Get a grip

GRIP

Is the world deflating? If so, what’s it mean for your family? You assets, your house?

The headlines at the end of the week were suggestive. Stock markets shedding two or three per cent in a day. Oil below forty bucks for the first time since 2009. The loonie in the 75-cent range. Weak growth in China. Apple, Twitter and other glam companies whacked. The first meaningful plop since 2011 getting a lot of attention.

Those who invest with their pants were selling. The confident ones were buying. Volatility jumped, and is almost 90% higher than a few weeks ago. That simply means trading volumes and prices have spiked, and adrenalin along with it. After stock prices hovered in a tight zone around record highs for the longest period of time in 90 years, we saw a fat wave of profit-taking.

But, to keep things in perspective, the S&P is down only 7% from the high it hit in May. In a balanced portfolio, bonds were racing ahead while equities were falling. Most investors who have any sense will snooze their way through this. Doomers who see every dip as the End of Days won’t. Sheesh. Get a grip.

Here’s a five-year chart of the major US market. So just imagine if you’d mistaken the big dump in 2011 (the US debt ceiling crisis) for something other than a useful correction.

CHART

Is the bull market over?

Hardly. The US expansion continues right on schedule. European markets have been on steroids, thanks to central bank stimulus. Corporate profits are robust and coming in at unanticipated levels. In the last 65 months, private employers in the States have added 13,000,000 jobs, for an average of more than 200,000 a month. Cheap oil is clobbering Canada, but it’s an unprecedented boon to energy-consuming nations. And every day the world gets more technologically advanced, more productive, faster, better connected and deeply entrepreneurial.

It’s only human nature that’s primitive. People want stuff that goes up. They fear things that go down. Investors lose sight of the fact we need corrections like this to keep dangerous asset bubbles from forming. They’re normal and beneficial. But with each decline people fret things are going to zero, just as they believe every advance will be permanent. There’s but one constant. They’re always wrong.

In the past four years the stock market has corrected by 5% or more seven times. On each occasion there was pissing and moaning in the steerage section of this blog. And every time this marked an attractive point to enter the market, which continued to advance. The pullback now is exactly in line with the average of all the others. So, draw your own conclusions. I’m not going to spoon fed it.

Well, we could still have deflation here even as the US economy motors on and markets recover. That’s because Canada is commodity-dependent, with a small population, negative economic growth and epic levels of personal and household debt. This may be masked by the consumer price index, which is rising – up 2.4% thanks to the crashed dollar and higher import costs. So it’s possible to have big assets like houses deflating in value (as they did in the US) while people are paying more for food and other consumer goods. Not a happy combo in a country with 70% home ownership and $1.2 trillion in mortgage debt.

Scotiabank economists this week dissed the notion of Canadian deflation entirely, saying it’s just not in the cards no matter where oil prices go. If anything, we might get disinflation. But deflation itself is probably as remote as hyperinflation, thanks to central banks which are coordinating global monetary policy as never before.

Still, if you think the lights are going out, there are concrete actions to take. Deflation is a far worse destroyer of wealth than inflation, harder to arrest and what policymakers fear the most.

The first defence is to pay off debt. Inflation makes a loan easier to handle since incomes rise along with the value of the thing you borrowed to buy. Deflation means wages decline and so do assets. So your salary and your house might erode together, while the mortgage remains constant. Now do you understand why people walked away from their houses in the States nine years ago, as during the 1930s?

In deflation, cash is a sweet asset since it rises in value and can buy more. Bonds are even sweeter since they preserve wealth and also pay you interest. In deflationary times, corporate profits plunge along with sales, and so do jobs. Thus, no matter how low mortgage rates fall, you can kiss the real estate market goodnight. If you think any of this is in store, you’d be a wise person to sell your house for an inflated price now. Oh yeah, and suck up at work. A lot.

But, don’t sweat it. This is not the prelude to a deflating world. Your investments will not disappear. Nothing has changed to derail the US, even as Canada continues to limp along.

If you possess the kind of portfolio I’ve continuously suggested, you’ll recover and be happy. If you’ve adhered to my Rule of 90, then your real estate is also in balance. If you’re sweaty cold with fear and slobbering in front of BNN, I have no pity.

248 comments ↓

#1 Boss Pittens on 08.21.15 at 6:12 pm

It appears that we are headed back into the Dark Ages. At this rate, we will all be struggling just to survive, like the wanderers on The Walking Dead, by Christmas. You may think I’m joking, but I’m not. The evidence is all around us. Some are saying these are signs of the End Times, and it’s hard not to rationally agree with that point-of-view.

So my question to Garth is this: in the coming Dark Ages, which gun is best for home protection – the Glock 17, the SIG Sauer P226 or the Beretta 92. Things are going to get scary, and I need to take care of my family.

Just stick your head further up your butt. You’ll be safe. — Garth

#2 Nick on 08.21.15 at 6:12 pm

My humble advice: I suggest you panic.

#3 TurnerNation on 08.21.15 at 6:13 pm

Monday: begin the beguine!

Dating myself with that reference (not really).

#4 Gentleman Prefers Bonds on 08.21.15 at 6:14 pm

I’m in a quandary of who to vote for.
1. Liberals: tax and spend
2. NDP: tax & spend
3. Cons: I don’t want to vote for the thieves and liars like Ol’Duffy and the bitch Wallin. Or the drunken wife beater Brazou.

Note: Nobody can accuse me of not ‘paying my fair share’ of taxes. Last year I paid $36,421 in income tax. This is more than I even spent on buying my car!

#5 Ash Lee Mad i Son on 08.21.15 at 6:21 pm

Run, this is the beginning of a 10% correction, we have recession coupled with inflation.
Foreign speculators are disappearing, helicopters are no longer flying over 1 million mansions ready to be bulldozed. Or maybe they found Google Maps!
My dog will eat only human food from now on, or is it the reverse? Buy gold, will help with digestion!

#6 Pat on 08.21.15 at 6:22 pm

I love my country Canada that is why i despise the current government

#7 Canadian on 08.21.15 at 6:29 pm

Choice overload. I can’t stop window shopping on holdings. Growth, fixed income, REITs, High Yield Dividends. My head is spinning!!!!

#8 JSS on 08.21.15 at 6:33 pm

Today I bought Canadian Utilities (CU).

On sale now less than $35 – 52 wk low.
I’ve been waiting for nearly a year.

42 years of dividend increases.

Planning to hold for the long run.

#9 BC Mike on 08.21.15 at 6:35 pm

Now is certainly not the time to buy. The correction in the US market has just began. As mentioned the big leading stocks in the US finally got wacked yesterday and today.

You will hear people on wall street/bay calling for the bottoms in the market as well “stocks are cheap buy now”. This is garbage. There has been a decent correction since 2009 we are way overdue.

#10 supply demand on 08.21.15 at 6:36 pm

Price of hotties is expected to drop.

#11 Danger Dan on 08.21.15 at 6:37 pm

This is what they call a fire sale, yeah?

#12 Shawn on 08.21.15 at 6:38 pm

My FINAL Response

BlackSheep quoted me and accused me of a lie as follows:

Shawn # 151, on 08.19.15 at 2:02 pm

“We put money in a bank and our neighbor borrows it”
————————————————
Please carefully read the following quote from our favourite BoE pdf and find the section that supports your comment (blatant lie) from: 08.19.15 at 2:02 pm

***************************************
I am happy to respond to this. I did not at first notice this particular accusation in the lengthy post yesterday and I focused on some material on the end.

The Bank of England quotes do not go on to talk about how deposits once created by a bank move around.

Okay, in crayon, Joe gets a loan and the bank creates a deposit by debiting a loan due and crediting Joe’s deposit account. Voila, money creation. Yes, we agree on that.

The new loan and the new deposit balance each other. The new loan is funded by the new deposit.

Joe uses the money (the deposit) to buy a car from Ed who no longer needs the car.

Now if Ed takes payment in cash the banking loan is no longer balanced by a deposit.

Ed deposits the cash and the system is back in balance.

The deposit is Eds. If Ed removes the deposit as cash then the bank needs some new deposit (someone’s savings) to balance the loan. It is fair to say that Ed’s saving is now funding Joe’s loan. That is not a lie. It is a mathematical observation form looking at any bank balance sheet.

Check Table 4 of the Wells Fargo annual report at page 37 where they list “funding sources” which include mostly deposits. So Wells Fargo considers its customer’s deposits (its customer’s savings) to be funding its loans. And they do so in spite of how deposits are originally created via loans. Is Wells Fargo also telling a lie?

Here is a quote from the Bank of England Paper:

A bank’s business model relies on
receiving a higher interest rate on the loans (or other assets) than the rate it pays out on its deposits (or other liabilities).

What is so hard about reading a Bank’s balance sheet and seeing that loans are balanced by deposits (someone else’s savings)?

And I think Blacksheep has said that banking is evil in some way. He treats the Bank of England paper like some expose that proves that banks don’t need to pay for deposits. It explicitly says they do usually pay interest on deposits. Deposits are owned by someone. That someone refers to the deposit as their savings.

If Blacksheep actually has a point about banking other than falsely calling me a liar, I don’t know what it is.

Well and truly this my last post on banking for the rest of this year. I trust the discussion has been entertaining and may have even educated some people.

I will respond no further to this matter.

#13 For those about to flop... on 08.21.15 at 6:38 pm

Don’t you guys remember the song you were taught in grade 1.
“Catch a falling knife and put it your pocket and save it for a rainy day”

#14 Harbour on 08.21.15 at 6:39 pm

Oil hits longest losing streak since 1986 as markets fall in worst bloodbath of the year

http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com%2F%2Finvesting%2Fglobal-investor%2Foil-nears-longest-losing-streak-in-29-years-as-markets-tumble-in-worst-week-of-year

#15 Safety Seeking Persona on 08.21.15 at 6:39 pm

Re #1 Boss Pittens and Garth reply

Hi Garth,

Not nitpicking, but have you been up there (up in the Boss Pittens b***) to personally guarantee it is safe.

We value your opinions and as I am desperately seeking safety your advice will be greatly appreciated by me and perhaps by the other wage slaves who simply do not have the time to visit all places in the word.

#16 Charity on 08.21.15 at 6:39 pm

Perhaps it is generational, according to this study
http://www.pewtrusts.org/~/media/Assets/2015/07/Reach-of-Debt-Report_ARTFINAL.pdf?la=en
Millenials in the states are the most risk aversive of the generations when it comes to mortgage and credit card debt, hence what happened a few years back for the states?
Whereas, in Canada not quite the same result thus no deflation here, but all net worth reduced by 39% in the states in the great recession, so 40% chop here Garth?
A house that doubles in YYZ from 500k to 1 mil, now has a conventional mortgage of 800K, gets hit with a 40% chop to 600k.
Well that means they are 200k in the hole ouch!!!

#17 Harbour on 08.21.15 at 6:40 pm

Drenched in red: Wall Street plunges in worst weekly retreat since 2011

http://finance.yahoo.com/news/drenched-in-red–wall-street-plunges-in-worst-weekly-retreat-since-2011-201140355.html

#18 seeing it from both sides on 08.21.15 at 6:43 pm

Between a rock and a hard place. Buy? Rent?

‘West End tenants cry foul over high rent hikes
Fixed-term leases give Vancouver landlords the option of unlimited rent increases’

….But as the end of his first year approached, the building’s owner Gordon Nelson Inc. told him that the rent for his one-bedroom suite would jump from $1,550 to $1,850 a month if he wanted to stay — an increase of close to 20 per cent………

Ouch!

Read more: http://www.vancouversun.com/business/West+tenants+foul+over+high+rent+hikes/11305576/story.html#ixzz3jUZvOOJB

#19 Ben Bur on 08.21.15 at 6:46 pm

Deflating advice? A few weeks ago it wasn’t a possibility.

#20 Republic_of_Western_Canada on 08.21.15 at 6:47 pm

DELETED (anti-Semetic)

#21 PJ on 08.21.15 at 6:47 pm

No worries. The government will save the day with more trillions pumped into the stock market, and that we all will have to pay back on the national debt. What an awesome concept it’s been since the lights went out in 2008, right Garth?

#22 Smoking Man on 08.21.15 at 6:47 pm

Thats it, ill never work in capital markets again…
Im losing it…i posted this on linkedin on that arab looking guy who use to work at pimco..

Damn, its 5:34 and I’ve nearly killed a 26 onz of Jack…liquid courage I guess..

There goes my return to a capital markets gig..

Retirement is boring as shit. Might as well give writing a shot.

You want the Facts Jack, yes I’m talking to the empty bottle. Only bastard in the room that listens to me.

The Herd is broke, they have been for a while. Seams the three leg stool of the economy , consumption, labour, investment is out of balance.

Labour being the biggest driver of economic growth via consumption, ran out of money in 2009. And that was with both sets of parents working. Wasn’t always that way, but lets squize every last penny out of our property.

The rocket scientists at central banks had a choice. Up the peasants salaries a bit, wait a bit, then they will start buying again.

Once the Globe trotting Lear jet alpha investors got wind of this… They lost their shit..make money free , drop the rates…Don’t you touch our bottom line..No fking way the guy across the street will have a better quarter than me.

So the central banks dropped rates…it sparked a bit of growth.. But did not address the stool about to tip over.

The herd took the bait, loaded up on helocks run up the tab, now in big time debt with shit salaries they cant spend..they want too. But can’t.

Now we have (Yellen) the sheep in wolf cloathing saying to the lear jet set, everything is fine, we are spiking in Sept…obviously the economy’s healthy. We have inflated housing, stocks, bonds, we are all rich now…mission accomplished.

Timber!!!!!!!!!!!!!! Is all i got to say..

Dr xxx xxxxxxc
Phd in Herdonomics.

#23 long time reader on 08.21.15 at 6:48 pm

Hi Garth, I am having a hard time recognizing where we are in the business cycle. I am overweight in Canadian dividend stocks and the last couple of days am outperforming the indexes. I am well within the rule of 90 and have a 7 digit portfolio so I do hold individual stocks. I am hesitant to re balance to include more bonds and international exposure. Am I a moron?

#24 Republic_of_Western_Canada on 08.21.15 at 6:49 pm

#1 Boss Pittens on 08.21.15 at 6:12 pm

If you’re dumb enough to get stuck with some nuclear family, you don’t deserve any firearms.

#25 gut check on 08.21.15 at 6:50 pm

#3 TurnerNation on 08.21.15 at 6:13 pm
Monday: begin the beguine!

Dating myself with that reference (not really).

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

you’re safe to trust your first instinct on that one I think. :)

#26 Trojan House on 08.21.15 at 6:50 pm

History is doomed to be repeated because humans never learn from our mistakes.

#27 sharing scare on 08.21.15 at 6:53 pm

Chicago Board of Exchange’s Volatility Index — the so-called “fear index” — surged more than 25% today and logged its biggest weekly jump ever.

So you are part of the mass hysteria. Like the cold water bucket challenge.

The real worry though, is melancholy.

Look at the US “formerly The Leader of The Free World and Democracy”:

Both parties produced dynasty candidates and became so weak and ridiculous like the aristocrats in France, around those let-them-eat-cake-time. So that a fringe candidate maps the floor with them.

Look at Canada: fringe NDP is on the surge.

In the past hundred years when melancholy due to impotence of the traditional, established powers opened up the floor for fringe, we always ended up losing our shirt, crying and happy to survive.

#28 Enthalpy on 08.21.15 at 6:53 pm

We are def due for a correction.
Long term ;shouldn’t matter much for most. But mid to short term if you can hedge your bets. Good idea.

#29 BobC on 08.21.15 at 6:58 pm

I’m hanging in there. I’ve been listening to Garth for at least 4 years. I KNEW he was wrong about gold. I knew in my heart it was going to $2500. I gave up and admitted Garth is right and sold at $1500-1550. It will drop again.
Now he says don’t panic. Until I can say he’s wrong I’ll be a follower. I’m rebalancing by adding another $30k in the next few days. Mr. Turner, should I wait until the correction hits a full 10% or more? And again, Thank you for what you do for everybody.

