Thick

SNOW CAR modified

Sam signs his last name as “Retired,” which is a sad way to define yourself. But I guess it’s better than “Stressed.”

“Our significant savings sit in a bank account,” he writes me. “No interest and no income. Your latest blog is very informative. We do not have any options for returns with such low bank rates. The future?????”

Well, Sam, it probably blows. More stress. More of the ultimate risk – running out of money, which for millions of Canadians, especially women, lies in the years ahead. They’re cursed with being more conservative and living longer lives. It’s a tough combo in days such as these.

Recent posts here have tried to underscore the fact interest rates – at least for savers – are going nowhere. For years. Depositors are forced into the arms of unproven, no-branch, no-human outfits like EQ or Zag just to get a miserable (and temporary) 2% or 3%. After inflation and taxes, that’s akin to 0%. So if you’re somebody on a miserable and inadequate public pension, forced to live off your dwindling savings, it’s a financial death sentence.

Stats tell us there are far too many in this boat. Being fearful of market risk, they cling to investments that stopped performing almost a decade ago – guaranteed investment certificates, Canada Savings Bonds, term deposits, high-interest savings accounts, strips and government bonds. Not only has the interest rate environment crashed, but the tax treatment of interest income has remained harsh and now with a weak dollar, inflation’s come roaring back. Witness the Cauliflower Crisis (which has gained global media exposure).

If you’re in your 50s, or retired, get used to the fact nothing about this situation will change. Sure, US rates will creep higher now that the Fed’s started the process, but they remain minimal in most of the world. Until commodity prices bounce back and the economy revives, they’ll be near-zero in Canada. As stated yesterday, almost $400 billion currently sits in bank instruments, put there by savers who are getting goose eggs in return.

Why would anyone give over their life’s money for no return? No income? No growth?

Simple. They’re ignorant. Not intellectually, but financially. Innumerate. Money illiterates. People who believe, despite the overwhelming evidence, that losing their cash is the worst possible thing that could happen. So they watch it slowly but inevitably disappear.

Some weeks ago I related the story of Sue, a widow whose husband left her a modest house, a $50,000 CSB and virtually no income. She sold the home (could not afford even the property tax, let along the maintenance) and invested the money in balanced mutual funds for growth. Then in the GFC she saw a 30% drop in capital value, panicked, cashed in and deposited the money in a ‘safe’ bank account at CIBC. Eight years later it’s kaput. Life’s a nightmare.

Meanwhile the balanced funds she abandoned regained all of their lost value in 2010 and 2011 and went on to provide returns which some years approached 10%. Her savings account delivered nothing. Now it’s gone – all into rent and groceries.

This is ignorance on parade. It’s the irrational fear people have despite never experiencing a depression or a market collapse – that their investments could (and probably will) go to zero. It’s why they buy things which are going up (feeling safe, and greedy) and bail on anything that’s falling (pure fear). It’s human nature. Until that changes, ignorant investment habits will remain – which opens up a window of opportunity for other investors.

These days, with 32% of the population morphing into retirement mode (the most ever) and interest-bearing investments having collapsed, we’re probably moving towards a point of crisis. The rational conclusion is a big dump of residential real estate, as millions of people realize they don’t have savings, portfolios or cash flow to support them through two decades of not working. If you’re 42 years old with a couple of kids and all your net worth in a house, this is not what you want to hear.

Now for the point of this blog post. Here it is:

S&P CHART

Yep, that’s the stock market over the last 50 years or so. You see the “panic point of no return” when Sue pulled her money out before it all potentially evaporated? You bet – in advance of the big rebound that took values 60% higher. In fact if you look at every market correction since 1987 – all 27 of them (when values declined by 10% or more) – you can see the negative effects of each were wiped away by a recovery rally soon thereafter. And it didn’t take years – usually just months – as was the case in 2008-9.

This is relevant now that fear once again stalks the land and sends chills through the boxer shorts of an entire generation. It’s even more salient in Canada when a crap economy means interest rates may not recover to ‘investment’ levels for a decade or more, if ever. Sure, stocks have dropped 7% over the past year in the US and almost 15% in Canada, but a balanced portfolio has protected capital, and investors with fixed-income assets have seen their income stream flow undiminished.

More importantly, life is long. Retirement’s now stretched over decades. It’s wicked expensive. And the government’s not coming to your rescue. You need growth – which will only come through assets that provide embedded income or the potential for capital gain, and which are kept in place.

Anyway, here’s a prediction for you. A decade from now I’ll still be writing about the Sams and the Sues. They never learn.

249 comments ↓

#1 dtmgos on 01.25.16 at 5:51 pm

remember the predictions for 2016?

After 25 days I wouldn’t be doing a scorecard yet. — Garth

#2 Darryl on 01.25.16 at 5:51 pm

yipes

#3 slick on 01.25.16 at 5:52 pm

furst?

bad market form today

#4 Frank on 01.25.16 at 5:57 pm

So if interest rates aren’t going anywhere then neither is the housing boom

#5 prairiegopher on 01.25.16 at 5:59 pm

Hey Garth, I love reading your blog. I am retired with a very good DB pension, but I couldn’t stay home because of the boredom. I work part time making a good wage and I will likely do that until I’m 65. I think I will have enough to look after me till the end. Freedom 55 is definitely gone the way of the dodo.

#6 RimJabba on 01.25.16 at 6:00 pm

This will be the first global downturn, real estate bubbles are a global phenomenon now.

The big debate in my head, will Poloz hike or negative on interest rates. This guy is flip flopping like a trout out of water.

He just came out on the 20th and said he will protect our dollar via rate hikes, but then said get ready for negative rates. Hmmmm. If it goes into negative rates, I’m with Smoking Man on FOREX’ing the death of the CAD. If he hikes rates, hell, might as well leave Canada because we are toast.

FOMC on the 27th, if they hike rates, I’m FOREX’ing. Either way, the Fed has Canada and the world like a boa constrictor.

#7 Alvin Lee on 01.25.16 at 6:01 pm

Hey can we put this Cauliflower thing to rest yet? They are $2 a head throughout Metro Vancouver right now.

#8 Microbalanced on 01.25.16 at 6:02 pm

thumbs up for the plan to continue writing!! ….. unfortunate about the topic, but at least you sticking with it….i try to inform my friends, with what you share here, they hear but don’t listen

#9 Water cat on 01.25.16 at 6:02 pm

US/Persia Bart oil exchange today- first Bart trade – Persian juice for Greek Debt. First sale after Sanction lifted.

http://www.ekathimerini.com/205324/article/ekathimerini/business/iran-sees-greece-as-conduit-for-re-entering-europes-oil-market

#10 powder_hound86 on 01.25.16 at 6:02 pm

I’m detecting a remarkable change in mood from garth…

It’s my feminine side. Ignore it. — Garth

#11 Irish Stew on 01.25.16 at 6:02 pm

Sometimes just having savings is a win in itself :(

#12 Water cat on 01.25.16 at 6:07 pm

Meet the Jug Runners – how bad do Americans want our Canadian Water?
Due to low levels of water in some northern US states, people are smuggling water from Canadian Lakes and into the U.S. It is becoming a very profitable business. There is a audio to the page as well.

http://www.cbc.ca/radio/thisisthat/school-real-estate-word-search-champion-water-smugglers-1.3194224/meet-a-canadian-making-thousands-of-dollars-smuggling-water-into-the-u-s-1.3194276

#13 kommykim on 01.25.16 at 6:10 pm

An article for the pessimists out there:
http://www.fool.com/investing/general/2016/01/21/why-does-pessimism-sound-so-smart.aspx

#14 Penny Henny on 01.25.16 at 6:17 pm

The study looked at the median cost of a home in each of the markets studied and then divided by the median income to produce a multiple. In Vancouver that $756,200 median-priced house produced a multiple of 10.8 when divided by the median household income of $69,700.
Benjamin Tal, deputy chief economist with CIBC World Markets, cautioned that some of the conclusions from the report don’t fit, and noted that in Vancouver the income used does not reflect the actual people buying the houses.
“If there is a bias in income in a place, it’s definitely Vancouver, where a lot of this money is coming from outside the country,” Tal said . “We are not just talking about foreign investors, we are talking about new immigrants. We might have the wife here and the husband over there. She might have income of zero and be living in a $5-million house. There’s a lot happening and that’s not foreign investment because she’s Canadian.”
http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouver-ranked-third-most-unaffordable-housing-market-in-world-worse-than-new-york-and-london

???????????????????????????????????????
Care to comment Garth?

#15 ole Doberman on 01.25.16 at 6:19 pm

For the general public the stock market is a computerized contraption rigged to steal retail money. But ya your chart would say otherwise.
What about gold though? It never tarnishes, cant go wrong with that

#16 WallOfWorry on 01.25.16 at 6:19 pm

How about one of the most objective arguments for why there could be a major correction in equities. I agree that it doesn’t make sense to try and time the market, and a balanced diversified portfolio is key (including a gold hedge of 5 – 10%) but basic investing strategies would also impress upon you the need to understand sector rotation and cash is a position too.

http://www.zerohedge.com/news/2016-01-25/dont-say-you-werent-warned-again

#17 EarlySpring on 01.25.16 at 6:22 pm

Well am I ever excited that you just committed to another decade of blogging, best news of 2016 thus far. Cheers Garth!

#18 Battousai on 01.25.16 at 6:22 pm

#214 Mark on 01.25.16 at 4:43 pm
“see whut i mean? lower bar.”

Nope. Just pointing out the truth. Tesla (and various other automakers) provide some pretty fancy driving aids, but they are not ‘self-driving’ and won’t be ‘self-driving’ without a dramatic increase in the instrumentation…. Even Google’s efforts at ‘self-driving’ has produced a dramatically increased rate of accidents compared to human-driven vehicles, under idealized conditions.

Google cars did not cause a single accident. Of the 14 minor accidents, human drivers were at fault in all of them. I’ve read they were mainly in fender benders being rear-ended.

Google driverless cars are already superior to their human counterpart drivers. Watch this video – fast forward to the 8 minute mark to see a visual of what the self driving car can see.

https://www.ted.com/talks/chris_urmson_how_a_driverless_car_sees_the_road?language=en

Driverless cars will happen within the next 10 years. I am looking forward to the day when I can get tanked at a bar and have the car drive me home. I also won’t miss paying auto insurance,

#19 valleyrenter on 01.25.16 at 6:24 pm

A little tripped up on fixed-income assets. Would that be dividends from telecoms, utilities, banks plus bank preferreds? Should that be more focused on in retirement if so, as well as harvesting any gains on a portfolio while keeping enough in the portfolio to preserve capital against inflation? I probably have a tonne more questions, but figure this is important enough to ask. The dots are finally starting to connect, and I am seeing things in the bigger picture on longer time horizons.

