Sleepless

DOG COFFEE modified

Enjoying the latest flash crash? Read the comments in the steerage section yesterday? So much wasted moaning. So many needless quick heartbeats. Such misplaced fear. And while volatility will continue, there’s no collapse. There never was. Nothing has changed, except lots of cool stuff costs less. Doomers, 0. Blog, 1.

Okay, let’s climb down from the esoteric into the world of traps, compromise and seriously confused relatives.

“My name is Maria,” she says. “I and my husband following your blog for last three years. I understand you are receiving tons of e-mail during the day. I would love to be one of those who never need an advise, but apparently we are. Unfortunately my parents situation effects ours and gives me sleepless nights.

“Our family is first generation immigrants, living mostly beautiful 20 years in Canada. Now my parents are turning 65 and here comes not so easy financial decision we have to make.”

Here’s the deal with Maria and her folks: The own a Mississauga townhouse worth $450,000 with a grand total of $50,000 in liquid (pension) assets, living off CPP and OAS. Not good.

“At least we managed to convince my parents to sell townhouse, but they are horrified of renting idea,” Maria adds. “We came to compromise and my parents agreed to rent condo for 1 year and then I promised they either love the idea of renting, or we are going to look for other living arrangements. I totally understand that my parent cannot afford to buy even small condo, it will eat 50% of all money they have.”

This is the cry for advice: M and her hubs have a kid, a dog, a half-million-dollar mortgageless house, $150K income and about two hundred grand in investments. (And so many people here dis immigrants…).

“Should we buy condo, and let our parents live in it paying us only property tax and condo fee  (if they will be able to afford even that) and we will pay mortgage?, or should we sell our house and buy bigger one with additional live in unit, so my parents will become dwellers? Obviously it will require big mortgage for us. Or should I hope my parents will live independently in rented condo unit owned by some “investor”.  And will they have enough income if I convince them (again not so easy task) to invest money from selling their home in very conservative monthly income generating portfolio?”

“I hope my family situation will be case study on your blog, this way I can have an advise from you and the blog dogs can ridicule for their pleasure.”

Well, this is simple. Let’s assume the geezers are collecting $560 each in OAS and $1,000 between them in CPP. That’s about $25,000 a year. Not enough to pay $15,000 in annual condo rent and still eat. But if they invested the $450,000 in a 40-60 portfolio (that’s sixty per cent fixed income, the rest growth assets) and collected about 6% a year, that would double their income – with the principal remaining for future needs.

No parentals in the basement. No seeing them buy a little skybox, and eating Alpo. A sense of independence and achievement on their part. No property tax, condo fees, maintenance, snow shoveling or financial stress. Just a monthly ‘paycheque’ from their investment account, most of it being in the form of return of capital. That way they don’t even report the additional income and it doesn’t chew into their OAS money. And, natch, a big chunk of their capital should be TFSA’d.

Now why would they refuse this?

Because, Maria, they’re chicken. They confuse the risk of losing money in investments they don’t understand with the bigger risk of running out of capital. After all, they’ve two decades left to finance. Besides, why should your family shoulder a bigger mortgage burden so the old folks can stay mired in their ignorance and live beside the laundry room?

Go find a nice fee-based advisor and drag them over there. Let him/her explain how great assets like preferred shares are on sale and yet will pay then 5%; how having some investment exposure to the economy is their best bet as long-term (twenty year) investors; how earning money tax-efficiently through dividends or capital gains, or unreported as ROC is way better than interest; how events like those of this week should be utterly ignored; how buying a condo in Mississauga is a disaster waiting to happen thanks to over-building and slap-dab construction; and how they can live with dignity, not forcing their daughter into the questionable arms of a pathetic, vaguely horny, blog.

Tough love, Maria. Like Donald Trump says. Be a man.

Tonight's conference call: the correction

Where are markets going and why did all this stuff happen? You might be interested in hearing what Portfolio Manager Doug Rowat and I think about things. We host a weekly conference call, and here is a link to tonight’s (August 25) . Parental discretion is advised.

178 comments ↓

#1 TurnerNation on 08.25.15 at 5:48 pm

Elephant in room: How many Albertans have seen their workplace stock price or stock options decimate with deep cuts in stock price and dividends.

At least they have equity in home right?

#2 Love my Kia on 08.25.15 at 5:48 pm

Doomers, 0. Blog, 1 – Garth
**********************************
Til tomorrow that is!

Wait for the dust to settle and start shopping.

#3 Goldie on 08.25.15 at 5:50 pm

Yes! The Donald! I was wondering when he would find his way into a post.

#4 Love my Kia on 08.25.15 at 5:52 pm

You mentioned the other day on your guiding tips, one of which was to take ‘CPP at age 60 no exceptions’.

What about the penalties for taking it earlier, ability to keep working, etc. I’m not sure everyone can afford to do this?

I hope you can elaborate and address this topic when the s**tstorm settles down on the markets.

#5 TR on 08.25.15 at 5:53 pm

Garth. Is this the end of the great party and the beginning of the great hangover?

#6 Another_Yawn on 08.25.15 at 5:56 pm

#1 TurnerNation on 08.25.15 at 5:48 pm

Elephant in room: How many Albertans have seen their workplace stock price or stock options decimate with deep cuts in stock price and dividends.

About as many who have been saving their 6-figure incomes since 2009. Which is why there’s still lineups at the diesel pumps for all the 85K F350s, and better produce here at the supermarket than anywhere in Onterrible.

#7 The New Blue is Orange on 08.25.15 at 6:00 pm

Garth! Could it be your blog has a secret admirer? When asked what he would do protect Canada from market volatility. Mulcair ponied up your, common sense refrain for balance. All blog dogs can howl with delight.

http://www.theglobeandmail.com/news/news-video/video-ndp-leader-tom-mulcair-on-protecting-canada-from-market turmoil/article26077290/#video0id26077290

#8 The New Blue is Orange on 08.25.15 at 6:02 pm

the links broken maybe this one:
http://www.theglobeandmail.com/news/news-video/video-ndp-leader-tom-mulcair-on-protecting-canadafrommarketturmoil/article26077290/#video0id26077290

#9 waiting on the westcoast on 08.25.15 at 6:03 pm

Is that the 1% conference call??? ;-)

My parents are similar to Maria’s. They have done extremely well by real estate over the years but even though their acreage is now becoming too much work… they just cannot let go. I understand in a way but they could be living a great life touring the world if they just “let go”….

Oh well – I guess we will see how adventurous we are at 79/77.

#10 jean on 08.25.15 at 6:03 pm

I honestly don’t understand the objection Canadians have to renting. I LOVE renting. I have owned many places over the last several decades, both as investments and principle residences and they were always a lot of stress and work. As a renter I know exactly what my outgoings are and I never have to do any work on the property. If anything breaks (rare, its a well managed building) I just fill out a slip at the management office and two days later it’s fixed. I have super cheap rent in a 1970’s building which means (a) my apartment is VERY large and (b) it’s rent controlled. This is a no-brainer. Of, and it includes utilities too. If I want to go to Europe for three months, I lock the door and hop in a cab. Seriously, this is the best way to live. I really don’t get why more people don’t embrace this lifestyle.

#11 Sasquatch on 08.25.15 at 6:03 pm

Also don’t forget that they are getting older. They may be in good health right now for their age, but it will eventually deteriorate. Driving will get hard-to impossible, stairs will give them a hard time, etc.

Renting the condo makes the most sense. Most likely to have an elevator (no stairs), can be close to public transit (affordable and no need to drive in later years), and don’t forget that in time they will probably move in ten to fifteen years any ways.

Most old people move into manners or assisted living in their 70-80s. of course assisted living is an option for those over 65. Basically think of them as rent controlled apartments for older folks. Typically these places charge rent based on percentage of annual income. This is normally less than rent in a regular condo or apartment block.

#12 Godth on 08.25.15 at 6:04 pm

Yawn indeed. It’s time for a nap. How esoteric is that?

Real estate in Canada – BORING! We may as well talk (gossip) about people – yawn!

#13 Nick on 08.25.15 at 6:06 pm

I’m 80% USD cash. I sleep well. All things being equal, this global crash may still be gathering steam.

#14 Left Vancouver and Happy on 08.25.15 at 6:10 pm

Garth, it’s surprising you are not seeing what’s going on in the US equity markets.

While you have gone on and on, over the last 7-8 years, about what cheap credit has done to the Canadian Housing Market, you appear completely oblivious to what it have done to equity markets, particularly in the US.

The majority of the cheap credit in the States has not been going into housing nor the economy in general. It has been pumped into equity markets. The S&P 500, prior to the last week’s gas release, was holding a PE ratio of over 18. This is not normal. It’s about 20% above normal. This in itself warrants a 20% decrease in the S&P. Add in the global effect the China slowdown will have, the deleveraging of credit in China, the commodities crash, the deleveraging of credit in the US as the Fed slowly starts raising rates, etc — This is an equity bubble popping before us…

I would not at all be surprised to see the S&P and DOW drop 35% or more from their highs, before starting their accent back upwards.

The writing in on the wall. It’s just a matter of removing the rose colored glasses to be able to read it.

S&P valuations are not inflated. The writing on the wall starts with ‘b’ and ends with ‘y’. — Garth

#15 Alberta Redneck on 08.25.15 at 6:12 pm

Garth, yesterday you said that nobody with a portfolio structured as you suggest has seen a 7% decline (or if so their portfolio was “certainly not balanced”). But between the hammering that preferreds have been getting and the stock market dip how would you not see exactly that level of decline in capital value (I know, buy preferreds for the dividends) from about a month ago on the model portfolio you have talked about so many times?

I’m getting a bonus this weekend and will be buying more of everything while it’s cheap. But still, what am I missing (other than a fee-based advisor)?

#16 Loonie @ $USD 74.93 on 08.25.15 at 6:17 pm

The toilet has been flushed. We’re just circling the bowl, waiting to go down.

Major economic crash and real estate catastrophe coming soon all across Canada.

This will be our 2008, finally. But much worse. Thanks, Harper.

And the lower loonie won’t help us much this time, not like the 1990s or 2000s. That horse has left the barn. Too many manufacturers, like the auto industry, have now fallen in love with Mexico etc… where there plants are more modern and workers more productive than here, at 1/5 the labour cost. Those jobs are gone forever, and many more will follow.

At least we’ll all have $800,000 semis to sell to each other.

Oh, wait……….

#17 Steerage Bilge on 08.25.15 at 6:18 pm

Free fireside chats to Turner nation!

#18 Winterpeg on 08.25.15 at 6:18 pm

Just for a change of pace, has anyone counted the number of dog photos in the blog since it’s inception?

Very interesting post as always.

#19 LH on 08.25.15 at 6:21 pm

Stocks are on sale! I would totally buy more if only I had cash around (most of my capital is already tied up by illiquid/private investments that generate reliable income). Hope they’re still on sale when the bonus check hits (Jan 2016).