#30 Smiley Fran on 08.21.15 at 6:59 pm

In the short term, markets like people are not always rational. It is possible that we are seeing the beginning of a 35-40% decline. Sometimes, profit-taking begets selling and selling begets selling

#31 JSS on 08.21.15 at 7:00 pm

Rather than crying, you should take this as an ideal opportunity to invest in both US and Canadian equities.

E-V-E-R-Y-T-H-I-N-G is on sale!

In six months time, all will be forgotten…except the fact that a buying opportunity was missed.

#32 Jon on 08.21.15 at 7:00 pm

AAPL naybe a “glam stock” as you put it, but at these levels it’s also a “value stock”.

Still growing like gangbusters and is trading at a 13 P/E (~10 ex-cash and debt)

#33 crowdedelevatorfartz on 08.21.15 at 7:05 pm

Every year the stock market lays an egg in late Sept.- early Oct. No surprise.
Late August IS a tad unusual.
Perhaps its all the smoke from the west coast fires clogging the brains of the eastern traders.
I aint too worried.
Soon grasshopper, it will be time to buy.

#34 Vanecdotal on 08.21.15 at 7:07 pm

Lolz GT, Top 5 Best Blog Pix Ever.

Not to get all political, but this just in, & may actually get them a majority (not sure how I feel about that, but here we are): http://globalnews.ca/news/2178277/mulcair-promises-to-decriminalize-marijuana-the-minute-we-form-government/

A large majority of Canadians see the common sense in this based on polling, even if they don’t use it personally. Reduces / eliminates ex$pen$ive court & policing resources currently allocated to this, to focus on more important issues, and creates a MASSIVE new revenue stream (via tax & regulation). Renewable, can be grown in an environmentally conscious manner, and job creator. I had been wondering for some time if this may be a funding leg for subsidized daycare (& other carrots). Guess so. SS. Neandercon sinking fast under obsolete, inflexible ideology.

#35 Yitzhak Rabin on 08.21.15 at 7:10 pm

You mentioned nothing about QE being the response to each market downturn in the past. The fumes of the last round have been enough to hold up the market so far in 2015 until now.

Now the Fed is boxed in. The one thing they can’t do is raise rates, but even worse they can’t admit that fact. Stocks will crater until the next round of QE. Even when they announce the “rate hike” is postponed to December, then 2016, then 2017 it will not be enough to lift the averages until QE4 is announced.

The bubble of central bank credibility and omnipotence is starting to crack.

Not only does the US look bad, but the rest of the world is in carnage right now economically. South America and southeast Asia look really bad.

If there is one rate hike it will be one and done, quickly clawed back and followed by more QE.

Gold is re-emerging from the shadows, and very strong against all currencies that aren’t the USD. The con game is being laid bare, central banks are losing control.

#36 Freedom First on 08.21.15 at 7:11 pm

Yes. Deflation can be crippling. Same as stagflation, inflation, and hyper-inflation. Good news is, you can shield yourself from all of them. Balance, liquidity, and diversity. Works in every area of my life, as #1 is, and always will be, my Freedom First. After all, I am only here for a short time, and it’s my life.

#37 Rantanplan007 on 08.21.15 at 7:12 pm

Sooo… We all have an opinion, mine is… The markets are likely to drop as long as the FED doesn’t resume QE. A few weeks ago, I clearly remember Gartho, you predicted a “100% chance of a rate hike in September”. Unlikely.

As you just said, central banks act together. So until the FED and the BoC and the ECB intervene even further, markets will continue in the same direction. Not yet a good time for bargain hunting, especially in the energy sector (however there there could be good opportunities in the US refining sector with Valero, Phillips66 and Marathon).

Let’s patiently wait for another intervention by the FED now.

#38 JimmyJoe on 08.21.15 at 7:17 pm

Gotta admire your optimism boss…You’re gonna go through a lot of lipstick the next few months…

Never been in gold but do you figure there’s a time one should pick up a few ounces……just for the halibut?

#39 Willy2 on 08.21.15 at 7:19 pm

One also has to look at median Household income in the US. That kept rising from – at least – 1965 up to the year 2000. No. not in a straight line but because with every recession it fell again but the overall trend was/remained up(-wards). Each next peak (in median income) was higher than the previous peak.

That trend changed between 2000 & 2007. After 2000 it fell (recession) and rose again from say 2004/2005 onwards but the peak of 2007 was actually slightly lower (for the 1st time (since 1965) and kept falling after 2007. And I see no sign of that median Household income rising in the US.

Chart:
https://www.dropbox.com/s/5yzr290qaob9a4n/9a%20Real-Median-Household-Income-Chart.jpg?dl=0

And what happened to median Household income in Canada since the year 2000 ?

#40 LH on 08.21.15 at 7:19 pm

This is why I like private equity. Or real family owned, family run businesses. Or even rental real estate. No Mr. Market to tell me what he thinks about my business every nanosecond.

There is a place for public equities, but any allocation greater than 50% is tough for those who can’t ignore BNN / CNBC / Bloomberg etc.

Me: simple. I am 31 and investing for the loong term. I don’t check bloomberg anywhere outside of work hours. No use stressing about the little ups and downs. Better controlling what we can control. Namely asset allocation, and costs.

#41 Nora Lenderby on 08.21.15 at 7:22 pm

#11 Shawn on 08.21.15 at 6:38 pm
…and BlackSheep

Jeez, I though “Fiat money” was what an Italian autoworker earned until I discovered this blog…

#42 Smoking Man on 08.21.15 at 7:23 pm

Being drunk is heaven….

Its so under rated and stigmatized . you can be rich, you can be poor.

On a good drunk, nothing matters…the mind has hallucinations of grander , and feer of being murdered.

You look in the mirror, look at you , you handsome beast. Oblivious to the fact that all your teeth will fall out soon.

Who cares.. When your + 50 death can happen anytime to a chain smoking fool, or a smart bike riding whole food eater.

Why the fk are we here….what demented bastard put us here, I was so happy in my pre birth place of nothingness.

God is an evil demented freak…if it wasent for booze I might jump infront of a train just to go punch his teeth out.

But the prick has everything figured out….feed smoking man his Jack and buy some time…..

Ultimately he knows , we are having words…

My issues, my late nephew, the Palestinians, my broke dick..

God you cant fk with me….

#43 F12 458 FF on 08.21.15 at 7:24 pm

I enjoy your blog Garth but I have to disagree with you on what is happening in Vancouver. Yes the prices are sky high over here and a drop would not be surprising considering many new builds on the west side are just a tad over $3 mil but the chance of a significant drop is zero.

In metro Van the majority of new builds are multi family and especially in Vancouver. Just look at all the new development along Oak, Granville, Cambie just to name a few. These buildings are constructed on land that was once single family. As a result of densification in Vancouver and the surrounding areas the number of houses are decreasing. Developers are willing to pay a premium to get these homes since the stand to make a healthy profit once they build. When this happens the number of houses decrease again.

With the number of houses decreasing but the demand high it will no doubt cause prices to rise. If rates do rise as you say, that will have an effect on the condos but the SFH will largely be unaffected. Anyone who is considering buying a house in Vancouver should do so cause you’ll make money if you sell. Don’t bother investing in a condo you won’t make anything.

#44 Austrian School on 08.21.15 at 7:33 pm

Every credit induced boom eventually becomes a bust. What we are experiencing, and are about to experience has been over 40 years in the making. Keep buying the dips. You are all very smart.

#45 Andrew Woburn on 08.21.15 at 7:33 pm

#223 Julia on 08.21.15 at 4:34 pm
#55 Andrew Woburn

Nightmare rental for short term? Read this one on long term rental nightmares:
http://www.torontolife.com/informer/features/2015/08/20/jesse-gubb-the-tenant-from-hell/
==========================

That was unnerving. Why bother hiring a property manager if that’s what happens.

#46 insider GT on 08.21.15 at 7:42 pm

Garth are you an insider? You state you know of a upcoming industrial crash? We want information. .transparency. ..you must expand. Thank you

#47 JimmyJoe on 08.21.15 at 7:50 pm

No way the fed will be increasing rates in Sept. Likely what’s gonna happen is ,at least by the end of the year, depending how badly the markets get whacked the next couple of weeks, they’ll come out with QE 4 or 5 , can’t remember what’s next in the series. And this will have to be done to help save the stock markets and of course the US buck will drop but soon thereafter all other foreign currencies can start/continue their inevitable devaulation. All the markets are more precarious than 2008 and I hope this works out well..but i have my doubts…
Hopefully Garth’s cogent advice will help us survive and actually prosper..

#48 Market Man on 08.21.15 at 7:51 pm

Everyone relax
Today was the first 3% drop in 949 days
There was about 46 drops like today in the four years prior to that

#49 Lea on 08.21.15 at 8:00 pm

11yr high office vacancy rate in downtown Vancouver:

https://www.biv.com/article/2015/8/slowdown-threatens-third-wave-office-towers/

What does this mean?

#50 Market Man on 08.21.15 at 8:03 pm

The longer oil prices are depressed the greater chance
The credit bubble will burst – houses, cars, credit lines

#51 raisemyrent on 08.21.15 at 8:08 pm

#18 seeing it from both sides on 08.21.15 at 6:43 pm

good old fearmongering. people rarely sign fixed-term leases, and when they do, is because they really do not plan on living there long. if they stay and felt pressured, they’re the greaterfool. nm, that implies they’re the majority…

no one reports on people who signed an open lease and are now enjoying comparatively low rent from having lived there through years of government capped rent increases. I had a couple years when my rent didn’t even go up the allowed max.
I have a mate who pays $2,200 for a 3 bedroom, 2 washroom luxury 1,400sq ft flat overlooking false creek in a building with a gym and a pool, etc ferraris in the parkade kind of building. with 3 people that would clock in at about $740 a month. they take the luxury of splitting 2 ways only… anyhow…

#52 Kim jon on 08.21.15 at 8:10 pm

Mr. Turner
Can you at least tell us which big city will be affected by the incoming crash? Vancouver by any chance?
Thank you,

#53 Comprehensive Economy Plan for Canada on 08.21.15 at 8:13 pm

Basic assumptions for the major trends

~ The most efficient economy is fully automated
~ Irreversible decline in demand for labor
~ Irreversible race to produce everything at rock bottom cost

Moonshot Goal
Canada becomes the first country in history to eliminate demand for labor, by creating a fully automated, robotic economy.

Why Canada

Canada is in a unique position to create the first fully automated, robotic economy:
– low population
– rich in natural resources, energy to create “stuff” from ground up
– the climate for much of the country is better suited for robots than humans
– close proximity to one one of the biggest consumer markets
– close proximity to one of the biggest capital markets
– close proximity to the biggest entrepreneurial hub
– close proximity to the most advanced technologies

Key factor
Low population.

Canada with her low population has a major advantage in the race for fully automated, most efficient economy over other countries with high population.

A relatively small fully automated industry is able to create the revenue to provide $100K per year for each citizen.

Highlight

The fully automated economy eliminates the need for income tax. This will virtually eliminate the need for different political parties, further improving efficiency.

The fully automated economy eliminates the need for immigration to create cheap supply for labor.

The Canadian population, no longer forced to spend their time with labor to make a living will unleash unprecedented individual creativity, which will form the basis of highly successful future products, services.
Canadian citizens will be able to do whatever they like to do the most, which enables for individuals to realize their best natural potentials in all fields of human interest. Some of these activities can become highly profitable.

People will still do things – but for pleasure, not for “work”, not as a “job”. These volunteer activities will create blueprints for the fully automated production.
The creators of blueprints will share revenue from the products, sold from their ideas. Blueprint creating income will also be tax free.

… to be continued.

#54 Waterloo Resident on 08.21.15 at 8:14 pm

Yeah, Garth is right about this being just a temporary drop down.
But WOW, what a drop !!!

Once all the panic sellers exit the market some time next week it should be an excellent buying opportunity.

#55 Barry in Pickering on 08.21.15 at 8:15 pm

>>> In a balanced portfolio, bonds were racing ahead

Hardly. Most bond ETF’s were flat or up a fraction (0.3%) today. And are up 3% YTD.

Plus yield. Quite satisfactory. — Garth

#56 Interstellar Old Yeller on 08.21.15 at 8:18 pm

I was a buyer yesterday and today. Nice to come here for reassurance and a cute puppy pic. Have a great weekend, Garth and blog dogs! :)

#57 Llewelyn on 08.21.15 at 8:21 pm

This recent turmoil is why many Canadians over the age of 65 are more interested in protecting their wealth than trying to accumulate more wealth by assuming risk.

I get that the managers responsible for large pools of money have ways of hedging their bets and mitigating risk but the assumtion of any risk at my age seems unnecessary.

Having said that I certainly understand the importance of investing for your future. I have read the majority of submissions to this blog over the past six months I fully concur with the emphasis on balanced investment portfolios.

One nagging concern however is the tendency to quote projected ROI without any consideration of the purchase price. The advertised ROI on dividend producing stocks that declined in price by 6.0% this week actually increased. This increase might not be quite as interesting to investors that bought last week.

While my interest in instruments such as ETF’s, preferred stocks, bond ladders and mutual funds is quite recent I could not help but notice that real ROI over the past nine months seems substantially lower that 7.0%.

Is there any source that tracks the actual ROI of an actual balanced basket year over year? I have looked up the year over year yield of components suggested for inclusion in the magic 7.0% basket and I cannot even come close to a 7.0% ROI when lost equity is included.

I apologise in advance if I have failed to understand how the average ROI of 7.0% is being calculated.

I cannot help but think that a 2,000 point drop in the Dow Jones average over the last four months might reduce the possibility of a 7.0% ROI on any balanced basket over the last 12 months.

Lesson one: earning an annual average of 7% over a decade does not mean 7% annually. — Garth

#58 Blobby on 08.21.15 at 8:22 pm

So, does the effect the fed raising rates in sept or not?

I’ve got a fair wad of cash in the USA that I’m holding on to…

#59 Vanecdotal on 08.21.15 at 8:27 pm

#48 Lea

It means the (pseudo) msm is finally noticing Vancouver doesn’t have a diversified economy, outside of low wage hospitality/tourism, and FIRE-friendly home flogging.

Supply well outstripping current demand for corporate space. As seen in residential condo market across Van & suburbs as well. A Vancouver-fied Ghost City taking shape before our very eyes…. meanwhile, the brain drain to cheaper jurisdictions continues.

#60 Smoking Man on 08.21.15 at 8:31 pm

The artist within us….we all got one…

Finding that fat rat is hard…

LH brags about his success, I love that about him. He’s in the lifes stage of showing worthyness. 31 and lets face if , money, status, as much as he wants to pine the Tim Horton blond apprentice coffee girl who will say yes for a ride in that car… Dont do it…

Backpage…pay em to go away..

Family is everything. So are the one or two real freinds you have. Broom the rest..

But if you can’t paint a skeleton on a canvas..or write about aliens…. Life is realy meaningless.

#61 Victor V on 08.21.15 at 8:34 pm

Couple who leased out their Toronto home shocked to discover it was turned into illegal boarding house

http://news.nationalpost.com/toronto/couple-who-leased-out-their-toronto-home-shocked-to-discover-it-was-turned-into-illegal-boarding-house

#62 ANON on 08.21.15 at 8:35 pm

@ #24 Trojan House on 08.21.15 at 6:50 pm
History is doomed to repeat itself because of the exponential math of compounding interest on loans (also known as “making promises to pay back the loan which is taken to be spent, and pay also that which does not exist on top of it”, in plain English).

@Garth & TheBlogDogs
I sincerely hope you have had already panicked some time ago.

#63 Get AGrip on 08.21.15 at 8:36 pm

Garth,

Could you explain your comment about central banks coordinating global monetary policy? Are you actually suggesting that the U.S, Europe, China and Japan are working together to stabilize the global financial system? If global growth is robust why are commodity prices falling like a stone? Isn’t the reality that GDP growth is slowing globally, thus drop in commodity prices, and job creation has been disproportionately high in the service industry (low paying) while manufacturing has been decimated resulting in the US middle class being obliterated? What are you going to say when the US doesn’t raise interest rates in September and then implements QE4 thereafter? China devaluing the YUAN was not coordinated, EU printing money has put pressure on the U.S which in fact is creating a real risk to the lackluster U.S recovery. Isn’t it closer to the truth that global monetary policy makers are fighting for their lives rather than your ludicrous suggestion that they are coordinating their actions?

