The Proud Highway.

Its very much a SM kind of book, has his letters from 1955 – 1967. You and him must be related in some way.

http://www.goodreads.com/book/show/10880.The_Proud_Highway

On another note where is blog dog – My Life is a POS?
Like Garth, I found him entertaining.

#124 Mike T. on 07.10.15 at 12:28 pm

no doubt there is a ton of doomer garbage out there

most of it is made up by the elites throwing skeptics off the trail

but something is true….under all the mis and dis info, something is true

the Alex Jones NWO will never come to pass, it’s a decoy, people do not want scary police state worlds and won’t accept it

global warming is real, but not caused by carbon

carbon is causing global warming the same way Chinese investors are goosing Canadian housing

it’s not!

but it makes a clever scapegoat, confuses the masses and keeps people from worrying about real truths

control both sides of the argument

#125 DON on 07.10.15 at 12:29 pm

#71 the Jaguar on 07.09.15 at 10:17 pm

Billy Bob:
I can’t stop thinking about Billy Bob’s musings on human intuition and warning signals from yesterdays blog. I have a lot of experience with this, but not a lot of understanding or explanation. I just put it away when the subject comes up because it troubles me.
Wasn’t there a book called ‘Fate is the Hunter’?
While it might be true that some can be saved by listening to their inner voice, not sure all have that inner voice. Or it is being drowned out by the relentless sound of other forces.
******************************

Most don’t listen to their inner voice as they think people will laugh or ridicule them… as that is a thing of the past and humans are so modern now. I listen all the time these days…and it pays off in one way or another. People are evolved…didn’t you get the memo – they don’t need to think for themselves anymore.

#126 Victoria Real Estate Update on 07.10.15 at 12:29 pm

# 93 Oceanside

SFH sales in 2015 have been below Victoria’s long term average (2007).

Gauging the strength/weakness of Victoria’s market by limiting your comparison to sales of recent years will prevent you from understanding the big picture.

Consider the facts:

2012: lowest SFH sales total since 1984
2013: second lowest SFH sales total since 1984
2011: third lowest SFH sales total since 1984

(source: Victoria’s board)
(not population adjusted)

With interest rates at record low levels, prices in Victoria should be hitting new record highs each month, however, that isn’t happening.

Consider the performance of Victoria’s market compared to the rest of Canada:

. . . . . . . . . . . . House Prices. . . . . . . . . . . .
. . Percent Above/Below June 2010 Price Level. .
. . . . . . . . x = Canada, * = Victoria. . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .x. . .
+20% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+15%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . .x . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+10% . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . x . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
….0%. . . x*. . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . . . . . . . . . . . *. . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . * . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—————————————————————————–
. . . . . . .Jun. . . .Sep. . . . . . . .Jan. . . .May. . .
. . . . . . 2010. . .2011. . . . . . . 2014. . .2015. . .

(source: Teranet’s index – most recent data)

In May 2015:

* Prices across Canada were 21% above June 2010’s price level.
* Prices in Victoria were 5% below June 2010’s peak price level.

From January 2014 to May 2015:

* Prices across Canada increased by 6.3%.
* Prices in Victoria increased by 5.0%

#127 gut check on 07.10.15 at 12:37 pm

Watching the markets lately and reading all of the news about:

— market manipulations,
— new laws prohibiting short sales, brokers refusing sell orders (China),
— massive speculation about Greece being passed off as fact in major papers,
— spoofing Treasuries,
— the plunge protection team and the PBOC
— “shut-downs”
— glitches/hacks
— the denial of inflation
— constant revision of reported employment numbers
— Joe Oliver seeming to live in a world of his own creation
— Access to information requests being turned down at an alarming rate
— media ownership consolidation
— oil price insanity (low and getting lower but NOT at the pumps)
— Real Estate madness

It’s a wonder anyone can pretend they know anything at all. this Blog and many others is starting to sound like the ramblings of a bunch of people standing around a fishtank saying authoritative things about which direction any of the fish in it are going to swim.

It’s a joke, everyone – there are not market fundamentals, just face it. The best guesses as to where any market is headed are the ones based on the behviour of your average psychopath.