#20 Penny Henny on 01.25.16 at 6:26 pm

#10 powder_hound86 on 01.25.16 at 6:02 pm
I’m detecting a remarkable change in mood from garth…

It’s my feminine side. Ignore it. — Garth
///////////////////////////////////////
Markets bad= Garth dovish

Markets good= Garth doomsdayish

#21 Mark on 01.25.16 at 6:30 pm

Very well put, and points I’ve tried to hammer home many times. The low rate environment has basically been nirvana for seniors (and cash savers/investors generally), as historically, when rates have been ‘high’, the real after tax returns associated with such rates have been significantly negative. Additionally, retired people are significant beneficiaries of government programs which are only sustainable in the context of low rates.

Those who clamour for the Bank of Canada to arbitrarily ‘increase’ rates when not indicated to do so by inflation, are effectively asking the BoC for a form of social assistance or welfare. Cash savers should be no more guaranteed a return than any other participants in what is essentially an economy devoid of sustainable growth for the past decade or two. Sure, vibrance in Alberta’s O&G sector made up for the crash of Ontario manufacturing and the disappearance of the (largely) Ontario tech/IT sector, but even now it is apparently obvious to everyone that Canada’s in pretty deep trouble when those two sectors are now both in the toilet.

“He just came out on the 20th and said he will protect our dollar via rate hikes, but then said get ready for negative rates. “

Poloz absolutely will protect the dollar (down 1.6% YoY, against a targeted depreciation of 2%) by hiking rates when necessary. However, with the collapsing domestic demand, it seems that there is likely going to be room to cut in the future.

Sometimes just having savings is a win in itself :(

Or not having debt. When negative equity washed over most of the under-45-year-old adult crowd in the USA in their housing collapse, newborns and homeless people were, in many cases, literally quite a bit wealthier than the majority of the population. Quite ironic, a newborn, just hours into the world, had already accumulated a net worth, simply by being at “zero”, in excess of people who had been in their accumulation phase for decades.

#22 Lee on 01.25.16 at 6:31 pm

Actually, the drop in the tsx from 2001-2003 took about 3-4 years to recover.

#23 MORE $$$ THAN NYC? LONDON? on 01.25.16 at 6:33 pm

How can this be? What economy can we boast of? This has to be due to relaxed regulations of offshore monies.

http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouver-ranked-third-most-unaffordable-housing-market-in-world-worse-than-new-york-and-london

#24 waiting on the westcoast on 01.25.16 at 6:35 pm

#18 Battousai on 01.25.16 at 6:22 pm
#214 Mark on 01.25.16 at 4:43 pm

Re: self-driving cars

As Battousai points out Mark – wrong again.

And sure even the self driving Google car could not drive in a snow flurry. Then again, neither can 3/4s of Vancouver residents. If perfection is your way of avoiding concession on the point, you are going to continue to struggle with credibility here.

#25 Buddy O' Pal on 01.25.16 at 6:38 pm

Sure hope you are still posting in a decade Garth-o!!! You the man cool guy!!

#26 nonplused on 01.25.16 at 6:39 pm

The problem with those long term charts for aggregates like the S&P or even TSX is that almost none of the companies that were in them at the beginning are still in them today. Companies are born, usually in response to some technological revolution, grow, peak, and fade away or collapse once their particular niche is exhausted or replaced. Even Wal-Mart and McD’s are said to be contracting. Who would have ever thought?

In the case of retailers it is said to be the online retailers who are crowding their space but Amazon doesn’t make much profit yet either.

In the case of McD’s it is said that after years of attack videos America is suddenly getting health conscious and shunning processed French fries and chicken nuggets. Personally I think docu-films such as “Supersize Me” are more about profit for the film maker than raising health consciousness, nobody eats 3 super sized meals a day anywhere without expecting to be overfed.

So anyway the point is the safest way to play it is still Garth’s way, a balanced portfolio and index funds that more or less follow the holdings of the indexes. They experience some inefficiencies as they actually have to sell the losers and buy the winners when the index is revamped, whereas the index itself just magically replaces one data set with another, but it’s still the best way to go.

#27 BC_Doc on 01.25.16 at 6:40 pm

“Anyway, here’s a prediction for you. A decade from now I’ll still be writing about the Sams and the Sues. They never learn.”

Garth, Jason Zweig (financial columnist at the WSJ) said in one of his recent columns:

“I was once asked, at a journalism conference, how I defined my job. I said: My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself. That’s because good advice rarely changes, while markets change constantly.”

http://www.jasonzweig.com/saving-investors-from-themselves-2/

As the cheeseburger eating guy from Ohama said, “Investing is simple but not easy.”

Smart guys and gals educate themselves accordingly and then live like the proverbial Ant. Winter always comes sooner than one wishes, especially here in Canada.

Cheers,

BC Doc

#28 Dishonest logarithmic S&P500 chart on 01.25.16 at 6:45 pm

This is a “dishonest” logarithmic chart version of the S&P500 – designed to push your objectives and to hide the very limited growth until 1980 and to smooth the volatility after 1995.

The real one is not that prettier!

Not my chart. Feel free to link yours. — Garth

#29 Axehead on 01.25.16 at 6:46 pm

That car’s pulling out of Red Deer – I just know it. Just shovelled it all after yesterday’s snowfall. And everybody’s pulling out of here because the economy blows. Wait…there’s no steel testicles, forget it.

#30 Smoking Man on 01.25.16 at 6:49 pm

Never and I mean never bet against the Smoking Man,
From Friday grass hoppers. when the world thought oil was back. The rich get richer.

………………………..
#120 Smoking Man on 01.22.16 at 9:39 pm
The pic is hilarious, if you took away the dude’s hair and one tooth. That would be me.

Wow lost 5 million in profit in two days. No sweet, who ever started the oil rally two days ago unloaded at around noon today. Ha some new greater fools. Look at the volume. Then oil slow assent on no volume.

If oil down ticks just a touch, or no demand I’m doubling up on my usdcad bet, been waiting for a dip like this.

Canada = COMMUNISM

Oil extremely over supplied.

Its how pros do it.

Watch and learn grasshoppers.

#31 Doug t on 01.25.16 at 6:50 pm

In 2008 my brother lost almost $200,000 that was invested by an idiot at RBC – it didn’t ruin him but now -like many – he doesn’t trust anyone or the system. What he has left sits in some accounts and a big chunk of cash in a safe – invest or don’t either way it can be a gamble

Did he sell at the bottom? That would make him the idiot. — Garth

#32 ROCK BEATS PAPER on 01.25.16 at 6:52 pm

Looks like the US stock market chart.

Thank God I am not retiring in Japan, the chart over their doesn’t look the same.

Wait a minute, I am not American either.

Garth, show us the global market for the last 50 years.

#33 Millenial-falcon on 01.25.16 at 6:54 pm

So why lambaste all the moist virgins taking out huge mortgages? U just said yourself rates going nowhere ….wasn’t rising Canadian mortgage rates because of USA recovery a theme on this blog for about 2 years ? Now a different tune. What’s the story Garth. Now screwed retirees dumping there 604 specials are gona stop the orgy in van ? Thas all you got ?

#34 tom black on 01.25.16 at 6:55 pm

Everything is normal and there is nothing to fear.. yea right!

Contrary to what we are told a seismic shift is taking place in the world’s economy. With many macro-economic outcomes. Make no mistake you will be affected and expensive cauliflower is the least of your worries.

The markets are horribly over inflated, look at Tesla for example $200 share with only a couple of products on offer, compared to say GM or Ford, you see where I am going? see their recent fluctuations? hmmm

Canadian banks will be CRUSHED very soon, responsible lending…? No I didn’t think so, I can’t wait to see how the insurance companies cope with the deluge of repos.

It would be laughable if it wasn’t so sad. Yes there will be a tomorrow and the sun will shine and life goes on, just not as we know it. Prepare yourself, this time it really is different.

See all those kids running around downtown with tattoo’s on their neck and bodies? majority of them are good kids for sure, but remember you are counting on them to sign on the line for the mortgage money to let you escape your property noose..

thats right, it ain’t gonna happen

wake up

#35 Leo Trollstoy on 01.25.16 at 6:57 pm

#24 waiting on the westcoast on 01.25.16 at 6:35 pm

leave mark alone. he thinks getting a job is a challenge. thinks getting hr to interview him is a challenge. there’s no way he’s gonna understand self driving cars. talk about puppies and rainbows. better traction. low bar.

#36 Bobs ur uncle on 01.25.16 at 6:57 pm

This is ignorance on parade. It’s the irrational fear people have despite never experiencing a depression or a market collapse – that their investments could (and probably will) go to zero.

*****

If you have a well-balanced portfolio, for it to go to zero, the entire stock market would have to go to zero. In which case, we’d all have much bigger things to worry about. This reality allows me to stay invested and sleep comfortably at night.

#37 tundra pete on 01.25.16 at 7:00 pm

#12 water cat.

Mark Twain once wrote; “whiskey is for arguin’ over, water is for fightin’ over”. The water fights will dwarf any petro fights from now on.

I think if you dig deep enough into these “free trade” agreements you will find that we will be supplying the U.S. with our water wether we like it or not at rates that will cost us to do so. The bankers are acquiring rights to public and private water the world over. Is becoming a serious issue.

#38 Retired Boomer WI on 01.25.16 at 7:02 pm

Another market day that tests the patience of a balanced investor.
Oil slipped on the ice again losing a few more %.
Would be Presidents blew more hot air up American skirts, and not much changed.
I detect a certain defeatism in Garth’s commentary, and if so, so be it. Not every Monday makes for a bright week, yet it is still early in the game.
Learned yet another friend, age 72, got his eternal ticket on Saturday. Seems I am noticing that more now that I have never been closer to closure myself.
So, what is it going to be, running out of money before I run out of time, or the other way…run out of time? Since I control not the exit clock, I’ll do what I did best. Invest & bitch. I feel SO empowered!!

M64WI

#39 Mark on 01.25.16 at 7:05 pm

“If perfection is your way of avoiding concession on the point, you are going to continue to struggle with credibility here.”

I have no problem with credibility whatsoever, here or elsewhere. In fact, I am so credible in telling the truth, even if it goes against the Realtor narrative (ie: their claims of rising prices in Toronto/Vancouver) that the trolls are left pretty much only to ad hominem in rebuttal.

“The problem with those long term charts for aggregates like the S&P or even TSX is that almost none of the companies that were in them at the beginning are still in them today.”

True, but the index methodology for those indices periodically will remove certain companies and replace them with others, sometimes re-weighting the index accordingly. The tracking error of index funds that have been around for the long term is negligible. Large-cap indicies are entirely investible with the modern index funds/ETFs we have today, and returns are completely representative of the chart that Garth has pasted, plus dividend yield.

This is a “dishonest” logarithmic chart version of the S&P500 –

Nothing dishonest about it. It just allows us to understand exponential growth in linear terms. It helps us to see that there was a period post-WW2 that there was significant stock market growth, followed by 2 decades of stagnation, followed by 2 solid decades of growth, followed by yet another decade and a half of relative stagnation.