#64 Crystal ball on 08.21.15 at 8:37 pm

“Subprime is contained” – Ben Bernanke, 2007.

#65 Jon on 08.21.15 at 8:40 pm

@marketman

So, in one post you tell everyone to “relax”. In the next post you tell everyone that if this keeps up the “bubble will burst” What are you Dennis Gartman?

When you learn to read, come back. Or not. — Garth

#66 Suede on 08.21.15 at 8:42 pm

stocks are plunging.

omg.

i need to sell! Get me out!

Should’ve bought a house like everyone else told me to. They don’t fall. Nor do they have a ticker on the side to tell me what it’s worth hourly.

….

But seriously though, Shawn, what are some of the good buys out there?

#67 luke8929 on 08.21.15 at 8:43 pm

The consensus seems to be this is Wall street having a fit and daring the Fed to raise rates in September. My guess is the Fed’s member banks are surreptitiously tanking the markets so that when the Fed does raise rates in September no one can point the finger at them for trashing the economy. My thought is they will raise rates right into the mauw of this thing and it will be several points, reset the interest rate games and start over. The last several years has just been cover for the bankers to get into a cash position where they can benefit from firesale asset prices in everything.

#68 Drill Baby Drill on 08.21.15 at 8:45 pm

Dear Pathetic Blog Dogs;
I agree with Garth that this is a correction and if diversified you can ride it out. I invest in oil & gas and minerals (not gold) because I understand them and their cycles. These commodities have a long way to go in a downward direction yet in my opinion. I will then jump back in. I am looking closely at solid corp bonds as well.I have 100% cash at the moment, house is rebuilt and fully paid off.

#69 Suede on 08.21.15 at 8:46 pm

Harry Dent must be loving this correction.

#70 Cheeky Bugger on 08.21.15 at 8:48 pm

The US expansion continues right on schedule……..

Oh ! Wonderful, would you mind sharing the “schedule” with us Lord Garth. I would like to time my entry and exit based on this US expansion schedule.

Thanks.

#71 omg the original on 08.21.15 at 8:49 pm

SO HERE IS THE PROBLEM WITH TRYING TO TIME THE MARKET……

OK so let’s say you got it right and sold out of all your equities positions 1 weeks ago.

Awesome – things are now down around 5% – you look like a GENIUS.

But you are a MARKET TIMER – so now you have to decide – do you buy back in or do you think things are going lower by 20% like 2009?

So you freeze up and watch the market go up 1000 points next week – but you keep waiting for things to pull back before you rebuy.

And things keep going up and leaves you behind.

The moral of the story is just stay in.

On average over time the market goes up more years than it goes down and that is where you get your returns.

#72 OXI in GREECE !! on 08.21.15 at 8:54 pm

And of course all the “money guys” will say that this is a “healthy and normal correction”.

We’ll see…..

#73 Vanecdotal on 08.21.15 at 8:58 pm

#60 luke8929

Agree. Thinking the same thing. Smoke & mirrors.

#74 saskatoon on 08.21.15 at 9:01 pm

#12 Shawn

“Deposits are owned by someone. That someone refers to the deposit as their savings.”

since you won’t be replying again…i will now interject:

a few times you have mentioned “ownership” over deposits.

“deposits” are owned by banks.

#75 Trojan House on 08.21.15 at 9:08 pm

#60 ANON on 08.21.15 at 8:35 pm

History is doomed to be repeated because humans never learn from our mistakes.

#76 Drill Baby Drill on 08.21.15 at 9:12 pm

If (big If) the Fed was smart they would raise rates in Sept. then ignore the temptation to bring in QE4. This would then force all to tighten up ride out another short term market dip then let thing level out and stabilize. Nothing is stable in the markets right now and we do need this.

#77 omg the original on 08.21.15 at 9:12 pm

#1 Boss Pittens
The evidence is all around us. Some are saying these are signs of the End Times, and it’s hard not to rationally agree with that point-of-view.
———

I honestly feel bad for people like this that get suckered into believing how bad things are now – they are not.

Without really trying I can list several times in the last century were things were much worse;

– like the 1930s where there was a massive financial crisis couple with extreme disruption in the NA agricultural sector
– WWII
– cold war/Bay of Pigs
– Savings and loans crisis of 1990s
– doc.com meltdown
– 2007 to 2010

I’d say we are in pretty good shape right now.

#78 Drill Baby Drill on 08.21.15 at 9:15 pm

Harry Dent is someone to respect and give time for thoughtful consideration of his opinions.

Nope. — Garth

#79 Andex Chart, people....Duuuuh!! on 08.21.15 at 9:16 pm

Garth, post a picture of an Andex Chart and MAYBE, just maybe the doomers will understand.

Tell yourselves this, doomers: if it’s “true” that stocks will crash “forever”, than “losing” money should be the LAST thing you need to worry about because life will be hell anyway! So in reality, what have you got to lose???

#80 Smoking Man on 08.21.15 at 9:20 pm

There once was a poodle who thought he was a cowboy.

And, though his white horse was a box of toothpicks, he galloped around until he saw the mother ship.

Sometimes I flap my arms like a hummingbird just to remind myself I’ll never fly, but i can.

Sometimes I burn my arms with cigarettes just to pretend I won’t scream when I die

Sometimes I can’t wait to come down with cancer
At least then I’ll get to watch tv all day.

And on my deathbed I’ll get all the answers even if all my questions are taken away.

If my life was as long as the moon’s, I’d still be jealous of the sun

If my life lasted only one day, I’d still be drunk by noon.

#81 working class on 08.21.15 at 9:21 pm

Lost about 13k the last few days, (5%) or so of my portfolio, Lucky I am young and debt free , stay the course, buy some more when things slow down near the bottom, and keep the eyes on the long term prize, may take weeks, months or years but it will come back, best of luck all, buy low and hold my friends!

#82 Nora Lenderby on 08.21.15 at 9:29 pm

#4 Gentleman Prefers Bonds on 08.21.15 at 6:14 pm
I’m in a quandary of who to vote for.
1. Liberals: tax and spend
2. NDP: tax & spend
3. Cons: I don’t want to vote for the thieves and liars like Ol’Duffy and the bitch Wallin. Or the drunken wife beater Brazou.

Everyone focuses on the personalities of the small people…OK, O, Mr. D. is a big person, but not really that important. Anyway all those people were launched from the trebuchet of the bus, long ago.

The Conservatives were using public money (Senate appointment salaries and expenses) to pay for party recruiting and fundraising. This is the conspiracy right in front of everyone.

However, moralizing aside, I see nothing about the present Conservatives to say they have a clue what to do about the economy or when to do it. The smart guys have all gone home to spend more time with their money. (Or in the case of Mr. F., he is dancing on Fiddler’s Green. I think we’ll give him that for his years of service to the country.)

Note: Nobody can accuse me of not ‘paying my fair share’ of taxes. Last year I paid $36,421 in income tax. This is more than I even spent on buying my car!

Fine. You paid your fees. No biggie, but welcome to the club notheless.

#83 Nagraj on 08.21.15 at 9:32 pm

I was gonna say … but #1 BOSS PITTENS (and Garth’s reply) had me laffing so hard I forgot.
It is devoutly to be wished that #1 & Garth don’t set the tone for future dialogue … but then again maybe BOSS is related to the SASKATOONSTABBER whose posts I always enjoy very much.

I also got sidetracked by the hilarious cruelty of #37 JIMMYJOE.

Not to mention SMOKING MAN’s fundamental interest in periodontitis, erectile dysfunction, and Jesus Christ.

I quit.

#84 Nora Lenderby on 08.21.15 at 9:34 pm

#78 Smoking Man on 08.21.15 at 9:20 pm
…If my life lasted only one day, I’d still be drunk by noon.

Very lyrical! Perhaps you might take up another drug and loosen up another set of brain connections.

Let’s see…ah yes, for you, psylocybin.

#85 GETAGRIP on 08.21.15 at 9:37 pm

#74 (DrillBabyDrill)…if the Fed raises rates they will further strengthen the US dollar thereby reducing the competitiveness of American producers. That is what is so farcical about Garth’s comment…if the U.S raises rates while China devalues, EU and Japan keep printing the US is screwed. They owe $19 T and that debt is now bigger due to the strength of the US dollar yet they have 2% GDP. Garth really needs to step up and clarify his comment or acknowledge that he is solely focusing on the improved labour rate as his single rationale for the FED to raise rates. And btw…with inflation at 2% what do you think will happen with an increased interest rate.

#86 Tony on 08.21.15 at 9:38 pm

So the big question this time is will the FED, the bankers and the government throw everything and the kitchen sink at the market when it drops more than 20 percent intraday like they did in 2011 to try to prevent a bear market? Will it work this time? This time I doubt it.

#87 GETAGRIP on 08.21.15 at 9:46 pm

#64…CrystalBall…love it! Classic.

#88 tundra pete on 08.21.15 at 9:49 pm

#1 boss pittens

I wouldn’t even consider a handgun (restricted) in this country. You need a restricted license and the handling ability. Other wise that thing will be taken away from you and used on you and your family.

Stick with the non restricted license. Get yourself a Mossberg 500 pump action 12 guage shotgun. Stockpile 5000 rounds of 4 shot heavy field load 12 guage ammo. No need to get all fancy with a shotgun, you dont even have to aim it, just point it. It will blow a big ass hole through anything you want from 2 to 40 or more feet away.

Remember, any gun is only as good as the handler. Learn to use your head and mouth to cease any conflict. Then your stealth and hands to take out any threat before they even feel you breathe. If all else fails that 12 guage is good to have around.

This is a metrosexual, latte-sucking, Vespa-loving organic site. Go shoot stuff elsewhere. — Garth

#89 Tony on 08.21.15 at 9:51 pm

Re: #69 omg the original on 08.21.15 at 8:49 pm

Remember when the cavalry came riding over the hill back in 2011 to save the day and avert a bear market? There’s a glimmer of hope the same thing could happen again. Some market timers will remember the memorable ride of 2011.

#90 Andrew Woburn on 08.21.15 at 9:53 pm

#48 Lea on 08.21.15 at 8:00 pm
11yr high office vacancy rate in downtown Vancouver:

https://www.biv.com/article/2015/8/slowdown-threatens-third-wave-office-towers/

What does this mean?

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

1) The herd instinct of developers means they always overbuild in bunches

2) A lot of Vancouver office space is taken up by mining companies, engineers, geologists and stock promoters none of whom are feeling much like moving to new prime commercial space right now.

3) Vancouver is becoming more of a tech town and techies want uptown funk not shiny corporate.

4) The Asian invasion doesn’t translate to a lot of business activity. My experience with Chinese businessmen is that they are happy to move the wife and kids here but they are less enthused about business prospects. They say how you can make any money in a place with so few people and so much tax? Remember that the whole population of BC wouldn’t make one decent Chinese city.

5) Businesses that want to employ people older than 28 find it easier to be where their employees can better afford to live like Richmond or Burnaby.

6) There aren’t that many businesses that absolutely need to be in downtown Vancouver. As their senior executives get tired of fighting their way around bicycles to get to work every day, there could be a change of heart.

#91 BG on 08.21.15 at 9:55 pm

That’s what I like about a my simple Canadian Couch Potato portfolio:

When the market’s up I’m happy about my numbers.
When the market is down, I have some controlled fun by trying to time it and spend my monthly contribution at the cheapest prices.
There’s always something to rejoice about.

#92 AK on 08.21.15 at 10:02 pm

It will be nice to see an additional 5% drop on the S&P. Doubt that’s going to happen though.

Today’s drop was attributed to the monthly Witching hours.

#93 steve on 08.21.15 at 10:12 pm

smokey make me fan # 52

#94 Frank on 08.21.15 at 10:13 pm

So my balanced portfolio is crying this week, whatever it’ll get better.

I have a bunch of cash. Do I hold on to it right now because cash is king or is it cheap to buy right now?

#95 shoot stuff on 08.21.15 at 10:25 pm

88 tundra pete on 08.21.15 at 9:49 pm

#1 boss pittens

Stick with the non restricted license. Get yourself a Mossberg 500 pump action 12 guage shotgun. Stockpile 5000 rounds of 4 shot heavy field load 12 guage ammo. No need to get all fancy with a shotgun, you dont even have to aim it, just point it. It will blow a big ass hole through anything you want from 2 to 40 or more feet away.

This is a metrosexual, latte-sucking, Vespa-loving organic site. Go shoot stuff elsewhere. — Garth

The metrosexual, latte-sucking, Vespa-loving organic choice when it comes to “shoot stuff” is the Glock 26, of course.

Enjoyable at Lock and Load shooting range, Miami.

#96 gut check on 08.21.15 at 10:27 pm

@ #80 Smoking Man

is that an original?

thumbs up

#97 gut check on 08.21.15 at 10:28 pm

d’oh! I should have googled first.

#98 Llewelyn on 08.21.15 at 10:31 pm

Lesson One acknowledged. However I thought the belief that past gains in equity will be repeated in the future remained the exclusive property of real estate agents.

I understand your confidence but inflation over the past 40 years averaged 4.0% per year and this average is declining as I type.

Is it possible to maintain an average ROI based on a history where inflation was significantly higher than it is today? At the very minimum 2.5% of historical ROI was attributable to inflation and even Janet Yellen seems confused as to why inflation seems to be deflating.

Logic leads me to conclude that the contribution of inflation to historical ROI on balanced baskets was much higher than most experts are predicting for the next ten years. Things could change but without a crystal ball it is difficult to see a return to 4.0% inflation in the foresseable future.

In addition to low inflation interest rates are at historical lows, many corporate dividends are being reduced or eliminated and growth in China seems to be slowing down. Extrapolation of past trends seems just a touch optmistic for me but your opinions are always given consideration.

#99 For those about to flop... on 08.21.15 at 10:37 pm

O.k ,so as guy who is low wage and is trying to be self sufficient by topping out my tfsa the cooling down of the market has me thinking this.
If you put the full 10k in January it leaves you with no chance to buy on the low later on the year .
On the flip side if you wait and the market rises you miss out .
Small potatoes I know but that’s where I’m at.
Living within my means ,staying out of debt .
Trying to be the boss of me.

#100 Steerage Bilge on 08.21.15 at 10:37 pm

#80 Smoking Man on 08.21.15 at 9:20 pm
———————————-

Drink up!

“So Much Wine”

I had nothing to say on Christmas Day
When you threw all your clothes in the snow
When you burnt your hair, knocked over chairs
I just tried to stay out of your way

But when you fell asleep
With blood on your teeth
I got in my car and drove away

Listen to me, Butterfly, there’s only so much wine
You can drink in one life
But it will never be enough
To save you from the bottom of your glass

Where the state highway starts, I parked my car
I got out and stared up at the stars
As meteors dived and shot across the sky
I thought about your sad, shining eyes

I came back for my clothes
When the sun finally rose
But you were still passed out on the floor

Listen to me, Butterfly, there’s only so much wine
You can drink in one life
But it will never be enough
To save you from the bottom of your glass

#101 VICTORIA TEA PARTY on 08.21.15 at 10:39 pm

THE DAY THE MUSIC DIED…

Of course Friday’s market actions do not represent the end of anything.

The markets will revive and move back up again. It will eventually be a buying opportunity for careful pickers and choosers.

BUT…

What was different about today’s market action was displayed loud and clear amongst the arrogant mavens on CNBC.

It wasn’t just another close to another bad day with hopes for a brighter next week.

No, it was something more somber, a realization that the US has SERIOUS competition in this world, China.

A number of commenters was asked what next Monday will look like: good or bad for investors?

The answer: “It all depends on China…”

In the 46 years I’ve been a market investor THAT comment perked up my ears big time.

American market watchers and commentators have always had a “get outta my way, I’m an American and you’d better watch it” type of attitude.

Their imperious behaviour, that America is invincible while the rest of us are not, has been their familiar refrain for decades.

Not anymore it seems?

The TV audience was told to watch Asian business shows on CNBC starting Sunday night at 9:30PM EDT for China’s response to this past week of very down markets and investor losses in the hundreds of billions.