That would be news to all the people who enjoy consistent, long-term investment returns. — Garth

#128 Kip on 07.10.15 at 12:39 pm

Oh boy, another LEGo “everything is awesome” thread

#129 DON on 07.10.15 at 12:40 pm

#73 Nelly Numbers on 07.09.15 at 10:20 pm

Garth

What’s the magic number? Lots of blog dogs waiting in the wings to get the word from you when to stop renting and purchase real estate after the big correction. So how much does it have to drop? 10, 20, 30%??? When is it going to happen??
**********************************

It will happen when it happens…but it will happen.

If you know a tsunami is on its way… DO you stand around on the beach waiting or prepare accordingly. This may not happen on people’s timelines. So many people asking Garth about timelines in disbelief even though it has occurred in the US, Ireland, Spain, Italy etc, and China is currently experiencing it. Japan has never recovered. But Garth is ridiculed for thinking it will happen here…geezus. It will happen when it is ready to happen and the gov can’t do anything further to slow it down. Now the perfect storm is upon us…china suffering, the west still suffering…Canada is on the brink of a recession and much much more. Alberta trashed by the right is no longer able to pick up the slack. Ontario has been gutted. Less demand for commodities. The hang over is upon us…others who are sobering up are watching the Canadians (who arrived to the party as the lights were coming on) binge drink with no worries in sight. It’s like watching stupid dousing itself in blood and jumping in a full shark tank.

#130 pinstripe on 07.10.15 at 12:53 pm

The reason many people are doing what they are doing is because the institutional policy makers force people to lose all trust and confidence in governing.

there is nothing to gain by making any attempt to educate the uneducated. what goes around comes around.

debt is the biggest killer.

#131 DON on 07.10.15 at 1:05 pm

#93 Oceanside on 07.10.15 at 12:50 am

Interesting the diverse opinions of what the market in Victoria is doing, I have a relative who has been a realtor in Victoria for 22 years. After years of easy living the last 3 years had been his worst until this spring. Big turnaround financially this year, lots of sales.

Many young people are moving to Nanaimo and the Comox Valley as it is a little less expensive.

That rancher in Broadmead for $645k is likely a 1970’s that needs a total gut. No surprises there. Broadmead homes look a lot better from the outside as you can’t see the pink bathtubs and shiny blue tiled kitchens…….

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

Yup people are still buying in Vic…but prices have come down. Friend at work sold to a young couple (who already lives in Vic) – although she had to reduce the price. The latest rate cut – has fueled a mini boom…but it will not last – especially in this economy.

Curious about the young people moving to Nanaimo and Courtney areas. Are they moving for all the plentiful high paying jobs or are you just seeing Albertan license plates returning to BC. BIL just came back from Alberta and so have a lot of his friends.

Prices are also being reduced in the bastion of retirement towns – QB.

My sister in law is no longer a realtor and moved out of Victoria as it has also become unaffordable. if you take time and caution in peeling back the facade it gets uglier.

#132 Keith in Calgary on 07.10.15 at 1:14 pm

That would be news to all the people who enjoy consistent, long-term investment returns. — Garth

Sure……..all markets will rise thanks to a 5 decade long growth boom fuelled solely for the first 4 decades by the expansion of consumer credit and in the last decade…..QE.

Working out fine for me. — Garth

#133 Holy Crap Wehres The Tylenol on 07.10.15 at 1:17 pm

#127 gut check on 07.10.15 at 12:37 pm

Watching the markets lately and reading all of the news about:

— market manipulations,
— new laws prohibiting short sales, brokers refusing sell orders (China),
— massive speculation about Greece being passed off as fact in major papers,
— spoofing Treasuries,
— the plunge protection team and the PBOC
— “shut-downs”
— glitches/hacks
— the denial of inflation
— constant revision of reported employment numbers
— Joe Oliver seeming to live in a world of his own creation
— Access to information requests being turned down at an alarming rate
— media ownership consolidation
— oil price insanity (low and getting lower but NOT at the pumps)
— Real Estate madness

It’s a wonder anyone can pretend they know anything at all. this Blog and many others is starting to sound like the ramblings of a bunch of people standing around a fishtank saying authoritative things about which direction any of the fish in it are going to swim.