Once USD$ debt and USD$ itself is depreciated, I’m pretty sure they’ll get back to another phase of growth. Although it probably won’t be the sectors which delivered so much of the vibrance in the past responsible for such.

#40 Leo Trollstoy on 01.25.16 at 7:05 pm

took me awhile to understand mark. i convinced that someone can’t be wrong on gold, usdcad, inflation, banking, re prices, and stuff all the time. too improbable. odds to great for anyone. then realized that it is his natural low bar. every1 has things they find difficult. every1. playing violin. coding. chess. every1 has their bar. hi and low. mark says getting job is hard. getting company hr person to interview is hard. that is his bar. low bar. so u can’t talk about stuff that goes over that. need to keep it lite. self driving cars? no. inflation? no. fractional reserve banking? hell no. gold is shiny? yes. respect the low bar.

#41 BG on 01.25.16 at 7:06 pm

Mark,

I’d really like to see your sources on that:
“Even Google’s efforts at ‘self-driving’ has produced a dramatically increased rate of accidents compared to human-driven vehicles, under idealized conditions.”

#42 Rob on 01.25.16 at 7:07 pm

Recent posts here have tried to underscore the fact interest rates are going nowhere

#43 not 1st on 01.25.16 at 7:07 pm

#18 Battousai on 01.25.16 at 6:22 pm

Driverless cars will happen within the next 10 years.

Thats great to hear. I assume you will be the first to take a driverless ride down the #1 between Calgary and Kamloops in January??

#44 G on 01.25.16 at 7:09 pm

“A decade from now I’ll still be writing about the Sams and the Sues. They never learn.”

No Garth, make it at least 2 decades. In the mean time, those who listen will be saved.

#45 BG on 01.25.16 at 7:11 pm

#28 Dishonest logarithmic S&P500 chart on 01.25.16 at 6:45 pm
This is a “dishonest” logarithmic chart version of the S&P500 – designed to push your objectives and to hide the very limited growth until 1980 and to smooth the volatility after 1995.

The real one is not that prettier!
————————————————————–

I thought logarithmic graphs were designed to mitigate the counter-intuitive effect of a constant growth percentage: an exponential curve.

What’s you theory?

#46 Villagemoron on 01.25.16 at 7:14 pm

With a click of a mouse – watch the money start to move

http://www.eccb-centralbank.org/currency/country_intrates.asp

#47 mike harrison on 01.25.16 at 7:14 pm

Don’t be fooled by indices! They are just another statistical tool that is used, abused and manipulated by financial industry participants. How many companies that were in the S+P 500 in 1965 are in the SP 500 today! Losers are dropped out and replaced by winners , maintaining the illusion that the index is always rising. The Dow 30 is far worse, since it is price weighted.
You have done a good job exposing CREA stats as being a misrepresentation of the realestate market, lets be honest and expose them all!

Don’t buy individual stocks. Problem of evolution solved. (This post of mine must be great. So many whackjobs emerging. Love it.) — Garth

#48 nonplused on 01.25.16 at 7:16 pm

#28 Dishonest logarithmic S&P500 chart

Logarithmic charts are not dishonest, but you do have to know what you are looking at. Any time you say something like x% per year you have an exponential function, which people don’t understand instinctively, so a logarithmic chart helps convert the compound growth back to a linear representation which people understand better.

Unfortunately, inflation is also exponential, so the actual increase in “wealth” created by things like the S&P is always overstated unless it’s adjusted for inflation. And then there is a big controversy over what the true inflation rate actually is. Initiatives like MIT’s “million prices” project always show way higher inflation than the government reports. Or the “cauliflower” crises is another good example. If, in your retirement, you expect to convert most of your assets you can hold (hold in your account I mean) into cauliflower you can eat, and cauliflower rises in price much faster than your assets, well you are loosing anyway but maybe not as much as if you had cash only. And anyway I’d rather eat beef jerky if I still have teeth. It tastes better and there is no chance of salmonella. Too much salt and it’s too dry for anything to survive. Ya sure the salt is going to get ya, but slowly. Salmonella can get an old person in a few days.

#49 HJD on 01.25.16 at 7:17 pm

Garth, Doesn’t your stock market chart also roughly represent what happened to house values over the last 50 years?

Also, with regard to #4 Frank: “So if interest rates aren’t going anywhere (over the next decade?) then neither is the housing boom.”

Seems to me that continued low interest rates will be accompanied by continued low mortgage rates. And in that case we probably won’t experience a significant downturn in home values. Maybe?

#50 Fine Wild Roasted Gonads on 01.25.16 at 7:20 pm

#28 Dishonest logarithmic S&P500 chart on 01.25.16 at 6:45 pm

This is a “dishonest” logarithmic chart version of the S&P500 – designed to push your objectives and to hide the very limited growth until 1980 and to smooth the volatility after 1995.

The real one is not that prettier!

Not my chart. Feel free to link yours. — Garth


Sneaky – good eye!!

Here’s one with an exponential fit!… up, up and away for ever!!

http://buildengineer.com/blog/charts/s_and_p_500_2014-1-26.png

#51 Water Cat on 01.25.16 at 7:21 pm

China Bart coming. Garth you better coin the number after trillion because it does not exist.

#52 Nobody on 01.25.16 at 7:23 pm

Terrible times for savers, yes, but up to very recently one could still get 3.5% for provincial bonds 10-15 years out. If one’s an expat living overseas as we are, it is arguably a viable alternative to the balanced portfolio and much safer.

Not even close, especially if not tax-sheltered. — Garth

#53 joe campbell on 01.25.16 at 7:23 pm

so your chart shows what ROI since the year 2000? ill help you out its 1%.

im all for investing but it has to be with reasonable expectations and a full understanding of risk. like if you get an etf should you expect to lose money relative to inflation? (i would answer yes).

read john campbell, harvard. he won the nobel prize if you like credentials

http://scholar.harvard.edu/campbell/files/campbell_qje1986.pdf

(he has more recent papers this is the first one i could link not the best)

#54 Don't Believe The Hype on 01.25.16 at 7:24 pm

This post should be required reading for every undergraduate student as part of a compulsory Financial Planning class at both college and university levels. Maybe T2’s government can make that happen. Not.

#55 Investx on 01.25.16 at 7:26 pm

Nice chart.

You rarely, if ever, hear financial advisors mention the very long bear market spanning from the 60’s to early 80’s.

“The stock market can perform miserably for periods as long as 15 to 20 years. For example, during the 17 years from 1966 to 1982, the stock market barely kept up with inflation, with the brutal 1973 – 1974 bear market occurring in the middle of the period.” – The Four Pillars of Investing

#56 NOTHING SURPRISES on 01.25.16 at 7:27 pm

Perhaps this is an alternative to the dismal future predicted by Garth for seniors.

If doomed to sit in a room all alone eating dog food in their twilight years unable to afford medications and dental care, commit a crime that will garner them time in prison……go for 5 years initially.

This will provide a room and clean sheets, good food, access to full medical and dental care, higher education if desired,T.V., and exercise. Their pension funds can accumulate and be invested by a fee-for-service only manager.

Visitation rights if there are family and friends. They may end up with people they know as well as make newer friends to play cards with.

They will be safe from street assaults and abuse from personal home situations and retirement holes they could end up in.

A drastic alternative to a situation but possibly a better end of life than living without money.

We now have these facilities and they’re occupied by folks that have never contributed to Canada!

#57 greyhound on 01.25.16 at 7:27 pm

Great picture; chart however conveniently goes only from 1950. Previous years produced somewhat different results. For example if you bought the Dow in 1929, you didn’t get your money back until 1954 — 25 years later.

There’s always one comedian around. — Garth

#58 28th recovery here we come… on 01.25.16 at 7:28 pm

“In fact if you look at every market correction since 1987 – all 27 of them (when values declined by 10% or more) – you can see the negative effects of each were wiped away by a recovery rally soon thereafter. And it didn’t take years – usually just months – as was the case in 2008-9.”

“It’s even more salient in Canada when a crap economy means interest rates may not recover to ‘investment’ levels for a decade or more, if ever.”

really sad state of affairs for not just Canada but World wide….Thank goodness the Central Banks have our backs….as long as you’re not a saver….

#59 Jeff on 01.25.16 at 7:28 pm

Garth, why do Economists disagree with each other so much? Maybe this is why Sam and Sue will never learn.

You mean, like meteorologists? — Garth

#60 Shawn on 01.25.16 at 7:30 pm

Actually, logarithmic charts are the ONLY honest way to post data where something grows over a long period of time.

Some anonymous person above stated and Garth responded:

This is a “dishonest” logarithmic chart version of the S&P500 – designed to push your objectives and to hide the very limited growth until 1980 and to smooth the volatility after 1995.

The real one is not that prettier!

Not my chart. Feel free to link yours. — Garth

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

Garth’s chart is completely honest and does show the flat S&P 500 from about 1965 to 1980 with periods of tremendous growth before and after the flat period.

Below is a link to my own chart which shows the same thing in real dollars adjusted for inflation and includes GOLD.

Guess what? The S&P 500 wins, hands down:

http://investorsfriend.com/wp-content/uploads/2015/01/SBBIlo2.jpg

#61 Why Why Jay on 01.25.16 at 7:32 pm

But, but, but…. This time is different!

;)

#62 April. on 01.25.16 at 7:34 pm

But it’s so scary here paddling in the beginner’s pool while the tide is going out in the investment ocean. For an aging beginner (Crimson in Clover was my first 45), the fear is that one won’t live to see high tide again. The dividends are nice though.

#63 Shawn on 01.25.16 at 7:36 pm

I got kicked off this additive Blog a good while back and that was okay really. Saved me a lot of time…

I been tempted to try to come back a few times if only to plead with Mark to seek help and an honest assessment of how his approach to life holds him back.

#64 TurnerNation on 01.25.16 at 7:40 pm

Have to say we Canadians are weak, scared sheep. Bent over a barrel by the few duopolies and billionaire families running this country for-profit.

Meanwhile anti-capitalists and leftists protest pipelines and jobs.

More of this: small town take-down.

“Guelph Mercury stops publishing print edition, all staff cut
CBC.ca – 7 hours ago
The Guelph Mercury will stop publishing its print edition as of Friday, the paper’s publisher Donna Luelo told CBC News in an email Monday.
Guelph Mercury newspaper to close amid financial pressures The Globe and Mail (subscription)

WestJet cutting back on scheduled flights from Calgary, Edmonton
CTV News – 1 hour ago
CALGARY — Fewer WestJet planes will be flying in and out Alberta’s two biggest cities as weakness in the energy sector puts a damper on demand.
WestJet grounding Alberta flights due to economy Calgary Sun”

#65 Leo Trollstoy on 01.25.16 at 7:45 pm

#47 Shawn on 01.25.16 at 7:36 pm

no need to say anything. life always punishes the dumb. that’s why he says it’s hard to get noticed by company hr. if hard to get a simple job, not much is ez

#66 28th recovery here we come… on 01.25.16 at 7:45 pm

as to all the chart talk, it is interesting that the Nasdaq (US high-tech index) was higher than it is now, what, about 16 years ago….and TSX was at the point it was now, what, about 10 years ago or so…..

now I know a wink is no more than a nod to a blind horse but that still is a pretty good period of time, eh…..

