Such luck

WET CAT modified

Do any normal people read this blog? You’d wonder. I do.

Here’s a note from Cheryl:

“I was introduced to your blog by a friend of mine. I am currently in a fight with myself for not getting educated on finance at the age of 21, when I won quite a large settlement of $180,000. My dad quickly took control, invested $37,000.00 into one stock (zero diversification), and then convinced me to buy a condo (which burnt down last summer). Such luck hey?

“My stocks are now at $13,000, and my condo is still under reconstruction.

“What should I do with my money? I am torn, and I know $13,000.00 isn’t very much money, but I am just not sure what’s best, if I should take it out, put it toward my current home and renovate, or save it, or reinvest it. I’ve asked a few financial advisors and they haven’t given me any definite answers. I am just feeling lost and confused as I’m being pulled in a few different directions.”

Reader Advisory: do NOT date or marry Cheryl. Evil things your way will come.

Well, this is classic. So many people believe there are but two asset classes in the world. Real estate and stocks. Both are fraught. In this case the leveraged property resided in a building Cheryl could not control. It burned. She suffered. A special assessment would have had a similar impact (and vast numbers of people will soon learn that lesson.) Meanwhile her numbnuts papa bought a single stock, displayed his ignorance, and lost the poor waif two-thirds of her capital. Now she has an unsaleable piece of real estate and enough liquidity to buy a used Kia.

The lessons?

Easy. If you want to own real estate, buy some. With dirt. If you can’t afford that, rent. It’s cheaper, safer, more flexible and allows you freedom and mobility. As for investing in financial assets, equities are fine – but never, ever dump your money into one stock. Or six. Use exchange-traded funds to purchase an entire index, because in that way you achieve better growth with less volatility. You have diversification, which is the difference between investing and gambling.

Oh yeah, and never listen to your parents. They’re so Nineties.

As to Cheryl’s question, also an easy answer. Sell the stock, warehouse the capital loss to be used on a future tax return, take the money and invest it within your TFSA in a two or three good ETFs – maybe picking up preferreds at today’s fetching price, large-cap US stocks and a little Canadian, also getting too cheap to resist.

Don’t use the money to pay down your mortgage. Certainly don’t renovate. And don’t waste your time asking the financial advisor at the bank what to do with thirteen grand. You’ll be sold a mutual fund ten times out of ten by a guy you’ll never hear from again.

Now, let’s look at the larger picture, as it’s growing a little spookier. Young people like Cheryl – with limited resources and limited knowledge – need to be careful about where to put their money. Pitfalls are everywhere.

On Wednesday crude oil lost an astonishing 5% of its value and tonight sits at forty bucks. That means Canada’s biggest export commodity has dropped in value by 30% in a few weeks. Massive energy companies are trading at 11-year lows. Stockpiles of oil in the US are brimming. In fact, there’s now a multi-year supply in storage – the most in eight decades.

In recent days there’s been speculation crude could hit $20 before it finds bottom. That sounds outrageous, until you realize it’s shed $32 a barrel since June. As you know, this is a big deal for Canada, right from house sales in Calgary (down 27% so far this month) to the outcome of the federal election in October. Already the national budget has gone from surplus to deficit because oil, and the Bank of Canada had to cut interest rates twice. Economists are bracing for crappy labour stats over the next couple of months, and our dollar at 76 cents US ensures higher consumer costs and less spending.

Core to this commodity price collapse and the impact on us is weakness in China. That country is the biggest user of raw materials on the planet. In fact China alone consumes 40% of the world’s output of copper, and half of all the aluminum. Weed-like growth there over a decade ago sparked a massive run-up in commodity prices which fueled the Toronto stock market, helped send real estate soaring and plumped the political fortunes of Canada’s Conservatives.

But that was then. Now it’s over. For how long is anyone’s guess.

The point, Cheryl, is simple. What worked for your old man fifteen years ago isn’t working today. You can’t throw a dart and buy a winning stock. You sure can’t count on sustained economic growth or wage increases to keep real estate moving up. Without engineered cheap rates and political trickery, housing would be in big trouble (and will be). And when it comes to investing, you must be balanced, diversified and liquid.

There ya go, kid. Good luck with the curse.

205 comments ↓

#1 Margaret Mulcair on 08.19.15 at 5:38 pm

FIRST

#2 Mickey on 08.19.15 at 5:40 pm

One suggestion, put sob story on gofundme, cyberbegging is a growth industry. ;)

#3 Nick on 08.19.15 at 5:43 pm

Talking about China, and in light of the ongoing industrial catastrophe in Tianjin, check out Under the Dome (if anyone out there hasn’t already) https://youtu.be/T6X2uwlQGQM The truth is horrifying, but lays bare some of the big structural issues China is really facing.

#4 MacBeer on 08.19.15 at 5:45 pm

Is it time to panic? Everything seems very unpleasant nowadays.

It is never time to panic. — Garth

#5 Canadian on 08.19.15 at 5:47 pm

Sounds like Nortel or Blackberry to me!!!

ZPR.TO is looking a little tasty right now…

#6 Steerage Bilge on 08.19.15 at 5:48 pm

Brutal ! Thanks pops.

#7 Next bubble on 08.19.15 at 5:58 pm

Where will the next bubble be?

Friend of mine gave me $10 to invest in my startup. I gave him a 0.000001% stake in the company. It’s valued at $10 Million. Woohoo!

On another note, refrain from posting your net worth, etc, portfolio value, etc. on this or any site.

Apparently Hackers are targeting such posters to try to get access to their accounts.

#8 Renter's Revenge! on 08.19.15 at 5:59 pm

“My dad quickly took control, invested $37,000.00 into one stock (zero diversification), and then convinced me to buy a condo (which burnt down last summer).”

Good example of diworsification.

#9 Brunett43 on 08.19.15 at 6:00 pm

Rule # 1 Never let a relative take control of your money.
Rule # 2 Never put all your eggs in one basket.
Rule # 3 Never buy a stock or house when prices are high.
Rule #4 Follow Garth’s advice and learn how to grow wealth.

Cheryl, I to won a large settlement, about 4x what you received. I went to 3 different financial advisers, took notes, did a lot of homework for about 3 months before I settled with one who is fee based. Within two years I’ve made over 80k in capital gains, dividends and interest with a highly diversified portfolio and maxed out my TFSA. If I were you I’d consider selling the condo and dump the equity into a portfolio.

#10 Andy on 08.19.15 at 6:03 pm

Why pick preferreds when in the growth cycle of investment? Are they not out performed by equities and have less favorable tax treatment unless they are the only source of income?

#11 Frank on 08.19.15 at 6:07 pm

Recommendation on a good preferred ETF?

#12 bb on 08.19.15 at 6:16 pm

Winning a huge settlement of 180k isn’t luck at all. Its pure skill. 13 grand is still 13 grand…

#13 Sideshow Rob on 08.19.15 at 6:20 pm

No fed rate hike in September.
Steerage economists 19 – Fed worshipers 0
You would think they would get tired of the Charlie Brown treatment. Football keeps getting pulled away and they keep teeing it up.

#14 Chris on 08.19.15 at 6:23 pm

It is ridiculously expensive to live in Toronto now. The least expensive 1 bedroom 1 bath condo in Scarborough rents for upwards of 1250. How did that happen? Not to mention buying something. It is indeed crazy. It is approaching new york price. Now does Toronto offer New York pays?

#15 Andrewski. on 08.19.15 at 6:31 pm

Re #1 Margaret Mulcair. Good for you to come first, as it’s always the guys who comes first…

#16 j0n on 08.19.15 at 6:33 pm

Here’s my notes from previous posts and comments:

=========================
“So divide the TFSA money into five piles, putting equal amounts into ETFs (exchange-traded funds) that mirror (a) the S&P 500, (b) the TSX 60, (c) a basket of preferred shares, (d) real estate investment trusts and (e) a Canadian bond index. You can use iShares products, or Vanguard, BMO exchange-traded funds or others. But these five will give you safe (preferreds and bonds) as well as growth (equities and commercial real estate).”

For example, using iShares, you’d buy XIU (Canadian stocks), XSP (US stocks), XPF (preferreds), XRE (real estate trusts) and XSB (short bonds). As your funds grow, you can add lesser weightings in XEM (emerging markets) or XCS (small-cap Canadian companies). When you get to $150,000 or so, it makes sense to pay someone 1% to manage this growing nestegg, rebalancing it, giving you tax avoidance advice and gaining further diversification.
http://www.greaterfool.ca/2014/11/21/trust-4/
=========================
Garth won’t specify or recommend particular ETFs, but I’m guessing these ETFs would work for Jenny’s profile:

(35k investment)
7k – ETF REIT (VRE, *XRE*, ZRE)
8k – US/CA prefs (ZPR)
2k – gov bonds (VSB)
2k – corp bonds (VSC)
1k – real-return bonds (XRB, ZRR)
6k – CA equities (XIU)
9k – US equities (XUS)
http://www.greaterfool.ca/2014/01/26/loaves-and-fishies/#comments
=========================
post #23 from http://www.greaterfool.ca/2015/04/22/the-quick-the-dead-2/#comments

First of all your allocation depends on your risk tolerance and age. Garth will tell you 60 (equities) and 40 (fixed income). But if you’re more conservative then just dial it back to 50/50 or even 40/60. Also keep in mind this applies to your total portfolio. No need to be balanced in the tfsa on its own if you have fixed income stashed in an RRSP. Ideally you will get the greatest return on equities, so those should fill up your TFSA first. The fixed income will be taxed at your marginal tax rate, as will anything you withdraw from an RRSP so you should use those to fill up your RRSP (you haven’t avoided tax, just shifted it to a time when you may be in a lower bracket).

TFSA ETFS:
Canada
ZLB.TO – Non volatile Canadian stocks
XIU.TO – TSX top 60 (heavy on banks and big energy).
US
VUN.TO – US total market
VGG.TO – US dividend
International
XEF.TO – Emerging Markets (heavy Euro weighting)

Fixed Income
XBB.TO – boring Canadian and provincial bonds
RBO.TO – Corporate bonds
XRE.TO – REITs.
XPF.TO – Preferred Shares
=========================
http://www.greaterfool.ca/2015/04/06/diversity/

#17 Love my Kia on 08.19.15 at 6:37 pm

Mulcair has the conservative vote locked up now too!

NDP majority awaits!

http://www.cbc.ca/news/politics/tom-mulcair-defends-praise-for-margaret-thatcher-s-winds-of-liberty-and-liberalism-1.3196265

#18 Randy on 08.19.15 at 6:38 pm

Garth,

I’m sorry, but the Ashley Madison debacle is more important than any of this. You should be covering that exclusively for the next week.

Randy.

#19 amazon girl on 08.19.15 at 6:46 pm

Amazon girl to smoking man#163

Why does anybody question my insane mind…

No need you are gifted…
insane smoking man

#20 Andrew on 08.19.15 at 6:53 pm

@16 j0n

You made the same mistake as me when reading that post from Garth so if you have followed it as you described with 35k you may want to reconsider.

I asked Garth why that portfolio has 20% in REIT’s when he consistently recommends to have between 5% and 8% in REIT’s throughout the blog. He told me 20% in REIT’s was insane and he would never recommend that. He told me that the “Diversity” post was suggested as part of a multi account portfolio and that the REIT portion should only be 5%.

I still think the post is highly unclear and does not suggest it as part of a multi account portfolio anywhere in it. To me it simply states split your money into 5 piles and put one of them in REIT’s. As a completely new investor I had followed this for a few months until he kept recommending 5% in REITs so I finally asked him and thankfully he answered.

Anyway, long story short, do not have 20% in REITs. Garth recommends the following, with some flexibility:

20% Bonds
20% Preferred Shares
15% Canadian Equity
20% US Equity
20% International Equity
5% REITs

This provides a balanced portfolio of 60/40 equity to fixed income.

#21 1.50 a litre gas on 08.19.15 at 7:00 pm

Garth who’s making all the money in the oil game? In the okanagan gas is 1.50 a litre for premium and 1.35 for regular? Who is getting all the profit???? I thought the story was sure dollar is lower but we will get cheap gas??? Well where is it??? Who’s raking in the dough Garth???

#22 Tripp on 08.19.15 at 7:00 pm

Vancouver, the great economic unknown that has yet to be explained…

http://www.scmp.com/comment/blogs/article/1851003/bizarro-vancouver-25000-households-declare-less-income-they-spend

#23 Blacksheep on 08.19.15 at 7:03 pm

Shawn….sorry buddy,

I know I said I don’t give a shit, but watching you LIE day after day, is just too annoying.

All I’m asking is, PLEASE cease and desist with the “We put money in a bank and our neighbor borrows it” bull shit, or I will be forced to humiliate you, just like I did last time and the time before that.

Do you need the BoE pdf ?

I saved it just for you.

#24 att on 08.19.15 at 7:06 pm

#20 Andrew is right on. Sign up with an online discount brokerage, DON’T look at the news and don’t try to predict if a fund is too high or low… just buy the recommended funds in the allocation in Andrew’s post. Rebalance when any of them go more than 5% off the target allocation. canadiancouchpotato.com helped me out a lot with this stuff.
ps – did I mention resist the temptation to guess the future when setting up the portfolio?