The message: if China does not say something soothing, then all hell may break loose on Monday: Black Monday markets everywhere.

Since when did the Yanks listen to anyone who doesn’t think and act just like them?

What’s going on here?

I know: the Chinese hold a lot of USD paper and their imports and exports are dropping like stones, as their economic problems get worse.

China, still the second largest world economic power hankering to be number one, is also tired of getting screwed by a high and mighty, USD.

This weekend then could be their perfect opportunity.

In saying “nothing comforting” Sunday night and seeing chaos on Monday could that play into China’s hands as it continues its battle for world economic supremacy?

While most countries’ markets would also be whacked, why would China care?

It’s only rock ‘n’ roll, right?

Meanwhile our Canada is not faring well at all in this imbroglio. China may hand us our lunch yet, as well.

#102 Blacksheep on 08.21.15 at 10:43 pm

Shawn #12,

You do realize…

1000’s of intelligent people were witness to our recent discussions.

They have been exposed to and likely read the Bank of England pdf.

They have read your comments and they have read mine.

They will rationalize all this out and draw there own conclusions.

I will sleep good tonight knowing, I represented my understanding of the truth well.

For your sake, I truly hope you can say the same.

#103 shoot stuff on 08.21.15 at 10:48 pm

#84 Nora Lenderby on 08.21.15 at 9:34 pm

#78 Smoking Man on 08.21.15 at 9:20 pm
…If my life lasted only one day, I’d still be drunk by noon.

Very lyrical! Perhaps you might take up another drug and loosen up another set of brain connections.

Let’s see…ah yes, for you, psylocybin.

Not a bad choice for him, but it might be too easy.

Smoking Man could create new neuro-paths with ayahuasca brew, which has the advantage of the familiarity of throwing up, which is a familiar territory for alcohol lovers, as I remember.

#104 We are devo on 08.21.15 at 11:01 pm

“#153 Smoking Man on 08.21.15 at 10:20 am
#142 BT on 08.21.15 at 8:53 am
……..

God damn grammar Nazis…..

Listen up, my version of englush is way better than the official version. ”

Imagine if everyone used their own “version” of English….a veritable tower of”Babble”…..suggest you stick to grunts/groans or smoke signals if you want to go fully monty communication de-evolution mode!

#105 Leo Trollstoy on 08.21.15 at 11:08 pm

Harry Dent is someone to respect and give time for thoughtful consideration of his opinions.

Nope. Dent is a salesman.

#106 White Crock BC on 08.21.15 at 11:14 pm

#95 VICTORIA TEA PARTY on 08.21.15 at 10:39 pm

China has for a long while,IMHO, been the world’s leader. Not only economically, but I think the Chinese could kick America’s ass in an all out war.
They just choose to keep a low profile while socking away lots of $$ and Gold… they will own us all soon

Hell, they (the US) had/have trouble with a dumbass country like Iraq for God’s sake ..

#107 I work in capital markets on 08.21.15 at 11:16 pm

“Those who invest with their pants were selling. The confident ones were buying.”

If you think today was ‘startling’ wait until Monday after the margin calls have sunk in. Monday will be a great puking. But it’s a great thing for a stock picker…the rebound cash made will be quick and easy. But…don’t catch a falling knife my boy…..only select stocks will recover….you’ll have to do your homework. 490 of the 500 S&P issues were down today….Monday Bloody Monday….and maybe Tuesday and Wednesday too. It will take a blood letting to reach capitulation…..and an outpouring of selling perhaps until the end of the year…or longer.

I’m so glad I keep piles of cash for such occasions…the market can stay irrational…and I can buy sun tan lotion for years and not give a darn.

#108 debtified on 08.21.15 at 11:33 pm

#80 Smokie

Use quotation marks at least if you are not willing to give credits. But of course, for all your fans like me, we all know what’s going on once your English somehow becomes straight and somewhat proper.

42% in cash and loving this opportunity for a bargain. Will start nibbling into some deals next week. Awesome!

Thank you, Garth, for the free public service!

#109 james on 08.21.15 at 11:44 pm

#88 tundra pete

Agree with you on the Mossberg. (There are many good semi-auto shotguns that do the job, but might not be legal in Canada). Don’t use slugs, as you don’t want to have your missed shots kill a neighbour a block away.

The RCMP have shown that they will, in a crisis situation, enter your home to seize your guns. Make sure to hide them carefully.

What this has to do with housing markets is beyond me.

#110 james on 08.21.15 at 11:47 pm

#106

“China has for a long while,IMHO, been the world’s leader. Not only economically, but I think the Chinese could kick America’s ass in an all out war.”

Define long while. In terms of scientific and engineering accomplishments, China still lags far behind, despite graduating millions of engineers per year. I’m a fan of China, but it faces some major issues (including environmental ones).

Also, you seem to be unaware that there has never been a war between conventional nuclear powers. Wargames back in the 1950s showed that attempt to invade the territory of a nuclear power was met with nuclear weaponry. Chinese generals noted 15 years ago that modern warfare is demographic and economic.

But back to housing…

#111 BC Guy on 08.21.15 at 11:48 pm

“Major Industrial Collapse …”

My educated guess is: the Syncrude oil sands project is running out of cash and there will be an announcement in a couple of days that it will be temporarily shutting down or worse-case that it’s weakest player, Canadian Oil Sands, will declare bankruptcy and/or file for creditor protection. Something along those lines.

One of the other players, most likely Suncor will pick up the assets pennies on the dollar, restructure, lay-off, downsize, outsource. Much of the production will grind to a halt. Sometime later this year, oil prices will rebound, and the oil sands will slowly ramp up again, under a new ownership structure.

Just my educated guess. What’s my prize if I’m right?

#112 Moses71 on 08.21.15 at 11:49 pm

Shawn
Your last post?? Because of comment(s)?
So you riled some feathers. Your comments are well thought out, calculated & educated opinions.
Why deny the rest of us your contributions?
If Garth hid under a rock due to others’ opinions, we’d lose a venue and a master.
Don’t let a squeaky wheel deny the rest of us valued and educated opinions.
Yours Truly

#113 saskatoon on 08.21.15 at 11:51 pm

#102 Blacksheep

indeed.

obviously Shawn lost this one big time.

#114 Jonah on 08.22.15 at 12:02 am

“Apple, Twitter and other glam companies whacked.”

Really! I am an active investor, Apple is still high at 105 and has not be whacked yet. Yes it is down from 130 but it will climb up and go further so would energy stocks specifically CPG which is already under oversold category.

As for the housing correction, then the correction has already happened. Loonie is down more than 20%, this would mean we are cheaper for US and inexpensive for the world meaning our exports will rise and our economy will boom which in turn will boost the housing.

What we really need to do is keep the loonie lower just as Chinese are doing. This will keep our neighbor corporate culture to rethink strategy and bring back jobs to Canada due to lower operating costs.

#115 Mister Obvious on 08.22.15 at 12:28 am

#106 White Crock BC

“but I think the Chinese could kick America’s ass in an all out war.”
—————————————-

This opinion is purely academic since after an all out war, any ass left on the planet still in one piece would be quite unaware who ‘won’ the kicking contest.

Nobody won the first world war. One side lost just a tiny bit less than the other. After a third world war such shades of distinction would be meaningless.

#116 Ron on 08.22.15 at 12:33 am

If you look at the history of the world recessions and occasionally major depressions happen for every generation. We should have gone into a depression many years ago but the great oracle Mr. Greenspan and his disciples believed they were far smarter and sophisticated than our ancestors. They started to prevent recessions and believed they had the magic touch. They were complete fools and idiots. Recessions blow off steam and are vital to a healthy economy. Instead of letting the pressure cooker release steam from its safety valve they plugged the valve and went …..VIOLA, no need to worry everything is wonderful under our skilled and exert stewardship. They made credit not only easier but created bottomless pits filled with fiat/counterfeit currency. When the sh.. hit the fan with the housing collapse and virtually all the dimwits in the banking and investment industry bankrupted their respective companies what was the response. Lets do QE1, 2, 3, etc. You can talk about buying on the dips and not to freak out but every now and again a really depression takes hold and everybody in stocks and real estate gets wiped out. I always laugh when I am in a brokers office and see the chart showing how stocks are always the best investment. Take a really good look at when all these charts start. It starts at the lowest point of the Great Depression. Guess what??? If you were fully invested in stocks in 1929 you did not break even until around 1953!!!! Unfortunately all previously sound stock investing advice is null and void in a depression. People who don’t learn from history are doomed to repeat it. I hope I am wrong but it looks to me like we are on the edge of another monumental depression. All the world’s major governments and their central banks have not only run out of ammunition but they are the ones that have thrown gasoline onto a burning building. Human nature never changes and therefore it is very logical and intelligent to realize we might finally be screwed. No I am not a doomer and the world will not come to an end. No need for guns, ammo and stockpiled canned beans. We will all survive. It will be extremely painful and we will have to trade in our Audis for bus passes and our LV handbags for plastic bags. We will come out wiser and more cautious until another generation of spoiled brats take over and the game begins again.

#117 Shawn on 08.22.15 at 12:35 am

And Now for Something Important

But seriously though, Shawn, what are some of the good buys out there?

********************************************
I like Boston Pizza Royalties a lot for yield (about 7.4%), Canadian Western Bank and Melcor Developments.

Buy these and check back in three years and I think you will have done well.

Costco is probably okay, also Berkshire Hathaway, probably Walmart as well, probably VISA too.

Also Toll Brothers and Wells Fargo and Bank of America

All of which I own except VISA and Costco.

#118 Shawn on 08.22.15 at 12:39 am

My bet would be that markets rise on Monday.

In any case it’s all entertainment. Markets down equals opportunity.

Freaken 5% decline and people panic.

#119 Now on 08.22.15 at 12:56 am

#80 Smoking Man

You must be a poet?

#120 OXI in GREECE !! on 08.22.15 at 12:59 am

A bit off topic….but it is an election issue and PM Harpo AKA (dis)honest Steve likes to tell you through his puppet Rhona Ambrose that weed is bad. Is always bad. Will always be bad…..and of course Steve will always (block) any report that says otherwise……

Heave Steve Please……

http://www.rt.com/news/312377-cannabis-report-canada-election/

#121 S.Bby on 08.22.15 at 1:00 am

I love human nature; it is so predictable.

#122 TRT on 08.22.15 at 1:13 am

Cash is king. Wait until this bottoms out and buy buy buy.

Funny , the more i make…the cheaper I get. WTF?

Capitalism is flawed. Those with EXCESS liquid assets will leave the day day workers in their dust. And now this is inter generational. If your selfish, present system works. If your altruistic, you are screwed in this system.

#123 E nuff sed on 08.22.15 at 1:26 am

You need to put a thumbs down icon on the comments. A majority of em are stupid.

#124 E nuff sed on 08.22.15 at 1:26 am

but entertaining

#125 OXI in GREECE !! on 08.22.15 at 1:33 am

#105 Leo Trollstoy on 08.21.15 at 11:08 pm
Harry Dent is someone to respect and give time for thoughtful consideration of his opinions.

Nope. Dent is a salesman.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Truly though…..is his research on demographics wrong? I have looked at his work (not just listened) and the numbers on demographics seem sound. Even Garth has talked about 500K people retiring for the next 3 or 4 years and how it will affect parts of the economy…..

#126 Love my Kia on 08.22.15 at 1:36 am

Thank you for the post today, much is true about human reaction to the markets.

I still have doubts on the Fed raising rates though.

Enjoy your weekend.

#127 Longterm on 08.22.15 at 1:38 am

#99 For those about to flop… on 08.21.15 at 10:37 pm

So put the $10k into your TFSA brokerage account in Jan and then either buy quarterly to dollar cost average and keep the transaction costs down or sit in cash and wait to pounce and buy during down days / weeks. Pretty simple.

#128 Pat Huge on 08.22.15 at 2:07 am

Keep on keepin’ on Garth!

Hater’s gonna hate.

Love your blog, took in most of your advice two years ago, on my way to being a millionaire by 38.

#129 Pat Huge on 08.22.15 at 2:08 am

Also, love the photo on this one, have the same doggy floatation device so my pup can follow me when I go out kayaking on the lake!

#130 Mark in Guelph on 08.22.15 at 2:39 am

Everything you need to know about Garth’s philosophy is laid bare in the following quote from his post: “European markets have been on steroids, thanks to central bank stimulus.”

See comrades, no need to worry, trust in the world’s central planners to solve all economic problems with their sweet sweet stimulus. Yes the planners know how to keep us all fat and happy, just buy the dips, they’ve got your back. What could possibly go wrong?

It was a statement of fact. Investors with European exposure have benefited from it. I gather that does not include you. — Garth

#131 Steve French on 08.22.15 at 2:40 am

Smokinh Man:

I got wasted at a friend’s party last night! Beer, wine… luckily couldn’t find the JD. Just now pulling it together at 3pm the next day.

For someone in their early 40s… hangovers are definitely not as much fun as they used to be…

But a classic booze up can be like a cleanse or detox.

Makes you look at the world in a new light. Releases the demons. Purges excess baggage from your brain. And when your hangover finally abates you feel great.

I need one or 2 good drunks per year.

#132 jane 24 on 08.22.15 at 2:40 am

Houses only go up if the herd are content and feel secure about the future. Now they don’t feel either. If you were waiting for the Fall market to sell RE, you have missed the opportunity to lock in those gains and make paper money into real money. Now it is a ride down and it may be down for a decade, same as last time. There will be no Fall RE market.

Agree that interest rate rises will now be postponed as they would only add to the current turmoil and central bankers are not that crazy.

On the plus side I can now get $2.07 for every British pound so both a cheap and fun trip to Montreal next month to see the family.

#133 Steve French on 08.22.15 at 5:48 am

you know.. it might be the hangover (i always get sentimental after a boozey night out)…

But back in the 80s Daryl Hall and John Oates actually had some pretty good tunes….

https://www.youtube.com/watch?v=s_8KR-n2fBQ

#134 Nagraj on 08.22.15 at 6:49 am

… here’s a MUCH more interesting topic than your investment and other struggles

I am informed that Margaret Atwood (none of whose books I have read) had her hilarious NP piece about HAIR (on the heads of the three PM contenders) CENSORED (upon due reflection by the NP higher-ups).

The two items they cut: 1) a remark re Harper’s credibility problem re the Duffy stuff, 2) a remark which SILENTLY referenced a rumour, as it were, that the famous (dirty-oil refinery owning) Koch Bros are helping Harper’s re-election bid (with $2M?).

Well, both Harper’s credibility and rumour issues are neatly symbolized by this simple question:

IS THE PM WEARING A WIG OR ISN’T HE?

If it’s a wig or hair piece, what does he look like without it? How many of the things does he own? Where’d he buy them? Does he regularly wash them? Does he put them on before or after the tie? Have the purveyors of said hair pieces been effectively silenced?

Whether it’s his hair or not – somebody should tell him his hairstyle kinda makes him look like Moe of The Three Stooges.

Pathetic.

Could our gracious host who has personal experience with the PM help clear up this potentially politically explosive wig issue?
Can any blogdogs with wig (or hair implant) expertise shed light on this political dynamite cover-up question?

[For history buffs: Mare Antoinette HATED the Pompadourish wigs in style at Versailles, as well as the architectural constructions known as dresses. At one point she had herself painted wearing a plain white (downright modern) muslin dress, with a simple straw hat on her real hair. The public was so outraged (“She looks like a whore in a nightgown, not a queen!”) the painting was promptly removed, and replaced by one, quickly painted, featuring her in full official Versailles regalia.
That muslin dress was the one they gave her to wear to the guillotine.]

And you thought you were having a bad hair day.

#135 Julia on 08.22.15 at 7:20 am

#81 Working class
“Lost about 13k the last few days, (5%) or so of my portfolio …”

************
You have not lost unless you sold?

#136 MD on 08.22.15 at 7:44 am

#132 Steve French
“you know.. it might be the hangover (i always get sentimental after a boozey night out)…

But back in the 80s Daryl Hall and John Oates actually had some pretty good tunes….”

It’s the hangover.