#67 Capt. Obvious on 01.25.16 at 7:45 pm

So if interest rates aren’t going anywhere then neither is the housing boom

How do you figure? Interest rates, at least those paid on mortgages, are not going any lower. That wind has blown. Now it’s all about demographics and income. I really don’t think people understand how important the decline in interest rates have been in fueling this beast. 25 y amortization, 400k loan at 3% is $1893/mo — most people can manage this on a decent middle class income. Same 400k at 6% (normal not that long ago) is $2559/mo. Doable, but no longer a slam dunk for a lot of families. At 6% for the same payment as at 3% you can borrow 295k. And that there illustrates exactly what has happened, using bigger numbers in bigger urban markets (600k is $2839/mo vs $3839/mo).
Your best case scenario going forward in most of Canuckistan is for real estate appreciation to keep pace with inflation. That would be a good outcome.

#68 ROCK BEATS PAPER on 01.25.16 at 7:48 pm

#38 Shawn on 01.25.16 at 7:30 pm

The chart is a bit sketchy. If gold is on there, we will need the other assets to go back at least 5 centuries and ideally 3 millium.

The only truly accurate part of the chart is that the US dollar is became worthless over time, as is the history of most fiat currencies. On your chart the US$ is actually negative! I guess, it is anticipating negative interest rates.

Bullion lickers are close to being exited again from this blog. Be warned. — Garth

#69 common sense on 01.25.16 at 7:52 pm

Be careful how you use the phrase “feminine side” Garth.

One of your biggest fans may turn.

#70 Rick on 01.25.16 at 7:58 pm

Garth, I enjoy your blog daily; I always get a good chuckle. Keep up the good work:)

#71 28th recovery here we come… on 01.25.16 at 7:58 pm

“Sometimes just having savings is a win in itself :(

Or not having debt.”

yes, the ‘new’ savers will retire debt, not themselves….just to survive…..

#72 Shawn on 01.25.16 at 7:59 pm

Chart feedback

Some apparently 500 year old person above said:

On your chart the US$ is actually negative! I guess, it is anticipating negative interest rates.

*******************************
Good point. Yes, I noticed that. The zero that it is below is actually 10 cents, rounded to zero.

A dollar bill foolishly deposited under a mattress in 1926 rather than in a bank account or bonds or stocks has depreciated to about 8 cents purchasing power.

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

#73 Linda on 01.25.16 at 8:01 pm

#16 Wall – what IS this thing with gold? I simply do not get it. If you have it in any quantity, you then have to protect it from theft. Whether you buy your own safe or rent a facility, either will cost. As for cashing it in, would you get the value you paid? Meanwhile the gold market swings up & down just like any other commodity.

#56 – interesting idea regarding repurposing jails, those if you’ve spent any time in nursing ‘homes’ the jail concept has already been incorporated for some inmates. I’ve been in places where visitors can’t get out w/o the aid of staff, as there are lockdowns in place to prevent mentally vulnerable residents from leaving. However, the jail thing does have one potential drawback. Evidently long term convicts in low risk jails have extremely long lives, mainly due to the fact they live such regulated ones.

#74 Bottom Feeder on 01.25.16 at 8:01 pm

The S&5 500 graph shows something else that is not impressive to the Millinials. Since peaking in 2000 it has had a difficult tine getting traction. Only by investing after each collapse does it look impressive.

#75 Just the facts please on 01.25.16 at 8:04 pm

#22 Lee
Actually, the drop in the tsx from 2001-2003 took about 3-4 years to recover.

and also:
the S&P/TSX is currently down closer to 21% from its peak
not the 15% that was implied

Nothing was implied. I said the 12-month drop was 15%. It is. The chart I used, by the way, was the S&P, not the TSX. — Garth

#76 Goofy 2 Shoes on 01.25.16 at 8:07 pm

I recall my Economics professor (who actually did have a PHD in Economics and worked in the field) stressing that everything about economics is a theory – and the theory they thought was rock solid at the time turned to jello under the right circumstances. It only takes the right combination of variables in place to take us on a ride we’ve never been on before.

I am risk averse but do invest a percentage of what I have in the market. I would likely be called stupid on this forum, but I know what I can live with and it helps me sleep at night. I do not feel sick with a big market dump. I know that if the market drops I can leave it alone and if necessary draw on those investments that some call crappy. I tend to think of them as ‘easy to liquidate at close to what I paid for them’. There is comfort in that. I understand I’m losing money due to inflation but I accept it because that’s the price I am willing to pay to sleep soundly.

This woman who had everything invested and pulled it out when the market tanked …. I don’t know what her investment strategy was, but perhaps she needed more ‘crappy’ investments so she could sleep through the market drop.

Investment risk tolerance is a very personal thing.

She converted it all into a no-risk asset. Cash. As such she courted the ultimate risk, and is now in penury. I hope you have lots of money. — Garth

#77 Warren - the lagging indicator on 01.25.16 at 8:13 pm

“Some source. Written by the gold-pumping (and troubled) Sprott gang, pushing their own product.” — Garth

++_++

When I listen to guys like John Embry or even Peter Schiff , while I may disagree with much of what they say, I find them to be quite likeable and trustworthy. I feel they are well intentioned and believe what they are saying is true and helpful. Man, I must be very naive and gullible. Now I may be naive, but I am not stupid and I realize they have a vested Interest in a rise in gold and a collapse in the USD, but is it true that they are knowingly peddling fear and misinformation to the intellectually arthritic doomer types that frequent this blog who would revel in the collapse of America. If so, that is pretty sad and shameful. Or maybe they are smart, but conspiratorial kooks that actually believe what they are saying and are trying to help people and make money in the process… I’m confused.

#78 ROCK BEATS PAPER on 01.25.16 at 8:16 pm

“Bullion lickers are close to being exited again from this blog. Be warned. — Garth”

Good point.

For the record, I am interested in all the asset classes but not necessarily at the same time.

There is still aversion and hatred toward bullion, and the only licking for the last few years is of wounds.

That is, unless your Canadian. It was one of the best asset classes last year for Canadians, and so far this year is looking up as well.

Garth, surely, it has tickled a contrarian nerve in you given the central bank mis adventures from 2011 onward.

#79 Barry in Pickering on 01.25.16 at 8:16 pm

Garth, For the stock market graph, why show the U.S. Stock market (S&P)? Last I saw, you only advise a minority of a balanced portfolio in USD, and the majority in CAD. Why not then show a CAD stock market graph?

Because it matters. Canada amounts to just 3% of global markets. — Garth

#80 Water cat on 01.25.16 at 8:22 pm

China Bart done just now. Reading the fudge

#81 Mark on 01.25.16 at 8:27 pm

“I’d really like to see your sources on that:
“Even Google’s efforts at ‘self-driving’ has produced a dramatically increased rate of accidents compared to human-driven vehicles, under idealized conditions.””

Sure, happy to provide them:

http://www.cnbc.com/2015/10/29/crash-data-for-self-driving-cars-may-not-tell-whole-story.html

“Since 2012, the self-driving cars tested by Google, Delphi and Audi have logged more than a million miles on public roads, and have been involved in 11 accidents. ”

(remember, these “self-driving cars” are operated under ideal conditions, and are ideally maintained)

While the accident rate for traditional cars is: “Crash rates fell to their lowest number (185 crashes per 100 million VMT), and injury rates also dropped, from a high of 169 per 100 million VMT in 1988 (the first year on record) to 74 per 100 million VMT in 2009, again the lowest on record. ”

http://www.caranddriver.com/features/safety-in-numbers-charting-traffic-safety-and-fatality-data

(real world conditions, all weather conditions, actual maintenance practices of actual users, not specially coddled vehicles!).

So let’s sum up the evidence. The “self-driving cars”, under pre-selected ideal conditions, are being in accidents “crashes” ~11 times for every million miles. Human-driven cars, under real-world conditions, are in crashes 1.85 times for every million miles.

Therefore, the alleged “self-driving cars” are notoriously poor drivers, just comparing the statistics alone. And if one were to expose the self-driving cars to representative real-world conditions including maintenance, road conditions, sleet/snow/rain, the numbers are certain to be dramatically higher.

Heck, even the main technology advocated by self-driving car proponents, “LIDAR”, basically stops working with any rain or snow. There are ways around such, such as phased-array radar, FLIR, etc., as part of a far more robust instrumentation package. But many of those technologies are subject to military controls at the levels of fidelity required. And cost is dramatically greater than even LIDAR. Not to mention the systems engineering challenges involved. Not insurmountable, but not a trivial nor inexpensive endeavour.

Invest in companies claiming “self-driving cars” are right around the corner at your own peril. I’ll just leave it at that (as this is a RE blog after all!).

#82 Metaxa on 01.25.16 at 8:29 pm

The beef stew was terrific, thanks for asking.

How come some of you seem more involved with Mark than with giving your opinion/answers/insight to the remainder?

Mark may or may not but you all seem like that clique in high school who decided to pick on the guy with big ears.

Never pick on the guy with big ears.
It’s as stupid as yelling “First” on a crowded message board.

Gas well under a buck, cauliflower still cheap, hugs still incoming.

Breathe.

#83 Leo Trollstoy on 01.25.16 at 8:31 pm

Bullion lickers are close to being exited again from this blog. Be warned. — Garth

ppl who lick gold have already exited. financially. poor buggers

#84 Mark on 01.25.16 at 8:34 pm

“Human-driven cars, under real-world conditions, are in crashes 1.85 times for every million miles. ”

Sorry, my dyslexia kicking in…. The human driven vehicles are in crashes 0.74 times every million vehicle miles travelled. The self-driving cars, 11 times every million vehicle miles travelled (according to the links provided).

The proponents have an incredibly huge gap to close to get those rates to even begin to favour the self-driving vehicles. Therefore, the claim that self-driving vehicles are ‘safer’ is largely complete nonsense created by certain tech firms trying to foment excitement concerning their otherwise failing future prospects. Particularly that one big company that makes most of its money from ads and has failed at pretty much every other business endeavour.