#20 common sense on 08.25.15 at 6:25 pm

Not much of a dead cat bounce was that today???

I hope anyone looking for bargins besides day traders has the patience to wait a while longer…

The sales haven’t even started to begin yet…

Looking forward to the carnage yet to come.

Does anyone in China know what they are doing? What next? Free property rentals and cities to occupy for foreigners in exchange for tips on where all the out flowing money is actually going? Why Not?

Tomorrow is another day..Any bets markets finish the week another 5% lower? Love those inverse funds..

Smoking Man are you any relation to Hunter S. Thompson? Just curious…..

#21 Obvious Truth on 08.25.15 at 6:33 pm

The 10 year and utilities most interesting again for me today.

Janet has got the ball and is controling the game. The Bronx baller is taking on the Wall St Cowboys all on her own.

Cpeso just got stretchered out!

#22 hhuuii on 08.25.15 at 6:36 pm

So …

when the Fed announces no rate rise this September, could you please not mention this until January 1.

Told Ya.

#23 JimH on 08.25.15 at 6:38 pm

The trollops who bought into this morning’s open are now fully qualified to sing soprano in the Vienna Boys’ Choir.

All moving averages from the 5-day to the 200-day of the S&P500 are now trending downward. This market is truly badly broken. I hope all are cautious of all gaps and rallies to the upside until things settle down.

I wouldn’t expect a neat, V-shaped rally to fix this mess anytime soon.

#24 Trolling Leo Trollstoy on 08.25.15 at 6:39 pm

“All the doomsayers and cry babies gone into hiding.
Or back to being wage slaves.
Don’t quit your day jobs fellas”
====================================

“The world is not the way they tell you it is” A.Smith

Seems someone counted his chickens before they’re hatched.

http://www.investing.com/indices/major-indices

Selloff in the three largest economies when everyone else was tricked to “buy the dip”.

Now the trapped 90,000,000 newly minted Chinese “investors/traders/chao gu piao” will try to get off the “frying stocks” any chance they get and will sell into any rally. Stick a fork in the Chinese stock markets for a while – and from there on the rest of the world’s!

#25 Investx on 08.25.15 at 6:41 pm

Garth: “But if they invested the $450,000 in a 40-60 portfolio (that’s sixty per cent fixed income, the rest growth assets) and collected about 6% a year, that would double their income – with the principal remaining for future needs.”

Garth, in previous comments you stated that earning an annual average of 6% over time does not mean 6% annually.

So why give that impression here?

Did I not say they have a 20-year horizon. Why, yes. I did. — Garth

#26 BC Guy on 08.25.15 at 6:42 pm

Agreed: buying a condo in Miss. would be a huge mistake. Condo fees and special assessments will suck you dry.
However, renting also sucks. The rental market in the GTA is extremely tight. Expect to pay $1500/month or more. Every time you write a rent cheque, you’ll get a sick feeling in your stomach. Every time the market plunges 5%, you get a sick feeling in your stomach. Every time you visit friends at their house (that they own) you will get a sick feeling in your stomach.

DON’T RENT!! BAD ADVICE!!

Hang on to your townhouse and be happy living off your govt. pension. Any sensible couple can easily live on $25,000/year if they don’t waste money recklessly.

Go to Mississauga and try it. — Garth

#27 bob dog on 08.25.15 at 6:48 pm

6%. Ya, right.

#28 Freedom First on 08.25.15 at 6:49 pm

Yes, lots of cool stuff costs less. I having been nibbling as I have stated here. Went overweight cash last fall, as I said then. Just bought the ETF ZRE. 2 other ETF’s I am watching closely. Then I will be liquid balanced and diversified to the nutz. Very close to Garth’s recommendations/specifications for a Global Portfolio. Thanks Garth. Your Blog helps the sane keep on the path that works in an insane world.

#29 Godth on 08.25.15 at 6:52 pm

#189 jess on 08.25.15 at 12:45 pm

from yesterday…
“fast-forward to the 27 min. 20 sec. mark and listen to the last nine minutes, when Zumbe utters some of his most colorful claims, threats and insults.”
https://www.youtube.com/watch?v=NPnc_pgsK-I

The thuggery was hilarious.

#30 Godth on 08.25.15 at 7:02 pm

Did I not say they have a 20-year horizon. Why, yes. I did. — Garth

Lawyer speak, shift the goal posts and change the definitions. Oh wait, we’re talking about money which is a creature of the law. Never mind, situation normal.

#31 jean on 08.25.15 at 7:06 pm

BC Guy 26 – “Every time you write a rent cheque, you’ll get a sick feeling in your stomach.”

Why? Do you not expect to pay for shelter? Do you not realise that every single penny of interest paid to the bank, condo fees, maintenance, are all “wasted money” not going towards paying down debt? Do you not realise that until the bank is fully repaid, THEY own the house too? Don’t think so? Just try missing a payment, see what happens.

BC Guy 26 – “Every time you visit friends at their house (that they own) you will get a sick feeling in your stomach.”

And that, right there, captures all that is wrong with this country. Maybe you should get new friends. The less snooty less judgemental type. Why do you care what other people up to their eyeballs in debt think of you?

#32 Andrew Woburn on 08.25.15 at 7:11 pm

I realize this piece sounds like it was written by the Canadian Chamber of Commerce but it is basically true. Most people underestimate the service economy because it doesn’t have smoke stacks or ship stuff you can see. But Britain, the cradle of the Industrial Revolution, makes most of its income today from services. Manufacturing in Ontario is down but it may not matter quite as much as it used to.

“Canada has the potential to be a services superpower”

http://www.theglobeandmail.com/report-on-business/economy/economic-insight/canada-has-the-potential-to-be-a-services-superpower/article26081775/

#33 cramar on 08.25.15 at 7:14 pm

Geezers? Heck, we are older than them!

Reminds me of my late mother. One year I visited her at her retirement home, and she was clearly depressed. I asked what was wrong?

“Nothing but old people here!” she said.

“OLD!? YOU’RE OLD!” I replied, “You’re in your 90s! You’re one of the oldest people here!”

“I know that,” she countered, “I just don’t think of myself as being old.”

Like mother, like son.

I suspect Maria’s parents would love living in an apartment, especially if it is close to family and grandkids. Ah, the freedom! We are anticipating making the jump ourselves at some point in the future, and I’ll NEVER buy a condo.

Also, I suspect any financial advisor worth their salt will do a risk tolerance assessment and probably advise 70%-80% fixed assets at their age. But that is just my opinion.

#34 Banker Jake Eckhart on 08.25.15 at 7:15 pm

@ #13 Nick.. Sleep well at night with 80% cash? What about negative interest rates and bank bail ins? Or access to cash being $60 per day? Unknown unknowns as they say..it’ll never happen? 2008 happened. Greece happened..contagions and -1000 Dow happened. Just staying in cash isn’t completely safe.

#35 Cici on 08.25.15 at 7:26 pm

I just listened to your conference call, and I my heart goes out to you Garth for everything you have to deal with on a daily basis…most investors only listen to what they want to hear, i.e., proceeds and house prices going up and up forever.

Oops, gotta go save the cat, she’s stuck out in the rain…

Thanks for all your help and advice so far…the markets have never made so much sense!

#36 JimH on 08.25.15 at 7:26 pm

#26 BC Guy
“Any sensible couple can easily live on $25,000/year if they don’t waste money recklessly.”
=================================
CAD or USD?
Seriously; do it for a couple of years, write a book about it, sell the TV/movie rights and you’ll be financially worry-free the rest of your life!

#37 Scott on 08.25.15 at 7:30 pm

Here you have it from guy that runs the largest hedge fund in the world. The “smart” folk at the US central banks and central banks around the world have painted themselves and their economies into a corner. They created the largest welfare and entitlement class ever seen in the world, bond, stock, and real estate owners.

“That’s where we find ourselves now,” he said. “Interest rates around the world are at or near 0%, spreads are relatively narrow (because asset prices have been pushed up) and debt levels are high. As a result, the ability of central banks to ease is limited, at a time when the risks are more on the downside than the upside and most people have a dangerous long bias. Said differently, the risks of the world being at or near the end of its long-term debt cycle are significant.”

http://www.marketwatch.com/story/bridgewaters-ray-dalio-sees-fed-launching-quantitative-easing-measures-2015-08-25?dist=tbeforebell

At some point someone going to cry out that the emperor has no cloths and when that happens you’d better have some gold.

For what? — Garth

#38 [email protected] on 08.25.15 at 7:34 pm

Is the ideal bal. portfolio %drop after today still <7% ? Any revised No. ?

#39 OXI in GREECE !! on 08.25.15 at 7:41 pm

There will be no 2008 again. There will be a 2015 crisis instead.

#40 salonist on 08.25.15 at 7:41 pm

others at age 65+ not qualifying for oas with minimal cpp benefit.

“ODSP is the Ontario provincial disability program. Ontario regulation 222/92 is one of it’s governing regulations. S.4 of the reg.established what is called a proscribed class if people who have automatic entitlement to ODSP if they are poor enough. However s.4 .1.2 says ANYONE who is over 65 and NOT ELIGIBLE for OAS is eligible for ODSP as a member of the proscribed class. This means non disabled poor seniors are eligible for ODSP.”
resplite with free benefits

#41 takla on 08.25.15 at 7:42 pm

Re #24 trolling the Troll-stoy
Not the first time this financial guru has put his” foot in his mouth”.Id bet This “self made” hi roller probably got his money the old fashion way….inheritance…lol

Figured we’d get the dead cat bounce early today then back to the new normal.Demigraphics/high cost of living and a looming interest rate up-tic has the sheeple holding and not spending and without QE pumping the markets they will continue their slide…cant anyone see this??

#42 sideline sitter on 08.25.15 at 7:44 pm

#10, I also love renting… I know exactly what my monthly nut is, it never fluctuates. And I just received word that the giant unit I rent in a very Tony Toronto neighborhood is getting all new windows (and I have two sliding doors too) all at zero cost to me!

#43 Llewelyn on 08.25.15 at 7:44 pm

I noticed that the weighting for fixed income assets was increased to reflect the age of the investors. Is there a sliding scale financial advisors apply that is based on age and the reduced need for a long term growth component?

I would also point out that it is possible to purchase very nice ground level condominium units outside of the central cores of major cities. My parents sold a big house in Toronto and purchased a very nice condo unit for cash in Peterborough. I ran the numbers and determined that after living in the unit for 13 years they realized a slight gain over renting a comparable unit over the same period.

I certainly understand your concern that condo units might be over valued in 2015 and why renting might be a better option. I hope they examine all possible risks before making a decision,

#44 Ronaldo on 08.25.15 at 7:50 pm

From what I understand, a couple who each qualify for the OAS and have $500 CPP each would qualify for an additional $220 each of GIS assuming no other income. GIS is not counted as income for tax purposes and they would likely qualify for other means tested benefitsas well. Their total income would be around $32280 and they would pay no tax. They would have to have over $175,000 in savings at 3% to equal what they are getting from GIS. I hope they have considered this.