#137 Jon on 08.22.15 at 7:52 am

When you learn to read, come back. Or not. — Garth

Garth, I was referring to a commentator called “marketman” not yourself.

Got it. Apologies. — Garth

#138 Mike in Toronto on 08.22.15 at 8:16 am

#134: “You have not lost unless you sold?”

Only for tax purposes, but the money is gone.

If you stay invested, then eventually it will be replaced with new money. I hate this stuff, but meh. F’d if you do, f’d if you don’t.

The other laugh is that it is a “buying opportunity”… only if you “rebalance” from your “cash positions”… but this is nothing more than gambling with timing. You don’t keep a stash of cash waiting for the market to fall. That’s just stupid. Rebalancing should be done on a calendar, not when reading the news tickers in the elevators at work.

This was the worst case scenario for savers standing back from the RE market. The currency devalues and nobody stops it because it helps people pay down their debts. Tack in lousy returns in the markets and saving for housing has been an idiot’s game.

Now where did those T3 slips go…. I get to pay income tax on my “earnings” from last year, yay!

#139 westcdn on 08.22.15 at 8:20 am

I have been following the Shawn/Blacksheep “debate” on banking. I had to think about banking for a while and concluded banks can create money out of thin air when but only when a customer demands it.

Let’s say I am a feckless banker running a bank today. Customer Bob will sell his home for more than he paid. Customer Joe wants Bob’s home and is willing to make an offer than can’t be refused. Bob agrees to Joe’s excessive offer. Joe comes to my bank for a loan. I say sure and electronically put cash in Joe’s account and set up a loan receivable – done. I will find some “cash” somewhere/somehow to meet my reserve requirement.

Voila, money out of thin air due to Bob and Joe. If Joe defaults on his loan – oops, there goes my bonus plus shareholders and taxpayers get stuck with the bill.

#140 VoteABC on 08.22.15 at 8:31 am

Ouch. Within the month of August alone my stuff grew -4.6%.
Because of the hit, the trailing 12 months growth remains at 7% growth.
22 days ago, my trailing 12 months was 13.6%

No tuning, stay the course, and recover. Play a long game and the blips like this month are just bumps on a long upward curve.

#141 Scott on 08.22.15 at 8:36 am

Whats missing in this whiplash of insight is a reality that the entire global economies and its attendant “markets” have been hyperinflation for 40 years. This on the backs of unprecedented credit expansion by governments, corporations, and consumers and lest we forget the historic expansion of central bank monetary expansion.

Like fingers in the rotting dam governments central banks have been trying to hold back the equilibrium of economic balance. They have been desperate to reflate unrealistic asset prices some for over 25 years (see Japan.) Partially to also offset the economic change in the global labor and its wage deflation

Now the cascade of central bank can kicking and government credit expansion that has finally reach its epoch of effectiveness. QE only finance asset bubbles and every dollars of credit only gains 30 cents of growth. Both are eventually are negative economic drivers.

Those that want to cling to the fiat paper house of cards believing that our modern life and financial system is different than thousands of years of experience then by all means hustle and shuffle between them.

Its not that paper money or its derivatives will go away. Instead of a faith and trust based valuation system we are fast approaching a more asset back fiat system.

BTW, QE 1,2,3,4-to-infinity were reactions to natural price readjustments. Every 10% decline has been meet by jawboning and real interventions by central banks. Lets see how they react now and what happens if they decide to stop financing the oligarchs and the Wall St. welfare and entitlement state.

There will be no asset-backed currency in a major country in the lifetime of you or your grandchildren. — Garth

#142 reality bites on 08.22.15 at 8:58 am

as predicted, the CPD has reduced distributions by 15% (from 0.06202/month, to 0.056) this month, with more reductions to come as more fixed resets cut distributions in half.

CPD price reduced, so the yield is maintained. In any case, it will all be reversed in due course. — Garth

#143 new now on 08.22.15 at 9:17 am

119 Now on 08.22.15 at 12:56 am

#80 Smoking Man

You must be a poet?

You must be new here?

#144 Porsche on 08.22.15 at 9:27 am

The perfect helmet hair of Harper… lol

Stephen’s hair piece appears to be general knowledge.
To really see the scope and placement of his rug, you have to have a camera person shooting tight head and shoulders shots outside on a windy day. You will notice that the straight front of the hair across the forehead will sometimes shift slightly, as a single piece. It happens when he has not used enough glue. It would take a force eight gale to disturb a single strand of that helmet with all the lacquer sprayed on it.

#145 Harper refinanced? on 08.22.15 at 9:37 am

33 Nagraj on 08.22.15 at 6:49 am

…a remark which SILENTLY referenced a rumour, as it were, that the famous (dirty-oil refinery owning) Koch Bros are helping Harper’s re-election bid (with $2M?).

Nice piece Nagraj, maybe even Margaret would enjoy it… the Marie Antoinette white dress part is priceless…

However, the idea of the Koch Bros. refinancing Steven Harper’s mortgage on occupying the 24 Sussex drive property for 2 million dollar is just outrageous.

Not because that’s more than Thomas Mulcair could collect from RBC, for remortgaging his less appealing postal code property 11 times in the past.

The real outrage is that the Koch Bros think they can pick up Canada for pennies on the dollar?

If the claim is true – I really wonder, who wrote the check, and does Mr Harper know about it?

#146 Name on 08.22.15 at 9:41 am

Do exactly as your told PEOPLE, “Don’t Panic”. Their not done raiding you retirement savings yet, just like 2008!

Anyone who panicked in 2008 and sold, lost capital. Those who ignored it and did not, lost nothing. Easy to see which camp you belong to. — Garth

#147 Shaken not stirred on 08.22.15 at 9:46 am

After reading this blog and listening to people I understand why your advice while correct is useless.
People do not understand money, budgets, taxes, investments and savings. Everyone wants a house because they cannot save money. So it’s easier to have a forced payment every month. People do not invest as the market dips and they feel they lost money.

And I admit I am quite shaken, I have a good balanced portfolio but I lost 5% or 10,000 have not sold, but when this is the only money I have it is nerve racking.

Whereas if I had brick and mortar I live rent free.
Yes you can debate everything and come up with a good Agrument for your viewpoint. Bottom line it’s an emotional issue. Why save for the future when you can spend it now with cars, holidays toys and whatever you like. That’s why financially we are screwed.

We have all the advice in front of us but we screw up with spending rather than saving.
Now I have to listen to my wife who wants a house so badly, and she will say you lost $10,000 and we could have bought a house.
Cheers today’s rant, thank you for reading

#148 The Bank of England on 08.22.15 at 9:49 am

#222 Blacksheep on 08.21.15 at 4:33 pm said:
“Shawn # 151, on 08.19.15 at 2:02 pm”

“We put money in a bank and our neighbor borrows it”

Copy and paste the section of this BoE document that supports this/your claim and I will NEVER show my face again at Greater Fool.

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

Fail to do so and be branded permanently, as the liar you are.

********************************************
Blacksheep, we at the Bank of England have noticed that you have misrepresented our paper by choosing to show a few sentences and not the rest of the story.

Our paper indicated that deposits (savings) are loaned out. Note the part of our paper that said:

“By attracting new deposits, the bank can increase its lending without running down its reserves, as shown in the third row of Figure 2.

Alternatively, a bank can borrow from other banks or attract other forms of liabilities, at least temporarily.

But whether through deposits or other liabilities, the bank would need to make sure it was attracting and retaining some kind of funds in order to keep expanding lending.

And the cost of that needs to be measured against the interest the bank expects to earn on the loans it is making, which in turn depends on the level of Bank Rate set by the Bank of England.

For example, if a bank continued to attract new borrowers and increase lending by reducing mortgage rates, and sought to attract new deposits by increasing the rates it was paying on its customers’ deposits, it might soon find it unprofitable to keep expanding its lending. Competition for loans and deposits, and the desire to make a profit, therefore limit money creation by banks.”

**************************
So you see, Blacksheep, we did explain how deposits (someone’s savings) are needed in order for banks to “keep expanding lending” and that banks need to “attract new deposits”. As you know when someone has a bank deposit that can be referred to as their savings. As in “savings account”.

#149 Funny on 08.22.15 at 10:16 am

And Julia,

I bought a painting for $100K last year but no one is offering me $10K now. But I haven’t lost if I don’t sell. :)

#150 crowdedelevatorfartz on 08.22.15 at 10:19 am

Hmmmm, I wonder it the Vancouver real estate market is similar to the ReMax hot air balloon hovering over Port Coquitlam this am.

Stalled, full of hot air, going nowhere…..

#151 liquidincalgary on 08.22.15 at 10:30 am

White Crock said:

but I think the Chinese could kick America’s ass in an all out war

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

does china even have a blue water navy yet?

#152 };-) aka Devil's Advocate on 08.22.15 at 10:34 am

Expect the price of that which you NEED to continue to rise and the price of that you WANT to continue to drop. Soon you’ll not be able to afford that Big Screen TV as your financial resources will be taxed to pay for the food on your table and the roof over your head and all that goes with it.

#153 Damien on 08.22.15 at 10:37 am

@Boss Pittens

Go with the Glock. They are extremely reliable – also very fun to shoot.

Shooting is a great hobby, but if you’re buying for your bug-out bag, please store in a safe secure place in the meantime. Handguns are dangerous when used improperly. Also extremely fun to shoot.

PS – if you’re buying one for home security, you’re accomplishing the exact opposite.

Cheers Garth! Much love xoxo

#154 };-) aka Devil's Advocate on 08.22.15 at 10:39 am

Anyone who panicked in 2008 and sold, lost capital. Those who ignored it and did not, lost nothing. Easy to see which camp you belong to. — Garth

As so too could it be said of anyone who panicked and sold their real estate in 2008. Anyone like… ME for example. }:-(

#155 };-) aka Devil's Advocate on 08.22.15 at 10:40 am

It’s real simple.

There are investors and then there are speculators.

Too many don’t understand the difference.

#156 JimH on 08.22.15 at 11:25 am

#147 The Bank of England
A very interesting debate Blacksheep/Shawn

Most of the “money” in our current system is in reality “credit”.

Here are some additional links that you and others might enjoy.

http://www.pragcap.com/the-basics-of-banking/
http://www.pragcap.com/where-does-money-come-from/

and a link with a ton of links about just about everything and anything about the monetary system, portfolio management, trading and investing…

http://orcamgroup.com/understanding-money/

Happy trails!

#157 willworkforpickles on 08.22.15 at 11:27 am

….I said it over a year ago, the US economy is not in recovery mode but merely sputtering forth on its way and still on its way to a collapse. I said interest rates won’t be able to move up because of this and gold would eventually head back up because of that.
The masses have generally accepted the so called experts opinions who i have said are usually all wrong better than most of the time. I have always said real estate will take a hit not as a result of rising interest rates but as a result of a long hard recession on its way.
I don’t run this blog so no one has should or ever would listen of course

No US collapse, of course. — Garth

#158 JimH on 08.22.15 at 11:36 am

#146 Shaken not stirred

Hang in there, bro!
You haven’t “lost” a red cent at this point, nor will you until you sell, but of course, you already know that!

If you’re “down” 5% in your portfolio at this point, when the S&P looks to be down about 7.6% off its recent high, then in reality, you’re looking pretty good.

I know it’s no fun to look at an account balance after a -3% day-drop in the markets, but I hope you don’t panic.

I suggest you pull up a 5-year chart of the S&P500 and pour yourself a whiskey. (Jameson Irish is guaranteed to relieve the pain)

#159 Daisy Mae on 08.22.15 at 11:54 am

GLOBE & MAIL: “….Today the PMO is virtually a government unto itself. It ruthlessly imposes its will on MPs, cabinet ministers, Commons committees and civil servants, and obscures expenditures and legislation in the dark corners of omnibus budget bills. Any insubordination is, as a memo released in the Duffy trial on Tuesday reveals, viewed as a failure on the part of members of Parliament to “embrace” their status as minions of the executive – a complete distortion of how our system is meant to work.

The PMO enforces its will two ways: through the prime minister’s power to appoint and fire cabinet ministers, committee members and deputy ministers; and his or her power to approve the nomination of everyone who runs for the party. An MP who shows signs of independent thought can be replaced by a more docile “team player” at the next election. A cabinet minister who fails to lip-sync the PMO’s talking points won’t be in cabinet for long. Deputy ministers who question PMO directives find themselves shelved….”

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

So….Garth understands this only too well. How did our country get to such a low point?

#160 For those about to flop... on 08.22.15 at 11:58 am

#99 For those about to flop… on 08.21.15 at 10:37 pm
O.k ,so as guy who is low wage and is trying to be self sufficient by topping out my tfsa the cooling down of the market has me thinking this.
If you put the full 10k in January it leaves you with no chance to buy on the low later on the year .
On the flip side if you wait and the market rises you miss out .
Small potatoes I know but that’s where I’m at.
Living within my means ,staying out of debt .
Trying to be the boss of me.
——————————————————
#127 Longterm on 08.22.15 at 1:38 am
#99 For those about to flop… on 08.21.15 at 10:37 pm

So put the $10k into your TFSA brokerage account in Jan and then either buy quarterly to dollar cost average and keep the transaction costs down or sit in cash and wait to pounce and buy during down days / weeks. Pretty simple.
//////////////////////////////////

I get what your saying even though I feel your talking down to me.
My point is one of my biggest gain periods this year was in early January ,maybe before everyone got their Xmas credit card bills.
If I had not gone all in I would have missed out and would be negative now for the year ,which I probably will be next week.
That’s one thing with the TFSA you are playing by someone else’s rules .
You don’t have to max out your contrubtions each year as you don’t lose the room ,but there is always this nagging feeling in the back of my mind that one day this or future goverment will play around with the TSFA and so I just want to be on the right side of the column when they do.
By the way I know I am a simpleton.
I finished high school at 15 ,but I have not let my lack of education stop me from living in 5 different countries and visiting another 30.
As I said I pay my way ,keep out of debt and try to be the boss of me.Pretty simple!

#161 crowdedelevatorfartz on 08.22.15 at 12:05 pm

@#150 liquidincowtown
“does china even have a blue water navy yet?’
+++++++++++++++++++++++++++++++++++

Not yet, but they ARE working on it….

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=5&cad=rja&uact=8&ved=0CDwQFjAEahUKEwibt5XGh73HAhUQOogKHZTIC3o&url=http%3A%2F%2Fwww.scmp.com%2Fnews%2Fchina%2Fdiplomacy-defence%2Farticle%2F1808948%2Fbeijing-pledges-increase-range-role-navy-amid-tensions%3Fpage%3Dall&ei=a5zYVdvVFpD0oASUka_QBw&usg=AFQjCNG2kf3ONYEUzreZfn6mIfuyIXsGzA

and this………

http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&frm=1&source=web&cd=7&cad=rja&uact=8&ved=0CDUQFjAGahUKEwji2P3nh73HAhUEOIgKHc5eB4U&url=http%3A%2F%2Fthediplomat.com%2F2015%2F04%2Fconfirmed-china-deploys-new-carrier-killer-missile%2F&ei=spzYVeK3EYTwoATOvZ2oCA&usg=AFQjCNGkQBzf8IQ4-d1tRSnaCwbwMFHdYQ

Like the introduction of Aircraft Carrier “game changer” air superiority of 75 years ago.
Guided missle technology, drones, rail guns, etc. will be the “new” weapons of war.
We may be entering a whole new era of warfare and defense.
Hopefully the US and its allies are prepared.

#162 Riker on 08.22.15 at 12:09 pm

No US collapse, of course. — Garth

Yup, it’s different there.

#163 willworkforpickles on 08.22.15 at 12:09 pm

Currency/trade war against the US is picking up steam and has already been hurting the US .

#164 JimH on 08.22.15 at 12:11 pm

#140 Scott
Scott, there are effectively zero asset-based currencies in the world today, and with good reason.

For example, as Ben Bernanke noted, the length and breadth of the deflationary spirals of the late 1920’s and early 1930’s (and the many such deflationary spirals that preceded them) had a monetary origin, and were exacerbated by the adherence to the gold standard. Asset-backed currencies would lock in recessions and depressions, as well as severely limiting a government’s ability to address employment issues and inflation.