#85 Thick - Realties.ca on 01.25.16 at 8:34 pm

[…] Source: http://www.greaterfool.ca/2016/01/25/thick/ […]

#86 Leo Trollstoy on 01.25.16 at 8:35 pm

poor guy. self driving makes him
confused. company hr hiring process makes him confused. inflation makes him confused. why am i wrong all the time. life must feel like a cruel confusing joke. :(

#87 CalgaryCarGuy on 01.25.16 at 8:38 pm

Re #18 Battousai
“Driverless cars will happen within the next 10 years. I am looking forward to the day when I can get tanked at a bar and have the car drive me home. ”
——————————————————————–

Yeah, I was thinking that too until I remembered we live in Canada and there is no way on earth our governments would let that be ok. The “passenger” would still be classified as the operator and would therefore have to be sober. Just watch.

#88 Battousai on 01.25.16 at 8:44 pm

#81 Mark on 01.25.16 at 8:27 pm

Mark, did you read the part in your link that said, “What’s more, not once was the self-driving vehicle the cause of the accident. ”

QED

#89 Robert on 01.25.16 at 8:45 pm

There is no guarantee stock market always recovers.

Japanese Nikkei 225 reached an all-time intraday high of 38,957 in 1986. 30 years later it is at 16,724…

If the same thing happens to US stock market then S&P 500 will be around 1,000 in 2046…

Then Sams and Sues will be smarter ones…

#90 Freedom First on 01.25.16 at 8:48 pm

Yes. Feminine side. I have been in touch with both my male side and my feminine side for decades. Understanding the male psyche and the female psyche has helped guide me in all my choices in my life. I would say this has really really helped save my a$$.

Keep in mind, I am a heterosexual healthy male who has always enjoyed the company of all of my girlfriends. And I have had some male friends who have been a friend for decades.

That being said, I will continue to live alone, as I would never want to put myself in a position where a Sue, or a Sam, may begin to think that I care what they have to say about anything I do, or don’t do.

Yes, And because I am in touch with my feminine side, while being a fine specimen of manhood, women are drawn to me like a moth to a light. Good thing I am honest with everyone.

#91 Brazil ex-pat on 01.25.16 at 8:49 pm

So for everyone saying bad bad bad to those who have gotten out recently, doesn’t that chart show that you are getting out close to the top? Just saying.

#92 Mark on 01.25.16 at 8:50 pm

““Bullion lickers are close to being exited again from this blog. Be warned. — Garth””

Good. Canadians are in a unique position of actually having a whole plethora of high quality precious metals mining companies to buy. Management is relatively accessible (I am told Rob McEwen even puts on lunches for his shareholders every few months, and shareholders’ meetings are easily accessible for the rest of the companies). If one wants precious metals exposure in Canada, it would be silly buy bullion rather than the dirt cheap mining companies.

Contrast this with someone in say, India, or China — big markets for precious metals traditionally. Most people in those countries cannot buy mining stocks, nevermind the dominant mining stocks in the industry — the Canadian ones. They have no meaningful access to management or the corporate governance process. Precious metals mining stocks just aren’t an investible asset class to many outside of Canada. Hence, to gain the exposure they want, they’re forced to buy physical metal or futures contracts, and give up the leverage inherent to owning the miners.

Eventually this will change, and, in a future precious metals mania, Canadians will travel the world selling quality Canadian PM mining stocks into the portfolios of as many as possible. But until that happens, there’s likely to be much greater returns buying shares of active businesses, such as miners, than there is in buying inanimate shiny rocks.

#93 Victor V on 01.25.16 at 8:50 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/fp-tech-desk/rogers-media-to-cut-workforce-by-4-affecting-200-tv-radio-publishing-and-admin-jobs&pubdate=2016-01-25

Rogers Media Inc., a subsidiary of Rogers Communications Inc., said Monday that it will eliminate roughly 200 positions from its conventional TV, radio and publishing arms, and its back office starting in February.

#94 JamesA on 01.25.16 at 8:57 pm

NPR story about AI writing surprisingly half decent content:

http://www.npr.org/sections/money/2015/05/20/406484294/an-npr-reporter-raced-a-machine-to-write-a-news-story-who-won

I am not sure if this is fake, but, the branching logic based on human feedback is pretty freaky (if real):

http://www.cnet.com/news/the-best-robo-call-ever-or-the-freakiest/

uncanny valley hear we come. To bad about those reporters that got laid off, content creation has a rough road ahead.

#95 SOLD OUT TO THE GOLDEN GOOSE on 01.25.16 at 8:57 pm

Anecdotal reports of mortgage brokers busier than ever….working to burnout pace. There is a problem as investors sell and trade our real estate like stocks and leave the common folk unable to participate for real reasons: buying a home.

http://www.troymedia.com/2015/08/30/vancouver-has-sold-its-soul-to-real-estate/

#96 bob the train on 01.25.16 at 8:58 pm

DELETED (gold nut)

#97 JamesA on 01.25.16 at 9:01 pm

Ughh. *Here* *TOO* I can’t spell anymore.

#98 WUL on 01.25.16 at 9:05 pm

#87 CalgaryCarGuy on 01.25.16 at 8:38 pm

Good catch!! The charge is based upon being in “care and control” and not driving the vehicle. Hence the multitude of folks sleeping in the back seat with the engine running to keep them warm that have been charged with impaired driving.

#99 acdel on 01.25.16 at 9:06 pm

Great post Garth.

I am just your average Joe but that is exactly the path I have chosen, diversify my portfolio, hell I live in Alberta and I have been through 4 or 5 of these dips. Being a young fellow in the 80’s I saw the destruction of what happened to many of my friends parents. That taught me a valuable lesson in life. I feel for the retires in your story. My concern is the debt level of countries, realistically, there are maybe a handful that can pay off what is owing, the rest have no chance including our neighbors to the South. What future is there for a child born today?? The world debt is the snake eating its tail.

#100 BG on 01.25.16 at 9:09 pm

Mark, thanks for the links.

However I think the data is not quite conclusive.

For example:
-How many of the 11 collisions with self-driven cars were caused by them rather than a human driver?

-Are we comparing collisions reported to police on the human side, with any collision occurring on the self-driving side? It’s likely, and it’s not fair.

-You say the self-driven cars enjoy ideal driving conditions. Fine. But we can’t assume they would perform worse than human drivers on less ideal conditions.

Just saying.

#101 The Turner Institution on 01.25.16 at 9:20 pm

Our way out of this thick mess is through education.
We need a excellent educational system that isn’t basic programmers for Google or anything from our souther friends. We have it here in Canada. Let’s stick to pure Canadian values. I know all would agree that The Turner Institution is the future for the next generation.

#102 Daisy Mae on 01.25.16 at 9:24 pm

#14: “Care to comment Garth?”

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

If I remember correctly, Garth does not hold Benjamin Tal in high regard. Hence, no comment.

#103 lee on 01.25.16 at 9:25 pm

Greyhound,

And Stalin was a heartthrob.

#104 Nagraj on 01.25.16 at 9:30 pm

Well, I read “Thick”, and I am left to wonder if our gracious host is joining that noisy chorus of angry voices damning Snow White and her assorted Gnomes.

The sopranos and tenors are yelling Policy Error! sotto voce because they want lower rates and QE restored forthwith. The rest, the less strident altos and ever steady basses, are brumbling on as usual that Snow White & Co have been institutionally benighted since Dec. 22, 1913. (Which could be the case, why not.)

Whereas our new and princely Prime Minister has been blessed by Providence with an insuperably photogenic face, our ancien regime POMP (Potentate Of Monetary Policy) has definitely not been similarly blessed – this Poobah Calonne always manages to look somehow dopey (and his primary dealer pals remain, as always, quite faceless). (He otta work for free for a year. And not make bad financial decisions like the rest of us. Maybe then he would not look so innocently stupid.)

Snow White and the Dorfs (sic) will be warbling something on Wednesday – which is sure to up the volume of aforementioned disconcerted choristers when they respond en masse.

Oft, in the stilly night
Ere slumber`s chain has bound me,
Fond memory brings the light
Of other days around me

#105 Gulf Breeze on 01.25.16 at 9:30 pm

Leo Trollstoy. — “People who lick bullion have all exited, financially.”

My income is in American dollars. I purchased gold as a hedge against American dollars in 2006, 2007, and 2008, for an average of 750.00. per oz, in Canadian dollars. Paid 111,000. Sold for 202,000. — Canadian dollars, a few weeks ago.

It was the right decision for me, at the time. I have now bought another house in the Gulf Islands, b.c and paid cash, with the proceeds. Prices here have been depressed for ten years and are now finally starting to appreciate, due to strong foreign, American interest propelled by weak dollar.

At the same time, I don’t buy the argument that ,”all fiat currencies eventually collapse,” either, nor anything about the federal reserve and yadayadayada. I’m truly sick of all of that.

Gold, for whatever reason, be it govt interference, or not, doesn’t always perform as it should, pr to the degree that it ‘should.’

The argument that it is only govt interference that keeps the price of gold from rising to unheard of heights — as a reason to go all in, is as naive and blinkered as the arguments against owning any gold.

If central banks have conspired for decades to keep the gold price from rising exponentially, what is to prevent them from continuing to do this in the future — particularly if everything goes to hell in a handcart?

The whole idea that central banks are going to ‘lose control’ is a bit outlandish. They are very firmly in control.

Still 10% of investments should be in precious metals as some protection against inflation. It is doing well in Canadian dollars right now– near 1600.00 per oz. because we are in a highly inflationary period.

#106 common sense on 01.25.16 at 9:35 pm

#89 Robert

Well said…No guarantees whatsoever. Especially with 10-20 year world demographics.

#90 Freedom First.

Hat’s off to you. There is no way someone can be as blatantly arrogant. No way. Excellent! Better than Andy Kaufmann….

#107 Smoking Man on 01.25.16 at 9:36 pm

It’s my feminine side. Ignore it. — Garth
…………………….

Hilarious, don’t worry T2 has enough in him for the whole country.

This kid has no clue, in Switzerland, IM A FEMINIST. Then he has private meeting with business leaders trying to sell Canada. Grow a brain kid,

What CEO in his right mind would suggest to their boards?

Hey got a selfie with JT, lets invest in Wynne-tario, or Alberta.

Kid, the world and countries are run by alpha male merciless killers, thieves and bad mo-fos.

They do shit under the covers that would make the devil himself jealous at there evilness.

WW3 is a mistake away from real men playing high stakes chess wanting to access markets for their energy products.

Not you; cutie pie tree hugger, just lip service to Alberta, you know it’s a matter of time before the un schools with no smoking man brain power are going to pay you a visit in Ottawa soon, Pickup trucks with balls on the trailer hitch, and empty gun racks in the back window.

Fire Butts’s ass immediately and hire me, I’ll work for free. I can out brain Obama with my eyes closed, Putin is going to be a problem.

You’re way out of your league when dealing with non-feminist Smoking Men.

#108 Retired Boomer WI on 01.25.16 at 9:38 pm

Self-driving cars. Robo-advisors. Self cleaning toilets. I hear they are working on others, some are rather… cute.