It’s a joke, everyone – there are not market fundamentals, just face it. The best guesses as to where any market is headed are the ones based on the behviour of your average psychopath.

That would be news to all the people who enjoy consistent, long-term investment returns. — Garth
__________________________________________
Re: fish tank, I think this is appropriate!
https://www.youtube.com/watch?v=j1kftCx5-tA

#134 Sixtyfourk on 07.10.15 at 1:23 pm

China doesn’t have a stock market. It has a state-run casino.

Consider that an individual stock is halted from trading if it falls more than 10%. Currently almost 50% of the listed shares are halted.

In order to prop up the market the government has:
– made it illegal for 5%+ shareholders to sell their shares
– forced large holders of shares to not sell them for 6 months
– (allegedly) made it illegal to do short sales
– a bunch of other policy interventions including reducing margin requirements, lending cheap money to brokerage firms etc etc

Imagine if the Canadian government did any of this to the TSX — would you still invest in it???

See here for details:

http://www.reuters.com/article/2015/07/09/us-china-markets-idUSKCN0PI2RT20150709

#135 H on 07.10.15 at 1:27 pm

“But I want to emphasize that the course of the economy and inflation remains highly uncertain…We will be watching carefully to see if there is continued improvement in labour market conditions, and we will need to be reasonably confident that inflation will move back to 2 per cent in the next few years.”

___________________

Data gets better we raise rates, but right now, we have no idea what the data will be.

#136 Holy Crap Wehres The Tylenol on 07.10.15 at 1:29 pm

#129 DON on 07.10.15 at 12:40 pm

#73 Nelly Numbers on 07.09.15 at 10:20 pm

Garth

What’s the magic number? Lots of blog dogs waiting in the wings to get the word from you when to stop renting and purchase real estate after the big correction. So how much does it have to drop? 10, 20, 30%??? When is it going to happen??
**********************************

It will happen when it happens…but it will happen.

If you know a tsunami is on its way… DO you stand around on the beach waiting or prepare accordingly. This may not happen on people’s timelines. So many people asking Garth about timelines in disbelief even though it has occurred in the US, Ireland, Spain, Italy etc, and China is currently experiencing it. Japan has never recovered. But Garth is ridiculed for thinking it will happen here…geezus. It will happen when it is ready to happen and the gov can’t do anything further to slow it down. Now the perfect storm is upon us…china suffering, the west still suffering…Canada is on the brink of a recession and much much more. Alberta trashed by the right is no longer able to pick up the slack. Ontario has been gutted. Less demand for commodities. The hang over is upon us…others who are sobering up are watching the Canadians (who arrived to the party as the lights were coming on) binge drink with no worries in sight. It’s like watching stupid dousing itself in blood and jumping in a full shark tank.
___________________________________________
Don’t worry when it happens those of us who are prepared and able shall be called the sharks. Being a shark is more than being an instinctive cold blooded killer. It is also a very opportunistic creature and will never pass up a free meal.

#137 Smoking Man on 07.10.15 at 1:39 pm

It’s official, YELLEN shifts it back to neutral. Ha.

No fed hike dogs, my accolades please.:)

What a hang over.. When I hands stop shaking. The will explain to you dogs my line of thinking and why I called for a rate cut in Canada , and no spike in USA.

Mark…I’m sorry dude, last night was crazy.

Was editing hugos monologue in my book, I need aggression, hence JD and picking on you as a bi product.

#138 Godth on 07.10.15 at 1:42 pm

#102 Herb on 07.10.15 at 8:03 am
Darwin’s Casino
http://thearchdruidreport.blogspot.ca/2015/07/darwins-casino.html

#139 E nuff sed on 07.10.15 at 2:03 pm

Best column yet. I am going to get this tatoo-ed on my kids chest.
(a) People buy when others are buying and sell when everyone sells.
(b) The greatest motivator isn’t profit, but fear.
(c) We all misinterpret risk. It’s not losing money but lacking it.
(d) Nobody invests when stuff is cheap.
(e) Financial illiteracy is the norm.