#45 Paul on 08.25.15 at 8:05 pm

Just Smile
https://www.facebook.com/doc.hallenstein/videos/10206458095065728/?fref=nf

#46 not 1st on 08.25.15 at 8:09 pm

Keep your house, get a HELOC and buy some REITs that are yielding over 10% right now. Income instantly doubles and you still get to stay in your own home. Much more respectable choice in your old age. Fearing debt is the problem, not the market.

#47 Sheane Wallace on 08.25.15 at 8:17 pm

http://marketsanity.com/robert-shiller-all-three-major-asset-classes-are-overvalued/

Robert Shiller believes all 3 asset classes – real estate, stocks, bonds are overvalued.

#48 Joe2.0 on 08.25.15 at 8:28 pm

And cool things cost less?
Maybe if your paying with US dollars and not Cdn pesos.
Foods up, fuels up, travels up, house prices up and buying power down due to excessive cheap money.
Are you in Thailand?

#49 the Jaguar on 08.25.15 at 8:30 pm

#10 – Jean. I totally agree with your comments, but what you might not realize (think you must be in Toronto) is that most of the country doesn’t such a thing as “rent controls”. And when gazillions of people flock to your city (Calgary) when it leads the country in job creation, and no new rental housing stock has been built since the 1970’s ( and most of that condo-ized), you get squeezed. For rent and for square footage. At the worst of it (right after the flood of 2013) it was brutal. Of course with the price of oil these days there are lots more opportunities.

#50 PVS Insight on 08.25.15 at 8:56 pm

#42 sideline sitter

“I also love renting…new windows (and I have two sliding doors too) all at zero cost to me!”

May I ask how much your monthly rent is? You are paying for the new windows. The landlord may subsidize your abode somewhat, but in the end, your rent payment is no investment.

Just like mortgage interest and property tax, right? — Garth

#51 Porsche on 08.25.15 at 8:59 pm

#4 Love my Kia

I’m working till 65 and make 100K+ a year, why would I take CPP at 60 for less and lose it all in taxes…. that’s just dumb.

Because you paid in and it’s time to pay back. Over five years you are giving up the use of about $50,000, which could steadily grow in a tax-free account. Besides, you could croak. — Garth

#52 Smoking Man on 08.25.15 at 8:59 pm

#20 common sense on 08.25.15 at 6:25 pm
Not much of a dead cat bounce was that today???

I hope anyone looking for bargins besides day traders has the patience to wait a while longer…

The sales haven’t even started to begin yet…

Looking forward to the carnage yet to come.

Does anyone in China know what they are doing? What next? Free property rentals and cities to occupy for foreigners in exchange for tips on where all the out flowing money is actually going? Why Not?

Tomorrow is another day..Any bets markets finish the week another 5% lower? Love those inverse funds..

Smoking Man are you any relation to Hunter S. Thompson? Just curious…..
…….

Hunter S Thompson lives in my basement..He faked his death.. Moved to Long Branch..couldn’t stand the fame..

Hes helping me with my writing..loves how I destroy the englush language..

The ultimate slap to the face of the literarty.

He never liked em.

#53 charles on 08.25.15 at 8:59 pm

As much as I enjoy the daily tussle of paper assets and mortgage debt paraded everyday for your enjoyment I would humbly point out that despite the market correction, devaluing dollar, gasping and gnashing of teeth an ounce of precious metal still weighs an ounce. The lords of Wall St. can try to tell the world what it is worth in the up and down currencies the beauty of real money is it does not care. It just is. Stored energy. Stored value. On sale today at a coin shop near you.

And worthless until converted to paper currency that actually buys something. — Garth

#54 MSM-Free Zone on 08.25.15 at 9:04 pm

#6 Another_Yawn on 08.25.15 at 5:56 pm
“….and better produce here at the supermarket than anywhere in Onterrible……”
_________________________

Au contaire….the Longo’s chain here in Ontario has some of the freshest produce on the shelves anywhere, with much of it locally grown…better than that imported sawdust I ate during my 20 years in Oilberta.

Speaking of sawdust…..how are the wheat fields in Oilberta looking these days? Not so good, huh. I guess the 40-year Con dynasty didn’t diversify away from that one either, eh?

#55 Guy Willoughby on 08.25.15 at 9:04 pm

Good article Garth. You helped them out. That is really good of you. Way to go!

#56 Washed Up Lawyer on 08.25.15 at 9:05 pm

If I understood a single thing about stock markets (actually I do – see below) and volatility, my comments might be germane and pithy.

However, in a scant few weeks the economy of Prince George, B.C. will see a boost with the Canucks training camp taking place there Sept. 17 – 20. If you own a food truck in Creston or Revelstoke, drive north and open outside the most luxurious hotel in P.G. where the likes of the Sedins will stay. A revenue spike on the sale of samosas, pulled pork sandwiches and quinoa salads will ensue.

In four weeks with pro shinny back on the menu, this blog comment section will be back in my wheelhouse.

O.K., back to investing. Buy stocks. When they go up in value, sell them. If they do not go up in value, don’t buy them. (Was that Mark Twain or Will Rogers or some other humorist?)

#57 espressobob on 08.25.15 at 9:06 pm

Lets hope momentum takes the markets down another ten points.

That would rock!

#58 bb on 08.25.15 at 9:10 pm

Tough for landlords to rent out their condo unit to seniors. Landlords are frightened on that idea alone. So expect a lot of landlords to “politely” decline any rent applications from seniors. I have neighbors tell me they got a lot of rejected rent applications because they have senior parents living with them. (I’m not a landlord. Simply a renter).

That’s a myth. — Garth

#59 Retired Boomer - WI on 08.25.15 at 9:19 pm

for the newly retired (cash poor couple) with $50,000 cash, and a property worth $450,000 sell the dam thing, invest the proceeds and rent until you hit room temperature, whether that’s in 5 years or 25 years.
Renting is not a sin. Your balanced portfolio should throw off enough to rent, save a bit and eat well. What do you need in retirement? Certainly not a new car. You will be fine, despite the gloomsters out there.

Markets sucked the bag today again! This is getting old, but the Chinese pig farmer investors on margin must learn a valuable lesson: trees do not go to infinity. Nor do Apples, or commodities, which do seem a bit overdone just now.

This old phart deployed some more cash into the market today. Buying cheap, or throwing good money after bad is yet to be determined. Time will tell, and I am not particularly worried. The Cadillac runs fine, I’m not out of booze, the sky is mostly blue, and the birds still poop on my car when left in the driveway. Life goes on, despite the doomers who insist the world is coming to its end. Yes, we HAVE crapped on it a bit too much, I have been guilty of that myself. I drive about 5,000 miles a year now, and fix my old electronics rather than shit-can them, and recycle what I am able. Does it help? It can’t hurt can it?
What’s an old phart to do? What he CAN is the best answer, while not living a totally boring life, and no I am not buying a smart phone either! Deal with it! As long as the Brandy producers exist, we should be OK.
I really hate volatile markets, especially when they are going down! This too, will pass…

#60 Smoking Man on 08.25.15 at 9:20 pm

Good damn exhausted..

Helping son with his start up…LCBO app will be available in the apple store in a few weeks.

And flogging my auto shop automation tool so I can fund my wife’s slot play..

Happy wife, happy life.

It feels so good to be hustling again. 5 years at the tax farm was cool, but nothing like closing a deal.

But these guys are idiots, one guy only reports 1/4 of his sales…

He has no idea he’s business is an asset. And worth multiples of his reported sales. Talked him into going fully legit. He wants to sell it in a few years.

There is a huge market for small business consulting, mind you getting loot of these simpletons is not easy.

Rule one…. Never approach wearing a suit.. Shorts and flip flops Gets you in front of the boss.

#61 Sheane Wallace on 08.25.15 at 9:24 pm

S&P valuations are not inflated

They are according to Robert Shiller. P/E of 24 vs. historical of 17. that gives easy drop of 30 %.

#62 Investx on 08.25.15 at 9:31 pm

“Did I not say they have a 20-year horizon. Why, yes. I did. — Garth”

So? Irrelevant to monthly rent and food expenses.

So are monthly fluctuations in returns when your income is fixed as ROC. — Garth

#63 Smoking Man on 08.25.15 at 9:32 pm

Ok back to markets.. Pluge protection is alive and well.

Might as well load up on stocks.. Your govt quietly runs central banks.

Think of all that pension money invested in the markets. Think of a zillion people with weapons, talking usa.

Your pluge protection is a certainly… Today you saw it with your oun eyes.

#64 Sean on 08.25.15 at 9:35 pm

The writing on the wall starts with ‘b’ and ends with ‘y’. — Garth

——

booby?

#65 takla on 08.25.15 at 9:40 pm

https://www.youtube.com/watch?v=Jt15F21jpN8

And worthless until coverted to dollars-Garth

Lets hope we don’t find ourselves in this situation..

#66 Sean on 08.25.15 at 9:47 pm

#46 not 1st on 08.25.15 at 8:09 pm
Keep your house, get a HELOC and buy some REITs that are yielding over 10% right now. Income instantly doubles

——-

Indeed… yields over 10%.. nothing unusual or risky about that.. lol.

#67 Yitzhak Rabin on 08.25.15 at 9:48 pm

Facts are facts. The DOW has now wiped out all of the gains it made in both 2014 and 2015. From a “low” of 15,699 on Jan-25-2014 to a “high” of 18,312 on May 18 this year we are now back at 15,666.

All of the gains were a result of cheap money, zero % interest and QE. It’s a phony recovery.

Until the Fed rolls out QE4, things will drift back to the pre QE3 level of 13,096 on Sep-30-2012.

If the Fed actually does raise rates once or twice the collapse will be much greater. Good luck with that conference call.

#68 Washed Up Lawyer on 08.25.15 at 9:54 pm

Found it. It was Will Rogers:
***********************************

In his syndicated column of November 1, 1929 (appearing in the New York Times and other newspapers), humorist Will Rogers (1879-1935) reflected on the recent stock market crash and said:

“There is one rule that works in every calamity. Be it pestilence, war or famine, the rich get richer and the poor get poorer. The poor even help arrange it. but it’s just as Mr. Brisbane and I have been constantly telling you, ‘Don’t gamble’; take all your savings and buy some good stock, and hold it till it goes up, then sell it. If it don’t go up, don’t buy it.”

#69 Jeb on 08.25.15 at 9:58 pm

Pension Funds Sue Big Banks over Manipulation of $12.7 Trillion Treasuries Market

#70 Victor V on 08.25.15 at 9:58 pm

Re: Bombardier

“If Mr. Bole doesn’t get it done, we’re going to get a front row seat to an ugly and very sad, sad show,” one analyst said.

http://trib.al/LyXOVct

#71 Leo Trollstoy on 08.25.15 at 9:59 pm

#58 bb on 08.25.15 at 9:10 pm

Completely wrong.