I could benefit from an invention that would make me more attentive to my wife’s voice. After more than 40 years some say it is ‘selective hearing’ or ‘selective listening.’ It’s more like Charlie Brown’s teachers’ voice…

Yes, the world has given us wonderful technological advances over the years. Not all worked as advertised, especially at the roll-out the “new” and “improved.”

Human nature, especially the emotional responses to loss vs gain, fear vs greed are MUCH harder to control, and for the investor a recurring problem. I struggle with this and it can be most irritating! My best actions are usually to do nothing.

At least none of my limit orders have been filled, tells me I am presently “too cheap.” We shall see where it goes.

Buy right or, catch a falling knife…

#109 Daisy Mae on 01.25.16 at 9:40 pm

#38: “I detect a certain defeatism in Garth’s commentary….”

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

Certainly not ‘defeatism’. Simply a sad realty.

#110 Leo Trollstoy on 01.25.16 at 9:42 pm

“What’s more, not once was the self-driving vehicle the cause of the accident. ”

don’t worry mark. i understand u. understanding self-driving is hard. getting hr to hire u is hard. usdcad is hard. life is hard. no worry. u’ll find something u good at. try painting?

#111 Leo Trollstoy on 01.25.16 at 9:43 pm

no point talking to mark abt tesla. can’t afford a car. let alone a tesla. move on

#112 Leo Trollstoy on 01.25.16 at 9:45 pm

Mark may or may not but you all seem like that clique in high school who decided to pick on the guy with big ears.

poor mark. banned from rfd. no respect here. :(

#113 TurnerNation on 01.25.16 at 9:47 pm

Paging Leroy W. to the blog….

#114 Gulf Breeze on 01.25.16 at 9:51 pm

Freedom First,

May I suggest a testosterone smoothie followed by a rigorous wrestling match with the man of your choice??

#115 WallOfWorry on 01.25.16 at 9:55 pm

DELETED (gold nut)

#116 Water Cat on 01.25.16 at 9:56 pm

Huh. Just received your blessing. Thank you. Sent more back to you. Big guy said. Arise and Shine

#117 Boombust on 01.25.16 at 9:58 pm

The more I see of this see-sawing stock market the less inclined I am to invest.

It all looks like a rigged game.

Oh, like housing? Or cauliflower prices? — Garth

#118 Gaia on 01.25.16 at 9:58 pm

#86 Leo T. Comments like that are not helpful to anyone.

#119 Doug t on 01.25.16 at 9:59 pm

On my earlier comment about my brother losing almost 200k in 2008 – he was recommended to do so by a “freaked out” RBC financial rep who I might add no longer “works” in the “industry”

Did you “brother” panic and cash out at “the” bottom? — “Garth”

#120 Gulf Breeze on 01.25.16 at 10:01 pm

Smoking Man,

“Putin’s going to be a problem.”

No kidding. Putin is the smartest coolest cat we’ve seen in generations. Love watching him play rope-a-dope with the U.S. John Kerry up against Putin? Priceless.

#121 Shawn on 01.25.16 at 10:01 pm

Japan Stock Market Peak

#89 Robert on 01.25.16 at 8:45 pm
There is no guarantee stock market always recovers.

Japanese Nikkei 225 reached an all-time intraday high of 38,957 in 1986. 30 years later it is at 16,724…

**************************************
A bit more time please…

And yes, the Japanese stock market peaked at 38,957 in 1986.

Some of us are old enough to remember and what I remember is that the P/E ratio was over 50. ( I think maybe even 70)

The land around the imperial palace was also said to be more valuable than all the land in California.

THAT was an epic bubble.

The S&P 500 trailing P/E ratio today is a bit under 20. No epic bubble.

By the way the P/E ratio of a ten year government bond today is about 50 (epic bubble?)

Back in 1986 interest rates were high so a P/E of 50 on stocks at that time was even more epically dumb than it would be today.

#122 Leo Trollstoy on 01.25.16 at 10:08 pm

#105 Gulf Breeze on 01.25.16 at 9:30 pm

got your msg loud and clear. sell gold. get rid of it. i agree.

#123 Smoking Man on 01.25.16 at 10:09 pm

#106 common sense on 01.25.16 at 9:35 pm
#89 Robert

Well said…No guarantees whatsoever. Especially with 10-20 year world demographics.

#90 Freedom First.

Hat’s off to you. There is no way someone can be as blatantly arrogant. No way. Excellent! Better than Andy Kaufmann….
……………..

I admire Freedom First for recognising man kinds primitiveness.

This whole 3rd wave feminist shit that been rammed down young womans thoughts is not natural.

Men are idiots, they will take a bullet for the girl they love, work like dogs to keep them happy, only thing they ask for is a smile.

New generation with this empowerment men are rabid dogs.

Casualties all over the place.

Son 1 finally woke up, he married a feminist, didn’t do shit, didn’t work, sex whats that.

She left him last year, took all the money. She developed MS, three months in, her mom already dealing with an other daughter with it arranged a special pass with air canada to send her back to my boy who was brought up to love.

She wasn’t getting on that flight with out it, she was that bad.

My boy took here back, got her a treatment , new experimental treatment. 80k

It worked, he transfers to Toronto, to make the extra money he thinks they need.

She don’t follow, needs to stay in NS for the health care.

He’s starts making a shit load of loot and sends it to her.
He needs back statement for tax, she says no.

He sees a like on her face book, some random dude with a pick of his dog on his carpet in his appartment.

That was is it… whether anything happened or not.

Real men demand loyalty. That’s how I brought him up.

He’s still keeping her on his benefits. But he’s gone freedom first. three and counting. My advice.

Woman men are simple idiots, loyalty, you own them.

Take a ride in a car with another man.

That’s it, your power lost..

#124 BS on 01.25.16 at 10:14 pm

Nobody on 01.25.16 at 7:23 pm

Terrible times for savers, yes, but up to very recently one could still get 3.5% for provincial bonds 10-15 years out. If one’s an expat living overseas as we are, it is arguably a viable alternative to the balanced portfolio and much safer.

If you are living overseas and purchase goods in USD or Euro you lost way more in CAD currency purchasing power than those provincial bonds paid you.

#125 WUL on 01.25.16 at 10:15 pm

Shout out to SMOKING MAN for his steadfast support of Alberta. Boy, would you be welcome out here in Fort Mac. The Boomtown Casino at the corner of Franklin Ave (yes, named after Sir John) and Hardin Street is not exactly Senikah. I will spring for the JD until they get to know you and they start to comp you.

#126 TurnerNation on 01.25.16 at 10:16 pm

LT USD Cad chart. Going back to memories of Shelly Cooter times?

http://finviz.com/forex_charts.ashx?t=USDCAD&tf=mo

#127 BS on 01.25.16 at 10:16 pm

greyhound on 01.25.16 at 7:27 pm

Great picture; chart however conveniently goes only from 1950. Previous years produced somewhat different results. For example if you bought the Dow in 1929, you didn’t get your money back until 1954 — 25 years later.

You forgot about the dividends.

#128 Jay_Huhman on 01.25.16 at 10:17 pm

Commenting on the post by #48 today.

The MIT Billion Prices project tracks the US CPI pretty well. See http://bpp.mit.edu/usa/.

#129 Hawk on 01.25.16 at 10:18 pm

#34 tom black on 01.25.16 at 6:55 pm

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

Maybe I am missing something so please enlighten me?

Why is the TSX so “horribly inflated”?

Canada has not engaged in the massive quantitative easing that the Fed has done, we have our own currency which is currently trading very low and finally the TSX price to earnings ratio is pretty good. The index is almost where it was 10 years ago.

So to repeat, how are WE……..”horribly inflated”?

#130 Yuus bin Haad on 01.25.16 at 10:26 pm

#96 bob the train

DELETED (gold nut)

Hilarious!

Now, how about “DELETED (first)”?

#131 Smoking Man on 01.25.16 at 10:27 pm

#120 Gulf Breeze on 01.25.16 at 10:01 pm
Smoking Man,

“Putin’s going to be a problem.”

No kidding. Putin is the smartest coolest cat we’ve seen in generations. Love watching him play rope-a-dope with the U.S. John Kerry up against Putin? Priceless.
….

I could beet him, the problem, I wouldn’t want to too.

#132 TRT on 01.25.16 at 10:28 pm

HAM pushing Vancouver housing prices to record levels.

Apparently, The major hospitals in Vancouver are now having trouble attracting workers. The rents are too high in the city and the commute from the suburbs is the most congested in North America!

End result is its going to get ugly in Vancouver.

Working class vs the Leisure class.

Unbelievable.

More than 90% of all house sales in YVR are local-to-local. — Garth

#133 Smoking Man on 01.25.16 at 10:32 pm

#125 WUL on 01.25.16 at 10:15 pm
Shout out to SMOKING MAN for his steadfast support of Alberta. Boy, would you be welcome out here in Fort Mac. The Boomtown Casino at the corner of Franklin Ave (yes, named after Sir John) and Hardin Street is not exactly Senikah. I will spring for the JD until they get to know you and they start to comp you.
…..

The entire county is in a trance of stupidity especially in cities. I say we get the hung man stand set up at city hall and find the bastards that influence the curriculum. Teachers get a pass, their stupid.

#134 MF on 01.25.16 at 10:34 pm

Sorry for the rant but:

Now I am reading reports with these “analysts” saying that Yellen won’t/should not raise rates anymore because of this BS that’s going on in the market currently. This is the exact same BS we experience EVERY FED meeting you idiots. Didn’t everyone know they were going to raise/tighten YEARS in advance? Why all this BS drama (rhetorical question). Just look north at Canada to see what a debt orgy disaster looks like. Raise the rates already this is pathetic. They should have been raised in 2011 anyways (earlier for us).

Don’t get me wrong, I am on board with the US recovery story. Seems all this fear of getting off zero bound rates is because so few people have confidence in this recovery. Has there ever been a point in history when so few people trust the system/central bankers? Perhaps the internet is responsible for this resentment and anger.

So the China story has ended. This is even more hilarious. Looks like we’ve been “fed” a lie for the past decade and all the statistics were embellished. Of course everyone is so “shocked” a communist government dead set on remaining in power could lie. Who knew?

Every night there is the same picture of the old Chinese grandma watching the stock tickers on all the news outlets. What no one thought to double check the statistics for the past 15 years? All these “economists” getting paid big bucks in the universities couldn’t take a look earlier on and fact check? Other professionals like scientists have to rigorously fact check before they speak, but no these idiots can just spout off opinion as fact whenever they want?

Next is the oil comedy. I love this. A decade ago it was all about peak oil. That’s all we heard, endlessly. Oil was expensive because it was running out. The expense was putting a drag on the economy and it was recessionary. So…here we are with dirt cheap oil, tons of it, and now THAT is recessionary too? What a joke. Oil is cheap, gasoline is cheaper than it was (but not where it actually should be) and we are all saving money and buying more garbage. Yet our “leaders” in charge decide to CUT interest rates and kill our loonie and all our investment portfolios along with it. Great move (sarcasm). I feel like buying more garbage now that my portfolio is deeper in the red alright..