#25 Nemesis on 08.19.15 at 7:09 pm

“It is never time to panic.” — CommanderGarth

#EverBeenToSeaBilly?…

https://youtu.be/Isx0GBj1fxU

#26 usa still rocks.... on 08.19.15 at 7:14 pm

too bad old dad didn’t pick aapl for the single stock….

#27 Jake Sanderson on 08.19.15 at 7:17 pm

People are dreaming if they think that oil will be $20 or $30 a barrel for long if it even gets that low.

People are also dreaming if they think gas will be $1.00 a liter or $1.10 a liter for long.

In maybe 2 years maximum 24 months, we will have $1.50 to $1.65 a liter gas and $80 to $95 a barrel oil.

Just like the song goes, that’s the way it is, somethings never change!

#28 Andrew Woburn on 08.19.15 at 7:22 pm

Those who still wake up in the night sweating that their hard earned bank deposits will be bailed-in should take comfort.

Even in Greece, TPTB have realized that any attempt to pick on depositors will kill any chance of rebuilding the banking system. Instead, bank depositors will jump to the head of the creditor queue trumping even secured bondholders. This is not good news if you are a junior bondholder. I don’t want to think what this will do to future cost of bank capital.

“Both senior and junior bondholders are expected to face losses, with holders of junior bonds almost certain to be wiped out and holders of senior bonds facing a hefty bill to prop up the banks, known as a bail-in, according to analysts. Equity investors are already facing sharp losses after bank shares fell heavily since the start of this year. Depositors, though, will be safe.

In a company’s capital structure, junior bondholders are more quickly wiped out than senior bondholders if the company falls into financial dire straits.

http://blogs.wsj.com/moneybeat/2015/08/17/greek-bank-bondholders-face-bail-ins/

#29 BC Guy on 08.19.15 at 7:34 pm

“Oil hits an 11-year low.”

Thanks, Obama.

#30 LH on 08.19.15 at 7:34 pm

Ashley Madison jokes aside, the reality for girls in Cheryl’s age group is that doing tricks at 200 a pop or finding a sugar daddy becomes a salient choice in this economy.

Exceptions: those born into money
Those who marry money
And the 1-5% or so top earners who can make their own keep through wage slavery

#31 JSS on 08.19.15 at 7:36 pm

I’m thinking of buying a stock (against the wishes of this blog hee hee!)

Here’s my choices:
– Exxon
– Walmart
– SNC Lavalin
– Suncor

My time horizon is > 15 years. Each of these stocks are dividend paying, and are a near 52 week lows.

Which one?

#32 Andrew Woburn on 08.19.15 at 7:37 pm

Another reason to stop worrying about bail-ins in Canada apart from the ones already given by Garth.

First it would be near suicidal for the banks and the government of the day. Secondly, low cost mobile phone banking could make it relatively easy to recreate the old post office bank which does simple retail banking and invests only in very secure assets. Burned depositors would move over in hordes if they had a chance.

Yeah, right, you say, that’ll never happen. Except it has already happened in Britain whose finance minister is determined to drive new banking technology innovation. This isn’t quite as bleeding edge as it sounds. Africa has been using mobile banking for a number of years.

“Mondo’s CEO Wants to Build a Bank for People Who Hate Banks – Bloomberg Business”

http://www.bloomberg.com/news/articles/2015-08-18/mondo-s-ceo-wants-to-build-a-bank-for-people-who-hate-banks

#33 Ronaldo on 08.19.15 at 7:38 pm

#3 Nick on 08.19.15 at 5:43 pm

”Talking about China, and in light of the ongoing industrial catastrophe in Tianjin, check out Under the Dome (if anyone out there hasn’t already) https://youtu.be/T6X2uwlQGQM The truth is horrifying, but lays bare some of the big structural issues China is really facing.”

Nick, that was a great video. I think if I was living in China I would want to move here real quick. China produces roughly 3.5 billion tonnes annually of the 8 billion tonnes produced worldwide annually.

Have you ever wondered how much coal that represents? Well, if you consider that each coal car carries 100 tonnes and 100 on each train representing 10,000 tonnes in a 1 mile long train, it would represent a continuous train stretching 350,000 miles long. To the moon and beyond. And that is EACH YEAR. 8 billion (worldwide production) is a train stretching 800,000 miles. And we worry about the amount that we pollute in our country. A speck in the bucket.

#34 the Jaguar on 08.19.15 at 7:46 pm

Garth, you changed the blog photo. It was a dog and now a cat is being subjected to an unpleasant experience. Don’t give in to the dark side, Garth.
Show some cats having fun at the expense of humans.

#35 Andrew Woburn on 08.19.15 at 7:47 pm

Chapter One:

Hey, I know. Now the US housing market has tanked we can pick up houses for nothing and rent them out. Let’s do an IPO, buy 5,000 houses in 15 cities and let the profits roll.

Chapter Two:

Publicly traded home-rental firms suffer stock declines as investors grow impatient

http://www.investmentnews.com/article/20150818/FREE/150819902/publicly-traded-home-rental-firms-suffer-stock-declines-as-investors?utm_source=Morning-20150819&utm_medium=email&utm_campaign=investmentnews&utm_term=text

#36 EarlySpring on 08.19.15 at 7:48 pm

Hey Garth, update your picture on the main page. I’ve been here 4 years. Curious to see how your doing!!!!

#37 Shawn on 08.19.15 at 7:56 pm

Walmart’s Price decline and Buffett

#168 bdy sktrn on 08.19.15 at 5:43 pm said:

I am not sure what Henry Danson at 128 concluded about Walmart. He did not tell us. Perhaps he thought it was obvious. Or he concluded only that: gee 23% is a big share price drop in eight months.
———————
maybe it was “buffett should have sold”

***************************************
No one who understands Buffett’s methods would say that.

Anytime someone starts a sentence with “Buffett should have” they are almost certain to be wrong.

Buffett is always thinking long term.

#38 A well diversified personal finance blog on 08.19.15 at 7:56 pm

#16 j0n
#20 Andrew

ETF… Finally… we are talking.

A well diversified personal finance blog:

30% How to make money – right now

20% How to make money – in general

20% Portfolio ticker talk

10% Making money – international

6% Smoking Man’s FX and other trade calls for the Ashly Madisoner investors, who seek excitement beyond the 7%

5% Politics, ideology and other stupid timewasters

5% Real Estate Psychological Warfare Maintenance

4% Personal Ego Maintainer Whatevers (women, boats, bikes, pets, kids,parents,cars,generational class warfare)

#39 art on 08.19.15 at 7:59 pm

I am not sure what you (Garth) get out of trashing people who write to you. Perhaps the letters are made up. Or possibly you enjoy making people feel inadequate, which would be a sign of your own fears.

You say that no one should ever date or marry Cheryl based on her email to you. Which shows you have a narrow and stupid mind, regardless of apparent success in the financial realm.

I’m still not sending you her email addy. — Garth

#40 No Canada, No on 08.19.15 at 8:04 pm

I would totally date Cheryl :)

#41 Shawn on 08.19.15 at 8:10 pm

Blacksheep on banking.

What you continue to miss is that when a bank creates deposits by simultaneously creating a loan due from a customer crediting a deposit to that customer’s account it is the customer and not the bank that owns the deposit.

At the moment the loan and deposit are created nothing has changed hands. In effect the customer has funded the loan by keeping it on deposit with the bank for time being.

I can do the same. I hereby grant you a loan of $1 million except my rule is you have to keep the proceeds on deposit with me. I give 1% interest on deposits and charge 2% on loans. At the end of one year if this arrangement is satisfactory you owe me $10,000 interest. Meanwhile I will attest to anyone that asks that indeed I am holding a million dollars for you.

Unlike me, our banker friends allow the customer to transfer his deposit to someone else.

Say he buys a house that previously had no mortgage.

Now our first customer owes a loan to the bank and has a house. Our second bank customer now has no house but the proceeds are on deposit with the bank. In this case our former house owner has in effect loaned the money to the buyer but done it through the bank.

The bank is collecting say 3% on the mortgage and paying say 1% on the deposit. In this example the bank is making 2% of someone else’s money.

AND, both customers are Happy. Banking is a wonderful thing for all of us.

There are rules around all of this but basically that is how banks work.

You call it nefarious and a secret. I call it banking business and a darn fine invention.

the bank does have risks. If our home buyer does not pay the mortgage the bank still owes the deposit to the other customer. Even if the mortgage is insured it’s not great fun for the bank.

But, surely you own some bank shares?

Now do your best to humiliate me like you think you did before. Blog Dogs can be the judges.

#42 White Crock BC on 08.19.15 at 8:13 pm

#21 1.50 a litre gas on 08.19.15 at 7:00 pm
Who’s raking in the dough Garth???

—————————————————-

The refineries are the culprits this time.

There have been many articles lately about their record profits.

http://www.valuewalk.com/2015/04/oil-refiners-crack-spread/

Google “crack spread” for more, but you may be taken to some porn sites…

The “fix” is in.

We have no chance.

It’s either the price of crude, the crack spread, taxes, refinery shutdowns, the low dollar… it doesn’t matter. They win, we lose.

But, I’m sure the Senate will look into it again, someday.

#43 pwn3d on 08.19.15 at 8:20 pm

#5 Canadian on 08.19.15 at 5:47 pm
Sounds like Nortel or Blackberry to me!!!

ZPR.TO is looking a little tasty right now…
————–
I thought that too then I lost another 10% lol.

So Garth, all the stuff you posted today is a good explanation why our rates are going nowhere. 5 year at .65 and probably another .25 drop from Poloz in September. Right?

#44 Metro Van Observer on 08.19.15 at 8:22 pm

Canada 10 year at 1.31% ! Rising rates anytime soon? Not a chance anytime soon. The bubble will continue to expand still…

#45 Smoking Man on 08.19.15 at 8:24 pm

#19 amazon girl on 08.19.15 at 6:46 pm
Amazon girl to smoking man#163

Why does anybody question my insane mind…

No need you are gifted…
insane smoking Man….
………

Thanks Amazonian Girl

Can I pencil you in as Fan 51?

#46 Tony on 08.19.15 at 8:25 pm

Re: #9 Brunett43 on 08.19.15 at 6:00 pm

Good luck in the future when you see the dump part of pump and dump.

#47 Julia on 08.19.15 at 8:26 pm

Shawn, Blacksheep

Where is Mark when you need him?

#48 bigtown on 08.19.15 at 8:31 pm

Britain like Canada has four large banks to serve the mainstream economy. The apple did not fall far from the tree.

The retail experience in Canada is showing the strain of inflation with shelves half empty with last year’s stock.

#49 pwn3d on 08.19.15 at 8:36 pm

Where’s all the NDP social justice warriors today? All the hate must make them tired I guess. Imagine if we had the NDP in power oil would be at $80 a barrel easy.

For those that are tired of Steve, I get it… but think about this, the alternative is Wynne and her band of activists by proxy through JT (shudder) and Angry Tom and his band of activists (yikes). I mean it’s a no brainer right?

#50 Tony on 08.19.15 at 8:37 pm

Re: #31 JSS on 08.19.15 at 7:36 pm

That one couldn’t be more easy Walmart will be the easy pick of those 4. The oil and gas stocks are hugely overvalued relative to the current spot price of oil.

#51 Mike T. on 08.19.15 at 8:37 pm

#21 1.50 a litre gas
——–
refineries

Enron 2.0

‘unscheduled repairs’ eh?

#52 zoronqueen on 08.19.15 at 8:39 pm

Cheryl,

I recommend the book Millionaire Teacher by Andrew Hallam…I’m 38 and just starting to learn about money…

Garth keep up the good work…teaching Gen XY financial literacy

#53 Andrew Woburna on 08.19.15 at 8:44 pm

21 1.50 a litre gas on 08.19.15 at 7:00 pm
Garth who’s making all the money in the oil game? In the okanagan gas is 1.50 a litre for premium and 1.35 for regular? Who is getting all the profit???? I thought the story was sure dollar is lower but we will get cheap gas??? Well where is it??? Who’s raking in the dough Garth???
======================

Apart from governments, right now it’s the refiners. They are getting the crude cheap but supplies of gasoline are tight so they can sell high. We are coming into fall maintenance/winter formulation season so refineries will not be able to use as much crude but gas will still be tight because of cuts in refinery output. They are loving it because they took it in the ear for years with sky high crude prices. That’s one reason no one wanted to build new refineries.Now we’re all paying for it.

An investment in a strong integrated oilco like Suncor is a prudent long term bet. They produce oil and they refine so their profits are more stable. That’s why Suncor just increased its dividend when others are cutting theirs.

#54 Tony on 08.19.15 at 8:47 pm

Re: #26 usa still rocks…. on 08.19.15 at 7:14 pm

There’s tens of thousands of Apple type stocks around the world. All these are traded companies that initially appear to be headed to bankruptcy but somehow make a miraculous recovery years later. Bowflex was such an example. I actually made a lot of money short Apple when it looked like they’d go bankrupt.

#55 Chris in Nanaimo on 08.19.15 at 8:51 pm

So why are there no refineries in Canada? Why do we ship the crude all the way down to the States, only to have buy the refined stuff back in US$ ?