Seniors make the best tenants. No kids that paint the walls. No loud music. Sleep early. No beer cans in the yard. And a greater % actually have money.

Seniors are the best.

#72 Buckhorn Bum on 08.25.15 at 10:02 pm

Garth, loved the conference call link thingy tonight. Feel free to do it more often! I’m hoping the next 5 years and I’ll be on the list of people who just get that ;)

#73 BS on 08.25.15 at 10:04 pm

49:

For rent and for square footage. At the worst of it (right after the flood of 2013) it was brutal.

There were 2 groups of people that may have had difficulty finding a place after the flood in 2013. Those renters who happened to be looking for a new place AND those who owned a home that was flooded which insurance didn’t cover and were forced to rent because they had no place to live. Which group would you rather be in?

#74 weedeater on 08.25.15 at 10:06 pm

#10 Jean has it right. Same here. No longer own, just rent in an older building, well maintained, giant apartment with lots of closets. Rent paid by dividends. No maintenance, taxes, assessments, repairs or surprises. Walkable score is 92. Love it.

#75 JacqueShellacque on 08.25.15 at 10:15 pm

As the Titanic steams toward the iceberg…

Relative of mine has a son in Revelstoke who buys then flips houses or rents them out to Ozzie ski bums. The son is a talented handyman (although why you’d bother fixing a house before renting it out to ski bums is beyond me….), and has convinced my relative to invest money (equity in paid-off GTA duplex) in his home-buying. He is early 50s, with defined benefit pension, and sees this as topping it up. Thinks nothing can go wrong. Methinks he’ll be working longer than he anticipates.

Another relative, 30ish years old and newly wed, has convinced spouse to buy a townhouse in the Kitchener-Waterloo area. 289k, soon to be no cash for having any fun. If they’re still married in 10 years I’ll eat the thank you card they sent for the gift I gave them.

Colleague joined with some of his in-laws to buy “waterfront” property in Stoney Creek for 730k. They all leveraged themselves to buy the property, but he says equities are “risky”.

#76 BS on 08.25.15 at 10:18 pm

May I ask how much your monthly rent is? You are paying for the new windows. The landlord may subsidize your abode somewhat, but in the end, your rent payment is no investment.

Your monthly rent is not an investment but the capital saved from on the downpayment and transaction costs is. In addition the money saved monthly by not paying maintenance costs, property taxes and bloated mortgage payments is.

Finally, you have flexibility with renting where you can easily upsize, downsize or move across the country with little notice and expense. That may land you a job you otherwise couldn’t take, provide a business opportunity you otherwise couldn’t do or allow you to adjust your dwelling size and monthly expense without forking out $50K to a realtor.

Sorry if your realtor didn’t explain the whole equation to you.

#77 the man from zowie on 08.25.15 at 10:21 pm

#137 Waterloo Resident on 08.25.15 at 12:31 am
Just finished entering all of the chart data into my computer and what the computer spit back out is NOT pretty. All indicators are deeply red, …..”

Lemme guess, you are one of these retro-geek types (with a plastic pocket insert) feeding your computer cards into your 1960s IBM super-computer…kind of reminds me of the movie, Our Man Flint…

#78 Locust Focus on 08.25.15 at 10:23 pm

Garth,

First the market collapse, and now this…

http://www.thestar.com/news/gta/2015/08/25/dangerous-and-invasive-khapra-beetle-intercepted-at-pearson.html

The locusts and the long-awaited Toronto RE market correction cannot be far off now….

#79 Moses71 on 08.25.15 at 10:30 pm

Smoking Man aka J.D.Salinger
Reading your comments reminds me of “Catcher In The Rye”
It’s your style of poetic muse
Just couldn’t resist
Not a bad book!!

#80 Dr Donelittle on 08.25.15 at 10:34 pm

#10 jean on 08.25.15 at 6:03 pm
….. If I want to go to Europe for three months, I lock the door and hop in a cab. Seriously, this is the best way to live. I really don’t get why more people don’t embrace this lifestyle…”

Sorry, maybe I passed out for a few weeks, but is it now possible to catch a taxi from Canada to Europe….is it via bridge or has their been an extension to the Channel migrant tunnel……the fare must be enormous, unless you share the ride with Canadians who are escaping the coming collapse and heading for their very own Euro welfare refuge….

#81 Smoking Man on 08.25.15 at 10:34 pm

What’s amusing about liberals and commies, you can spit in there face. Deficate on there lawn.. Hit them with rock laced snowballs.

They never fight back.. The rationalize your behavior via some stupid thing they learned in school. Quick let’s have a conference call, a meeting to discuss this..

When they should realy just kick your teeth in.

Dr Smoking Man
PhD Herdonomics

#82 Godth on 08.25.15 at 10:39 pm

#59 Retired Boomer – WI on 08.25.15 at 9:19 pm

The first thing any of us can do is acknowledge what is happening. That’s largely verboten in a world of smiley faces though.

You at least have the fortitude to recognize screwed up as you see it and that gets my respect (for whatever that’s worth).

We need to change the narrative, of course the narrative is changing and will always change but we are really stuck on some anachronistic, narcissistic thinking (behaviour patterns) these days. The worse things get the more the majority dig in it seems, even doubling down. Science is great (like a religion) as long as it tells us what we want to hear, otherwise and it’s crickets…

We’ll adapt though, or not…Darwin awards are forever. We’re not that special, never were. (psst, don’t tell the masters of the universe that though, they’ll get angry at you).

#83 The American on 08.25.15 at 10:39 pm

With all due respect, I’m not sure why Canadian population continue to blame Harper for the current economic situation, the ridiculous housing bubble, and the future of the Canadian economy in general. Of course it’s all in the shitter. Hell, I’m not sure there’s an economist of sound mind on this planet who would disagree. This isn’t the making of any one man’s doing. This the making by the hands of an entire population of people, who collectively agreed “we’re different,” as they laughed at other nations’ demises. Don’t get me wrong, Harper is a total tool and douche bag, with one of the ugliest haircuts I’ve ever seen on a politician (sans Bernie Sanders and Angela Merkl). However, time and time again Canadians watched other nations fail while they tried to build worth on unsound economic fundamentals, while *truly* believing they were somehow better than or different. The time is here, and it truly only gets worse for several years. A LOT worse. $1 USD now buys nearly $1.34 CAD. Still, you haven’t seen the real show. That comes circa January 1st, 2017.

#84 Dr Donelittle on 08.25.15 at 10:40 pm

#19 LH on 08.25.15 at 6:21 pm
Stocks are on sale! I would totally buy more if only I had cash around (most of my capital is already tied up by illiquid/private investments that generate reliable income). Hope they’re still on sale when the bonus check hits (Jan 2016).”

Ever heard of margin?

#85 Godth on 08.25.15 at 10:42 pm

#63 Smoking Man on 08.25.15 at 9:32 pm

I thought the Banks that own the Fed. run the government? I’m so confused.

#86 Smoking Man on 08.25.15 at 10:48 pm

#79 Moses71 on 08.25.15 at 10:30 pm
Smoking Man aka J.D.Salinger
Reading your comments reminds me of “Catcher In The Rye”
It’s your style of poetic muse
Just couldn’t resist
Not a bad book!!
……

Can you explain poetic muse…

No obidance certificate here.

#87 Holy Crap Wheres The Tylenol on 08.25.15 at 10:51 pm

Was talking to my brother today about his neighbor in Georgetown. This guy told him he punched out of the market yesterday. He got the jitters and punched out $475k in investments. My brother said what the hell were you thinking? The neighbor said but it was all over the media about the crash and such I had to do something or I would lose it all. Today the next door neighbor is inconsulable , he admits big mistake listening to all the media hype. He lost a very large percentage that would have recovered. Slow snd steady, stay the course even when bad seas are in your path.

#88 Smoking Man on 08.25.15 at 10:54 pm

#85 Godth on 08.25.15 at 10:42 pm
#63 Smoking Man on 08.25.15 at 9:32 pm

I thought the Banks that own the Fed. run the government? I’m so confused.
….

Me too, ever since leaving my habit of a good tax farming tail wagging boy , I’ve over indulged in all the bad things that liberals think are bad. .

So a heads up, my predictive skills might be a bit off.

Tax farm fans, be careful of my calls.

Your on your own..

#89 Bones McGriffin on 08.25.15 at 10:58 pm

#83 The American on 08.25.15 at 10:39 pm
… This isn’t the making of any one man’s doing. This the making by the hands of an entire population of people, who collectively agreed “we’re different,” as they laughed at other nations’ demises.”

Well put, the “we’re better because we’re different” econo-ethos has been disproven on many occasions throughout recent history….remember the Japanese were going to take over the world in the late 80s and theory Z; then there was the “Asian values = economic superiority” nonsense by the Singaporean guy which made sense right up until the 1997 crisis…so maybe this really is Canada’s moment to join the international ne’er do wells…

#90 Holy Crap Wheres The Tylenol on 08.25.15 at 11:02 pm

#81 Smoking Man on 08.25.15 at 10:34 pm
What’s amusing about liberals and commies, you can spit in there face. Deficate on there lawn.. Hit them with rock laced snowballs.

They never fight back.. The rationalize your behavior via some stupid thing they learned in school. Quick let’s have a conference call, a meeting to discuss this..

When they should realy just kick your teeth in.

Dr Smoking Man
PhD Herdonomics
__________________________
Hang em by their heals they’re all the same cut of meat!
Never met a commie that I didn’t want to just freekin shoot!
Sorry pinkos!

#91 Rexx Rock on 08.25.15 at 11:09 pm

Whats happening is just a global slowdown.Every country will suffer economically.Short the markets or be safe and get a gic.

#92 Tony on 08.25.15 at 11:25 pm

Re: #46 not 1st on 08.25.15 at 8:09 pm

Sell the townhouse and buy a house in Peterborough or Belleville. That way they might only see a 10 percent correction instead of a 50 to 70 percent correction on a condo or townhouse in Mississagua. Like moving from Denver to Texas before the real estate crash in America. Florida condos dropped an average of 80 percent.

#93 amusing commies on 08.25.15 at 11:27 pm

#81 Smoking Man on 08.25.15 at 10:34 pm

What’s amusing about liberals and commies, you can spit in there face. Deficate on there lawn.. Hit them with rock laced snowballs.

They never fight back.. The rationalize your behavior via some stupid thing they learned in school. Quick let’s have a conference call, a meeting to discuss this..

When they should realy just kick your teeth in.

==

You must be from an alternative universe, according to school of Google there have been around 100 million victims of commies on this planet.

#94 not 1st on 08.25.15 at 11:37 pm

#66 Sean on 08.25.15 at 9:47 pm

Indeed… yields over 10%.. nothing unusual or risky about that.. lol.

—–

As you know, these are quality assets on sale, nothing to worry about. No crash ever, keep buying.