#140 gut check on 07.10.15 at 2:08 pm

@ #133 Holy Crap Wehres The Tylenol on 07.10.15 at 1:17 pm – See more at: http://www.greaterfool.ca/2015/07/09/lessons-5/#comments

ha! yes.. that was apropos!

#141 gut check on 07.10.15 at 2:10 pm

Smoking Man – I’m just a visual artist and I’ve been saying the same thing. Granted not as often as you or with such flourish, but it’s all there in burgundy and white for the record books.

the fact is that they cannot raise rates – you see what happens to the markets every time they even whisper about the possibility? Further, of course, this would mean that they have more to pay back to their creditors the FED. So yeah – it’s obvious.

Too bad. You lose. “Federal Reserve Chair Janet Yellen said she still expects to raise interest rates this year and repeated that the subsequent pace of increases will be gradual. “I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said in her first public remarks since the June meeting of the Federal Open Market Committee.” — Garth

#142 Has anyone seen this? on 07.10.15 at 2:11 pm

http://www.huffingtonpost.ca/2015/07/10/newsalert-canadian-unemp_n_7769166.html

(Breaking down the report, public sector employment increased by 42,200 for the month, while the number of private sector jobs slipped 26,300.)

#143 SWL1976 on 07.10.15 at 2:20 pm

#124 Mike T.

the Alex Jones NWO will never come to pass, it’s a decoy, people do not want scary police state worlds and won’t accept it

A decoy for what?

You think just because people don’t want it, that it can’t happen?

It is happening right before our eyes, but people are too naive to believe it. Take a look around and observe the world we are living in…

The Patriot Act, Bill C-51, Agenda 21, the fast tracking of the TPP through congress with the signed deal being classified, the perpetual war on terror, and the list goes on, and on and on and on and on.

Quit being so naive

The war on terror is quite simply a war on freedom

#144 Joe2.0 on 07.10.15 at 2:29 pm

The Chinese Government says they will prosecute short sellers.
The second or arguably the largest stock exchange in the world.
Free markets?
They are being propped up by cheap cash being accessed by corporations doing buy backs and inflating stock prices.
It’s all smoke and mirrors.
The markets are fixed people, all of them.
And it’a coming to an end very soon, when they start speaking about the dirivitives on MSM run for the door.

There is no direct comparison between Chinese and North American markets. Communism and capitalism, dude. — Garth

#145 Bottoms_Up on 07.10.15 at 2:46 pm

#142 Has anyone seen this? on 07.10.15 at 2:11 pm
__________________________________________
We are gaining full time jobs and losing part time jobs. “losing” jobs in this manner almost seems like a good news story?

#146 Bottoms_Up on 07.10.15 at 3:03 pm

#129 DON on 07.10.15 at 12:40 pm
——————————————–
I’m not sure about all that.

It seems there are a lot of people on the sidelines already (this can be bullish for real estate).

Our top 2 markets (Toronto and Vancouver) are not that high relative to other major markets around the world (granted, we are *only* Canada).

Smaller markets in Canada haven’t really seen the crazy run-up in prices….or if they have, they’ve already been through a correction (Edmonton).

Again, Garth cautions to people that have lots of money and assets, to be diversified and not have too much in real estate.

This does not necessarily mean that an average middle class family should not be buying real estate for a family home.

#147 gut check on 07.10.15 at 3:14 pm

But but but… Yellen SAID! :( You’re right though – I lose. We all lose, ultimately, in this ponzi scheme of an anti-business economy

and you said the bubble was bursting.
and Obama said he would close Guantanamo

people say lots of things.

That was compelling. — Garth

#148 devore on 07.10.15 at 3:15 pm

#25 ben

What are your thoughts on actually solving this? It’s clear there are root causes beyond “Canadians are idiots” as it’s happened all over the world since the abolition of full regulation / limits on bank money creation.