#56 Smoking Man on 08.19.15 at 8:52 pm

#162 Rosie on 08.19.15 at 4:15 pm
Garth,

I love your blog (most of the time) and the sensible financial and real estate wisdom that it provides. But not today. It really needs to chill out on the derogatory comments towards “wives,” who are more often than not framed as being so silly as to believe that real estate will always go up in value. And that they should be traded in if they force their husbands down the deluded path towards homeownership at historic rates. I’m a wife and I read this blog to help our family sound real estate and financial decisions, which is key because we currently live and rent in Vancouver. And I bet there are lots of other wives who read this blog too. So PLEASE start showing more tact and respect towards “wives”. You can still keep up the humour which is so much a fun part of this blog but without putting down a whole category of people. And I would recommend that those husbands that post to your blog do the same – or they may end up wealthy but without a wife!
……

Just saw this..

Are you Fricking serious… First off, wealthy without a wife…

Bahahaha…. What tragedy that would be….

Have you ever heard of hummor, the above line is just that.

Insecurity huge if a little tong and check upsets you.

#57 Republic_of_Western_Canada on 08.19.15 at 8:53 pm

#31 JSS on 08.19.15 at 7:36 pm

I’m thinking of buying a stock (against the wishes of this blog hee hee!)

Here’s my choices:
– Exxon
– Walmart
– SNC Lavalin
– Suncor

My time horizon is > 15 years. Each of these stocks are dividend paying, and are a near 52 week lows.

Which one?

Of those, when the knife has bottomed, definitely SU and XOM. More so SU, as XOM has to be in your RSP for any chance of getting the U.S. holding tax back and might take up all the room in it depending what else you’re up to.

However, hydrocarbon overproduction could last several years. It’ll be awhile before those are ground down far enough for a decent entry point.

Lo-leveraged mid-caps like CPG, and SGY and WCP, are getting hit harder and quicker so should bottom out late 2015/early 2016. After that they should have the strength to live out the glut years without bankruptcy or buy-out at decent dividend payouts. Then, you’ll get significant multiples of your invested capital back without waiting 15 years.

Nearly all stocks in all markets are overpriced however, and many are getting pummeled especially emerging markets. Bonds will come down as int rates rise, but a huge spread is developing between high-yield ones and the better kind. Diversification/ETFs won’t help against the coming systemic broad-based corrections. Best to keep cash for a spell while all this unwinds, especially in our present deflationary environment.

#58 Marco from vab on 08.19.15 at 8:54 pm

Cheryl, sell an option on your condo.

$40k and and agreed price for exchange when the reconstruction is completed. The buyer can then either complete upon reconstruction or forfeit the $40k.

If they forfeit, you make back some of your losses, if they complete, well hopefully after closing costs and whatever sliver of appreciation you can try to make some back.

I’d say put that “offer” on Kijiji and Craigslist noting you are willing to take on a realtor at 1% to complete the deal as structured.

Worse case you get no bites and nothing changes, best case you sell your condo on your terms…

Why not try?

#59 For those about to flop... on 08.19.15 at 8:56 pm

Just finished watching Tom Mulcair state that if elected his party would fund 2500 extra police officers in dodgy hoods like Slurrey.
Whilst I agree that the extra officers are needed it seems kind of pointless if the judicial system gives the offenders a lollipop and a slap on the wrist.
More cops and tougher sentences is the only way to go .
Most people deserve a second chance ,just not so soon.
Also white collar crime needs to be treated like violent crime.Fraud ruins live’s too.

#60 Freedom First on 08.19.15 at 8:58 pm

Normal? What I see as normal today looks like slavery to me. Most frightening thing, people accept it as normal.

#61 james on 08.19.15 at 8:59 pm

Wow, her dad should go work for the Toronto Community Housing Corporation. They were given a big whack of money by the city to spend on repairs (maybe 70 million), and promptly lost it in the stock market (which they weren’t supposed to be active in). He would fit right in.

#62 John on 08.19.15 at 9:05 pm

#39 Shawn is obviously a paid schill. Please disregard anything this person posts. It is highly misleading. Borrowed money is not ‘borrowed’ from any other deposit. Money that is borrowed from a bank is created on the spot with your signature. Created from nothing. There was NO money that your borrowed from anyone else. The money DID NOT EXIST UNTIL YOU PROMISED TOP PAY IT BACK WITH A CONTRACT YOU SIGN + INTEREST!! The bank creates the credit but where does the interest to be paid back come from?? It is built into the system that either the loaned ‘debt’ money bubble must continually grow in order to keep this ponzi scheme going or there must be a default on the loan and the bank will assume any real tangible wealth that had purchased with the loan. They are in fat out NOTHING when someone defaults on a loan payment. Since they put up nothing in the FIRST PLACE!!!!

#63 You're Getting Hosed ! on 08.19.15 at 9:19 pm

Re #21

Nice little gas war going on in St. Catharines Ontario the past few days, currently 89.7¢ for a litre of regular is the best price at 9:00pm and they’re still making money. No excuse to be paying $1.35 per litre mate, the good people of Kelowna should be giving their MP an earful with oil prices at multi year lows .

#64 Brian Ripley on 08.19.15 at 9:37 pm

“On Wednesday crude oil lost an astonishing 5% of its value…” Garth

Today I mashed up a chart on recent Canadian household debt and the ratio of bank credit to GDP of 17 developed countries including Canada: http://www.chpc.biz/history-readings/ten-dollar-oil

I also added two perspectives of the possibility of “ten” dollar oil.

In 2001-2002 oil was indeed below USD$20

It may not get to $10 but what is happening is indeed continuing commodity DEFLATION.

This is not good for the highly leveraged in Canada.

#65 TurnerNation on 08.19.15 at 9:37 pm

Albertan Divorce Law firm Yenta & Yenta offering special discounts:

1. The “For Richer or Poorer?” package. Fees on contingency against severance package.

2. “Ashley is Mad” package. Cui bono basis.

#66 Yeah we are getting hosed on 08.19.15 at 9:39 pm

1.35 at the pumps they are sticking it to all the tourists and even when they leave I’m sure we won’t see relief! Right now wall to wall tourists literally never seen it this busy in the okanagan in spite of the prices on everything noticeably increasing. Sometimes you feel like people must have endless money and heck why don’t I lol? In spite of it all its a dang shame we have to cross the border if we want to save money on gas even with a worthless Canadian loonie we can get gas cheaper stateside how insane is that!!!

#67 Shawn on 08.19.15 at 9:40 pm

Andrew Woburn at 35:

Chapter One:

Hey, I know. Now the US housing market has tanked we can pick up houses for nothing and rent them out. Let’s do an IPO, buy 5,000 houses in 15 cities and let the profits roll.

Chapter Two:

Publicly traded home-rental firms suffer stock declines as investors grow impatient

**************************************
Chapters three to whatever…

The money was already y raised and invested in houses to rent out.

The founders of this business keep on collecting fat pay checks. If the business eventually works out it is of little consequence that the stock priced bumped around over time.

Only if they still need to raise new money does the stock price matter much. If it is a good business (and it probably is) the founders should be confident enough to wait for their bigger reward when house prices rise and they sell the houses.

Profits dive share prices. Not the other way around.

#68 S.Bby on 08.19.15 at 9:44 pm

Unless you stock pick like me: LULU RBA HBC DOL ATD.B these are no-brainers. I made a shitload on LULU.
PS: don’t buy TCK.B until $4. And stay away from REITs and Prefs for the rest of this year.

#69 Shawn on 08.19.15 at 9:50 pm

Bank Depositor Risk

Andrew Woburn

bank depositors will jump to the head of the creditor queue trumping even secured bondholders.

****************************************
Of course. Many banks have gone under in the U.S. hundreds and hundreds since 2007.

Typically, the deposits are taken over by another bank and are fully honored. If there is any loss it is equity and debt holders who get burned.

See for example Wachovia and Washington Mutual. Shareholders were wiped out. I don’t think any depositor lost a dime. I am not sure about debt holders.

Warren Buffett *Berkshire Hathaway) used to own a Bank and his view was that he had a special fiduciary responsibility to depositors and continues to feel that way about insurance customers. Berkshire would ALWAYS pay our legitimate insurance claims first. That is part of the reason he holds onto billions in cash all the time. Even if Berkshire were to suffer the largest imaginable catastrophe losses on insurances he makes sure the cash is on hand to make sure his cheques clear. He does invest part of the insurance premiums but always there is plenty of cash to pay those claims.

Same for banking, paying back depositors must come first. Morally if not legally. And if it is not the law it will still happen. No bond holder is getting paid while a bank deposit suffers losses. Count on it.

In fact this is the reason that the bail-in provisions are meant to turn bank debt investments into equity if need be. It’s all to protect depositors. Banking regulations exist to protect depositors not those who buy bonds issued by banks (which are liabilities but not deposits)

#70 Estrella on 08.19.15 at 9:53 pm

I am not sure if anyone has posted CNBC segment about Canada in a recession. Very interesting and also reporter pointed out that a case of Canadian beer is now more expensive that oil.

http://video.cnbc.com/gallery/?video=3000408647

I don’t think the hike will happen in September, and if it does it will be dovish. (prob less than .25).

Should I sell my 10 year BC bond that’s earning 9% till 2023? hummm?

#71 Canadian on 08.19.15 at 9:56 pm

#42 pwn3d on 08.19.15 at 8:20 pm

Well, no disrespect but you’re nuts chasing growth on preferred shares. I’ll take that tasty 5% yield thought. Just like FIE.TO, yield is currently 7%

#72 kommykim on 08.19.15 at 9:58 pm

RE: #54 Chris in Nanaimo on 08.19.15 at 8:51 pm
So why are there no refineries in Canada? Why do we ship the crude all the way down to the States, only to have buy the refined stuff back in US$ ?

Because we are idiots.

#73 Jen on 08.19.15 at 10:05 pm

the fed is now admitting that QE did nothing, will this blog?

#74 Shawn on 08.19.15 at 10:06 pm

#61 John on 08.19.15 at 9:05 pm said…

#39 Shawn is obviously a paid schill. Please disregard anything this person posts. It is highly misleading.

*******************************************
Actually, I am here on my own recognizance to educate and spread the truth and the light as I see it.

I enjoy providing and giving feedback. But I am often tempted to stop since it really a waste of time. Few minds are changed.

John, I am sorry that you have a distorted view of banking probably picked up from doomer sites and those with excuses for not doing better financially.

Some people here have more open minds.

Money as I have explained in a construct. It is not tangible or real. It represents claims on real world goods and services. It has value only to the extent it can be exchanged for real goods and services at some point. And it surely can. At any point, actually, wherein lies its beauty.

One example of how a loan can be paid back is a loan for seeds that turns into a crop worth far more than the seeds. In this example real wealth of the earth has clearly been increased and the loan made it possible.

If on the other hand you take out a loan for a depreciating asset then the money to repay it will have to come from something like the value of your work in the labor market. I trust that like a farmer, you do create value. That the output you produce for your employer is worth more than what you are paid?

You are most welcome to start your own bank if you think it is a license to print money.

At very least you should invest in some bank shares. According to you it is a sure thing.

My Wells Fargo Bank shares are up about 200% in the past few years. (not counting the currency benefit). Ditto my Bank of America shares bought at low prices. But my Canadian Western Bank shares are down close to 50% in about the last year. I wonder how that is possible? Did they lose their ability to print money?

#75 Shawn on 08.19.15 at 10:10 pm

#71 kommykim on 08.19.15 at 9:58 pm said

RE: #54 Chris in Nanaimo on 08.19.15 at 8:51 pm
So why are there no refineries in Canada? Why do we ship the crude all the way down to the States, only to have buy the refined stuff back in US$ ?

Because we are idiots.

***************************************
“we” don’t ship oil to the U.S. The companies that own the oil do. They pay our government royalties and taxes and then “they” not “we” own the oil they ship.

Also there are of course refineries in Canada. See Edmonton, Sarnia, St. John as a few locations I know of.

In a somewhat free market, oil and gasoline both are allowed to cross borders.

Feel free to build a refinery. Oil is cheap so that is plus.

P.S. Kommy Kim, Speak for yourself.

#76 Carpe Diem on 08.19.15 at 10:11 pm

>Do any normal people read this blog? You’d wonder. I do.

Garth … define normal?

#77 Carpe Diem on 08.19.15 at 10:11 pm

Cheryl

Listen to Garth and get 2-3 ETFs. The other recommendation of good as well, but for 13K you want to limit the amount of trade costs.

This site shows info and a few strategies that can help ….

http://canadiancouchpotato.com/model-portfolios-2/

#78 For those about to flop... on 08.19.15 at 10:12 pm

#68 Estrella on 08.19.15 at 9:53 pm
I am not sure if anyone has posted CNBC segment about Canada in a recession. Very interesting and also reporter pointed out that a case of Canadian beer is now more expensive that oil.

————————————-
Your story reminded me of what I was thinking of last week.
I was in a small town in Washington state an I seen a 12 pack of Kokanee beer for $10 which I swear is way cheaper than here .
How does that work?
On the flip side I seen Granny Smith Washington apples for $1.49 at Walmart in the U.S.
I get the same apples up Fraser St.( east Van ) for .99c Can.
Something ain’t right ….

#79 Shawn on 08.19.15 at 10:12 pm

Should I sell my 10 year BC bond that’s earning 9% till 2023? hummm?

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

I am sure it ain’t earning 9% on its market value. Presumably it is trading above par. It will mature with a capital loss at par.