Assets (of all classes) ride a fluctuating roller-coaster of valuations, and such fluctuations result in economic instability. (imagine if the Loonie were directly tied to oil right now; about a 65% drop in a year)

Any global asset-backed currency system would be the kiss of death for many developing nations, especially those lacking natural resources.

Due to their inability to expand at a rate conducive to healthy global economic growth, asset-backed currency systems would cripple international trade and commerce. On a macro-economic level, not only would a switch to asset-backed currencies be impossible, such a switch would be highly undesirable in the first place.

Garth is correct:

“There will be no asset-backed currency in a major country in the lifetime of you or your grandchildren. — Garth”

#165 TJM on 08.22.15 at 12:14 pm

Here’s another thing to keep in mind…

If most online self-directed account services are like mine, your “Holdings” screen probably tells you whether your portfolio as a whole is up or down i.e. unrealized gains show up in happy green with little plusses, unrealized losses show up in angry red with little minuses. So it’s easy to see when a bunch of your investments have “lost” capital value, however temporarily. When you sell an investment that has appreciated in value, that green number goes away and the total “unrealized loss” number goes deeper into angry red territory.

What it doesn’t put right in your face is the sum of interest payments and dividends that have been paid into your account since you bought those things. So the value of getting in early instead of trying to time a correction or a crash is less obvious.

So it seems to me that the way the data are presented, tends to encourage people to feel like they’re losing more than they’re winning. Couple that with the fact that people feel losses more keenly than equivalent gains, and it’s a recipe for driving people to the exits at exactly the wrong time.

#166 NoOneOfConsequence on 08.22.15 at 12:28 pm

The correction confirms that the FED will indeed raise rates. This correction is completing the pricing in of that correction.

What everyone is missing here is that the FED MUST RAISE RATES.

QE is over, ZIRP is over for the USA.

Mathematics confirms that this cannot continue.

#167 Mike T. on 08.22.15 at 12:28 pm

the problem with the information ‘we’ get is that it is mostly native advertising at this point

nothing to do with indigenous people, native advertising is advertising passed off as a news story, like the realtors do, except it’s everything ‘we’ get to read

everything

if the US is so great why does the WSJ report that 17% of people with student loans haven’t made a payment in 1 year?

to confuse people – that’s the purpose – so people never figure out what is happening

I will tell everyone again, this is how simple reality is

the sun is changing and life in this solar system is changing, our glorious elites need distractions so you don’t figure this out

Go Jays!

#168 SWL1976 on 08.22.15 at 12:33 pm

#138 westcdn

Voila, money out of thin air due to Bob and Joe. If Joe defaults on his loan – oops, there goes my bonus plus shareholders and taxpayers get stuck with the bill.

Thanks for simplfying that as it is really not as complicated as bankers and economists would have you believe. This is also why they hate cash and asset backed currencies

Is there and easy solution?

No, but leaving the foxes in charge of then hen house will produce more of the same.

I’m no banker, but I am smart enough to understand the deception

Likewise I could explain to a banker how a compressor works without going into the minute details about rotor end floats and how the clearances affect the performance. It might make it sound more complicated but it doesn’t change where the raw gas goes in and compressed gas comes out.

Likewise with banking

#169 Stephen Harper's HAIR Team Six on 08.22.15 at 1:15 pm

Mr. Nagraj, #133,

You might want to reconsider drawing attention to your obviously partisan self with such queries re: a Harper wig.

HAIR Team Six proudly promotes the PMO and the Canadian Way by assuring respect for our PM and the Western way of life. His hairpie……er, hair, mascara, blush and lipstick are our classified, taxpayer-subsidized responsibilities. You don’t want to stick your nose in there.

We know your IP address and where you live. We can be there in minutes. Our numbers are classified, and we are everywhere.

Did you know that we took out Osama Bin Laden’s manicurist months before he was killed? By the time the SEALS got to him, he was so despondent for lack of personal grooming that he literally walked straight into the muzzles of those American guns.

Mess with further references to Mr. Harper’s personal appearance, and we will coiffe you up, Nagraj.

Promise.

(Ever wonder why these people have never been heard from since they posted this?)

https://www.youtube.com/watch?v=r2mu1lDnYvo

#170 Occupy 24 Sussex Drive on 08.22.15 at 1:15 pm

144 Harper refinanced? on 08.22.15 at 9:37 am

33 Nagraj on 08.22.15 at 6:49 am

…a remark which SILENTLY referenced a rumour, as it were, that the famous (dirty-oil refinery owning) Koch Bros are helping Harper’s re-election bid (with $2M?).

Nice piece Nagraj, maybe even Margaret would enjoy it… the Marie Antoinette white dress part is priceless…

However, the idea of the Koch Bros. refinancing Steven Harper’s mortgage on occupying the 24 Sussex drive property for 2 million dollar is just outrageous.

Not because that’s more than Thomas Mulcair could collect from RBC, for remortgaging his less appealing postal code property 11 times in the past.

The real outrage is that the Koch Bros think they can pick up Canada for pennies on the dollar?

If the claim is true – I really wonder, who wrote the check, and does Mr Harper know about it?

To Thomas Mulcair’s credit, at least he remortgaged his own house, not Canada.

#171 tundra pete on 08.22.15 at 1:17 pm

#120 Oxi in greece

Never forget, its all about the money. Nothing else. Harper and his crew of wannabee’s and misfits are deep in the pockets of the pharmaceuticals. They are scared silly by the thought of legal pot.

Under his mismanagement, Marijuana will never be legal or decriminalized to make any fiscal sense to the taxpayer’s. Now its more obvious than ever why we will likely end up with an NDP govt.

#172 Blobby on 08.22.15 at 1:20 pm

Who is this Harvey dent everyone is talking about? And does he have two faces?

#173 Re #77 "omg the original" rebuke on 08.22.15 at 1:22 pm

“omg the original” in post 77 said:

I honestly feel bad for people like this that get suckered into believing how bad things are now – they are not.

– like the 1930s where there was a massive financial crisis couple with extreme disruption in the NA agricultural sector
– WWII

– doc.com meltdown
– 2007 to 2010
I’d say we are in pretty good shape right now.
====================================

Instead of placing the significant events vertically in chronological order – try to place them side by side when they “match”

1920s / 2000s – high inequality, high banker pay and reckless bankers, low regulation, robber barons (CEOs)

1929 / 2008 – Wall Street crash

1930s / 2010s – Global recession, currency wars, rising nationalism and extremism

1940s / 20??s – Global WAR

Perhaps this will open your eyes

#174 Nora Lenderby on 08.22.15 at 1:22 pm

#148 Funny on 08.22.15 at 10:16 am
“And Julia, I bought a painting for $100K last year but no one is offering me $10K now. But I haven’t lost if I don’t sell. :)”

Bruce Bailey, is that you?

#175 kommykim on 08.22.15 at 1:37 pm

RE:#159 For those about to flop… on 08.22.15 at 11:58 am
You don’t have to max out your contrubtions each year as you don’t lose the room ,but there is always this nagging feeling in the back of my mind that one day this or future goverment will play around with the TSFA and so I just want to be on the right side of the column when they do.

There is nothing stopping you from putting money into your TFSA brokerage account and letting it sit at 1% in a HISA if you are worried about the government taking room away:

http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/

#176 Dan Bryson on 08.22.15 at 1:39 pm

Garth, first of all I enjoy your blog, followed you for many years.

Since the late nineties markets are juiced on cheap money and liquidity. Companies haven’t been investing in their businesses because there is little end demand and growth. Q1 of 2015 companies in the S&P 500 are paying out over 100% of operating earnings on Dividends and stock buybacks – buybacks being the larger of the two by almost 2 to 1.

There is a major reliance on stock buybacks to grow earnings per share, over 20% of S&P 500 companies purchased over 4% of their shares year over year.

This too will not end well, like housing, it works until it doesn’t.

It’s popular, but wrong, to attribute overall stock performance to one fifth of companies buying back four-one-hundredths of their stock. Earnings and economic recovery, as measured mainly by employment growth, are more fundamental. — Garth

#177 Confused millenial on 08.22.15 at 1:47 pm

Another massive explosion in China… The day after record setting DOW losses… No connection there, right?

#178 Screecher's pet on 08.22.15 at 1:56 pm

#136 Jon on 08.22.15 at 7:52 am
When you learn to read, come back. Or not. — Garth

Garth, I was referring to a commentator called “marketman” not yourself.

Got it. Apologies. — Garth”

Good grief….quit sucking up so much Jon….such groveling could cause the bearded one to lose respect for the rest of us in the rabble…

#179 waiting on the westcoast on 08.22.15 at 2:15 pm

#114 Jonah on 08.22.15 at 12:02 am
“What we really need to do is keep the loonie lower just as Chinese are doing. This will keep our neighbor corporate culture to rethink strategy and bring back jobs to Canada due to lower operating costs.”

This is great in the short-term but a poor strategy in the long-run. We need to be creative and become more competitive without devaluing our currency. We need to optimize and become more efficient not rely on tactics that make us less competitive.

#180 For those about to flop... on 08.22.15 at 2:27 pm

#174 kommykim on 08.22.15 at 1:37 pm
RE:#159 For those about to flop… on 08.22.15 at 11:58 am
You don’t have to max out your contrubtions each year as you don’t lose the room ,but there is always this nagging feeling in the back of my mind that one day this or future goverment will play around with the TSFA and so I just want to be on the right side of the column when they do.

There is nothing stopping you from putting money into your TFSA brokerage account and letting it sit at 1% in a HISA if you are worried about the government taking room away:

http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/
—————————————–
Thanks Kim for your advice, I am in my early 40,s and have already realized I am not going to have enough money for a comfortable retirement if still alive.
Hence I view the tfsa as my one chance to avoid living on cardboard so I feel pressure to take a little bit of risk.
Enjoy your weekend.For those about to flop…

#181 Steerage bilge on 08.22.15 at 2:31 pm

#176 Confused millenial on 08.22.15 at 1:47 pm
Another massive explosion in China… The day after record setting DOW losses… No connection there, right?
———
You got it dude. Heard the last was a mini-nuke too. That will teach them to mess with the usd.

#182 I suggest you PANIC on 08.22.15 at 2:34 pm

Technically…we are in for one very crappy..day…week…month….year….ahead. If you haven’t spilled your guts puking up your stocks, ETF’s already…..Monday is going to be a horror show…..followed by an all out panic throughout the next month. The margin ‘players’ are dumping everything….bonds…taking second mortgages….filling their pants. It’s a bloodbath….puke fest….pant soiler…..time for a vacation…..and when all confidence is lost….a great leader will emerge in Canada….and take down housing in a socialist swipe at the capital system. I think people in Canada are that easily herded….and that panic is how great communist systems emerge.

http://www.timingthemarkets.com/

#183 #163 JimH rebuke on 08.22.15 at 2:56 pm

Re #163 JimH

World population 1900 – 1.8 Billion;
Total gold in existence 1900 – around 24,000 mt;
Average per person at 1900 – 0.42 oz
Most of the world (or at least the part that mattered) was on the gold standard

World population 2000 – 6.0 Billion;
Total gold in existence 2000 – around 165,000 mt
Average per person in 2000 – 0.88 oz
We have more than twice the amount of gold per person that existed under the “gold standard” from 1900 – which will make an “asset-based” standard doable.

But hey – what we will do without the FED and millions of grossly overpaid banksters and the other financial industry professionals. And on the other hand we ended with monstrous unpayable sovereing and personal debt, two world wars and countless other regional conflicts to keep the banksters happy.

#184 Blacksheep on 08.22.15 at 2:57 pm

Ahem…yes…’Bank of England’ # 147 on 08.22.15 at 9:49 am

“By attracting new deposits, the bank can increase its lending without running down its reserves, as shown in the third row of Figure 2.”

“So you see, Blacksheep, we did explain how deposits (someone’s savings) are needed in order for banks to “keep expanding lending” and that banks need to “attract new deposits”. As you know when someone has a bank deposit that can be referred to as their savings. As in “savings account”.”
——————————————————–
Dear: ‘Bank of England’,

I am honoured that you’ve shown interest in our little debate here, @ Greater Fool.

Thank you for the quotes, Fig (2) from your BoE pdf , laying out the operations in regards to reserve requirements, and the challenges of reserve out flows when a commercial bank creates a new deposit, with it’s customer signature, and then the reality that said new deposit is often transferred to a different bank, as part of a home purchase.

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

But may I respectfully point out, the debate between my fellow blog dog, Shawn and my self, was AT NO TIME, about RESERVE requirements, or the impacts of reserve OUT FLOWS.

But since you’ve shown interest in our ‘debate’ I will pose the actual question being asked.

Simply put, is the following statement, TRUE or FALSE?

“Shawn # 151, on 08.19.15 at 2:02 pm”

“We put money in a bank and our neighbor borrows it”

I figure, hey…who knows the BoE doc. better than, ‘THE BANK of ENGLAND’!

So…if your firm could be so gracious as to quote the portion of your document that supports or denies, the above statement in question, I would be forever in your debt.

Yours sincerely,

B. Sheep

#185 Godth on 08.22.15 at 3:28 pm

#147 The Bank of England on 08.22.15 at 9:49 am

Try again.
Steve Keen: “Loans create deposits!” aka No One Understands Banking.
https://www.youtube.com/watch?v=E9R4lxRETOE

Deposits restrict lending
Deposits are not loaned out
Loans create deposits

#186 call wambulance on 08.22.15 at 3:29 pm

#145 NAME

Stop blaming others ….. and get yourself a spell check, ‘their’ quite cheap.

#187 Figmund Sreaud on 08.22.15 at 3:42 pm

Lesson one: earning an annual average of 7% over a decade does not mean 7% annually. — Garth
________________________

Hmmm, … same type of sermon at this church, too!

“But 7% average annual returns are not the same as 7% annual returns.”

http://thereformedbroker.com/2015/08/21/five-hundo/

#188 JimH on 08.22.15 at 3:42 pm

#182 #163 JimH rebuke

LOL You call that a rebuke???? Seriously?

Your post is just plain silly and clearly demonstrates that in terms of macroeconomics you are functionally illiterate.

My post attempted to outline just a few of the many problems with asset-based currencies. You addressed absolutely non of them!

ADHD, metalhead syndrome… or worse?

#189 Dan on 08.22.15 at 3:43 pm

Bear market denial, stage one. And you still think the Fed will raise interest rates?

Give me a break. Doomers have been laughed at for years now, and even the Zero Hedge crowd are convinced in the government’s ability to “stop the plunge” at any point.

Index investing and balanced portfolios are very popular again, don’t kid yourself.

“Anyone who panicked in 2008 and sold, lost capital. Those who ignored it and did not, lost nothing”

Tell that to the countless people trapped in crappy mutual funds that never recovered.

Like you? — Garth

#190 Victor V on 08.22.15 at 4:46 pm

http://www.thestar.com/yourtoronto/education/2015/08/22/ontario-high-school-teachers-to-get-increase-in-pay-not-class-size.html

TORONTO—Ontario’s secondary school teachers are set to receive a raise and there will be no increases to class size limits.

The details of a tentative contract agreement are outlined in a briefing that was given to local union leaders on Friday and obtained by The Canadian Press.

The agreement between the Ontario Secondary School Teachers’ Federation, the Public School Boards’ Association and the province was reached on Thursday.

The briefing says the teachers will get a one-per-cent lump sum payment for the upcoming school year and a one-per-cent raise as of Sept. 1, 2016, with another half-per-cent later on.

It also says they will get improved sick leave and benefits, and an additional professional activity day within the current school year.

#191 Retired Boomer - WI on 08.22.15 at 4:51 pm

Well that hurt. Down $27,700. not counting interest & dividend returns which lessen the blood loss.

So what did he do? Put out for more orders to “buy.” That’s what happens when you have a few % of your investment portfolio sitting idle. Still didn’t get my “fills” on all my limit orders from Thursday even by the end of Friday!! Guess it might take another -300 to -450 drop to hit those levels (dam it)!

Am I worried? No, but interestingly, the ETF’s and mutuals as a group lost between $1.55 and $2.84 in share value on Friday, while the stocks I wanted had less than .50 to get to get to my buy limit order. Let us hope for a bit more carnage come Monday! We have another 5-15% before I will break a sweat here.