Why? To what purpose? Neither Garth nor any of us can effect that kind of change. What we can do is react to it and work within it to our advantage. Why worry about things you cannot control? There are plenty of things that are within your control and ability to change and improve. Low hanging fruit, your own house in order, and all that.

There are already plenty of armchair economists on this site commenting on the things you talk about.

#149 gut check on 07.10.15 at 3:22 pm

“That was compelling. — Garth”

I’m a compelling sorta gal.

#150 Holy Crap Wheres The Tylenol on 07.10.15 at 3:28 pm

#137 Smoking Man on 07.10.15 at 1:39 pm
It’s official, YELLEN shifts it back to neutral. Ha.
No fed hike dogs, my accolades please.:)
What a hang over.. When I hands stop shaking. The will explain to you dogs my line of thinking and why I called for a rate cut in Canada , and no spike in USA.
Mark…I’m sorry dude, last night was crazy.

Was editing hugos monologue in my book, I need aggression, hence JD and picking on you as a bi product.
_____________________________________________
It’s best to get back on your horse and ride it Smoking Man. Head to your Niagara Casino and put it all on green while your head is still fuzzy. Went up to visit my buddy yesterday in Orillia, what a sad lot he is in with. Hope your buddy can get his cash out. I drove up in the old corvette and we went out for a drive instead of a boat ride. He said his biggest real estate mistake ever. Needless to say I bough all of the drinks and he needed help getting into the cottage. He is coming down to see me in two weeks and were going to sail to Port Colborne. I’ll get him to forget his sorrows with a solid weeks va-cay.

#151 Marco on 07.10.15 at 3:39 pm

@Has anyone seen this?

Ya I’ve seen that. A few things noticed : I do not see Alberta mentioned in the regional analysis.

We seem to be losing a number of self employed and private sector jobs, yet gaining public sector jobs.
Taxes to rise to pay for a bloated Public sector?

If we gained in the private sector I would see this as a positive.

Cheers.

#152 shuu on 07.10.15 at 3:57 pm

Bombardier allocated $1.3 billion to capital expenditures for expanded manufacturing facilities. At the same time, the company has squirrelled away over $3 billion in its rainy-day account.

#153 Has anyone seen this? on 07.10.15 at 3:58 pm

#142 Has anyone seen this? on 07.10.15 at 2:11 pm
__________________________________________
We are gaining full time jobs and losing part time jobs. “losing” jobs in this manner almost seems like a good news story?

(public sector jobs are not “jobs” they are a tax burden on the country even if they are required)

#154 Has anyone seen this? on 07.10.15 at 4:00 pm

http://www.chicagobusiness.com/article/20150704/ISSUE01/307049988/how-much-could-chicago-pension-payments-jack-up-your-property-tax-bill-try-30-percent

(30% in property taxes in order to pay for legacy public sector pension plans – Canada is 300 billion in the hole. Are we next?)

#155 Smoking Man on 07.10.15 at 4:04 pm

#150 Holy Crap Wheres The Tylenol on 07.10.15 at 3:28 pm
#137 Smoking Man on 07.10.15 at 1:39 pm
It’s official, YELLEN shifts it back to neutral. Ha.
No fed hike dogs, my accolades please.:)
What a hang over.. When I hands stop shaking. The will explain to you dogs my line of thinking and why I called for a rate cut in Canada , and no spike in USA.
Mark…I’m sorry dude, last night was crazy.

Was editing hugos monologue in my book, I need aggression, hence JD and picking on you as a bi product.
_____________________________________________
It’s best to get back on your horse and ride it Smoking Man. Head to your Niagara Casino and put it all on green while your head is still fuzzy. Went up to visit my buddy yesterday in Orillia, what a sad lot he is in with. Hope your buddy can get his cash out. I drove up in the old corvette and we went out for a drive instead of a boat ride. He said his biggest real estate mistake ever. Needless to say I bough all of the drinks and he needed help getting into the cottage. He is coming down to see me in two weeks and were going to sail to Port Colborne. I’ll get him to forget his sorrows with a solid weeks va-cay.
……

Those propertys are next to impossible to unload. My pall just retired, he bought it years ago. Big pontoon boat at the dock, thats his. He bought 5 or 6 property s by the orillia school, rents to students. He’s not hurting.