#80 Moses71 on 08.19.15 at 10:14 pm

Sorry, Cheryl, to hear of your beaten trust in your dad. They mean well, but then ego plays a part, too. I remember a younger than youold hairdresser who won approximately 20mil(?) years back in Toronto who entrusted her father to “invest” her $$ for her. She was broke a mere few years later and back to hairdressing. If you want lamb, go to a lamb restaurant. If you want beef, go to a steakhouse. If you want a dad, hug show love to your dad. If you want a financial advisor, go to Garth!! You got punked
Sorry, but take it as an expensive lesson

#81 For those about to flop... on 08.19.15 at 10:16 pm

Yeah I know I bagged Surrey in a previous post and then just admitted I live in East Van but as the local tourism office says…
East Van is a shithole ….just not as big a shithole as Surrey!

#82 Leo Trollstoy on 08.19.15 at 10:19 pm

21 1.50 a litre gas on 08.19.15 at 7:00 pm
Garth who’s making all the money in the oil game?

Currency traders.

#83 young & foolish on 08.19.15 at 10:26 pm

super duper post :P

#84 MF on 08.19.15 at 10:29 pm

#66 S.Bby on 08.19.15 at 9:44 pm

Yes stay away from preferred’s please lol. CPD getting creamed. I’m down thousands. Wish I could sell.

S.Bby you think TCK-B will reach $4? seems to be bobbing at 8-9. $4 is quite a drop. I’m guessing you think commodities are going to get hammered even more?

#42 pwn3d on 08.19.15 at 8:20 pm

Lol misery loves company! I’m getting hammered too. I don’t even want to look at it anymore. Yield doesn’t mean anything when your down thousands. I should never have bought but what can you do?

MF

Buy preferreds for yield, not capital gain. They will reset with rates. Relax and collect your tax-reduced dividends. — Garth

#85 Elmer on 08.19.15 at 10:31 pm

Don’t you need to know what the stock is before you advise her to sell it? How do you know it isn’t going to rebound? Why turn a paper loss into a real one?

#86 The American on 08.19.15 at 10:34 pm

Just for fun. I know there are some Aussies reading this blog. I love you guys, but I love John Oliver more.

https://www.youtube.com/watch?v=ucA2VM4ghw0

#87 cramar on 08.19.15 at 10:34 pm

Well Cheryl. Bad luck! That is in choosing your dad! Can’t help but wonder what his financial state is?

#88 Steerage bilge on 08.19.15 at 10:36 pm

#1 Margaret Mulcair on 08.19.15 at 5:38

——-
Welcome aboard. Why do you keep remortgaging your house. Surely 11 times is a bit much, no? Is hubby a gambler?

#89 Carpe Diem on 08.19.15 at 10:37 pm

#21 1.50 a litre gas

BC pays a hell-of-a-lot in taxes for gas.

In Ontario, taxes are much less than in Quebec but BC really sucks.

I could not believe the difference when I was in BC last month!

https://en.wikipedia.org/wiki/Motor_fuel_taxes_in_Canada

#90 Snowboid on 08.19.15 at 10:44 pm

#21 1.50 a litre gas on 08.19.15 at 7:00 pm…

Despite the talking heads’ excuses of refinery shutdowns, low dollar, etc – there is really no other explanation than charging what they think Canadians will pay, knowing all well we usually silently accept this gouging and never question their reasoning.

I had to laugh the other day when one shill for the industry explained that Canadian refineries can probably get a wholesale price of $ 1.10 US per litre selling to the States, so that’s one reason for the shortage and why our costs are so high.

Checked yesterday and the retail price for regular in our suburb of Phoenix is .88 CAD/ .67 US a litre, so that’s why I spilled my coffee when the MSM expert said we could sell it to them for $ 1.10!

In fact I did some price comparisons yesterday and the average prices of food, beverages, fuel, and other staples are still more than 1.5 times higher in Kelowna than Phoenix, with prices for both cities in CAD.

Obviously prices will vary in the US, and Canadian prices will always be higher – but there is no valid reason for them to be 1.5 to 2 times more, is there?

#91 MF on 08.19.15 at 10:49 pm

#179 Smoking Man on 08.18.15 at 3:20 pm

Wheeling and dealing is great for sure, but do you actually think telling the manager during an interview that you learned how to do the job by doing a google search is going to get you the job? lol zero chance. Nobody cares. I wish it were that way. We all do. Maybe in the 1950’s you could walk in and show how eager you were. Those days are over.

Today, when you send your resume you don’t talk to anyone. You send it online. The HR programs are designed to sift through the one million resume’s and pick out the qualified ones…this means the required education, whether we like it or not. The days of pounding the pavement are long gone. Then you are lucky if you get to the interview stage. Having wits, charm, and creativity is always good and is most definitely an advantage, but you need the qualifications to be able to show them off (unless you are applying for a job in sales). Also having a resume full of wheeling and dealing will be discounted in .1 milliseconds for lack of “relevant experience”.

We are competing with the entire world now. If you don’t have the proper schooling + experience, someone from India does. Actually a billion people do.

MF

#92 omg the original on 08.19.15 at 10:50 pm

JSS on 08.19.15 at 7:36 pm
I’m thinking of buying a stock (against the wishes of this blog hee hee!)

Here’s my choices:
– Exxon
– Walmart
– SNC Lavalin
– Suncor

My time horizon is > 15 years. Each of these stocks are dividend paying, and are a near 52 week lows.

Which one?
——————–

If you have a discount brokerage account just by all 4 and have some diversification. Its only going to cost you $10/trade.

Then only look at the account twice a year, don’t watch CNBC or BNN.

And all those on here that claim to know what will happen in the market next week, month, year.

They have no clue – nobody does.

But over the long-run the market goes up, up up.

#93 Shawn on 08.19.15 at 10:53 pm

#81 Leo Trollstoy on 08.19.15 at 10:19 pm said:
21 1.50 a litre gas on 08.19.15 at 7:00 pm
Garth who’s making all the money in the oil game?

Currency traders.

*****************************************
How are currency traders making money. Who is on the other side of that zero-sum trade.

Already explained above it is refiners who are making the extra money on gasoline.

Big refinery in Chicago half shut down.

There is a surplus of oil but a shortage of gasoline and gasoline refining capacity.

The basic rules of supply and demand dictate that refiners are having a moment in the sun.

You prefer central command and control?

You could have bought refinery company stocks. They don’t always make big money though. In general it’s been a tough business.

As to why gas in Canada is so much more, we all know we have higher gasoline taxes. They should be higher yet to pay for roads and to mitigate damage to the atmosphere. User pay what could be more fair?

Gasoline taxes in Europe are higher still. The U.S. is the outlier with low gasoline taxes.

#94 Shawn on 08.19.15 at 10:57 pm

Okay this is my last post tonight. Otherwise I might get hauled off to GreaterFool-aholic rehab. That’s where Mark is. There was an intervention. Poor bugger, but it had to be done for his own good.

#95 kommykim on 08.19.15 at 11:01 pm

RE: #74 Shawn on 08.19.15 at 10:10 pm
“we” don’t ship oil to the U.S. The companies that own the oil do. They pay our government royalties and taxes and then “they” not “we” own the oil they ship.

Exactly. We make the rules for them about how they do business in our country. In BC we used to have rules about raw log exports and forced the companies to have local mills. Christy Clark changed those rules and now virtually all we do is export raw logs, so WE in BC are even bigger idiots. Nationally we are idiots for allowing the export of unrefined petroleum without a set quota for locally refined products. We are idiots for voting for right-wing governments that allow the oil industry to do virtually whatever the heck it wants. Idiots!

#96 omg the original on 08.19.15 at 11:02 pm

james on 08.19.15 at 8:59 pm
Wow, her dad should go work for the Toronto Community Housing Corporation. They were given a big whack of money by the city to spend on repairs (maybe 70 million), and promptly lost it in the stock market (which they weren’t supposed to be active in).
—————————-

Actually……the TCHC had a pool of money in the order of $250 million as I recall. The idea was to invest it and fund ongoing programs with the income generated.

In 2009 or 2010 the province of Ontario was considering giving $75 million to the TCHC. At the time the TCHCs portfolio was down 15-20%, like most institutional portfolios. Critics question whether the province should give the TCHC more money after “losing” so much on their investments (the critics likely were regular readers of zerohedge.com).

Since then the TCHC investments have fully recovered and gone on to do nicely.

Plus I am pretty sure they got the $75 million.

#97 family beagle on 08.19.15 at 11:12 pm

I get it. Cheryl got hosed.

The nice thing, she lives in a lucrative society with lots of opportunity. Making back her loss through a few strategic commissioned ventures should put her back in the groove. What’s 200k in the grand scheme? Half a year’s research, 20k for molds and frieght, 3 mos starred on Amazon… You’ll be cruisin up to Daddy-o’s in a flat black Sterling with the road pool in the back.

Three rules of investing:
1. Invest in yourself first. Get educated.
2. Remember you are dealing with people.
3. Buy low, sell high.

#98 Nora Lenderby on 08.19.15 at 11:12 pm

There is definitely room for a “Relationship Edition” of this blog.

People always talk about a house being the biggest financial decision of ones life…but I’d say that the most important decision is the people you choose to have in your life.

Now I’m starting to understand what Mr. Freedom First is always havering on about. (He might be a little extreme, but, depending upon his personal experience it might be justified.)

Choose your friends, significant others and in-laws wisely. You can’t choose your own relatives. (Except if you are Bill Gates. He appears to have chosen his grandparents very wisely :-)

If I were Cheryl, I wonder if I’d speak to my father again…

#99 OXI in GREECE !! on 08.19.15 at 11:21 pm

#71 kommykim on 08.19.15 at 9:58 pm
RE: #54 Chris in Nanaimo on 08.19.15 at 8:51 pm
So why are there no refineries in Canada? Why do we ship the crude all the way down to the States, only to have buy the refined stuff back in US$ ?

Because we are idiots.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

And because Canada is one of the poorest run countries in the G-20. Ask anyone who immigrates here. Most of them are coming to escape bullets, bombs or some form of totalitarianism.

#100 Nora Lenderby on 08.19.15 at 11:25 pm

#90 MF on 08.19.15 at 10:49 pm
We are competing with the entire world now. If you don’t have the proper schooling + experience, someone from India does. Actually a billion people do.

I think you’d fail the apocryphal software company recruitment test question number 26: “How many people in the world are any good at programming a computer?”

p.s. You’ll have to pay extra if you also want good spelling, polite demeanour and tidy appearance. It’s almost certainly not worth it, but it does make managers feel more confident in their choice. They like to look in a mirror and see themselves which is a major problem with recruitment.

#101 Blacksheep on 08.19.15 at 11:26 pm

Shawn # 39,

“In this case our former house owner has in effect loaned the money to the buyer but done it through the bank.”
—————————————-
100 % wrong. “Has in effect” is a made up bullshit phrase, that has nothing to do with banking, in any way.
—————————————-
You memory seems to be failing so here was some of our interactions from April/2015:
———————————————
Blacksheep # 208, on 04.11.15 at 3:28 pm

“For what it’s worth, commercial banking is not nefarious, it’s an awesome system once you recognize it as merely government sanctioned, privately guaranteed, IOU’s.

But for some reason certain parties, are hell bent keeping the truth about banking from public knowledge.

They assume the Cattle to be to immature to cope with realities of what modern money, really is. As a reformed gold bug and an MMT advocate, I understand the power of the sovereign in control. I understand why Garth is saying good luck to the credit union people if ever TSHF. I understand why you can’t compare debts in Greece, to debts’ in canada.

I’m just working out some finite details, and deception from suddenly silent Mark and even your self in the past Shawn, until you were both painted into a corner (you then, Mark now) by the BOE pdf and it’s details, doesn’t help.”
———————————————-
Blacksheep # 230, on 04.11.15 at 6:16 pm

“I’ll let Shawn straighten this out, here are some highlights from his posts today:”

“Shawn # 194, I did not disagree with anything in your quoted phrase and specifically agreed that banks create deposits (albeit they need a borrower to do it).”

“Shawn # 200, Bank deposits are counted as money. Banks together with their customers create deposits all day long. Blacksheep has provided links to the bank of England demonstrating this. Close the commercial banks and see how much money survives. The economy would grind to a standstill.”

“Shawn # 204, “Correct, there is basically no incremental cost to set up the loan and create the deposit.”
—————————————–
Shawn Allen # 233, on 04.11.15 at 6:32 pm

“Sorry Mark, I guess Shawn’s the new smart guy on the blog : )”-Blacksheep.
***************************************
“My respect for Blacksheep’s intellect is definitely growing. He has debated these banking matters on this site for at least a year and he has demonstrated the ability to think and learn and to recognize truth when he sees it.”
——————————–
Google can be a bitch.

#102 White Crock BC on 08.19.15 at 11:28 pm

89 cents per liter (in YSN) is even less than I pay across the border everything taken in account… 10% less.

My God are we getting screwed.

#103 Julian on 08.19.15 at 11:31 pm

What happened to Mark?

Shawn: appreciate your posts.

#104 just say no on 08.19.15 at 11:46 pm

Cheryl will just have to go win another settlement and this time a bigger amount. How does one go score this easy loot anyhow? Must be the new way to get ahead since saving is so yesterday. Oh and the mess she could put you through if you did marry this one…just saying….