#95 sideline sitter on 08.25.15 at 11:41 pm

#50 – it’s simple to save when your monthly expenses are fixed. Property tax, utilities, maintenance and repair costs always change and always go up!

The transaction costs and down payment to live as cheaply as we do per month is A LOT of money.

#96 B Riding Dirty on 08.25.15 at 11:45 pm

Still Drinking this purple kool aid you be serving up Garth, but over the last couple days its been hard to hold it down. Feeling like Smoking Man after drinking to much JD.

I thought I was better prepared for this then my RBC invested business partner but it seems my portfolio performed the exact same as my 40/60 portfolio over the past week.

But my question is it normal to restructure your portfolio by selling and buying other stocks at the bottom?

#97 Employed for now on 08.25.15 at 11:50 pm

Listened to your conference call. The truth is many of us in Alberta are more concerned about our jobs than what the market is doing. Just watched another handful of people get shown the door. Unfortunately this is far from over.

#98 No Canada, No on 08.26.15 at 12:02 am

I don’t really understand how a diversified portfolio supposed to prevent substantial drops when both bonds and stocks are in bubble territory?

For example, how’s notes at current 2% with a long-term averages around 5-6% going to help with a blowing up stock bubble, which can easily drop 30-40%?! Or they are going to help by paying 2% interest for 10 years?!

Also, what else I don’t understand, what market performance has to do with economy (I’m referring to the weekly call, where you basically said we advise to keep portfolio because “economy” in US is doing just fine). But, it wasn’t doing fine at all in 2008-2010 and yet market exploded higher.

And last thing. Why aren’t you advising to sell call against holding in portfolio? Or to the same extent, selling puts especially if one doesn’t mind holding underlying. Is there a specific excuse not advising to do that? That kinda strange.

#99 Rabbit One on 08.26.15 at 12:47 am

# 43 Llewelyn

>Is there a sliding scale financial advisors apply that is based on age and the reduced need for a long term growth component?

I heard of rule of 100 before.
Deduct your age from 100, that part represent equities, rest in FI.

So, for instance, if you are 40, 60/40 mix.
If you are 100, all in FI – Bonds.

#100 Nagraj on 08.26.15 at 1:03 am

Dear Mr. THE AMERICAN,

You are grossly underestimating the Harper toupee issue, it may be one of geopolitical consequence: WHY would the leader of a developed Western nation choose to wear a hairpiece which makes him look like Moe (of Larry, Moe and Curly Joe fame)?

Has his PR suite been infiltrated by clever Russian spies effectively trained perhaps by the like of Angela Lansbury? (See “The Manchurian Candidate”.) How aesthetically challenged (or stupid) can any Canadian PM get just all by himself?

– particularly inexplicable when one of his contenders is a hirsute Adonis. (I refer to JT, of course, not TM.)

Maybe the plot is to have a falcon trained for this purpose: to grab it (it is ratty-lookin’) during a televised al fresco tv appearance. One fell swoop should do the trick.
Of course if the falcon is very hungry there could be blood.

Mrs. Harper loves animals. Her menagerie includes two little bats. The CBC had a lovely write-up on this, including pictures of the two little bats and the two little bat houses she had built for them. You don’t suppose she’s training them – ?

Canada may be stranger than you think.

#101 Suede on 08.26.15 at 1:08 am

Stephen runs the show…

The Globe and Mail reports in its Tuesday, Aug. 25, edition..

That in a statement the Prime Minister’s Office said on Monday that Stephen Harper spoke with Bank of Canada Governor Stephen Poloz about the latest upheaval in financial markets.

The Globe’s Bill Curry writes that the statement said, “Prime Minister Harper and Governor Poloz discussed the recent decline in global stock markets and commodity prices, slowing growth in China and emerging markets, and the potential impacts on Canada’s economy.”

The notice made no mention of Finance Minister Joe Oliver, who would normally be the government’s main point of contact with the Bank of Canada. The Globe asked for more information about the meeting from the Conservative Party but received no response.

Former Finance Canada deputy minister Scott Clark said that while prime ministers and BOC governors do speak from time to time, it is unusual for the PMO to publicize the meeting.

As a result, Mr. Clark said the announcement appears to be a political tactic. Mr. Clark said the more common practice would be for the governor to speak with the finance minister and then the finance minister would brief the prime minister.

#102 jane 24 on 08.26.15 at 1:28 am

The idea of generations living together is how human life works in most of the world. Everyone gets support. This is how the Chinese and Indian families that have moved to Canada over the last generation have made it.

Why have kids and grandkids if you don’t want to help them and let them help you. Dog share and grandkid share is the way forward regardless of personal financial circumstances.

Plus i think that this particular older couple who started new lives in Canada at 45 have done very well in 20 years. It costs money to start new lives. The parents have sacrificed to ensure that their kids had a better tomorrow and from what Maria says that part has worked out well. Parents have made half a million in 20 years.

THis whole thing is a Canadian success story. Congratulations to this family.

#103 Kate on 08.26.15 at 2:01 am

Garth, they won’t get $560 OAS each, they will get half of it since they lived in Canada only 20 years and not 40.

#104 Gobsmacked and smiling on 08.26.15 at 2:22 am

Yes indeed….with rates going nowhere but up the battered prefs are a bargain…both for capital gain and divvies.

#105 Jake Sanderson on 08.26.15 at 3:30 am

Harry Dent is predicting another great depression in the next 2 to 3 years and everything will go down, stock markets, real estate markets, commodities etc.

#106 juno on 08.26.15 at 3:49 am

Interesting article

China debt fueld boom followed by a crash

http://www.vox.com/2015/8/23/9195891/china-stock-market-crash

Sounds familiar. What sector do we have that has been fueled by debt

#107 Steve French on 08.26.15 at 5:05 am

This crisis is all about China, and specifically, as Martin Wolf talked about today, the transition from an investment fled economy to a consumption led economy.

Trouble is, China won’t be able to pull it off.

Sure China builds 12,000 km of high speed trains.

They can build a new Manhattan every year.

Use more cement in a year than the USA did in the 20th century or whatever it is.

But the sheer scale.. of malinvestment… has become mind boggling.

And this malinvestment has been driving global commodity consumption, which supports Canada and Australian economies.

So China needs to stop building new cities because this is no longer a productive enterprise. Instead they are now sinking under a titanic debt load.

So their citizens need to start consuming. Stop working 80 hours per week and start building a life for themselves. Freedom.

They will want freedom… to consume what they want.

And as they start experiencing this freedom, then their eyes will look up at their Masters.

The Communist Party.

CCP.

And they will wonder … why are these corrupt idiots controlling us.

And they will revolt.

Don’t you see?

This is not an economic crisis.

This is a political-economic and potentially a geopolitical crisis.

The potential implications of which are incredibly dangerous at this moment.

Be forewarned.

A quarter of humanity is teetering on the brink of revolution.

Put that in your balance sheets and smoke it.

#108 Steve French on 08.26.15 at 5:12 am

.. and of course the catch 22 is…

If the CCP decides to avoid the shift to a consumption led economy.. and a transition to democracy…

And decides to double-down on more mal-investment….

China will collapse in a few more years, under the weight of multiple bubbles popping at once.

Either way… if the transition to a consumption led economy is made…

or is not made…

we are reaching the end of the line…

for Mao’s Grand Old

CCP.

#109 Bottoms_Up on 08.26.15 at 7:42 am

#83 The American on 08.25.15 at 10:39 pm
———————————————-
Don’t matter, I’d still rather live in Canada in a recession than in the USA in an economic boom…..but I am Canadian, and therefore partial to my great country.

#110 miketheengineer on 08.26.15 at 8:03 am

Garth et al:

As posted in a major UK newspaper, front page:

http://www.independent.co.uk/news/uk/politics/stock-up-on-canned-food-for-stock-market-crash-warns-former-gordon-brown-advisor-10469509.html

See what I mean about emotions? — Garth

#111 Brandon on 08.26.15 at 8:17 am

Hi Garth. This is off topic, but I have to ask: Mortgage renewal. Would you take a 5 year fixed at 2.59 or 5 year variable at P-0.7 ? The mortgage is small so a 0.59% difference is $47 in interest per month

#112 Smoking Man on 08.26.15 at 8:26 am

The UCC explained.

https://youtu.be/gUyqfUut8lA

#113 Holy Crap Wheres The Tylenol on 08.26.15 at 8:59 am

#109 miketheengineer on 08.26.15 at 8:03 am

Garth et al:

As posted in a major UK newspaper, front page:

http://www.independent.co.uk/news/uk/politics/stock-up-on-canned-food-for-stock-market-crash-warns-former-gordon-brown-advisor-10469509.html

See what I mean about emotions? — Garth
____________________________________________
Is it the great Apocalypse? Zombies? Alien invasion? Communist army invasion? An asteroid cruising towards earth? Nuclear winter? A ravaging plague? Oh hell your just talking about a stock market correction. Never mind!

#114 Holy Crap Wheres The Tylenol on 08.26.15 at 9:09 am

#110 Smoking Man on 08.26.15 at 8:26 am

The UCC explained.

https://youtu.be/gUyqfUut8lA
___________________________________________
Took quantum physics course in University. String Theory is a the most favored model for a Unified Field Theory. Through various dualities, most importantly the AdS/CFT duality, and through an understanding of asymptotic limits, String Theory can effectively morph itself to encompass most if not all of the current theories governing the four forces. The chief difficulty associated with the current theory is that the fundamental vacuum solution, or kernel, of the theory is unknown and there are 10500 possible solutions that would satisfy the constraints of the theory. This effectively means that we have a means of understanding how a field would be governed by String Theory, but no means to decide what that fundamental field actually is. Just saying!

#115 sideline sitter on 08.26.15 at 9:11 am

Question : how and why is China in debt? I thought they had billions of USD and owned so much US debt?

#116 Brain Smoke on 08.26.15 at 9:18 am

“Did I not say they have a 20-year horizon. Why, yes. I did. “— Garth

This does raise an important point that has not addressed and should be.

It’s not just about ROI, tax planning, etc.

Life goes on day to day.

CASH FLOW is important too.

By way of example, consider a year or even two in a row where the returns on a well balanced portfolio are considerably less than 6%.

Consider events like what happened to Seniors when Harpo pulled his (disgraceful and unforgivable) Income Trust Betrayal. Many seniors on fixed incomes took a heavy cash flow hit thanks to Harpo.

Obviously an AVERAGE 6% return doesn’t mean 6% every year, some years will be better, some worse.

So when it’s “worse” where do folks get the cash that they need in order to live?

Eat some equity perhaps?

To be fair Mr. Turner, Cash Flow planning really should be addressed too.

I have noticed that most people don’t think in terms of cash flow and they really should, especially if their incomes are marginal when compared to their needs.

By way of example, how many of the Blog Dogs have actually taken the time to draft a budget spreadsheet and can honestly say that they track their actual cash flow regularly ( as in monthly or quarterly)?