Loves the life style. Just moved there permanently thus week.

#156 Smoking Man on 07.10.15 at 4:15 pm

#141 gut check on 07.10.15 at 2:10 pm
Smoking Man – I’m just a visual artist and I’ve been saying the same thing. Granted not as often as you or with such flourish, but it’s all there in burgundy and white for the record books.

the fact is that they cannot raise rates – you see what happens to the markets every time they even whisper about the possibility? Further, of course, this would mean that they have more to pay back to their creditors the FED. So yeah – it’s obvious.

Too bad. You lose. “Federal Reserve Chair Janet Yellen said she still expects to raise interest rates this year and repeated that the subsequent pace of increases will be gradual. “I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,” Yellen said in her first public remarks since the June meeting of the Federal Open Market Committee.” — Garth
……

I don’t bet by headlines. Fed fund futures, if anything Dec at the earliest. And watch that one dwindling over the next few months.

#157 Ponnaps on 07.10.15 at 4:19 pm

Scotiabank economists (the latest to comment) say no. And no rate drop next week. — Garth

Nothing online the no rate cut news..On the contrary found this..

http://business.financialpost.com/news/economy/bank-of-montreal-rbc-join-bank-of-canada-rate-cut-call-we-are-seeing-persistent-disappointments

#158 Marco on 07.10.15 at 5:06 pm

Good article on maintaining a healthy balance between Private and Public sector jobs,

from Macleans Magazine:

“The problem is that to pay for public sector jobs, governments depend on tax revenue from the private sector. Otherwise: Greece.”

http://www.macleans.ca/economy/economicanalysis/canadas-private-sector-job-growth-looks-grim/

Cheers.

#159 Mike S on 07.10.15 at 5:18 pm

“To be on par in terms of house prices, we are looking potentially at loonie in the .35 – .4 range but the debt and CMHC can make situation much worse.

My mind can not comprehend people holding loonies in bank accounts at close to zero nominal and strongly negative real interest rates. its is safe bet that are going to lose big chunk of their savings and that fast.”

This kind of move (to 0.4 USD) will undoubtedly cause a major cost increases, which will bring the bond interest higher and cause the BoC to raise rates quickly
Thus such a big move is not expected to happen (precisely because the BoC will follow the Fed o the rate rising path)

That said, don’t keep all your funds in CAD

#160 Smoking Man on 07.10.15 at 5:58 pm

#4 Sean on 07.09.15 at 6:26 pm
Does look like Canada is in, or close to, recession territory.

Scotiabank economists (the latest to comment) say no. And no rate drop next week. — Garth
….

Obviously scotia bank uses no Herdonomics.
Were did prozak work before. Who has he had the most golf games in his life with…?

Why it was Expoters.

He’s looking for any excuse to swing the axe.

#161 Bottoms_Up on 07.10.15 at 6:16 pm

#153 Has anyone seen this? on 07.10.15 at 3:58 pm
———————————————————
And you’re a burden on the environment but I’m over it.

If you read the whole article they discuss job creation in Q1 and Q2, with private sector jobs a big part.

#162 Mister Obvious on 07.10.15 at 6:42 pm

“nutso Vancouver”? Hey, that’s cruel.

The polite term is ‘reality challenged’. Profoundly so.

“Dumber than a bag of nails” is also acceptable.

#163 Bill Gable on 07.12.15 at 1:11 pm

RE: #9 Godth on 07.09.15 at 6:52 pm –

One OTHER major reason Rome fell into decline was – poor treatment of Veterans. Their “guaranteed” pension and Farm benefits were cut and help for their families – sound familiar?

Rome is the most amazing City – today – so I can only imagine it, back in the day.
I will never get over the feeling of seeing that City for the first time. It is eerie how we saw the city, at the same time, watching the Greek mess and more.

Europe is not to be ignored. I learned enough, on this trip, to realize I know very little about how the grinding of the gears work, in that part of the world.

I think we ignore Europe at our peril.