#105 whitehorn on 08.19.15 at 11:53 pm

“On Wednesday crude oil lost an astonishing 5% of its value and tonight sits at forty bucks. ” The crude bloodbath is spreading to many areas of the Alberta economy. I know a dealership owner who sells ATV’s, boats, and recreational equipment; he mentioned this is one of his worst years in 30 years of business. I was surprised as many downturns in the economy in that time period. This tells me, many people are struggling, and it will get worse. There will be more job losses, causing more of a ripple effect. Also, employment insurance runs out and usage of life savings. This pessimism could spread throughout the economy including real estate purchases.

#106 ronh on 08.20.15 at 12:03 am

A little off subject. But this summer there has been a lot of Alberta License plates cruising the South Okanagan.
Looking for a job or one last party before the crash.

#107 Nosty, etc. on 08.20.15 at 12:37 am

SMan, your call on WW3 is getting closer — Cold September and Wet October. Of course, there are plenty of distractions to keep sheeple turned away from this.

I read a few days ago that Spain is to be the next Greece, so I guess this article is the start of Spain’s troubles, followed by Italy.

It is the Rothschilds, Rockefellers, Soros, Bill Gates etc. (private-for-profit central banks, depop.) who are driving this forward, not the politicos or lobbyists. They are just talking heads. Also, Silly Love Songs?

Just as Crimea did, Donetsk will hold (east Ukraine) will hold a referendum to join Russia and ditch Ukraine. However, the universe is unfolding as it should!

#108 Bottoms_Up on 08.20.15 at 12:40 am

#162 Rosie on 08.19.15 at 4:15 pm
—————————————
Garth is first and foremost a writer and as such is also an entertainer. Take his off-handed remarks as what they really are: his style of comedy. He is the first person to shoot down generalizations and blanket statements. Do you really think he believes one should get divorced due to disagreements on real estate?

And for the record, most wives I know could care less about the value of their home, and there are also those that think prices are crazy. So yes generalizations are typically laughable statements.

#109 Real Estate Odysee on 08.20.15 at 12:44 am

“waif”, “numb nuts” “never listen to your parents”- Garth

Garth

What is going on with you these days? Mind thee language and ease up old boy!

I am sensing some sort of Oedipal rage or perhaps the pressures of being a contrarian guru during these trying times are getting to be too much….I hope the hordes don’t turn on you and blame you once the real estate market plunges…that would be a fate too cruel…

#110 Bottoms_Up on 08.20.15 at 12:47 am

#91 MF on 08.19.15 at 10:49 pm
——————————-
Check out those on-line work sites. There are literally PHDs willing to work for $10 an hour, as they have to compete in a world-wide labour market. You literally start to give SM some credit, if you could land a writing contract job for thousands, then farm out the work to cheap PHDs, you are literally sitting back and letting other people make you money.

#111 Kev on 08.20.15 at 12:50 am

I think the Garth, “R/E is going to $£I+ it’s pants”,moment is finally going to come true. Great readings over the years. Thanks!

#112 BS on 08.20.15 at 12:53 am

Nationally we are idiots for allowing the export of unrefined petroleum without a set quota for locally refined products.

There is no extra refinery capacity in Canada. Where would they refine the extra oil the government tells them they must refine in Canada? Would they legislate them to build and run the new refineries too? Why stop there. Lets legislate Apple to set up manufacturing plants and manufacture their iphones in Canada too.

Of course any legislation that forced the oil companies to do anything that does not make sense to them would just mean less investment in Canada’s oil industry and shutting down existing operations. Less jobs in Canada finding and extracting the oil and the same jobs refining it.

The real solution is make Canada more competitive where the oil companies want to refine oil in Canada because it makes financial sense. An NDP government would do the opposite. We may see the refineries we have now shut down under the NDP. After all the NDP wants to shutdown the oil sands so there may be no oil to refine anyway.

What people need to consider is as bad as things seem now, they will be worse under the NDP.

#113 Chris in Nanaimo on 08.20.15 at 12:54 am

#95 kommykim

Right….we have a so called free market except if you happen to be a nice rovincial or national cartel, e.g. I can buy US beer but not Ontario wine, i can’t buy non Canadian butter.

Very short sighted to simply allow International companies to cart off our resources (and then sell the processed version back to us). Loss of local jobs and as we now see we are at the mercy of other countries and exchange rates to use resources that came from Canada in the first place.

Insanity…

#114 Nagraj on 08.20.15 at 1:07 am

Bulto here.

Dear Miss Sherryl,
I read your letter. I am very sorry you are jinxed.
First you have to be unjinxed. Or you will be on welfare.

The reason Dr. Garth didn’t suggest CURANDERISMO is only because he just doesn’t know what it is. VOODOO works too but it’s scary. Dr. Louise says WICCA can help.
If nothing works, I can get you a part time job here. One day a week we have “Girls Night” at the strip club (Wednesday night) but you’ll need a costume. Maybe you could get one from a Hydro worker like –
I can help you. Tulong (my royal friend) knows some construction workers and greasy monkeys and two motorcycle cops. The girls who ride a motorcycle on stage always get lots of applause and money thrown at them.
Do NOT invest anything until the jinx is gone.

Bulto

PS: Maybe you could ask Mr. Garth for his Harley. We can shave his beard and dress him up like a older lady and that way we can sneak him in Wednesday night and he could just ride the Harley home again.

#115 liquidincalgary on 08.20.15 at 2:48 am

21 1.50 a litre gas on 08.19.15 at 7:00 pm
Garth who’s making all the money in the oil game? In the okanagan gas is 1.50 a litre for premium and 1.35 for regular? Who is getting all the profit???? I thought the story was sure dollar is lower but we will get cheap gas??? Well where is it??? Who’s raking in the dough Garth???

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

further to andrew woburna’s response. over the past 40 years, we have gone from having 44 refineries to just a dozen now; ergo, we buy increasing amounts of gasoline from american refiners.

so, as the loon continues to devalue vis a vis King Dollar, the more we will pay at the pumps!

#116 liquidincalgary on 08.20.15 at 2:50 am

Chris in Nanaimo on 08.19.15 at 8:51 pm

So why are there no refineries in Canada? Why do we ship the crude all the way down to the States, only to have buy the refined stuff back in US$ ?

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

it’s called NIMBY.

#117 Freedom First on 08.20.15 at 3:24 am

#98 Nora Lenderby

My personal experience is fine. I enjoy and love women. That being said, from men I have known, and from what I have learned, marriage and children are too high risk for men.

Don’t get me wrong, if I was a woman, I wouldn’t marry a man either. For a lot of the same reasons. I would still be operating the same way I do now, always placing my own Freedom First. Me first, then everybody else, and yes, to get into my inner circle is extremely difficult. As it should be.

#118 Ponson du Terrail on 08.20.15 at 6:24 am

#99 OXI in GREECE !! on 08.19.15 at 11:21 pm

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<
And because Canada is one of the poorest run countries in the G-20. Ask anyone who immigrates here. Most of them are coming to escape bullets, bombs or some form of totalitarianism.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

That's correct and it's a far cry from the early 90s when they wanted educated types, the whole immigration shell game is now designed to bring in fresh obedient slaves who can't think for themselves and the only thing they want is a house that will not be bombed. For this they are willing to slave away 30 -40 years.. What a difference 20 years make…LOL

Plus when you think of it, the slaves are supposed to buy the overpriced houses of seniors who are eating dog food compliments of the "smart" policies of the canadian government…LOL

#119 Well-T on 08.20.15 at 7:11 am

Preferred shares have been whacked since the beginning of the year. With ZPR and CPD now yielding about 5%, I couldn’t resist and bought into preferreds for the first time (split evenly between both ETFs). Holding for yield to cover my margin loan. Loan at 2.70% fully tax deductible at marginal rate, and 5% tax-advantaged preferred income. Bring it. If they lose value I’ll just use them in a few years to offset cap gains on something else.

#120 Liz Maple on 08.20.15 at 7:23 am

The TSX will be going below 14,000 today and as recall, the high for the TSX was around 15,000 back in 2007.

What a bad investment over the last 8 years+ now. It is not as bad as Hang Seng Hong Kong, China’s Shanghai, Taiwan TAIEX stock markets down 32%, 27%, 20% respectively.

Only a fool would have a one-asset portfolio, and a bigger fool never rebalances. Sound familiar? — Garth

#121 maxx on 08.20.15 at 7:32 am

“Liquid” is one of our most beautiful words.

#122 Llewelyn on 08.20.15 at 7:48 am

I am curious why so many contributors to this blog fail to incorporate the purchase price of an asset when commenting on a juicy ROI.

To my logic driven mind bragging that a current ROI is 7.0% because the market value of an asset has declined by 20% seems just a touch disingenuous.

As the market value of an asset with a fixed ROI (dividend) increases the actual ROI decreases and visa versa.

I am getting a strange feeling that all this chatter about how a nice balanced basket of goodies will generate an average ROI of 7.0%, easy peasy, deliberately discounts the impact of getting into and getting out of that revenue generating basket.

I have looked into the 52 week history of a number of ETF’s touted on this blog over the past six months and found that the market value of nearly every one had declined substantially. The ROI realized by investors that bought many popular ETF’s 52 weeks ago was substantially lower than the ROI being advertised today.

I suppose when the market value of apartment buildings declines by 20% the investment industry will be promoting the high ROI to a new crop of investors. Always a silver lining!!

Oh I know you are supposed to hold onto your basket of goodies until your hair turns grey but remain concerned that a substantial decline in market value might actually accelerate that process.

#123 neo on 08.20.15 at 8:02 am

#73 Jen on 08.19.15 at 10:05 pm
the fed is now admitting that QE did nothing, will this blog?

It did do something. It put off a deflationary depression. The hope was an escape velocity of growth would take place in the subsequent years following it. That hasn’t happened and has only exacerbated the underlying issues. Hence it was a fail.

Two million more families in the US have employment than in 2009. Tell them it failed. What a bunch of elitist nobs on this blog. — Garth

#124 pbrasseur on 08.20.15 at 8:11 am

No problem, soon we’ll have an NDP governement, investement and productivity will explode and everything will be fine…

#125 Londoner on 08.20.15 at 8:26 am

#84 MF

Why did you buy prefs if you don’t understand how they work or what they achieve?

#126 SWL1976 on 08.20.15 at 8:27 am

We’re definitely past the tipping point as far as the inevitable terd hitting the fan. Now it is just a matter of how bad things are going to get, and how well are you prepared?

I’m boots on the ground, ground zero here in the land of truck nutz and grocery getters with 38” tires. I can assure you there are lots of nervous people. The workers who still remain are getting nickel and dimed now on everything, and of course the take home pay is not what it used to be. I feel bad for the ones who saddled up to big debt and put their trust in government.

Nosty is right about the talking heads and politicos not running the show at all. Most are simply caught up in one-up-man-ship trying to do their best while failing to see the big picture. Sadly nothing brings about swift and abrupt change like the chaos and carnage of war. Don’t think for a second that the real crazies do not understand this.

I certainly hope the ones on the bottom taking the orders can learn to question their authority and start to think outside of the box we have been conditioned to live in.

#127 Chris on 08.20.15 at 8:59 am

Here is something to consider. With mass immigration, Canada’s livng standards would be going down to approach those of the immigrants’ native countries. Because that is the living standards they are used to and can accept. Part of the housing cost surge can be explained by this.

#128 Axehead on 08.20.15 at 9:13 am

Dear Garth,

The answer is NO; normal people do normal things and this blog is not normal.

And I promise never to visit this site again if you stop making fun of everybody and especially if you stop the sardonic insults towards Korean cars … despite chagrin to #17 and in support of #56.

#129 Ronaldo on 08.20.15 at 9:36 am

#97 family beagle on 08.19.15 at 11:12 pm

”Three rules of investing:
1. Invest in yourself first. Get educated.
2. Remember you are dealing with people.
3. Buy low, sell high.

Great advice and so true.

#130 Andrew Ross on 08.20.15 at 9:51 am

Gas 87 c per L what a nice change but I doubt it will last unfortunately. Garth keep up the battle against financial illiteracy and housing lust.

#131 Sinister on 08.20.15 at 9:55 am

Cheryl should be set up with Jared Fogel. Then she could really get some cash. But she would have to work all outlets for it. Then again this is the case for most women.

#132 CJBob on 08.20.15 at 9:57 am

MacBeer on 08.19.15 at 5:45 pm
Is it time to panic? Everything seems very unpleasant nowadays.

Actually this is getting close to a good buying opportunity. Timing the absolute bottom is impossible, but buying into the market in the next few days is looking promising.

#133 NoName on 08.20.15 at 10:00 am

Interesting read

“As the market boomed, more and more ordinary people invested their savings and funneled borrowed money into stocks. The virtual economy of the markets detached itself from economic fundamentals, and stock prices of listed companies became disconnected from their real value. It was as though investors were spending 100 yuan to buy a 1 yuan pair of chopsticks.”

http://goo.gl/PTx5ZP

#134 Canadian on 08.20.15 at 10:05 am

#119 Well-T on 08.20.15 at 7:11 am

Yield will probably drop with rate resets, but overall preferreds seem drastically undervalued at the moment. Preferreds is essentially the only long-play “gamble” I’ve taken this year. I rebalanced my Canadian equity in exchange. ZPR and CPD have such low cap costs I couldn’t resist either.