Lastly, this fixation on “stimulus” is so damn lame. Why does anyone listen to this Draghi clown? Didn’t we get stimulus last year? Yet every time this clown says the word “stimulus” (whatever that means???) my Vanguard Europe fund goes up like a drug addict getting his fix. Then my US fund goes up because of Draghi’s “stimulus”. Shoot..what was it like before “stimulus”? 1929?

Personally, and maybe I am wrong, but I think the EU is disaster and failed entity now completely dependent on “stimulus” to lurch forward. Left wing Governments, this refugee crisis, demographic headwinds..all don’t bode well for the future in Europe (stimulus or not).

#noconfidence
#itsallajoke

/end of now monthly rant.

#135 Apocalypse2016 on 01.25.16 at 10:41 pm

Russian citizens turning to social unrest as their economy crashes. Putin will turn to war with the rest to distract them, a tried and true path.

http://www.telegraph.co.uk/finance/economics/12120113/Russian-economy-in-turmoil-as-Putin-is-battered-by-falling-oil-price-and-sanctions.html

Our ecosystem teeters on the brink of collapse of major food sources, this very year.

http://enenews.com/tv-worst-wildlife-die-recorded-underway-west-coast-experts-talking-marine-die-offs-yeah-really-big-deal-many-species-getting-sick-facing-possibility-extinction-scientist-sort-toxin-video

Catastrophic species extinction and war with Russia are in the offing now for 2016.

Stock up on canned food and self-defense tools while you can.

If catastrophic species extinction means you leave us, it’s not all bad. — Garth

#136 MF on 01.25.16 at 10:42 pm

#62 April. on 01.25.16 at 7:34 pm

I’m in the same boat, maybe a little younger though. I’m using the volatility as a learning experience. Maybe couch potato won’t work the same anymore and we have to be a little more proactive? Maybe I am wrong..who knows. The TSX at some point will probably be a good buy and our time will come. Try to remember that everyone here who is more experienced than us has gone through this before. That’s what I am trying to do.

MF

#137 Goofy 2 shoes on 01.25.16 at 10:46 pm

She converted it all into a no-risk asset. Cash. As such she courted the ultimate risk, and is now in penury. I hope you have lots of money. — Garth
———–

I’m agreeing that she shouldn’t have hauled it all out.

I’m suggesting there was too much at risk (in her view) to be able to leave it there without the panic reaction.

There was more risk spending it. — Garth

#138 Liberal Crisis on 01.25.16 at 10:51 pm

Trudeau has a crisis on his hands in Vancouver.

He has sent 2000 refugees here so far. Problem is the average family size is 7!

No one will rent a place for 7 people. Nor will a car seat 7 people. Run down hotel operators are making a mint since they are charging tax payers the maximum amount.

One parent working won’t be able to support his family of 6 dependents. Not being able to speak English fluently is a obstacle. Competition exists in the form of TFW and IMP workers.

Trudeau may just have to buy houses and a minivan for each refugee family in Vancouver. I don’t see any other solution. If he does this, he can kiss the next election goodbye.

#139 Investx on 01.25.16 at 10:51 pm

#89 Robert
“There is no guarantee stock market always recovers.

Japanese Nikkei 225 reached an all-time intraday high of 38,957 in 1986. 30 years later it is at 16,724…”

– – – – –

But it’s different here!

#140 MF on 01.25.16 at 10:56 pm

#123 Smoking Man on 01.25.16 at 10:09 pm

Ouch. Sorry to hear about your son. Every man’s fear is to be the cuck. We will do anything for our women in return for her loyalty. The one thing that they don’t seem to grasp the importance of is what it means for us to be loyal to them as well. They don’t know how hard it is. Rabid dog is a good way of putting it. Being loyal as a man is extremely difficult and for that we demand recognition for this ultimate sacrifice.

The FF lifestyle is payback for that lack of recognition. Nice guys brought up well usually lose and go FF eventually anyways. Glad he is happy.

MF

#141 Zanko in Siberia on 01.25.16 at 10:59 pm

OPEC is playing chicken. Too bad it won’t last. I smell blood, yum.

http://www.telegraph.co.uk/finance/oilprices/12120946/Opec-pleads-for-Russian-alliance-to-smash-oil-speculators.html

#142 Smoking Man on 01.25.16 at 11:12 pm

#140 MF on 01.25.16 at 10:56 pm
#123 Smoking Man on 01.25.16 at 10:09 pm

Ouch. Sorry to hear about your son. Every man’s fear is to be the cuck. We will do anything for our women in return for her loyalty. The one thing that they don’t seem to grasp the importance of is what it means for us to be loyal to them as well. They don’t know how hard it is. Rabid dog is a good way of putting it. Being loyal as a man is extremely difficult and for that we demand recognition for this ultimate sacrifice.

The FF lifestyle is payback for that lack of recognition. Nice guys brought up well usually lose and go FF eventually anyways. Glad he is happy.

MF
…….
It’s a Part of growing up. Men are simple dumb down dogs, up against freaks shows, who now own Ontario.

All made possible by your stupid teacher that had no critical thinking skills, or if they did, did not own balls.

Paradox i’m thinking.

#143 Smoking Man on 01.25.16 at 11:27 pm

Man that loves his wife, Wife loves her man.

You want the same for your kids.

Home school them.

Dr Smoking Man
Phd Herdonomics.

#144 acdel on 01.25.16 at 11:27 pm

#123 Smoking Man

That’s tough!
Realistically is today’s world it is barely about love but a business/life/career arrangement, I say this to all men and women who have a career, PRENUP!
I cannot remember as to which European country has actually implemented this or were in talks to do so. The idea was or is to sign a 5 yr contract once married; when the 5 yr contract us up, both partners would at that time determine if they wish to continue for another 5 yrs. Perhaps this is the future and who knows maybe a better arrangement! I am too old for this. :)

#145 macroman on 01.25.16 at 11:40 pm

Crikey April, Crimson and Clover 45? Not even Joan Jett?

You sure you’re not December? You ain’t no spring chicken.

Goodonya

#146 Tony on 01.25.16 at 11:42 pm

Re: #60 Shawn on 01.25.16 at 7:30 pm

It all balances out over time meaning stocks will be the worst investment in the future.

#147 Bad Apples on 01.25.16 at 11:45 pm

Best Post in 2016 Garthie; thanks to your Feminine side maybe you should consider getting a sex change, it work well for Jenifer.

On another note is Horizons BetaPro NYMEX Crude Oil Bear (HOD.TO) another example of a bad apple?
It has gone from $10 to $30 in 3 months
Oil for delivery in one or two months is more expensive than oil for delivery today. That is called contango and it erodes returns.
ETFs that offer leveraged or inverse exposure or are subject to contango are all rotten in their own way.

#148 macroman on 01.25.16 at 11:47 pm

At least with those driverless cars, Mark will be able to lick windows and not cause a crash.

#149 JamesA on 01.26.16 at 12:26 am

Speaking of AI, one of the pioneers just past away:

http://www.nytimes.com/2016/01/26/business/marvin-minsky-pioneer-in-artificial-intelligence-dies-at-88.html

A lot of what these CS researchers did is still relevant today. Now the chips are faster and there is more training data. Thats the big difference. He was one of the greats of CS.

Sorry for dragging your blog off topic. But, this stuff might affect more and more people.

#150 IKnow on 01.26.16 at 12:37 am

Garth said:
More than 90% of all house sales in YVR are local-to-local.

Garth:
Is that hypothetical “dai ma” (= big lady, Vancouver realtors’ slang for the wealthy Chinese-landed-immigrant wife) is buying a $5M house yet with zero income, do you call that HAM? and does that count in the 90% or out?

And the Canadian seller who won the $5M house lottery, say the seller has three kids, so he gives each kid $1M as downpayment for a piece of dirt in East Van or Burnaby or beyond. Surely in many Vancouverites’ mind each of the $1M is just transferred or “diffused” HAM, so should the effect be counted in the 90% or not?

My point is that counting for diffusion effect, the HAM has to be much more than 10%.
The psychological effect of a near infinite stream of China money is the primary driver of Vancouver high prices.

#151 AB Boxster on 01.26.16 at 12:43 am

#21 Mark on 01.25.16 at 6:30 pm
The low rate environment has basically been nirvana for seniors
———————————————
Mark that comment is nonsense.

Seniors are savers, and not consumers.
When mortgage rates were 15% and inflation 10% seniors were not nearly as affected as working class stiffs with families.

Why?
Because seniors do not pay 15% mortgages. Because they don’t have mortgages.

Seniors don’t need that brand new car, because they don’t work. And they can easily have 1 car because both partners are not working.

Retired don’t need to buy fancy new wardrobes, because they don’t need to.
Retired don’t really care about the price of gas, as they don’t have to travel anywhere, except to the food store once a week.
Seniors are not nearly as much impacted by food prices as the spend a pittance on food compared to a young growing family.

Sure there are some fixed costs inflation that cannot be avoided. (Heat, electric)

But when you are retired you don’t ‘have’ to consume near as much as you must consume when you are younger.

The effects of inflation on the retired is far less than you think.

Retired and nearly retired would love rates to go nuts.
Give me all the 10% interest rates you want.

10% return on savings that I don’t have to spend on much of anything, goes a long way.

#152 DON on 01.26.16 at 12:45 am

Via CBC BC

Flights slashed from 6 B.C. cities

WestJet’s announcement means a cut of 88 regularly scheduled flights a week between B.C. and Alberta.

The airline says it is completely canceling direct flights to Calgary from Terrace and Prince George, as well as all flights to Edmonton from Kamloops and Nanaimo

WestJet will also reduce flights between Penticton and Calgary and from Edmonton to Abbotsford.

“We’ve been watching the numbers on that flight reduce over the last couple of months,” Lagace told Radio West host Rebecca Zandbergen. “They won’t fly airplanes that are next to empty very long.”

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

Notice the impact on Abbotsford (outside Vancouver proper). Not just affecting the island, and interior but also the lower mainland. Yikes…oil creep keeps on oozing. Not pretty at all!

#153 I am the Babbler on 01.26.16 at 12:49 am

“Witness the Cauliflower Crisis (which has gained global media exposure).” – Garth

———————————————-

Come on. This is nonsense. The media has really overblown this “crisis”. I bought two at No Thrills today for $1.98 each. Decent size too.

#154 jane 24 on 01.26.16 at 12:55 am

Affording 25 years of retirement is only a problem if you want to stay in the snow and pay artificially high Canadian prices and taxes on everything. Take your money and run.

I have said before that you can have a great retirement in the south of Italy on 1000 euros a month after buying a nice house for $150,000 Cdn. But the Italian smart money is retiring to Albania, just a short ferry trip away, where you can live for 750 euros a month with a maid.