I suspect that many live by the seat of their pants and cash flow issues may cause some pain.

Only naïve investors would try to match monthly earnings with monthly cash flow. Such temporary fluctuations are irrelevant. Some months portfolios will ebb, and during others they will flow. The key is to take income regularly as non-reportable return of capital. Over the years fluctuations become inconsequential, both practically and emotionally. — Garth

#117 Axehead on 08.26.15 at 9:24 am

Maria,

Garth’s advice is sound. Renting is the best option. Housing is a very risky investment in Canada at this point. I rent (when I can claim the rent as a tax deduction) and rent out (seniors on fixed income are steady cash flow and preferred vs crazies wanting to smoke crack in the basement).

Have your parents use their life skills to start a business – anything, then claim a portion of their rent (and utilities) as a deduction.

Or, if they are so horrified of renting, move to a small Newfoundland (or Maritime province) town and buy a mobile home looking over the ocean. At least they’ll be able to afford the trailer, enjoy nature/friendly people, and eat lots of seafood.

#118 Ponzius Pilatus on 08.26.15 at 9:45 am

No dog in the fight.
Sleeping like a new born.

#119 The American on 08.26.15 at 10:00 am

AT #92: Tony, you said, “Florida condos dropped on average 80%…”

Source, please? I know of some that dropped 80%. But these were in absolutely atrocious areas only a Canadian or German would buy in. On average, the collapse was very bad, but not as bad as you state. 40% was the average, little Tony. Damn, you are a complete fuck-tard, aren’t you?

#120 pbrasseur on 08.26.15 at 10:06 am

sideline sitter

«how and why is China in debt?»

Real estate bubble of epic proportion with all the financial non-sense that go with it.

#121 Smoking Man on 08.26.15 at 10:07 am

#112 Holy Crap Wheres The Tylenol on 08.26.15 at 9:09 am
#110 Smoking Man on 08.26.15 at 8:26 am

The UCC explained.

https://youtu.be/gUyqfUut8lA
___________________________________________
Took quantum physics course in University. String Theory is a the most favored model for a Unified Field Theory. Through various dualities, most importantly the AdS/CFT duality, and through an understanding of asymptotic limits, String Theory can effectively morph itself to encompass most if not all of the current theories governing the four forces. The chief difficulty associated with the current theory is that the fundamental vacuum solution, or kernel, of the theory is unknown and there are 10500 possible solutions that would satisfy the constraints of the theory. This effectively means that we have a means of understanding how a field would be governed by String Theory, but no means to decide what that fundamental field actually is. Just saying!
……

Let the rocket scientists figure it out and explain it. I just know how it works.

Positive energy brings good fortune, negative thoughts or energy bring bad luck.

I’m so good at, I can will a slot machine to pay out. I can influence an earnings report. I can crash stock markets, or build them back up with my drunken mind.

Only four of us on earth that can do this.. And yes we are Nectonites. And yes you need to buy the book for a full understanding..

Now if only I can will the book to be finished..

#122 Pull Your Head Out Of Your Bottom on 08.26.15 at 10:12 am

Bottoms_Up
Don’t matter, I’d still rather live in Canada in a recession than in the USA in an economic boom…..but I am Canadian, and therefore partial to my great country.
*******************************************

No way. I’m Canadian and proud to be Canadian. I’ve lived in both countries. Two times in the USA now. My wife is from Chicago by way of Boston. The drivel we are fed about the USA is utter fear mongering nonsense to make us feel better about where we are already. I used to share your sentiment Bottoms_Up. I no longer do. Without a doubt my American friends experience a much higher quality of life than my family does here in Victoria. Let’s face it too, there is so much more to do and see in the USA. They embrace individualism and encourage it which is probably why they are so innovative. We do not and we should adopt that way of thinking if we are ever truly to compete. My wife can only stand it here for two months at a time. Me for about 4 now. To say you’d rather live in what is unquestionably an inferior country with a huge inferiority complex especially in a coming recession says everything.

#123 young & foolish on 08.26.15 at 10:12 am

Good God please …. not another rate cut !!!

#124 pbrasseur on 08.26.15 at 10:15 am

A pretty good take on China’s multiple bubbles:

http://www.thebubblebubble.com/china-bubble/

Interesting comment at the end:

« The popping of China’s bubble will also pop bubbles that are derivatives of it, primarily the bubbles in commodities, emerging markets, Canada and Australia.»

Can’t argue much with that!

#125 JimH on 08.26.15 at 10:18 am

Thanks for the conference call link, Garth!
Good analysis and commentary. Hope you’ll do it again!

Even with the wild ride and close yesterday, it is starting to look like the market is trying to find a bottom and start settling down. We’ll see!

I broke one of my trading rules out of boredom and nibbled on a little RYH (Guggenheim S&P 500 Eq Weight Health Care) into yesterday’s close. I usually wait for a higher high and higher low to appear before buying, but only a nibble.

#126 Spaccone on 08.26.15 at 10:30 am

Looks like this will be making the rounds, F’s reaction to SH replying regarding not being informed of the Duffy bribe.

https://www.facebook.com/drigcanada/videos/895760827209726/

#127 Smoking Man on 08.26.15 at 10:31 am

#120 Pull Your Head Out Of Your Bottom on 08.26.15 at 10:12 am
Bottoms_Up
Don’t matter, I’d still rather live in Canada in a recession than in the USA in an economic boom…..but I am Canadian, and therefore partial to my great country.
*******************************************

No way. I’m Canadian and proud to be Canadian. I’ve lived in both countries. Two times in the USA now. My wife is from Chicago by way of Boston. The drivel we are fed about the USA is utter fear mongering nonsense to make us feel better about where we are already. I used to share your sentiment Bottoms_Up. I no longer do. Without a doubt my American friends experience a much higher quality of life than my family does here in Victoria. Let’s face it too, there is so much more to do and see in the USA. They embrace individualism and encourage it which is probably why they are so innovative. We do not and we should adopt that way of thinking if we are ever truly to compete. My wife can only stand it here for two months at a time. Me for about 4 now. To say you’d rather live in what is unquestionably an inferior country with a huge inferiority complex especially in a coming recession says everything.
……

I like the USA. But when wifee poo sees stuff like this. It’s a no deal..

Happend this morning… Rip

https://youtu.be/9H07rMdr-KE

#128 Godth on 08.26.15 at 10:33 am

#119 Smoking Man on 08.26.15 at 10:07 am

Bwahaha, you know “The Secret”, who knew you are a new age hippie.

String theory is fantasy.
—————
#106 Steve French on 08.26.15 at 5:05 am

http://www.democracynow.org/2015/8/25/casino_capitalism_economist_michael_hudson_on

#129 Nora Lenderby on 08.26.15 at 10:49 am

#249 meslippery on 08.25.15 at 9:52 pm
“Just for fun why does Walmart work in Canada but Target did not? They cut bait and ran.”

Good question. My guess is that they misunderstood the Canadian market. Really misunderstood the small-c conservatism of Canada – which can be summed up: “Cheap” and highly risk-averse.

Target stores were not cheap enough for the mass-market and not exclusive enough for the cool, fashion-buying minority.

Getting a “good deal” is amazingly popular in Canada. The time and energy that people devote to shopping for small marginal gains is incredible, so it must be the thrill of the hunt.

Target came in thinking that Canadians have money to spend. They do (or they did). However they will drive 20 minutes to buy lottery tickets while getting gas at 5 cents a litre less for their big new “Cowboy Edition” truck.

There are a minority of posh spenders who deliberately buy overpriced branded goods in Canada, but you couldn’t drag them into what were once Zellers or Kmart stores. (Someone they know might see them!) It would be fine to shop at Target in the U.S. though. (Everyone does that.)

Disclaimer: I am aligned with Andy Capp’s wife, Flo. Her idea of nice clothing is something that doesn’t itch.

#130 cramar on 08.26.15 at 10:55 am

#114 Brain Smoke on 08.26.15 at 9:18 am

To be fair Mr. Turner, Cash Flow planning really should be addressed too.

I have noticed that most people don’t think in terms of cash flow and they really should, especially if their incomes are marginal when compared to their needs.

By way of example, how many of the Blog Dogs have actually taken the time to draft a budget spreadsheet and can honestly say that they track their actual cash flow regularly ( as in monthly or quarterly)?

I suspect that many live by the seat of their pants and cash flow issues may cause some pain.

———

Most older people have structured their portfolios to provide regular cash flow, which is different than going for capital gains.

My financial guy told me about an elderly client who had $900k in his portfolio. He was desiring to get to $1 million. Then the 2008 fiasco hit. His portfolio when down to the $600k range. But it did not effect the cash flow generated from the account. Eventually the account came back to $950k when he died. He didn’t quite make it, but the real goal was to provide regular income from his account.

#131 Ronaldo on 08.26.15 at 10:59 am

Well, the TSX is performing on queue. Yesterdays close 13150 and todays open 13318 and up to 13360 and the regular smash at around 10:30 to 13060 (300 pts) and now back to yesterdays close around 13150. That is 300 pt. spread in the first 1.5 hrs. HFT and shorting at its best.

#132 young & foolish on 08.26.15 at 11:03 am

When you are useful to people, or if you have something they need to sell them, then you can generate cash flow. Simple and straight forward. But most people seem to find it difficult to structure reliable cash flow from investments.

Perhaps it’s best to consider investments for the long term and as a way to protect you from devaluing currencies.

#133 Steerage Bilge on 08.26.15 at 11:15 am

Disclaimer: I am aligned with Andy Capp’s wife, Flo. Her idea of nice clothing is something that doesn’t itch.
————–
Fun. Andy Capp, man that triggered some ancient neurons to fire in my brain that I didn’t know still existed.
A pint, or ten, and a life on a couch. Peace.

#134 Tony on 08.26.15 at 11:17 am

Expect the U.S. stock exchanges to do the opposite of yesterday that is rally big into the last hour and or last half hour of trading today. Followed by a strong open tomorrow and around 10:00am tomorrow the bottom will fall out of the market all day long.

#135 Steerage Bilge on 08.26.15 at 11:22 am

#124 Spaccone on 08.26.15 at 10:30 am

Looks like this will be making the rounds, F’s reaction to SH replying regarding not being informed of the Duffy bribe.

https://www.facebook.com/drigcanada/videos/895760827209726/
—————————–
That’s hilarious. Nice!

#136 young & foolish on 08.26.15 at 11:22 am

Shiller may be right …. everything is over-inflated thanks to central banks. Companies are not really investing so much as buying back shares. Don’t be a greaterfool, don’t believe that stock markets can remain detached from main street for very long.

#137 Ronaldo on 08.26.15 at 11:32 am

The blog is very quiet this morning. Everyone must be away selling their shares. Probably explains the action this morning.