#135 Grantmi on 08.20.15 at 10:23 am

Looks like no fed rate increase in Sept Garth.

The FED and a Goal-Line Stand Needed
Posted by Gary Kaltbaum on August 20th, 2015
http://www.garyk.com/fed-goal-line-stand-needed/

For 3 years, we have been telling you both sarcastically and seriously, THE FED WILL NEVER RAISE RATES UNTIL THE MARKETS FORCE THEM TO. We have been utterly amazed how every month, pundits continue to predict otherwise. The latest nonsense has been September…September…September…the reading has been the Fed is ready…and now we get yesterday’s nonsense. As usual, the Fed teased and then punted again. They now have everyone leaning NO RATE HIKE…thus, there is now zero chance.

Why don’t we wait and find out? In any case, rates will rise. Best to prepare. — Garth

#136 Mf on 08.20.15 at 11:07 am

#125 Londoner on 08.20.15 at 8:26 am

It is my first time investing. I followed the recommendations outlines in a few books, blogs, websites.

It was a noob mistake maybe, but maybe worrying about
it is also. Lesson being learned.

Mf

#137 young & foolish on 08.20.15 at 11:15 am

The reality is, nobody has any idea about exactly where the next batch of “good jobs” are going to come from, or when …

So, go ahead and dump on the bloated RE industry, but remember, the higher ups know full well it is keeping business flowing. Replacing aging infrastructure may be next (more debt coming).

To those Austrians who think a free and dynamic economy, free of any red tape is the answer, well be prepared to embrace serious deflation.

#138 Kevin on 08.20.15 at 11:31 am

@John (#62)

Money that is borrowed from a bank is created on the spot with your signature

Completely false. Banks cannot loan out money that is not already in their vault (in the form of deposits of other customers, or cash borrowed from other banks/lenders).

How can people still be this clueless about how fractional reserve banking works?

#139 Smoking Man on 08.20.15 at 11:34 am

#91 MF on 08.19.15 at 10:49 pm
#179 Smoking Man on 08.18.15 at 3:20 pm

Wheeling and dealing is great for sure, but do you actually think telling the manager during an interview that you learned how to do the job by doing a google search is going to get you the job? lol zero chance. Nobody cares. I wish it were that way. We all do. Maybe in the 1950’s you could walk in and show how eager you were. Those days are over.

Today, when you send your resume you don’t talk to anyone. You send it online. The HR programs are designed to sift through the one million resume’s and pick out the qualified ones…this means the required education, whether we like it or not. The days of pounding the pavement are long gone. Then you are lucky if you get to the interview stage. Having wits, charm, and creativity is always good and is most definitely an advantage, but you need the qualifications to be able to show them off (unless you are applying for a job in sales). Also having a resume full of wheeling and dealing will be discounted in .1 milliseconds for lack of “relevant experience”.

We are competing with the entire world now. If you don’t have the proper schooling + experience, someone from India does. Actually a billion people do.

MF
……….

Its just a matter of how your brain is weird. First off managers are scum to me.

Im independent, only do contract work. And I can walk the walk. Im the second best in the world atvwhat i do.

Now if your usless like 80% of the academic workforce yes you need an obeisance certificate. A pack of uslessoids around the water dispenser.

Find a school that went under, give yourself a PHd . problem solved.

Jobs , full time employment it s for losers. Self employment, or contract work the only option. Or suck ass, for no money.

I would rather eat shit from a sewer than be an FTE in any occupation.

Its all attitude that makes you loot grasshopper.

#140 TurnerNation on 08.20.15 at 11:37 am

I’m leaning towards the no rate hike idea.
Maybe a hike in 2017/18 when Dow hits 20,000 -based on current trend.

#141 Protea on 08.20.15 at 11:45 am

Garth question as I value your wisdom !!

Do you still feel that the Feds will increase the interest rates in view that the Federal Reserve Bank has printed trillions of dollars to monetize US government debt just to keep the government afloat. Any significant rise in interest rates will probably decimate US government finances, the fragile housing market and in the bond market it will cause a financial catastrophe through interest rate derivatives.

This could be a reason why the Fed might not raise any rates in any foreseeable future.

#142 Smoking Man on 08.20.15 at 11:55 am

Hey Amazon Girl.

You should consider Amazonian Girl.

When ever I see (Amazon Girl) It invokes an image in my head of a chubby frame, top less with huge wads of armpit hair, wearing a straw dress in rainbow colours, bare foot and in the jungle, while sporting a crew cut.

Amazonian, congers up, long beautiful hair on head, with a full body wax from the neck down… Pink painted toe nails and finger nails.

#143 89 cents!!! on 08.20.15 at 11:58 am

Wow 89 cents a litre and here in BC we are closer to the source and almost paying twice as much!!! BC – bring cash ok again excuse it’s the sunshine cash except these days you get a healthy dose of forest fire smoke!!! Tourists don’t seem to be bothered though!!! Tickleberrys still selling loads of 7 dollar ice cream cones lol!!!

#144 Joe2.0 on 08.20.15 at 11:59 am

Catastrophe?
Markets are about done.
Hope someone heeded my advice re precious metals.
It’s not going to be pretty, but it will be painful.

#145 Lillooet, BC on 08.20.15 at 12:06 pm

#90 Snowboid on 08.19.15 at 10:44 pm
#21 1.50 a litre gas on 08.19.15 at 7:00 pm…

Despite the talking heads’ excuses of refinery shutdowns, low dollar, etc – there is really no other explanation than charging what they think Canadians will pay, knowing all well we usually silently accept this gouging and never question their reasoning.

I had to laugh the other day when one shill for the industry explained that Canadian refineries can probably get a wholesale price of $ 1.10 US per litre selling to the States, so that’s one reason for the shortage and why our costs are so high.

Checked yesterday and the retail price for regular in our suburb of Phoenix is .88 CAD/ .67 US a litre, so that’s why I spilled my coffee when the MSM expert said we could sell it to them for $ 1.10!

In fact I did some price comparisons yesterday and the average prices of food, beverages, fuel, and other staples are still more than 1.5 times higher in Kelowna than Phoenix, with prices for both cities in CAD.

Obviously prices will vary in the US, and Canadian prices will always be higher – but there is no valid reason for them to be 1.5 to 2 times more, is there?

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

Are you hunting for a mcmansion in Lillooet?
Haven’t see your post for a while.

#146 Pre-Retiree on 08.20.15 at 12:17 pm

I KNOW there are no normal people reading this blog. But that’s why the comments are so entertaining.

#147 Mf on 08.20.15 at 12:35 pm

“Jobs , full time employment it s for losers. Self employment, or contract work the only option. Or suck ass, for no money”

Stopped reading right there. How is anyone supposed to get a start and learn something in this world without any money in the first place? Parents perhaps, loans maybe? But for 99.99% that means working and saving first. To do that you need to get hired first. To do that you need the qualifications. You think we all wanted to do years of post secondary education? I wish I could have just googled how to be a highly paid professional but that is far far from how it works. Sucks but it’s true.

As for the guy who mentioned the phd’s willing to work for 10$ an hour, who’s going to pay them? Me? With what money?

Mf

#148 bill on 08.20.15 at 12:41 pm

#95 kommykim on 08.19.15 at 11:01 pm
”Christy Clark changed those rules and now virtually all we do is export raw logs, ”

It was an NDP government that enabled this fiasco.that and Nafta.
I lost my job of 21 years due to this.
that it continued under the socred/liberals didnt help matters.
in the late 90’s virtually every sawmill on the fraser was closed from eburne sawmill right up the river to canfors panel and fibre.

#149 Ken Nash on 08.20.15 at 12:43 pm

Castles in France for sale compared to Vancouver real estate lol It’s scary what is considered normal in Vancouver
http://www.buzzfeed.com/tanyachen/castles-that-cost-less-than-a-condo-in-vancouver#.yaNe5DPQe

#150 Blacksheep on 08.20.15 at 12:50 pm

Kevin # 138,

“Completely false. Banks cannot loan out money that is not already in their vault (in the form of deposits of other customers, or cash borrowed from other banks/lenders).”
—————————————————-
You must be new here, so I will be gentle.

Please peruse this Bank of England pdf. that has been globally accepted as fact. The relevant details are in simple language and located on the first couple pages, so it only takes a few minutes.

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf

Quotes from opening page of BoE pdf:

“In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans.”

“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money”

“Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits”

Forget the term “Fractional lending” as only muddies the water and simply does not apply in Canada.

#151 The American on 08.20.15 at 12:55 pm

At #13: Sideshow Rob, football keeps getting pulled away to make room for the unorthodox halftime show! Enjoy…

https://www.youtube.com/watch?v=PAu7L0hcRUY

#152 Snowboid on 08.20.15 at 12:57 pm

#145 Lillooet, BC on 08.20.15 at 12:06 pm…

Thank you for noticing I was MIA, and I would have preferred to be looking at RE in Lillooet – but unfortunately I’ve been in and out of KGH since June 19th, including a three week stint in ICU. Turned out I neglected an oil change, and the old engine nearly seized up.

I’m back at home recovering, busy catching up on all I’ve missed on my favourite blog!

And I have a much greater appreciation now for Smoking Man and his creed of living for the moment!

#153 bdy sktrn on 08.20.15 at 1:00 pm

wow, consensus moves to no rate hike and the market takes a nosedive. a bad sign.

-2.2% on nasdaq.

look out below!

#154 LOL Canada on 08.20.15 at 1:11 pm

#150 If you haven’t seen money masters, then check it out.
https://www.youtube.com/watch?v=L2zxQ3IQnQ0

Basically, banks have unlimited money they can lend. They just make it up, and to ensure they have enough money to cover their reserves, they can just lend themselves money to cover this.

Generally, banking is just another way to take money from the poor and give it to the rich, and taxation is a way to give the money from the rich to the poor.

To me, banking is the core concept of capitalism. If you have money, you can use this to make more money. If you have no money, you need to sell your services to pay for privileges the rich have. We are all humans, so why does birth right give some a lifetime of benefits, and others a lifetime of curses. Ask any economist. Poor stay poor, rich stay rich.

#155 Kevin on 08.20.15 at 1:43 pm

@Blacksheep (#150)

You misunderstand your own cite. Banks cannot make loans out of thin air any more than you or I can. As I said before, they can only lend money that is already in their vault (i.e., other customers’ deposits) or that they’ve borrowed from other sources (GICs, bond issues, loans from the Central Bank).

The “money creation” aspect comes from the fact that they’ve lent you money that I’ve deposited while still telling me all my money is in the bank. In fact, much of it has been lent to you, creating money.

If I show up at the bank and demand all my money back, they take it from other depositors’ accounts. If too many people do this all at once, the bank must borrow the shortfall from the central bank. They pay a fee for this (the “overnight lending rate.”) They are required to bring things back into balance ASAP by either calling loans, slowing the issue of new loans, or issuing new debt (GICs, bonds).

Nothing in the document you linked refutes anything I just wrote.

#156 Shawn on 08.20.15 at 1:59 pm

Or, try looking at a Bank Balance Sheet Instead

#154 LOL Canada on 08.20.15 at 1:11 pm advised:

#150 If you haven’t seen money masters, then check it out.
https://www.youtube.com/watch?v=L2zxQ3IQnQ0

Basically, banks have unlimited money they can lend. They just make it up, and to ensure they have enough money to cover their reserves, they can just lend themselves money to cover this.

******************************************
LOL, indeed. Why would anyone want to look at some doomer bank bashing video that takes a grain of truth and turns it into bank bashing nonsense?

#157 WaitingForThatDay on 08.20.15 at 2:03 pm

#141….great point…and good luck getting a response from Garth. I would add, with US GDP at 2 – 3 %, any rise in interest rates will decimate the fragile economy. Yet….Garth sees it as a juggernaut. Go figure!

The Fed will make the best decision for the US economy, and is armed with the data on which to base it. Unlike us. — Garth

#158 Smoking Man on 08.20.15 at 2:04 pm

#147 Mf on 08.20.15 at 12:35 pm
“Jobs , full time employment it s for losers. Self employment, or contract work the only option. Or suck ass, for no money”

Stopped reading right there. How is anyone supposed to get a start and learn something in this world without any money in the first place? Parents perhaps, loans maybe? But for 99.99% that means working and saving first. To do that you need to get hired first. To do that you need the qualifications. You think we all wanted to do years of post secondary education? I wish I could have just googled how to be a highly paid professional but that is far far from how it works. Sucks but it’s true.

As for the guy who mentioned the phd’s willing to work for 10$ an hour, who’s going to pay them? Me? With what money?

Mf
……

I’m trying to get you to think not like a slave , it’s like your stuck in a circular reference. I can’t snap you out of it.

I was forced into retirement by the tax farms legal dept. Apparently consultants not allowed to trade, 30 day hold, who knew?.

What did I do, I dusted off an old app that I bartered for a new engine a few years ago. It’s a simplified easy to use accounting and process automation tool for auto repair shops. I’ve only been flogging it for about a week now and my sales are just shy of 20k. Pure Profit. My expenses, A bit of gas, a few pit stops at the nudy bar and lunch.

Do I need the loot, hell no, I’m I desperate to get out other house. Hell ya… I hate golf, and weather shit for boating.