#192 Steerage Bilge on 08.22.15 at 4:56 pm

#182 #163 JimH rebuke on 08.22.15 at 2:56 pm

Re #163 JimH

World population 1900 – 1.8 Billion;
Total gold in existence 1900 – around 24,000 mt;
Average per person at 1900 – 0.42 oz
Most of the world (or at least the part that mattered) was on the gold standard

World population 2000 – 6.0 Billion;
Total gold in existence 2000 – around 165,000 mt
Average per person in 2000 – 0.88 oz
We have more than twice the amount of gold per person that existed under the “gold standard” from 1900 – which will make an “asset-based” standard doable.

But hey – what we will do without the FED and millions of grossly overpaid banksters and the other financial industry professionals. And on the other hand we ended with monstrous unpayable sovereing and personal debt, two world wars and countless other regional conflicts to keep the banksters happy.
————————-
That was truly a special level of stupid.

#193 gut check on 08.22.15 at 5:51 pm

@ #180 Steerage bilge on 08.22.15 at 2:31 pm
#176 Confused millenial on 08.22.15 at 1:47 pm
Another massive explosion in China… The day after record setting DOW losses… No connection there, right?
———
You got it dude. Heard the last was a mini-nuke too. That will teach them to mess with the usd.

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

Make of this what you will, but the very same footage of this most ‘recent’ explosion can be found at the link below, with a date of July 17.

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

#194 Herb on 08.22.15 at 6:06 pm

#158 Daisy Mae,

How we got this way –

1. Chretien used his majorities and the PMO to establish his “Friendly Dictatorship” (Jeffrey Simpson) that really didn’t hurt anyone. “Mr. Dithers” Martin (Clive Sangster) couldn’t keep it going, so …

2. “Hostileman” Harper (moi) turned the screws and gave us the “hostile dictatorship” (moi) that really is no good to anyone except neandercon ideologues.

Next, of course, we will have the “Dictatorship of the Proletariat”. (Sorry, Garth, a dig too good to resist.)

In what our “democracy” has become, it all depends on the leader you hand the levers of power to.

#195 DON on 08.22.15 at 6:37 pm

#106 White Crock BC on 08.21.15 at 11:14 pm

#95 VICTORIA TEA PARTY on 08.21.15 at 10:39 pm

China has for a long while,IMHO, been the world’s leader. Not only economically, but I think the Chinese could kick America’s ass in an all out war.
They just choose to keep a low profile while socking away lots of $$ and Gold… they will own us all soon

Hell, they (the US) had/have trouble with a dumbass country like Iraq for God’s sake .

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

China and Russia seem to be playing quite the chess game with the west. The West seems to be in damage control on many fronts. Revert to the mean…

#196 ANON on 08.22.15 at 6:45 pm

@#75 Trojan House on 08.21.15 at 9:08 pm
Not quite. Making promises has been the modus operandi for humans ever since intelligence has allowed imagination of the future. Humans cannot learn from their mistakes (except individually), socially they are bound by imagination to think “this time is different” each time the future confirms the possibility of keeping the promises, thus an expansion. It might seem stupid to build on promises which cannot be kept, but you cannot blame it on not learning, anymore than you can blame flock of birds for not being schools of fish :)

#197 Andrew Woburn on 08.22.15 at 7:28 pm

How Wall Street’s Bankers Stayed Out of Jail

http://www.theatlantic.com/magazine/archive/2015/09/how-wall-streets-bankers-stayed-out-of-jail/399368/

#198 LH on 08.22.15 at 7:32 pm

@ smoking man

amen to that
happy wife happy life
for the four kids (and counting)
in some ways she is 10x smarter than me and
yes she will get a great pension!

Re: LH brags about his success, I love that about him. He’s in the lifes stage of showing worthyness. 31 and lets face if , money, status, as much as he wants to pine the Tim Horton blond apprentice coffee girl who will say yes for a ride in that car… Dont do it…

Backpage…pay em to go away..

Family is everything. So are the one or two real freinds you have. Broom the rest..

#199 Randy Randerson on 08.22.15 at 8:01 pm

Meh, it’s only a less than 10% drop anyway (for the S&P). So what I’m seeing $34,000 evaporated over the last month. I’m hoping it’ll be a 50% drop so that I can leverage up with my LOC.

#200 Lee on 08.22.15 at 8:23 pm

Column in the Sun today by Sean Madigan saying no bubble in Toronto. Didn’t Garth work for this outfit once? Must be reliable. There you have it: no housing bubble in Toronto. Enough said. Cat back in the bag.

On a brighter note, if the s and p loses five more percent , time to back up the truck. Stay away from energy etfs. If they make up forty percent in five years you’ll still make more balanced especially with major indexes heaving.

#201 Daisy Mae on 08.22.15 at 8:24 pm

“Anyone who panicked in 2008 and sold, lost capital. Those who ignored it and did not, lost nothing. Easy to see which camp you belong to. — Garth”

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

That’s the tactic I believed at the time. But it backfired for me….thanks to many INVESTORS GROUP screw-ups.

#202 Llewelyn on 08.22.15 at 8:31 pm

# 186 Figmund Sreaud

I think we all get the concept of averages. My concern is that the historical average ROI of 7.0% was generated, in part, by an inflation component that was substantially higher than the inflation rate being projected by experts for the next ten years.

Why would a company provide a 7.0% ROI to their shareholders if they could buy back their shares and replace the cash with bonds offering a ROI of 3% or 4% or low interest loans?

The historical ROI of 7.0% occurred when bonds, GIC’s, interest rates on savings account etc. were substantially higher than in 2015. Capitalists are not known for providing their shareholders with a greater share of their profits than necessary.

This is why I asked Garth to illustrate how a 7.0% ROI can be achieved in the current low inflation environment. Quoting ROI averages from the last ten years seems to indicate that fundamentals like inflation rates or the projected cost of accessing capital from other sources are meaningless.

Criticizing the real estate industry for ignoring market fundamentals while promoting a 7.0% ROI for a balanced portfolio solely on historical averages seems somewhat hypocritical.

Just seeking a little more proof than faith in a rear view mirror where the timeframe can be adjusted as required.

#203 Nagraj on 08.22.15 at 9:01 pm

HAIR TODAY GONE TOMORROW

So he puts on the toupee, looks in the mirror and sighs, “Oh thank God, now I can live with myself again.”
Not realizing – for some reason – that this toupee makes him look really odd.

Or was he convinced by some PR idiot that the toupee was actually indispensable to his political career?

Like who in their right mind gives a s*** if some man past 50 is losing hair.

And with this incomprehensible nonsense goin’ on, they have the temerity to make an issue of JT’s Greek God looks. (TM’s coiffure is tres au naturel.) Is there some death wish subtly animating the PMO?

Stupid beyond belief.

There are, I’m told, such things as corsets for men – or will it be proposed to the PM that he photo-op hisself into a weight loss program after Labour Day?
The paunch and the puffiness aint no crime, but throw in blue jeans, a checkered shirt, a microphone and SINGING – what is this, a fat and colourful Johnny Cash? What’s the point?

Style confusions are all over the place these days. GT says he has no pity for folks “slobbering” in front of BNN. Their Stepford Wives money bunnies (Horodelski excepted) and Father Knows Best male anchors are a hoot. (They also have Sponsored Content.) If you like the late 1950’s tune in.

Get the idea that nobody knows “where it’s at”?

#204 7% ROI on 08.22.15 at 9:07 pm

Why would a company provide a 7.0% ROI to their shareholders if they could buy back their shares and replace the cash with bonds offering a ROI of 3% or 4% or low interest loans?

That’s a pretty good question, isn’t it?

It makes absolutely no sense. — Garth

#205 stocks on 08.22.15 at 9:21 pm

Who knew that so many greedy closet stock investors are lurking in the shadow of the ETF worshiping?

#206 ANON on 08.22.15 at 9:39 pm

Money isn’t about what’s backing it. It is about what the promise is perceived to be worth. All money started as being a (rare and/or extremely durable) thingy, but, the need to pay back more has mathematically increased the number of promises of repayment exponentially (look at any debt=promise chart). Money did not “became” fiat (no pun) overnight in 1971 or 1913, or whenever. Money was fiat the second the first promise to repay a non-existing rare thingy has been made. So, theoretically, we do have an asset-based money system. And no, mathematically it is impossible to pay for extracting rare thingies for profit to expand the money supply this way, promises (=debt) would still have to be made. And yes, if the rare thingies existed exponentially more by some miracle, they would be worthless, and another rare thingy would be chosen. So there…now, back to the pan to throw some popcorn in that butter.

#207 Paul on 08.22.15 at 9:41 pm

#198 Randy Randerson on 08.22.15 at 8:01 pm

Meh, it’s only a less than 10% drop anyway (for the S&P). So what I’m seeing $34,000 evaporated over the last month. I’m hoping it’ll be a 50% drop so that I can leverage up with my LOC
———————————————————-
Sounds like you are bragging again! Independently wealthy lol, Piker

#208 Steerage Bilge on 08.22.15 at 9:44 pm

#201 Nagraj on 08.22.15 at 9:01 pm

HAIR TODAY GONE TOMORROW

So he puts on the toupee, looks in the mirror and sighs, “Oh thank God, now I can live with myself again.”
Not realizing – for some reason – that this toupee makes him look really odd.

Or was he convinced by some PR idiot that the toupee was actually indispensable to his political career?

Like who in their right mind gives a s*** if some man past 50 is losing hair.

And with this incomprehensible nonsense goin’ on, they have the temerity to make an issue of JT’s Greek God looks. (TM’s coiffure is tres au naturel.) Is there some death wish subtly animating the PMO?

Stupid beyond belief.

There are, I’m told, such things as corsets for men – or will it be proposed to the PM that he photo-op hisself into a weight loss program after Labour Day?
The paunch and the puffiness aint no crime, but throw in blue jeans, a checkered shirt, a microphone and SINGING – what is this, a fat and colourful Johnny Cash? What’s the point?

Style confusions are all over the place these days. GT says he has no pity for folks “slobbering” in front of BNN. Their Stepford Wives money bunnies (Horodelski excepted) and Father Knows Best male anchors are a hoot. (They also have Sponsored Content.) If you like the late 1950’s tune in.

Get the idea that nobody knows “where it’s at”?
——————————————————-

It’s his real hair. Used to be his neighbour. Known him a fairly long time. But yeah he’s a nasty piece of work.

#209 Nope on 08.22.15 at 9:50 pm

#96 gut check on 08.21.15 at 10:27 pm

@ #80 Smoking Man

is that an original?

thumbs up
========================

Drunk By Noon (An acoustic cover of a song by The Handsome Family)

https://youtu.be/BgqBAE-_Zh8?t=27s

#210 Smoking Man on 08.22.15 at 10:29 pm

#207 Nope on 08.22.15 at 9:50 pm
#96 gut check on 08.21.15 at 10:27 pm

@ #80 Smoking Man

is that an original?

thumbs up
========================

Drunk By Noon (An acoustic cover of a song by The Handsome Family)

https://youtu.be/BgqBAE-_Zh8?t=27s
….

You bastard…

I was on my way to fame and fortune as a poet, but you outed me you prick…

Handsome Family , one of my favorite bands in the world…

Thanks for the publicity… Dogs, they are amazing..I waited all day for someone to find em…

You’re the Man Nope.

#211 jake on 08.22.15 at 10:50 pm

Confused millenial on 08.22.15 at 1:47 pm
Another massive explosion in China… The day after record setting DOW losses… No connection there, right?

Actually it’s because China devalued it’s currency. http://www.naturalnews.com/050816_Tianjin_explosion_space-based_weapons_military_retaliation.html

#212 jake on 08.22.15 at 10:58 pm

tundra pete on 08.22.15 at 1:17 pm
#120 Oxi in greece

Never forget, its all about the money. Nothing else. Harper and his crew of wannabee’s and misfits are deep in the pockets of the pharmaceuticals. They are scared silly by the thought of legal pot.

Under his mismanagement, Marijuana will never be legal or decriminalized to make any fiscal sense to the taxpayer’s. Now its more obvious than ever why we will likely end up with an NDP govt.

____________________________________

We the people can vote on who we want. The paid media which is owned by the 1% are trying the fool the masses to either vote for that dummy Harper which benefits no one other then the 1% or try to get people to split the vote by throwing away their vote on NDP. Liberal should Win and is only choice for the middle class.

#213 Smoking Man on 08.22.15 at 10:59 pm

Mr Nope , got to tell you a story.

I used pirate bay to download The handsom Family discography… Felt so guilty after enjoying all there magic..could not find a place to buy it.

I sent Renee a confession note….I want to shoot some loot your way.

She said, as long as you loved it, no money is nessasay.

Artists im thinking…

Made a big donation..

How could i not…..

My fav….weightless again….

You tube it..

#214 Steve French on 08.22.15 at 11:12 pm

All you “buy , hold , prosper ” types…

Why would you insist on holding when all indicators are pointing to a rough patch ahead?

That’s not a flexible, informed approach. That’s just dumb.

It’s not about trying to time the market. It’s about hitting the eject button when there’s a brick wall coming at you.

You don’t need to time it perfectly, but you can avoid the majority of an obvious downturn.

It’s just common sense.

#215 Waterloo Resident on 08.22.15 at 11:34 pm

According to an expert at timing market crashes, the mother of all crashes is now upon us. This guy says he is so BEARISH on the markets that he’s growing fur.

http://markdcook.com/?p=703

Quote: “I am asked often, “Well how bad will it be”? My answer is this, “If a dump truck is going to run over you do you ask a bystander, how bad can this be or do you jump to safety”? “

#216 Nosty, etc. on 08.22.15 at 11:38 pm

SMan, gut check, swl et al — Some more barf bilge to feed the Sunday morning funnies with — Trump — Not all that he seems to be and Porky Goes To The (Un)Promised Land.

#217 Blacksheep on 08.22.15 at 11:43 pm

Ref: Bank of England

Re: B. Sheep inquiry, file A-23.

Dear Mr. Blacksheep,

We are pleasantly surprised buy the volume of traffic our website has received since the release of our ‘Money creation in the modern economy’ document, Q1- 2014.

The Bank of England has always strived, to provide leadership and clarity in all matters involving commercial banking.

We decided to disclose the details of how commercial banking functions after that unfortunate Leman business in the fall of 08, dreadful stuff really.

At the time due to the required bailouts, the public was painting all manner of banking, with the same negative brush.

It was concluded some public relations actions were in order in the form of sharing some insights with the everyday commoners. We felt this would appease the little people and help them realize, we were not the sinister elitists, many believed us to be.

But I digress, back to your inquiry:

After an extensive search of our database, we were unable to find support for the aforementioned: “We put money in a bank and our neighbor borrows it” statement.

The closest relative language we did find, was on the opening page of the BoE. pdf.

Quote: “Money creation in practice differs from some popular misconceptions — banks do not act simply as intermediaries, lending out deposits that savers place with them”

I hope this result, helps clarify your discussions.

Thank you for your continued support of The Bank of England.

Long live the Queen!!!

Yours truly,

J.H. Axlebottom, the 3rd.

#218 Shawn on 08.23.15 at 12:03 am

Bank of England

Blacksheep at 183 asked:

Simply put, is the following statement, TRUE or FALSE?

“Shawn # 151, on 08.19.15 at 2:02 pm”

“We put money in a bank and our neighbor borrows it”

I figure, hey…who knows the BoE doc. better than, ‘THE BANK of ENGLAND’!

So…if your firm could be so gracious as to quote the portion of your document that supports or denies, the above statement in question, I would be forever in your debt.

Yours sincerely,

B. Sheep

**************************************
Yes, as our paper indicates it is true. That is why banks need to “attract deposits”. The quotes were already given above, by us, the one’s about a bank NEEDING to attract deposits in order to expand lending.

Of course the depositors money was often originally created by the banking system in a loan / deposit transaction of the sort that you are do fond of. But the deposit thereafter moves around and we need to keep attracting it back to the banks.