An interesting article on todays market and why a 500 pt drop today is not like a 500 drop back in Oct. 1987. As I have pointed out previously, these volatile markets can swing that much in intraday trading and most people are not even aware of it because at the end of the day all you see is what it closed at and often that is close to what it opened at. All the skimming takes place in between. This is why one can’t take this too seriously but is why a lot of people panic and sell only to find that the market recovers just as quickly as it fell. It’s totally out of our hands. It’s all algos doing their job.

A lot is made of the crash of 87 but by year end the market was up around 10% for the year. That was the biggest bubble I’d witnessed besides the Tech bubble of 2000.

http://www.marketwatch.com/story/markets-selloff-reveals-how-youll-react-if-stocks-fall-further-2015-08-23?mod=MW_story_recommended_default&Link=obnetwork

#138 Joe2.0 on 08.26.15 at 11:36 am

No Rate hike talk markets go up.
Rate hike talk markets go down.
Nice healthy broken unfree market.

#139 Ronaldo on 08.26.15 at 11:37 am

#127 Nora Lenderby

”There are a minority of posh spenders who deliberately buy overpriced branded goods in Canada, but you couldn’t drag them into what were once Zellers or Kmart stores. (Someone they know might see them!) It would be fine to shop at Target in the U.S. though. (Everyone does that.)”

That is so true. I know of a few like that. Wouldn’t step foot in a dollar store for fear of their friends seeing them who probably just left before they got there.

#140 miketheengineer on 08.26.15 at 11:39 am

#111 – Mr. Holy Crap

One thing I have learned….no one can predict the future.

If I see something, that may be relevant and is interesting, I post from time to time. I am not one to panic….

In the past, I have had to make decisions on weather or not to feed my family, pay bills or pay the mortgage. I could not do all 3. This is not a fun thing to do. When several “economic” experts say that a rough time is coming……guess what, it may just be coming.

I respect Mr. Garth’s column. His advice is solid. A lot of people put input here, and it is great way to convey information. A lot of people profit from stuff that happens on the blog….and this is good.

Everyone has a slightly different opinion.

Currently the stock market is in a downward trend, from being (in the past) in a upward trend. This is a reality that is happening now. I can not predict how bad it will get. Or how good it will get. Nor do I offer advice on what to do or when to do it. I am not in any position to offer advice of any kind.

I do know, a lot of people will make money, buying and selling stock during these times.

I wish you well Mr. Holy Crap, and truly hope you make a ton of money in the market during this time.

Good luck to all.

#141 Calgary Rip Off on 08.26.15 at 11:47 am

http://www.realtor.ca/Residential/Single-Family/15810879/9-MACEWAN-RIDGE-VW-NW-MacEwan-Glen-Calgary-Alberta-T3K3W2-MacEwan-Glen#v=d <<< $1887/ month with 5% down on 25 year amortization.

https://www.rentfaster.ca/calgary-house-for-rent/bowness/river-front-home-with-37832 About same prices, smaller.

Rent = mortgage in Calgary. Unless you want to move, are old, or job is not secure, ITS ALL A RIPOFF!!!

#142 Lillooet, BC on 08.26.15 at 11:50 am

Maria:

Take a trip to the big city and meet with Garth. Have him as the advisor for you and your parents.

Or moving to Lillooet, BC – sacred heaven.
I hear Snowboid is coming to visit my neighbour’s open house show.

#143 young & foolish on 08.26.15 at 11:50 am

I know, I know, RE as an investment sucks. But if you bought it for cash flow in a popular city and are getting a decent cap rate, even if it’s value takes a hit, then you are still getting paid.
Much like preferreds (ZPR is down by almost 30% since 2013 but it’s still paying dividends).

#144 Pull Your Head Out Of Your Butt on 08.26.15 at 11:52 am

Smoking Man

I like the USA. But when wifee poo sees stuff like this. It’s a no deal..
*****************************************

Does wifee poo really think that kind of stuff doesn’t happen right here? If she does I’m sure the USA would rather she stay here as she would be a fool and also in complete denial. The USA even had better coverage of our own event.
https://m.youtube.com/watch?v=W27ByB2_fJA

#145 Mike T. on 08.26.15 at 11:54 am

whoopsadoodle!

it’s zero headline but the guy still said it

DUDLEY: CASE FOR SEPT RATE HIKE LESS COMPELLING

genius is hitting a target no one else sees

the weird events have been scripted so people don’t notice the changes happening to the planet/solar system

the man made societal rules will close in on us all

this is what is happening

it is time to try and remember what it really is to be a human, not worry about taxes and mortgages and balanced portfolios

#146 cramar on 08.26.15 at 12:14 pm

Just saw on the Toronto news, that the gas price war continues in St. Catharines at 79.7 cent/liter. Would be even cheaper if the Loonie wasn’t swoonie!

Makes you wonder why certain locations can have a price war and others do not. Collusion and conspiracy I tell yah!

#147 Julia on 08.26.15 at 12:19 pm

#127 Nora Lenderby

If you are interested, the Affidavit from Target for their CCAA filing is public information. Granted it is their opinion as to why they failed but it is a fascinating insight as to how they not only did not understand the Canadian market but they also opted to launch most stores at once without having fine tuned their distribution channels.

http://www.alvarezandmarsal.com/sites/default/files/Affidavit%20of%20M.%20Wong%20(January%2015,%202015).pdf

Most information is available for reading pleasure on the Monitor’s website.

#148 Smoking Man on 08.26.15 at 12:20 pm

#142 Pull Your Head Out Of Your Butt on 08.26.15 at 11:52 am
Smoking Man

I like the USA. But when wifee poo sees stuff like this. It’s a no deal..
*****************************************

Does wifee poo really think that kind of stuff doesn’t happen right here? If she does I’m sure the USA would rather she stay here as she would be a fool and also in complete denial. The USA even had better coverage of our own event.
https://m.youtube.com/watch?v=W27ByB2_fJA
…..

I’m with ya, but I can’t compete with MSM they have her. She was a good student.

She makes fun of my tin foil Fedora….

#149 Holy Crap Wheres The Tylenol on 08.26.15 at 12:27 pm

#138 miketheengineer on 08.26.15 at 11:39 am

#111 – Mr. Holy Crap

One thing I have learned….no one can predict the future.

If I see something, that may be relevant and is interesting, I post from time to time. I am not one to panic….

In the past, I have had to make decisions on weather or not to feed my family, pay bills or pay the mortgage. I could not do all 3. This is not a fun thing to do. When several “economic” experts say that a rough time is coming……guess what, it may just be coming.

I respect Mr. Garth’s column. His advice is solid. A lot of people put input here, and it is great way to convey information. A lot of people profit from stuff that happens on the blog….and this is good.

Everyone has a slightly different opinion.

Currently the stock market is in a downward trend, from being (in the past) in a upward trend. This is a reality that is happening now. I can not predict how bad it will get. Or how good it will get. Nor do I offer advice on what to do or when to do it. I am not in any position to offer advice of any kind.

I do know, a lot of people will make money, buying and selling stock during these times.

I wish you well Mr. Holy Crap, and truly hope you make a ton of money in the market during this time.

Good luck to all.
_____________________________________________
You are correct no one can predict the future however I have left a portion of my investment portfolio in very capable professional hands. Another portion is under my control and a portion of my wealth is in my company. I am not interested in making a ton of money. I am already financially set for the rest of my life whether it be 29 days or twenty nine years. The people who flinched on Monday were most likely advised to stay put. Day traders mehhh, you have to be in it for a long haul for the slow and steady approach. Or you can go all in Smoking Man style make tons of cash or just as easily loose it all. Buy the way the professionals have done better than myself in the investment world. I just do it for fun.

#150 Axehead on 08.26.15 at 12:28 pm

#127, #137 – Target.

I visted a Target store to buy shoelaces. They had a crappy selection, prices were high, no service, and the store was as dull and depressing as a KIA 1/4 mile time (yes, Mr. American, we still do miles and imperial).

I never went back. Suspect others had the same experiance and did the same thing.

Walmart is better for cheap stuff.

A shitty store – that’s all, good riddance.

#151 Brain Smoke on 08.26.15 at 12:37 pm

“Only naïve investors would try to match monthly earnings with monthly cash flow. Such temporary fluctuations are irrelevant. …” — Garth

It behooves me to point out that your entire blog appears to be an effort to educate NAIVE investors.

Haven’t you noticed that?

You know, like the Naive investors who can’t be bothered learning how investments and taxes work and who instead NAIVELY invest all of their net worth and debt into McMansions, helocs, and GIC’s?

If you re-read what I said, pay particular attention to :

“especially if their incomes are marginal when compared to their needs.”

To those people, Cash Flow planning is vitally important and should be addressed, or at the very least recommended. A tax change (like the income trust betrayal), a rule change (like the CPP age change) can have a profound affect on CASH FLOW planning, especially for those whose investment incomes vs. needs are marginal.

Whatever…your blog…feel free to cherry pick whatever suits your personal agenda (whatever that is).

Speaking of picking a cherry, I suggest you re-read my entire response. Tell what part of it you do not understand. “Only naïve investors would try to match monthly earnings with monthly cash flow. Such temporary fluctuations are irrelevant. Some months portfolios will ebb, and during others they will flow. The key is to take income regularly as non-reportable return of capital. Over the years fluctuations become inconsequential, both practically and emotionally.” — Garth

#152 Rainbows and Ponies on 08.26.15 at 1:42 pm

“Dis Immigrants’? How about dissing everyone who’s 50 and above, been in this country for twenty years or more… who hasn’t become a self made cash multi-millionaire millionaire with a paid off house in this great country of ours. People ..if you are 55-70 and still working you have made some really dumb decisions in life. If you’ve ‘made your money’ through inheritance or being a teat sucking civil servant parasite it doesn’t count.

#153 Ponzius Pilatus on 08.26.15 at 1:44 pm

The dog in the picture is obviously a fully balanced investor.
one of the funniest pictures yet.

#154 Ponzius Pilatus on 08.26.15 at 1:48 pm

The blog is unusually quiet given the market turnmoil.
Too many DIY investors trying to cover their asses, wishing they had followed Garth’s advise.

#155 Peter on 08.26.15 at 1:59 pm

#152 – Or like the dog, we yawned, because the market correction didn’t our well-balanced 60-40 portfolios with de-emphasis on Maple.

Before the oil collapse, I had way too much in Canada (bonds, REIT’s, and XIC).

Reduced the above, as per Garth’s advice, while pumping up Fixed Income (CPD, et al.) for that 5% monthly dividend taxed at marginal rate.

Porfolio dipped maybe 5% during this “correction” and looks to be actively recovering in everything but CAD.

Listen to Garth. Think long-term. Don’t panic sell. Have a balanced portfolio and multiple asset strategy (if you can afford it). Weather the storm.

#156 Axehead on 08.26.15 at 2:21 pm

#150 – right on the mark but some choose to work for satisfaction or opportunity in the ‘new’ retirement model (unless you are a civil leech and it’s time to draw that DB pension that us non-pension earners get to pay for).