My point is. Real Money is made by trading a service, a product, fx, stocks. Anything.

Anyone working to support that eats crumbs. Your a dog. Fetch dog Fetch.

So you’re smart, big ass obedience certificate, the second you trade valuable selling time to support someone else’s trades your a loser.

As for me at the tax farm, it was for pure market Intel. Free access to all the tools and people to make big risk free bets.

Go to the dollar store, buy some towels, go door to do and sell them for three times what you paid. Attach a bull shit story, the proceeds go to the local animal shelter. Or what ever it takes…

Once you get this in your blood. It’s all prosperity going forward.

But I guess that way of making a living is benneth the mind if the schooled.

#159 Nagraj on 08.20.15 at 2:05 pm

“In recent days there’s been speculation that crude could hit $20 … ”

In May and June every oil bull cited every reason under the sun why oil would resume its climb heavenward, no straw was left unclutched. Now business news is in a body fixated on a final, final $20. Well, well.

I’m old enough to think a normal savings acc’t interest rate is 4% 5% or 6%, that gasoline should be thoughtlessly affordable, that ARMs are abnormal, that house prices normally move with the inflation rate, that stock mkts do correct, that normally a stock buyback is a negative signal.
I must be out of touch.

#160 Shawn on 08.20.15 at 2:06 pm

Truth in Banking

Blacksheep at 150quoted Bank of England paper:

“Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits”

*****************************************
Absolutely true of course but remember the created deposit is owned by a bank customer and owed to that customer by the bank.

As I have explained in simultaneous creation of a loan and deposit (which yes creates money) the customer in effect funds his own loan with his newly created deposit. But he soon spends his deposit by sending that deposit to someone else’s bank account via a cheque or transfer which deposit is now owned by someone else and owed by some bank to that someone else.

#161 Mark in Guelph on 08.20.15 at 2:10 pm

Two million more families in the US have employment than in 2009. Tell them it failed. What a bunch of elitist nobs on this blog. — Garth

Garth prefers an unsustainable bubble “recovery ” where those same families and more will find their jobs evaporate after a few short years, rather than stable, secure, slow long-term growth that can be sustained.

QE 4 before any rate hike, bet on it, after all the first three rounds were so successful.

#162 Leo Trollstoy on 08.20.15 at 2:20 pm

Not sure why all the wage slaves are focused on the Sept FED.

It doesn’t matter when the FED jacks rates.

What matters is that rates are going up.

If you don’t understand this, you’re going to have a bad time.

#163 OXI in GREECE !! on 08.20.15 at 2:20 pm

#157 WaitingForThatDay on 08.20.15 at 2:03 pm
#141….great point…and good luck getting a response from Garth. I would add, with US GDP at 2 – 3 %, any rise in interest rates will decimate the fragile economy. Yet….Garth sees it as a juggernaut. Go figure!

The Fed will make the best decision for the US economy, and is armed with the data on which to base it. Unlike us. — Garth
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Yes….best…..decision…EVER !!

http://www.rollingstone.com/politics/news/secret-and-lies-of-the-bailout-20130104

#164 Leo Trollstoy on 08.20.15 at 2:24 pm

Kevin doesn’t understand banking. But that’s ok. 99.999% of people don’t either.

#165 Smoking Man on 08.20.15 at 2:28 pm

What is with everyone’s obsession with jobs.. Holy crap…..

Go work for MF now that he’s starting his door to door towel selling business..

And don’t screw around, when he says, hey dog, I want that sales report on my desk by 3 you better damn well do it, or no milk bone for you..

Now fetch!!!!!!!!

#166 Joe2.0 on 08.20.15 at 2:35 pm

Any bets as to when plunge protection intervienes?

#167 Shawn on 08.20.15 at 2:35 pm

Banking is Good or Bad?

So Blacksheep, are we in agreement as follows:

Banks together with their customer create money all day long. Customer asked for loan. It is granted and deposited. Money is defined as paper cash plus bank deposits. Voila money has been created.

At the moment a loan and deposit are simultaneously created the customer has gained money but owes a loan, the bank has a loan receivable but owes the deposit to the customer. The wealth of neither party has changed at that moment.

Banks make money not by creating a loan but by collecting interest on the loan as time passes.

The deposit money created belongs to the customers (the bank owns the offsetting loans)

The created deposits fund the loans

The deposits (money) can be instantly transferred to others which is what we call spending money.

Banking allows those without money to buy things now in return for the promise to repay the money.

Banking provides a way to store and transfer wealth.

Banking is the grease of the economy. Trade would grind to just about a halt without it.

Banking like any other business in our economy was created to fill a need.

Deposits and loans are simultaneously created from thin air and deposits owned by some people fund loans owed by others are both true statements.

Banking is a great thing and there is nothing nefarious about it.

Paper money is a tiny and disappearing aspect of the monetary system and is considered to be a liability of the central bank. As it eventually disappears from circulation it will return to the central bank and be destroyed.

Transferable bank deposits are the main form of money today, by far.

If Joe gets a loan and buys a car from you and his new deposit is transferred to your account, your deposit is now funding Joe’s loan. When you spend that money and transfer it to some other business the deposit now owned by that business is now funding joe’s loan.

Banks earn a return in a competitive marketplace.

Let me know, which, if any of these points you disagree with.

I have said before that you started out on this blog with a half way understanding of banking but I thought in the past you had demonstrated learning some other points (like deposits owned by some people fund loans owed by others). I thought you acknowledged than banking was a good and vital thing for the economy. If I am wrong that you opened your mind and learned a thing or two then I apologize for that.

Okay, with that I pledge not to comment further on banking at least for today. Let the audience judge my comments on banking. Sadly some of them will reflexively disagree but others will agree. Some will have learned something or at least been made to think. That is progress.

#168 Smoking Man on 08.20.15 at 2:43 pm

My best sale this week was amazing..

I walk into this shop in my uniform, shorts, flip flops, golf shirt. I ask the slaves, who’s the boss. They point me in the direction of this dude.

Guy around my age. Hand him my card. My three second shpeal, he’s says, his daughter looks after that stuff. She’s in the next room.

She shouts out go away, I’m to busy…

I said, your too busy cause you don’t have what’s in my bag..

She said, I do everything with my head and my hands.

I start laughing my head off, I said. I dident see the neon light at the door that said were open.

She got my joke and started laughing…

I said give me five minutes…. And you will spend alot of time at a legitimate spa…

She laughed again….

Took a G note off her 20 minutes later… And she has tool that takes a days work down to an hour.

This is what I call happy ending.

I’m good…..

#169 Shawn on 08.20.15 at 2:45 pm

#159 Nagraj on 08.20.15 at 2:05 pm said
….

I’m old enough to think a normal savings acc’t interest rate is 4% 5% or 6%, that gasoline should be thoughtlessly affordable, that ARMs are abnormal, that house prices normally move with the inflation rate, that stock mkts do correct, that normally a stock buyback is a negative signal.
I must be out of touch.

******************************************
bank deposit rates have varied greatly over the years, we all tend to anchor on the rates we first learned as teenagers. We forget the higher inflation that accompanied those higher rates.

Gasoline was NEVER thoughtlessly affordable. My recollection goes back to 20 cents per liter days. Before that 50 cents per gallon. In the mid 60’s gas was I think about 50 cents per gallon and the minimum wage was under $1.00 per hour.

A lot of people were lucky to afford one car and were not thoughtless about the cost of gas. My Mother used to put in $2.00 at a time, presumably because more than $2.00 was not so easily afforded.

Stock markets have always had unpredictable periods of big losses. Always it catches people by surprise.

Stock buybacks have generally always been generally thought of as positive but mathematically they may be good or bad.

#170 Mark in Guelph on 08.20.15 at 2:51 pm

#162 Leo – Not sure why all the wage slaves are focused on the Sept FED.

Not sure why you’re using a pejorative Leo, except to deflect from your own focus on the September Fed move when you were so sure it was happening. You a wage slave, or just wrong?

QE4 is coming before any rate hike, because at this point even you can see that this 6 year “recovery” is actually just another bubble, and the air is coming out as we speak.

#171 Shawn on 08.20.15 at 2:52 pm

Oil prices

Gasoline and oil got a lot more expensive when OPEC was formed and created a cartel to artificially boost prices.

Alberta benefited greatly from this in the 70’s.

Around 1980 the National Energy Program lowered oil and gas prices in Canada but soon after the OPEC cartel seemed to weaken possibly because the high prices spurred non-OPEC production. Oil prices were relatively subdued for much of the 80’s and 90’s.

For whatever reasons world oil got really high in the early 2000’s. Presumably the OPEC cartel was working again or their were world shortages. Alberta benefited greatly.

Problem (for Alberta) is high prices begat high production and new technologies like shale oil which begat low prices.

#172 KL on 08.20.15 at 2:54 pm

#127 Chris
“Here is something to consider. With mass immigration, Canada’s livng standards would be going down to approach those of the immigrants’ native countries. Because that is the living standards they are used to and can accept. Part of the housing cost surge can be explained by this.”

If you’ve read this blog at all, or know a little bit about economics you’ll know that the housing cost surge has to do with Canadians speculating, interest rates and a variety of other factors. What you’re saying is obviously pure xenophobia with no facts or logic supporting your case. Here in Vancouver immigrants get blamed for rising house costs cause they have too much money, now you are trying to blame them for rising house costs because they don’t have enough? That’s crazy.

#173 Lillooet, BC on 08.20.15 at 2:55 pm

Mark in Guelph on 08.20.15 at 2:10 pm
Two million more families in the US have employment than in 2009. Tell them it failed. What a bunch of elitist nobs on this blog. — Garth

Garth prefers an unsustainable bubble “recovery ” where those same families and more will find their jobs evaporate after a few short years, rather than stable, secure, slow long-term growth that can be sustained.

QE 4 before any rate hike, bet on it, after all the first three rounds were so successful.

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

You are beyond help. Sigh!
You should thank Garth for not deleting your comments.

#174 MF on 08.20.15 at 3:07 pm

#161 Mark in Guelph on 08.20.15 at 2:10 pm

That reminds me of an article I read on Bloomberg a few days ago. The author called the current recovery “The Rodney Dangerfield Recovery” because it “don’t get no respect” lol

The article basically said this recovery is slower and more gradual with less inflation than previous recoveries and that is making people worry. It was an optimistic article.

#162 Leo Trollstoy on 08.20.15 at 2:20 pm

I concur. Be prepared or be left behind.

MF

#175 TRT on 08.20.15 at 3:12 pm

@Joe2.0

The PPT is in action!

#176 TRT on 08.20.15 at 3:14 pm

@Leotrollstoy

Rates will not go up significantly. Maybe once or maximum twice. Take a look at the massive move in the USD-EUR.

Wow.

#177 TRT on 08.20.15 at 3:17 pm

Garth, a wise man once told me to get out when the US Dollar index and US indices BOTH go down by more than 1% on the SAME day.

That day is here.

Doomsday?

#178 Saskatchewanite on 08.20.15 at 3:18 pm

#52 zoronqueen
Cheryl,

I recommend the book Millionaire Teacher by Andrew Hallam…I’m 38 and just starting to learn about money…

Garth keep up the good work…teaching Gen XY financial literacy
*********************************************

– 2 Thumbs Up for MILLIONAIRE TEACHER!
– Good job empowering yourself, ZoronQueen!
– Thanks for the case studies, Garth!
– Nice discussion by blog dawgs re: portfolio allocation & ticker picks.

#179 Bob Santarossa on 08.20.15 at 3:22 pm

Garth: Economists are bracing for crappy labour stats over the next couple of months.

Bob: No need to wait, the stats are here now:

EI in June 2015 up 4% vs. June 2014 (up 20,300 people).

May 2015 up 3% vs. May 2014 (up 15,400 people).

Funny how the May and June EI recipients jump of 35,700 almost equals the 41,000 “self-employed” jobs increase of July?

YVR and 416 real estate brace yourselves for a job loss recession within a few more months.

Cheryl:

Sell condo NOW, rent and invest as Garth and many in this blog recommend.

#180 Steerage Bilge on 08.20.15 at 3:28 pm

#168 Smoking Man on 08.20.15 at 2:43 pm

My best sale this week was amazing..

I walk into this shop in my uniform, shorts, flip flops, golf shirt. I ask the slaves, who’s the boss. They point me in the direction of this dude.

Guy around my age. Hand him my card. My three second shpeal, he’s says, his daughter looks after that stuff. She’s in the next room.

She shouts out go away, I’m to busy…

I said, your too busy cause you don’t have what’s in my bag..

She said, I do everything with my head and my hands.

I start laughing my head off, I said. I dident see the neon light at the door that said were open.

She got my joke and started laughing…

I said give me five minutes…. And you will spend alot of time at a legitimate spa…

She laughed again….

Took a G note off her 20 minutes later… And she has tool that takes a days work down to an hour.

This is what I call happy ending.

I’m good…..
———————-
Daughter was probably Cheryl who has to work for pops after he pretty much bankrupted her.. Does the software include a trojan part that just stole all their company records?