Simply ask yourself if a bank would have to call in its loans or not if all of its depositors withdrew their deposits. The loans would have to be called in unless the central bank was willing to make a huge deposit (lend money to the bank). We allow a bit of that on an emergency basis but if a particular bank could not attract deposits it would have to call in its loans or sell the loans to a different bank and it would have to shut down. Or it could lend share owner equity instead of deposits but without the leverage the ROE would drop to maybe 1%.

Or just look at any bank balance sheet and observe how loans are funded partly by equity and mostly by deposits.

We trust you understand that deposits are amounts owed to customers. Customers tend to call these savings.

Looking at any bank balance sheet please observe that for every loan due there is someone who owns or funds that loan on the other side of the balance sheet. In other words, one man’s saving is another man’s debt and vice versa.

Remember also money (at least coins) were made round to go around. The creation a deposit and loan is only the start of the process and thereafter the deposit moves around and sometimes escapes as paper cash. In which case it needs to be attracted back to the banking system.

In closing, You’re welcome.

#219 Randy Randerson on 08.23.15 at 12:31 am

#205 Paul on 08.22.15 at 9:41 pm

Realturd strikes again! Now how did I rub you the wrong way? Oh right, wishing you kind would starve. Nothing to see here, moving along.

#220 lookoutbelow on 08.23.15 at 1:05 am

Why, I am shocked, absolutely shocked that the Markets went down big on Friday. How could this happen? Thought they were supposed to go only UP and UP.

Just like the Canadian Real Estate market. It’s simply not allowed to go down, even if we have to sacrifice our meagre RRSP retirement saving by spending that cash on Real Estate, so extols, Mr. Harper! As a fellow conservative, Garth, you gotta be proud of our leader. Sorry, couldn’t resist.

Anyway, back to the markets, here are a few rules:

Rule number 1: Markets Fluctuate
Rule number 2: Central Banks will be there to prop them up if they go down too much.
Rule number 3: Quantitative Easing always available should that market bear come mauling.
Rule number 4: We must call it a free and open market, not like those Chinese officials that actually intervene. Shame on those guys.

So where do we go from here? How can Canada keep it going:

1. Lower interest rates to stimulate the economy, hmmm, kinda difficult when rates are at 0.5%. But cut the rate, nevertheless.

2. Create another Commodities Supercycle. We need one, for sure. After all that’s all we have.

3. Hope like hell, that the Canadian export sector can make hay while the low loonie is still here.

4. Price of Oil rises to $50 per barrel before it gets to $20, Western Canada Select that is. We just heard that a barrel of that stuff costs less than a case of 24 beer.

Hmmmmm. This is not looking good!

#221 D day on 08.23.15 at 1:35 am

Garth it is true that roughly every 7-8 yrs the stock market takes a sharp correction ie recession ie 40% dump what’s different this time…except record debt and zirp. I say this time it’ll be 50% with no bounce back for a few yrs. Unless you can convince us otherwise!

No, stocks follow the economy and not vice versa. Of course. — Garth

#222 Dave in Kincardine on 08.23.15 at 5:08 am

It was the Best of Times, it was the Worst of Times:

A key component of peoples spending decision is based on prices and how fast they are rising -inflation. But the US and Can governments rejigged the CPI to show no inflation (excludes food, oil, taxes) so it always remains around 2% or less per year.
But the top 500 items in Chicago that people spend their money on shows the following:
2011 10.9% increase from previous year
2012 13.6% increase from previous year
2013 12.1% increase from previous year
2014 10.9% increase from previous year
2015 10.1% increase (9 months trailing number) from previous year.
This a huge hit to middle class and the poor. Why does the government give us fake CPI numbers- because wages are tied to the CPI. The US has saved $860 billion so far and the stats are the same for Canadians. Time for honest politicians – vote for the one you can trust the most please.

I posted this on Facebook the other day.

#223 Llewelyn on 08.23.15 at 5:31 am

Garth

If you are going to state assertively “that makes absolutely no sense” it might be useful to explain the rational behind the reduction on interest paid on fixed income assets such as savings accounts, GIC’s, bonds etc. to less than 2.0%.

I assume a balanced portfolio includes fixed income components generating an average ROI of substantially lower than 7.0% per annum. Logic would dictate that the ROI of risk related components of a balanced portfolio, such as ETF’s, must be substantially higher than 7.0% per annum. You know like averages work.

Financial advisors seem to be suggesting that companies who decide to raise capital by issuing shares will continue to generate a ROI on shareholder equity substantially higher than 7.0% per annum. I certainly understand why shareholders would want to continue the dividends established in the past, and the potential for future growth, but have a real problem understanding how, or why, the significant premium for shareholder capital will be continued in the future.

Logic and history would dictate that at some point the spread between the average ROI being offered by the equity markets and the average ROI offered by fixed income components of a balanced portfolio must narrow.

To emphatically state that a low inflation environment will only reduce the average ROI for fixed income assets but will have no impact on the equity markets seems rather myopic to me.

#224 Financial Planner Dude on 08.23.15 at 6:10 am

#12 Shawn

What about shadow banking?

You don’t have deposits to loan out!

https://www.coursera.org/course/money

#225 Jazzed on 08.23.15 at 7:43 am

Had campaign stop at my door Sat aft from the cons, low and behold Joe O appears. This is not a spry man. I let him give his spiel and I’m sure he expected the usual nodding of approval and smile.
I then told him to reign in CMHC before taxpayers take the hit and also that we need a leadership change to which he replied “thats another issue”

#226 Linda on 08.23.15 at 8:23 am

#201 Nagraj

“Is there some death wish subtly animating the PMO?”

Funny you should mention this. I have had this thought myself quite often lately. The Duffy trial is raising horrible contradictions, so why not hold the election earlier; Harper ignored his own election timing law before, so why not now?

Maybe he really just wants to accept disaster and be able to blame others as he limps away.

Harper is not really very bright at all, contrary to some malinformed opinions, but he is smart enough to recognize how stupid are most of the people in his party. This is exactly what cost him the 2004 election, bozo eruptions from all around, and hence his dictatorial approach since then.

The conservative movement is filled with people who are, to speak kindly, intellectual laggards in most every way. Not the sharpest knives in the drawers, don’t you know. Harper knows this too, knows time has run out, and I do believe he truly does have a political death wish.

After which he can go out and get some nice directorships, maybe join another policy think tank and finish his life never having had to bother with a real job his entire existence, with lots of other people to blame for his lack of acumen and general mediocrity.

A death wish in the PMO?

Highly plausible and worth exploring, imho.

I smell a good non-fiction book to be published in about two years.

#227 BenBer on 08.23.15 at 8:43 am

Do yourself a favour and Google “ETF shadow banking”.

#228 crowdedelevatorfartz on 08.23.15 at 9:27 am

@#209 Jake
Bwahahahahahahahaha
You belive that “National Equirer” gar-bage?
I have seen such science fiction fantasy conspiracy drivel since a new 1st person shooter video game was released.
I particulary liked the “headline” in the column to the left of your “news” story.

http://www.naturalnews.com/050876_mercury_exposure_homosexuality_Ibis.html

Sensationalist Drivel worthy of printing ONLY if you run out of toilet paper for the outhouse while on summer vacation.

#229 Shawn on 08.23.15 at 9:30 am

Excuse my couple of extra posts about banking after I said I was done.

I AM done on this topic until January 1 ir later as stated.

If I comment on banking again before then please send in the intervention team from GF aholics.

Meanwhile I will still waste time commenting on other topics.

#230 Shawn on 08.23.15 at 9:56 am

Llewelyn said:

Logic and history would dictate that at some point the spread between the average ROI being offered by the equity markets and the average ROI offered by fixed income components of a balanced portfolio must narrow

*************************************
agreed. If profits stay same this will happen by stock prices increasing to lower yield.

Or competition will force profits down given lower cost of capital.

DOW companies are still running over 15% ROE , why should that be in a competitive world?

Partly due to protection from competition.

#231 7% ROI on 08.23.15 at 10:05 am

220 Llewelyn on 08.23.15 at 5:31 am

Garth

If you are going to state assertively “that makes absolutely no sense” it might be useful to explain the rational behind the reduction on interest paid on fixed income assets such as savings accounts, GIC’s, bonds etc. to less than 2.0%.
… To emphatically state that a low inflation environment will only reduce the average ROI for fixed income assets but will have no impact on the equity markets seems rather myopic to me.

—–

Garth, like most people is subscribing certain school of ideology, practice and the dogmas them come with it.

The mainstream school of ideology he is subscribing for seems to believe that the current financial system will go for ever, as it is.

For Garth this is temporary anomaly, everything returns to normal, as soon as the Fed comes to her senses. There is no need for any explanation.

In fact, for the school of ideology he subscribes there is no other answer for this then this is an unimportant, nonsense, temporary deviation of normal.

Others, of course, subscribing to different school of thoughts, including a new, emerging direction see this as a symptom of some coming fundamental change, related to – what they think – the permanent imbalance of labor supply demand.

#232 Broke Dick on 08.23.15 at 11:57 am

102 Blacksheep on 08.21.15 at 10:43 pm
Shawn #12,

You do realize…

1000’s of intelligent people were witness to our recent discussions.
++++++++++++++++++++++++

No we didn’t, the intelligent people skipped past them.

#233 Godth on 08.23.15 at 12:02 pm

#216 Shawn on 08.23.15 at 12:03 am

Looking at any bank balance sheet please observe that for every loan due there is someone who owns or funds that loan on the other side of the balance sheet. In other words, one man’s saving is another man’s debt and vice versa.

Remember also money (at least coins) were made round to go around. The creation a deposit and loan is only the start of the process and thereafter the deposit moves around and sometimes escapes as paper cash. In which case it needs to be attracted back to the banking system.
———————————————————–
So close! It’s double entry book keeping. The deposits are a matter of solvency. What would you call a bank that had all assets and no liabilities?

“In other words, one man’s saving is another man’s debt and vice versa.”

Here’s the facepalm statement you keep coming back to. One person’s savings (who saves anymore?) keeps the bank solvent to make another double entry loan/deposit to someone else.

In the end it’s all about the Vig.

#234 Ralph Cramdown on 08.23.15 at 12:09 pm

#215 Blacksheep —
Long live the Queen!!!
Yours truly,
J.H. Axlebottom, the 3rd.

Usage note: Naming your male progeny with your selfsame Christian name, that his son may someday style himself third of his name is a particularly American affectation. In Blighty the only people with numbers after their names wear crowns. The landed gentry are also numbered, but the number serves to distinguish successive holders of the title, not of the same given name, e.g. the 3rd Baron Thomson of Fleet.

#235 JimH on 08.23.15 at 12:19 pm

#216 Shawn
“Remember also money (at least coins) were made round to go around. The creation a deposit and loan is only the start of the process and thereafter the deposit moves around and sometimes escapes as paper cash. In which case it needs to be attracted back to the banking system.”
===================================

It might help to consider the difference between “inside money” (essentially balance sheets within the system, etc.) and “outside money” (cash, coins etc. in circulation).

#236 Bill on 08.23.15 at 12:47 pm

Dis is not your average correction. Garth has very good advice but I would ne careful here. Im in cash and a tiny gold for now. This is not the 70s graduating to the 80s commodities melt. Low inflation ect.
I mentioned prior blog. Find yourself a historical chart TSX/looinie. The TSX was a disaster after any major decline in the loonie. Although housing is still hanging on in areas i would expect the same result for the TSX….
Know your history and it may provide a clue to our future. Sugesting a 10% correction is a guess at this point. Could go 20-30. Who knows for sure.

#237 Godth on 08.23.15 at 12:54 pm

Reserve requirement
https://en.wikipedia.org/wiki/Reserve_requirement

Blacksheep (and the Bank of England paper) are talking about the endogenous money theory which disproves the conventional view.

You’ll also notice that Canada has no (deposit) reserve requirements.
“A zero reserve requirement cannot be explained by a theory that holds that monetary policy works by varying the quantity of money using the reserve requirement.”

#238 Bill on 08.23.15 at 12:55 pm

I meant high inflation where Volker has to increase rates massively to curb that.

#239 Bill on 08.23.15 at 12:58 pm

Comment worth listening to. No big show for gold.
Garth did warn at the top of the gold cycle to run for the hills…
http://talkdigitalnetwork.com/2015/08/equity-markets-beyond-central-bank-help/

#240 Blacksheep on 08.23.15 at 1:02 pm

Broke # 231,

“No we didn’t, the intelligent people skipped past them.”
—————————————————————
Touché.

#241 Debtfree on 08.23.15 at 1:05 pm

Your firing by harper blog post is being passed around at #cdnpoli . I haven’t been reading the comment sections for ages . After reading to first one on this post , I remember why I stopped .

#242 DON on 08.23.15 at 1:41 pm

#231 Broke Dick on 08.23.15 at 11:57 am

102 Blacksheep on 08.21.15 at 10:43 pm
Shawn #12,

You do realize…

1000’s of intelligent people were witness to our recent discussions.
++++++++++++++++++++++++

No we didn’t, the intelligent people skipped past them

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

Yup…had to skip the majority. Not to say it is not a warranted discussion. But no time.

More interested in the the two market downturns and the two explosions in China.

#243 Nora Lenderby on 08.23.15 at 1:52 pm

#216 Blacksheep on 08.22.15 at 11:43 pm

re: Money for nothing and the Bank of England

Dear Sir,

Unfortunately the National Strategic Reserves of Parody are being drained by an unfortunate leak in the gasbag of the confidence of the Bank of England.

We encourage you to continue this intercourse with your interlocutors while we determine the identity of the offending parties.

Your task may result in your unfortunate demise, but rest assured that we will award you a posthumous award for extreme silliness.

Your most obedient servant,

Captain Sir George Mansfield Smith-Cumming, KCMG, CB.

#244 West Texas Funster on 08.23.15 at 2:26 pm

Real Panic Sweeps the Emerging markets as western markets sleep.

http://www.bloomberg.com/news/articles/2015-08-23/china-now-has-company-in-supporting-stocks-as-neighbors-follow

Oh Boy….if you’re going to watch the market open on Monday you’d better be sitting on the throne. Emerging markets ( meaning your Emerging Markets / International ETF’s) have taken a dive into the blood and fire.

The selling is wholehearted..two fisted panic…everything is being dumped…bonds …. stocks, foreign currencies ( Canadian inc) ….it’s going to be a blood bath. The panic selling has triggered technical institutional selling as lines are crossed….meaning bigger faster dumps of entire positions…into a black hole of bottomless misery.

If you don’t have lots of cash right now….and need to sell to live…oh boy..are you in for a world of hurt.

I can hear it now…the panicking retail investor in Monday traffic hears the ‘Business Report’ on the radio…calls the broker on his car phone as the local radio station and screams “SELL”!! And the broker replies…”TO WHO”…..and the retail fool drops a big wet load into his pants as his fortune drips down his pant leg. .

#245 Fiona on 08.23.15 at 3:50 pm

I don’t understand finances at all, since my generation is wonderfully illiterate about money (30 under) but I can’t go on being this ignorant, with friends struggling to get by and simultaneously drooling over the new semi detached they drove by. Especially want to thank Smoking Man because tbh, even if I don’t get everything, his posts make me laugh.

#246 Steerage bilge on 08.23.15 at 4:04 pm

#242 West Texas Funster on 08.23.15 at 2:26 pm
——-
What a pant load of bunker brain stupidity.

#247 For those about to flop... on 08.23.15 at 4:45 pm

West Texas clown
I can hear it now…the panicking retail investor in Monday traffic hears the ‘Business Report’ on the radio…calls the broker on his car phone as the local radio station and screams “SELL”!! And the broker replies…”TO WHO”…..and the retail fool drops a big wet load into his pants as his fortune drips down his pant leg.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$

EXAGERATE MUCH?

#248 Joe2.0 on 08.23.15 at 10:02 pm

There’s going to be a day when the puppet masters agree that they have subsidized the markets enough.

And come to the agreement that if the sheeple can’t see the correlation of QE means markets up vs no QE or interest rates hike equals markets DOWn.

A warning of sorts perhaps to appease the great ones hardened conscious.

Regardless, you have been warned by me for months, technical and astronomical data spells economic troubles ahead.
The markets are going to dump over the next year.
And there will be much pain and remorseful reflection.