#149 – why not solve the problem by keeping a certain amount of retirement investiments in ‘cash’, easily used and topped up when markets high, sufficient to draw from on-going basis? Everyone needs to take responsibility for their own wealth and how it’s invested and what cash flow is needed.

#157 Ronaldo on 08.26.15 at 2:23 pm

I got to thinking about this “short selling” thingy. So some guy borrows your shares and others from your friends with the idea of throwing them on the market all at once so that he can knock the heck out of the stock price so that he can then buy them up cheap. So, if you knew that your shares were being borrowed so some guy could knock the crap out of them, would you lend them to him? Just wondering.

#158 Mrs. Doubtfire on 08.26.15 at 2:32 pm

The tension in the air on most trading floors is almost palpable alike in a Mexican standoff in one of Sergio Leone’s westerns. — Mrs. Doubtfire

#159 Holy Crap Wheres The Tylenol on 08.26.15 at 2:53 pm

#146 Smoking Man on 08.26.15 at 12:20 pm
#142 Pull Your Head Out Of Your Butt on 08.26.15 at 11:52 am
Smoking Man
I like the USA. But when wifee poo sees stuff like this. It’s a no deal..
*****************************************
Does wifee poo really think that kind of stuff doesn’t happen right here? If she does I’m sure the USA would rather she stay here as she would be a fool and also in complete denial. The USA even had better coverage of our own event.
https://m.youtube.com/watch?v=W27ByB2_fJA
…..
I’m with ya, but I can’t compete with MSM they have her. She was a good student.
She makes fun of my tin foil Fedora….
____________________________________________
She married you right! That’s all we needed to know about her education!

#160 Randy Randerson on 08.26.15 at 2:55 pm

Wow, great rebound on the S&P today. Guess those who sold out a few days ago didn’t see this coming and missed all those gains.

Back to my sleepy portfolio.

#161 IHCTD9 on 08.26.15 at 3:01 pm

#144 cramar on 08.26.15 at 12:14 pm
Just saw on the Toronto news, that the gas price war continues in St. Catharines at 79.7 cent/liter. Would be even cheaper if the Loonie wasn’t swoonie!

Makes you wonder why certain locations can have a price war and others do not. Collusion and conspiracy I tell yah!
—————————————————————–

Must be a few independent retailers out there, big dogs like to deprive them of margin until they cave. None left out my way, gas is 1.05…

#162 Blacksheep on 08.26.15 at 3:15 pm

Ponzius # 152,

“The blog is unusually quiet given the market turnmoil.
Too many DIY investors trying to cover their asses, wishing they had followed Garth’s advise.”
——————————————————–
No, no…Most secretly liquidated their holdings years ago and are now instead enjoying the continued stability / gains in Van RE. Now we just come here for the crazy.

Don’t tell Garth, it will break his heart.

Well at least, I know I did.

#163 Retired Boomer - WI on 08.26.15 at 3:25 pm

As of this morning I’m off -5.2% for the year. Not really terrible, but was amazed how MUCH I could lose in a short time and how much NOT fun it could be.

Looking at it all, not counting the dividends received, it is not the end of life as I know it. Merely a correction – long overdue!

Markets still open, and up today, a nice change. Dead cat bounce or, not. Here kitty, kitty.

#164 Retired Boomer - WI on 08.26.15 at 3:41 pm

#82 Godth

Thanks. I read a lot. Some of it makes sense, and to be aware, is to be armed with foreknowledge.

It never quite plays out as anticipated though. Looking at our own lives, what you were thinking of at 20 or 25 will be quite different from the reality at 60 trust – me on that.

It could be better, or much worse, but you will have been through it to make your own assessments. The good news you only have to live it once, and now the bad news, you only get to live it once!

As soon as I hear from a dead guy on what’s next I’ll let you know. In the meantime live it well!! Our time however long on this gas bag is indeed, rather limited.

That’s why we get to laugh, and smile.

#165 Moller on 08.26.15 at 3:49 pm

A game that shows you just how foolish it is to time the market.
http://qz.com/487013/this-game-will-show-you-just-how-foolish-it-is-to-sell-stocks-right-now/

#166 Sponge on 08.26.15 at 3:51 pm

Happy National Dog Day! Be kind to your pets..

#167 IHCTD9 on 08.26.15 at 4:18 pm

#87 Holy Crap Wheres The Tylenol on 08.25.15 at 10:51 pm
Was talking to my brother today about his neighbor in Georgetown. This guy told him he punched out of the market yesterday. He got the jitters and punched out $475k in investments. My brother said what the hell were you thinking? The neighbor said but it was all over the media about the crash and such I had to do something or I would lose it all. Today the next door neighbor is inconsulable , he admits big mistake listening to all the media hype. He lost a very large percentage that would have recovered. Slow snd steady, stay the course even when bad seas are in your path.
____________________________________________

The safest way and the easiest. I’ll start worrying about what’s coming down the pipe economically when I am 5 years or so from retiring. For now I ride the waves, worked in the past, will work this time too – I’ve got 25 years working to go still..

#168 Steerage Bilge on 08.26.15 at 4:35 pm

It’s National Dog Day. Yeah.

#169 JSS on 08.26.15 at 4:44 pm

It’s over!

Get back into the stock market!

#170 bigrider on 08.26.15 at 4:52 pm

Houses on 60 foot lots at Keele and King Side road, 4000 square feet and up, now selling for 1.6 million Last year , one could have been had for 1.2 million.

Just saying that no end seems to be in sight for RE prices

#171 Leo Trollstoy on 08.26.15 at 5:07 pm

…was amazed how MUCH I could lose in a short time

Percentage wise was no different than the dozens of cradle over the last 60 years.

No surprise to experienced investors.

The rich get richer.

Always.

#172 AfterTheHouseSold on 08.26.15 at 5:08 pm

#149 Brain Smoke
“…cash flow planning…”

Total invested, times 7%, divided by 12 months. This is the monthly FIXED amount that drops into your account, for cash flow planning. Like a pay cheque.

When the portfolio makes more than 7%, like recent years, the excess grows and cushions the portfolio for times that it makes less. Ebb and flow.

#173 SWL1976 on 08.26.15 at 5:17 pm

#162 Retired Boomer – WI

The good news you only have to live it once, and now the bad news, you only get to live it once!

I like that saying as I have never heard it before

All truth

#174 jess on 08.26.15 at 5:21 pm

Press Release
SEC Charges Citigroup Global Markets for Compliance and Surveillance Failures

…”Because broker-dealer employees routinely have access to material nonpublic information, the federal securities laws require every firm to take reasonable steps to prevent the misuse of that information. An SEC investigation found that Citigroup did not review thousands of trades executed by several of its trading desks during a 10-year period. Personnel used electronically generated reports to review trades on a daily basis, but technological errors caused the reports to omit several sources of information about thousands of relevant trades.

“Today’s high-speed markets require that broker-dealers and investment advisers manage the convergence of technology and compliance,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “Firms must ensure that they have devoted sufficient attention and resources to trade surveillance and other compliance systems.”

http://www.sec.gov/news/pressrelease/2015-171.html

#175 kommykim on 08.26.15 at 5:24 pm

RE: #97 No Canada, No on 08.26.15 at 12:02 am
I don’t really understand how a diversified portfolio supposed to prevent substantial drops when both bonds and stocks are in bubble territory?

See how the TSX and Canadian bonds are inversely correlated most of the time? And when they aren’t, bonds are nowhere near as volatile as stocks so they still help reduce volatility.

https://www.google.ca/finance?chdnp=0&chdd=1&chds=1&chdv=1&chvs=Logarithmic&chdeh=0&chfdeh=0&chdet=1440623891297&chddm=985320&chls=IntervalBasedLine&cmpto=TSE:XBB&cmptdms=0&q=INDEXTSI:OSPTX&ntsp=1&ei=pCzeVdi4KariiwKxtYSABA

#176 Tony on 08.26.15 at 5:25 pm

Re: #163 Moller on 08.26.15 at 3:49 pm

What worked say 30 to 50 years ago doesn’t work anymore. It was blatantly obvious Monday when all the people who manipulated the markets upwards the past 6 years were in when all the trades had opened around 10 in the morning. On a day the DOW would have lost 3 to 5 thousand points that made day trading easy the next few days. Expect a strong open tomorrow followed by a down market the rest of the day. A strong up day on Friday and the same Monday with the DOW gaining about 800 points Friday and Monday combined. September should see a big up day the first trading day of the month followed by a down month of about 6 percent.

Go away. — Garth

#177 Brain Smoke on 08.26.15 at 6:27 pm

“Only naïve investors would try to match monthly earnings with monthly cash flow. Such temporary fluctuations are irrelevant. Some months portfolios will ebb, and during others they will flow. The key is to take income regularly as non-reportable return of capital. Over the years fluctuations become inconsequential, both practically and emotionally.” — Garth

I understand completely Mr. Turner and I do not disagree at all. FWIW I didn’t say that anyone should “try to match monthly earnings with monthly cash flow”, Those are YOUR words, not mine. Please don’t try to provoke me into defending YOUR words. That’ way too Harpo. LOL (no offense intended!)

The point is, Mr. Turner…that one of the most fundamental issues on the table when investing is Risk vs. Reward. More risk, more potential reward and all that.

I really do believe that one of the critical failings in the equation, especially for the less well off “naive investors” goals is their inability to quantify the reward (ROI) that they NEED vs. the risk that they will accept to achieve those goals. Many of these less affluent folk ain’t greed motivated, they are closer to survival driven.

I think that a critical first step in quantifying that NEED is to prepare a cash flow budget and decide what “reward” (return) is needed as a minimum and then, if it is attainable and how.

Simply put, people who have gone into mega-debt to buy a house often don’t really know how to properly budget for the life that they have chosen to buy. They don’t think about it because they don’t know how to think about it.

By way of example, how many of the moist virgins of which you speak consider that if they plop 100K cash into a down payment they remove 100K from their potential investment capital and therefore reduce the income $ potentially attainable? That their purchase includes a $6K~$8K (or more) yearly ROI and yearly cash flow penalty?

Really Garth, what’s the point of preaching that having your entire net work and debt in a house is a danger when people can’t even quantify their risk with real, properly thought through numbers?

You cover part of the equation with your blog (the risks of not diversifying,debt, etc.) but I really think that you need to fill in these blanks too if you want your message to help people understand.

Educate people in respect to budget/cash flow planning too, help them to think “bigger picture” and you can help them more and thus will better achieve your agenda.

#178 Retired Boomer - WI on 08.26.15 at 7:00 pm

#174 Tony

What worked 50 years ago still works! Your task is to KNOW what really worked 50 years ago.

Hmmm… 1965 Freshman in high school. I knew everything….still do, except I know I know I know nothing.

What was the question, Tony? Oh, what worked 50 years ago? Me, for one thing.