#181 WaitingForThatDay on 08.20.15 at 3:31 pm

Leo/MF….rates haven’t risen in 9 years. They can’t go lower, so yes, they may rise. Maybe in Septenber, but I doubt it. Regardless, the reality is we have GDP at 2 – 3%, US debt at $19 Trillion and inflation at 2%. How could any reasonable person expect or suggest that rates will continually rise for the next 3 – 5 years? Garth will one day be right about interest rates rising, but I would suggest that it will not be until we have a new wave of innovation which nobody can predict when that will happen. The job growth that Garth keeps referring to is in the service industry where it is mostly minimum wage, and there is still a high rate of non-participation.

#182 Steerage Bilge on 08.20.15 at 3:37 pm

#167 Shawn on 08.20.15 at 2:35 pm

Okay, with that I pledge not to comment further on banking at least for today. Let the audience judge my comments on banking. Sadly some of them will reflexively disagree but others will agree. Some will have learned something or at least been made to think. That is progress.
—————-
Where’s Mark when ya need him.

#183 Henry Rearden on 08.20.15 at 3:38 pm

Interesting video about why homes cost so much – https://www.youtube.com/watch?v=dcbjWGj3jBk

#184 PF on 08.20.15 at 3:46 pm

>>Sell the stock, warehouse the capital loss to be used on a future tax return, take the money and invest it within your TFSA in a two or three good ETFs – maybe picking up preferreds at today’s fetching price, large-cap US stocks and a little Canadian, also getting too cheap to resist.<<

She should hold the etfs outside tfsa until she's used up accumulated tax free capital gains. It will also let her take advantage of lower dividend tax rates, as well as any potential capital losses, which seem to be hitting all over the equity space right now.

#185 Mark in Guelph on 08.20.15 at 3:50 pm

#174 MF

Seven years of 0% interest rates and trillions of QE, unprecedented in US history and we have the lowest labuor force participation rate in 40 years. Not boomers retiring, they’re in the labour force in greater numbers than before. Why is this?

This “recovery” is already turning over and all you can do is blindly trust the cheerleaders at Bloomberg and CNBC. Do yourself a favour, search for all the same rah rah type articles from 2006 and 2007 and see just how clueless they, along with the Fed, were then.

Trust the Fed and the media at your peril, but there is no rate hike coming, and a resumption of QE begins before long.

#186 TheLaughingCON on 08.20.15 at 3:54 pm

Re #168 SHAWN

“Gasoline was NEVER thoughtlessly affordable. My recollection goes back to 20 cents per liter days. Before that 50 cents per gallon. In the mid 60’s gas was I think about 50 cents per gallon and the minimum wage was under $1.00 per hour.
A lot of people were lucky to afford one car and were not thoughtless about the cost of gas. My Mother used to put in $2.00 at a time, presumably because more than $2.00 was not so easily afforded.”

Yes, Shawn it was, but do you know what else was/were?

That minimum wage of $1 was paid in one “silver” dollar and today it is equivalent to more than C$12 which I suspect is higher than the minimum wage now everywhere in Canada (please I do not have time to verify the min wage laws in Canada right now)

These $2 worth of gas at a time that your mother was forced to put in is also the equivalent of C$25 today – and I believe there are people today that fill their cars with less gas…

#187 Retired Boomer - WI on 08.20.15 at 4:05 pm

152# SNOWBOID

Sorry to hear your motor started to ‘knock.’ Glad you’re still here among the desperate.

Yeah, you never know when that motor, or rubber band snaps, but it will for us all at least once!

Sometimes you get a bit more time via the 2nd chance.
Don’t screw that 2nd chance up – live each like it’s your last day, one day you will be right!

Cheers

#188 Texas T on 08.20.15 at 4:10 pm

Garth…in order to ‘warehouse’ a capital loss would mean that ‘Cheryl’ would have to buy more stocks to make a capital gain against which to write off the loss in a future tax year.

That ‘capital gain’ ain’t looking so much of a guarantee for the novice ‘advestor’ as values on everything ‘except the very best stocks’ plummet in value.

http://www.bloomberg.com/news/articles/2015-08-20/credit-traders-gird-for-the-worst-as-fed-loses-its-grip-on-debt

Bonds and balance are out the window…every balanced portfolio is in the red and will stay that way for the foreseeable future. In fact …giving out advisories to ‘sell sell sell’….is exactly what will cause the next puking wave of panic selling….causing the balanced portfolio’s to plummet even further than they already.

Right now….if you’re not in cash and the very best dividend paying bluest blue chips…you’re Texas Toast friend. The market will stay irrational a lot longer than a majority of the retail minions can stay invested. Tax loss season will drive this banshee over a cliff…..right into my cashed up waiting arms……ya’ll.

This ‘Attack on Oil’ by Obama and his sycophants has set up a generational opportunity that will enrich the wicked and dumbfound the already poor. Last one in the pool is a rotten egg!!

(a) A capital loss can be carried forward indefinitely. (b) A properly balanced portfolio is still positive on the year – not that it matters to wise investors. — Garth

#189 pinstripe on 08.20.15 at 4:11 pm

another example of a culture created by harpo.

http://www.edmontonjournal.com/news/edmonton/Edmonton+Peter+Goldring+spied+campaign+volunteers/11304889/story.html

#190 Blacksheep on 08.20.15 at 4:19 pm

Shawn…I’m struggling to accept, at this late date after literally dozens of conversations on this topic and multiple admissions by your person, you still claim the following to be true:

“I thought in the past you had demonstrated learning some other points (like deposits owned by some people fund loans owed by others).” “If I am wrong that you opened your mind and learned a thing or two then I apologize for that.”

One of us has learned and grown, while the other, has stuck to archaic inaccurate falsehoods, from the past.

See if you remember this:

Blacksheep # 237, on 01.23.15 at 2:43 pm

Shawn # 214,

“Bashing fractional reserve banking which has been part of the incredible explosion of prosperity and living standards for hundreds of years strikes me as strange.”
————————————————-
When Critical thinkers figure out what’s really going on, it is a natural progression to initially, bash commercial bank money creation, because they (thinkers) become aware they have been systematically deceived, their entire adult life.

You, just today seem to have personally reached the point at which your denial that commercial bank money creation actually exists, has ended and has shifted to a: “It’s beneficial for society” platform.

And I completely agree.

I wrote this up to work out this ‘commercial bank money creation’, for my self.
This helped me reason out and accept how the banks function:
———————————————————–
Bob a buyer, wants to purchase a house from Joe, a seller.

Bob offers Joe, his personal IOU, as payment for Joe’s home to be repaid over the next 20 years.

If Joe, was Bob’s very wealthy brother in law, this deal might just fly. But since the Bob, is a Stanger to Joe, Joe is simply not comfortable accepting his IOU. Bob needs a commercial bank to accept his IOU, (based on Bob’s good credit) in order to purchase Joe’s house.

Bob has a solid credit history so the bank is comfortable giving him credit over the required 20 year period. That’s what they do. Bob then gives a mortgage to the bank (signs document) and the bank “credits” his account for the required sum to buy Joe’s house.

No cash was created, only credit.
The newly created loan, is an Asset to the bank.
The newly created deposit, is a Liability to the bank
The newly created loan, is a Liability to Bob
The newly created deposit, is an Asset to Bob.

All the commercail bank has done is taken Bob’s IOU and put a “Legal tender $ stamp” on it.”
—————————————-
Do you need more?

#191 Londoner on 08.20.15 at 4:27 pm

#136 Mf

Hmmm… I’m pretty sure it was you the other day that was chirping about how rates have only one way to go, blah, blah, blah. And now you’re saying that maybe buying a bunch of rate reset prefs was a mistake? Something doesn’t add up.

#192 Rexx Rock on 08.20.15 at 4:42 pm

Zirp,and qe ie printing money can’t keep up the stock market up forever.Just short the weakest stocks.The USA needs to do qe 4 .China,Britain,EU,USA and Japan need to do the right thing and print way more money.Its the only thing to do.

#193 SWL1976 on 08.20.15 at 5:06 pm

#190 Blacksheep

Denial is a powerful emotion and a failsafe mechanism for many. People find comfort in their views of how they think the world really works.

Most people don’t not want to admit that indeed they have been played the fool and will simply look the other way.

I would rather know than not and plan accordingly as soon there will come a day when the ugly truth is simply unaviodable.

When that day comes, no one knows, but a systematic or sudden collapse of our debt based economy is mathematically unavoidable no matter which way you slice it.

#194 Canadian on 08.20.15 at 5:06 pm

#186 TheLaughingCON on 08.20.15 at 3:54 pm

Actually if you check out these figures the price of oil has been at least 2 or 3 times the inflation adjusted cost preshock for a long, long time now.

http://inflationdata.com/inflation/inflation_rate/historical_oil_prices_table.asp

#195 lee on 08.20.15 at 5:15 pm

If a properly balanced portfolio is up for the year it is only up a percent or two.

And that’s a bad thing? — Garth

#196 For those about to flop... on 08.20.15 at 5:36 pm

(a) A capital loss can be carried forward indefinitely. (b) A properly balanced portfolio is still positive on the year – not that it matters to wise investors. — Garth

——————————————

I’ll be the first to admit that I am an investment hack ,but even my balanced portfolio is up this year so I’m not too sure what goodies the so called pro,s on this blog have got in their baskets.
Here’s my numbers 65/ 35 split
40% U.S.
40% int.
20 % beaver.
Sounds like some of you guys are to smart for your own good .

#197 MF on 08.20.15 at 5:43 pm

#191 Londoner on 08.20.15 at 4:27 pm

What do you mean doesn’t add up? I don’t think Canadian rates are going anywhere for a long time. Also I’m new to investing so watching my CPD go down so much is causing a new sense of panic I have not felt before.

I do think rates are going up eventually here. Sooner in the US though. In any case I’d rather be prepared.

MF

#198 MF on 08.20.15 at 5:46 pm

#185 Mark in Guelph on 08.20.15 at 3:50 pm

Lol come one the Rodney Dangerfield thing was funny no? Anyhow, I don’t trust anyone. That’s why it’s prudent to stay prepared for what I think is going to happen. Like you said, nobody knows for sure if rates will rise (not me, not you either).

MF

#199 kommykim on 08.20.15 at 5:58 pm

RE:#148 bill on 08.20.15 at 12:41 pm
#95 kommykim on 08.19.15 at 11:01 pm
”Christy Clark changed those rules and now virtually all we do is export raw logs, ”
It was an NDP government that enabled this fiasco.that and Nafta.

The BC Liberals removed the local milling requirements through the Forestry Revitalization Act in 2003, thus allowing tenured logging companies to shut down their mills. What did the NDP do?

#200 Damjan on 08.20.15 at 6:09 pm

If a properly balanced portfolio is up for the year it is only up a percent or two.

And that’s a bad thing? — Garth

Captain obvious. How much RE went up this year? More than 2% net cost.

It’s not a competition and, as I have said so many times, everybody needs balance. Own a house if you want, just don’t have a one-asset strategy or excessive debt. — Garth

#201 eddy on 08.20.15 at 6:12 pm

The conservative party of canada sent me a survey affirming their belief that canada a a very dangerous place because of Islamists. Only ‘you know who can’ keep us safe. The were confusing me with someone with the same name who gave them five bucks in 2005..ha ha ha

#202 cramar on 08.20.15 at 6:40 pm

Since gas prices seem to be the topic of the day, just returned from a trip to London, ON. Gas selling there for 0.997. First time I’ve seen it under a Loonie in S-W Ontario in a while.

As for those who claim food is much cheaper in the U.S., we have never found it so. Just 2 weeks ago we were camping in Michigan. Factoring in exchange rate, beer much cheaper. Wine much cheaper. Gas much cheaper. State Parks much cheaper than Prov. Parks. However when we went shopping for food, all fresh veggies and fruits were cheaper back home. The most interesting item was when I picked up a package of dark heritage tomatoes and said it was just like the ones we recently bought back home. In fact it was! They were greenhouse grown in Kingsville, ON., and much more more expensive in the U.S.

I’m glad some local growers are profiting from the low Loonie. Just noticed today, construction for massive greenhouse additions in this area is underway.

#203 and yet again on 08.20.15 at 7:25 pm

Living in Ireland in the early 2000’s was eye opening. The economy was roaring, the Celtic Tiger was in full flight and there was house horniness galore. The EU was pouring money into the country to increase the punt and establish the country as a leader in technology investment. The locals were upset that the Germans were buying up prime Irish establishments and were fearful that they could not buy a house due to this unwanted foreign investment which led to bidding wars and wild house auctions. After 2008 the locals got their wish and their economy crashed along with the housing market. Flash forward to today where austerity measures are in place and you are able to pick up a house at hugely deflated prices. In Canada, our economy should be roaring after two consecutive interest rate cuts but it is sputtering. Locals are upset with HAM in Vancouver and Toronto and want the government to slow this investment down. Our roaring industry has put it’s head between it’s tail and has ran off. I left Ireland before they imploded because of these obvious signs. I am thinking of moving again.

#204 pat on 08.20.15 at 7:58 pm

http://www.armstrongeconomics.com/wp-content/uploads/2012/08/realestate-cycle.jpg

This graph tells it all !

#205 Mr H on 08.21.15 at 1:36 pm

6_charts_show_stephen_harper_has_the_worst_economic_record_of_any_prime_minister_since_world_war_ii

http://www.pressprogress.ca/6_charts_show_stephen_harper_has_the_worst_economic_record_of_any_prime_minister_since_world_war_ii