Spain is dirt cheap too, especially away from the coasts and I am still impressed with the high standard of living I saw in Vietnam and Thailand for ex-pats.

Our retirement now is likely to be a city flat in the UK for family and health care reasons, the palazzo in Italy for the summers and maybe a Spanish island home for the winters. Anyone can do it. You just have to have the guts to try.

#155 Van real on 01.26.16 at 1:03 am

Retirement is highly overrated in my opinion. I want to work as long as I’m productive.

#156 DON on 01.26.16 at 1:04 am

MF

How many left wing govs are in the EU. Just curious if you have the stats?

Rule of thumb…question everything you hear, doesn’t matter who is saying it. If you ground yourself in reality and are balanced in your reasoning you can pass go and collect $200 dollars. Just don’t let the CRA know.

#157 DON on 01.26.16 at 1:11 am

#33 Millenial-falcon on 01.25.16 at 6:54 pm

So why lambaste all the moist virgins taking out huge mortgages? U just said yourself rates going nowhere ….wasn’t rising Canadian mortgage rates because of USA recovery a theme on this blog for about 2 years ? Now a different tune. What’s the story Garth. Now screwed retirees dumping there 604 specials are gona stop the orgy in van ? Thas all you got ?

**************************
Perhaps you should spend some time researching what the rates were in other housing bubbles when they burst. Try the US first, were rates high! Don’t think so! Gotta wonder why Garth didn’t answer you.

#158 Lee on 01.26.16 at 1:15 am

Buy xcs. Small cap bounces back fast.

#159 Doug t on 01.26.16 at 1:22 am

It’s funny how ego gets in the way of constructive discussion – meh

#160 TRT on 01.26.16 at 1:40 am

China hard landing…

China stock markets -6.5% and falling rapidly.

Lets see if China Gov buys massively at close…

#161 TRT on 01.26.16 at 1:51 am

More than 90% of all house sales in YVR are local-to-local. — Garth

I agree. But you fail to realize that buying in high end and desirable areas has a ripple effect downstream. That $5 Million dollar home bought in the west end by HAM means the sellers move a little away. End result is that 1 HAM buy effects 4 other purchases downstream as each seller pockets a few hundred and moves a little away.

There is a distinct pattern of migration in the Filipino, indian, and Western European households in the lower mainland.

#162 Freeman on 01.26.16 at 2:15 am

Oh oh, its not looking very good out in China, their stock market is tanking again, down 6% as I speak,

https://ca.finance.yahoo.com/q/ta?s=000001.SS&t=5d&l=on&z=l&q=l&p=&a=ss&c=

and oil has gone from $32.5 to $29.5, a decline of 10%.

http://quotes.ino.com/charting/?s=NYMEX_CL.H16.E

Looks like Tuesday is going to bring in more losses for stock holders.

#163 Keith on 01.26.16 at 2:38 am

Luxury retail is expanding like crazy in Vancouver, despite the city being outside Canada’s top twenty for median family income. Presumably selling to local workers who are borrowing from the same magic bank that’s financing their housing purchases.

https://www.biv.com/article/2016/1/downtown-lap-luxury-gets-deeper/

#164 Mark on 01.26.16 at 3:20 am

“I been tempted to try to come back a few times if only to plead with Mark to seek help and an honest assessment of how his approach to life holds him back.”

I used to have a significant amount of respect for you and you blog. But when you come out with comments with nonsense such as the above, below the belt sort of stuff, you’ve lost all that I once had.

Perhaps try using your stature to raise the level of discourse rather than dropping yourself to the level of the usual trolls who, as usual, simply have no idea what they’re talking about and thus engage mostly in personal attacks.

#165 Metaxa on 01.26.16 at 3:23 am

#138 Liberal Crisis writes:

Trudeau has a crisis on his hands in Vancouver.

He has sent 2000 refugees here so far. Problem is the average family size is 7!

No one will rent a place for 7 people. Nor will a car seat 7 people. Run down hotel operators are making a mint since they are charging tax payers the maximum amount.

One parent working won’t be able to support his family of 6 dependents. Not being able to speak English fluently is a obstacle. Competition exists in the form of TFW and IMP workers.

Trudeau may just have to buy houses and a minivan for each refugee family in Vancouver. I don’t see any other solution. If he does this, he can kiss the next election goodbye.

That isn’t how it works…at all.
Macleans mag has a longform story in this weeks issue or online that will tell you what is going on.

Your opinions are not fact, not even close.
Your opinions come from a dark place.

#166 SquareNinja on 01.26.16 at 3:50 am

Leo Trollstoy – LOLLL – Maybe it’s a limbo bar?

Mark – I enjoyed reading your comments about the imminent Canadian RE crash. But with all due respect, self-driving cars are real! The only thing preventing them from complete autonomous driving is government regulation.

BMW’s i3 can drop you off at the mall entrance and go park itself. If you fall asleep in a Tesla Model S, it can drive you home. Volvo got the green light to test XC90 self-driving on highway in Germany. Audi is racing with no one sitting in cockpit. Uber is going to soon eliminate the driver and take all the profits for itself. Jean Claude Van Damme did splits between Volvo semis which can follow the leader like a train on pavement. There’s even toy self-driving cars!

I certainly trust a car that can see in every direction for 200 metres, has split-second reaction, does not get tired or distracted and can control each wheel individually… more than any human driver!

Also, commercial airplanes are self-flying; they can take off and land all without human input. FYI only.

#167 Bernard forever on 01.26.16 at 4:10 am

When Justin smiles, it is for him, or at us?

http://business.financialpost.com/news/the-low-loonie-is-attracting-americans-to-canadas-used-cars-and-that-may-mean-higher-prices-for-you

#168 George S on 01.26.16 at 7:05 am

Self driving cars:
“did you read the part in your link that said, “What’s more, not once was the self-driving vehicle the cause of the accident. ””

They still were in about 10X the accidents per km driven. That must mean that they don’t react human-like enough to be useful and there is a problem with them. And that is under ideal conditions. You can’t even use cruise control in the winter on mostly clear highways in Saskatchewan.
Just like Vancouver and Toronto real estate they are being hyped and promoted to fool investors.

By following Garth’s advice, the last time I calculated our actual net return on investments (balanced portfolio like he says) made in the early 90’s (untouched since then) it was about 7% minus the management fees (0.9% in this case) = just over 6%. Which is again what Garth says.

#169 MF on 01.26.16 at 7:19 am

#156 DON on 01.26.16 at 1:04 am

Don’t have the stats and I probably could find out, but just off the top of my head I am thinking of PIGS…and I’m not talking about HAM (both the food or the rich Chinese guy buying houses in Vancouver).

And don’t worry I’ve got the CRA on speed dial, of course.

MF

#170 Leo trollsoy on 01.26.16 at 7:43 am

poor guy. life must b hard for some like that. 2 degrees but getting interview w corporate hr is hard. low bar

#171 JustThrewUp on 01.26.16 at 7:45 am

Re: #90 FreedomFirst writes: “And because I am in touch with my feminine side, while being a fine specimen of manhood, women are drawn to me like a moth to a light. Good thing I am honest with everyone.”

Honest with everyone? Except maybe YOURSELF!

#172 Nobody on 01.26.16 at 7:59 am

#124 BS on 01.25.16 at 10:14 pm

If you are living overseas and purchase goods in USD or Euro you lost way more in CAD currency purchasing power than those provincial bonds paid you.
______________________________________

BS is a good handle for you. We live in Spain now and that 3.5% return on our Canadian Peso bonds sure goes a lot further here than it does in Canada. Read Jane 24’s comment about the living costs in Europe or, better still, go here http://www.numbeo.com/cost-of-living/ and compare the costs for yourself.

#173 BillyBob on 01.26.16 at 8:03 am

#166 SquareNinja on 01.26.16 at 3:50 am

Also, commercial airplanes are self-flying; they can take off and land all without human input. FYI only.

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

No.

Completely false. Sorry. Please don’t pass out information that is 180 degrees opposite of the truth. There is no “automatic takeoff”, and even so-called “autoland” is simply autopilots being monitored by humans who intervene to avoid catastrophe if any malfunctions occur so close to the ground.

-A Commercial Airline Pilot

(Is this what Garth feels like reading idiocy in his field of expertise?!)

#174 maxx on 01.26.16 at 8:27 am

Your premise is not entirely complete Garth. I have the utmost respect for you and I’m certain that your investment firm is top-notch and impeccably honest.

However, for many, if not most savers, the question is not one of financial ignorance, but rather one of deep, and likely irreversible distrust in the investment industry. Many of us have seen deep fiscal damage from which there is no recovery.

My family saw its investments wiped out when the firm they trusted went bankrupt. Fortunately, they were CDIC protected and today, they winter down south and life is good and fiscally healthy.

Trust is indisputably the main issue. People always remember being ripped off and see the machinations of dangerous, sloppy, ineffective, inadequate and risky government policy leading to QE and interest rate suppression every single day.

Investment experts on the inside track with connections to vital information will always win, especially with the way government operates today. No contest. The investment industry seems to function like a bellows, with professional investors sucking in wealth leaving the retail investor “hoping” in the dark, brought on through ignorance of information and deprivation of timing.

So, as tempting as it is to jump into the “free markets” and possibly reap better gains, distrust will almost always hold sway with savers, especially those with more than enough to be comfortable for a long lifetime and unwilling to risk such an exceptional situation.

So, is it thick? Or terminal distrust based on a very long history of rip-offs?

The day we see a safe, guaranteed investment product paying savers a respectable harvest is the day trillions upon trillions of wealth flow back into the markets. Like lightening.

Until then, savers will take their chances with CDIC and push their wealth into the future by continuing to save.

Saving and having a bountiful life are far from mutually exclusive.

I regret your family made a poor choice and suffered a negative experience. Your generalization, however, is just that – an emotional fog that masks today’s reality. Compared to real estate (for example), the financial business is pristine, ethical, massively skewed to consumer protection and regulated in extremis. Try to broaden your horizon and experience. Your view is debilitating. — Garth

#175 Dups on 01.26.16 at 8:55 am

If they learned we would not make money. Let them be.
Is the S&P 500 chart in a log scale?

#176 Grantmi on 01.26.16 at 9:20 am

Cauliflower alert. $0.98 lb.
South Surrey

#177 45north on 01.26.16 at 9:25 am

water cat: from your link: Chase Holden is a self-proclaimed “Jug Runner” who says Canadian water south of the border is now more valuable than marijuana.

CBC version of the Dukes of Hazzard

https://www.youtube.com/watch?v=qogVHlmFcx0

#178 liquidincalgary on 01.26.16 at 9:32 am

Water Cat on 01.25.16 at 7:21 pm

China Bart coming. Garth you better coin the number after trillion because it does not exist.

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

quadrillion, quintillion, ….you’re welcome :)

#179 Water cat on 01.26.16 at 9:53 am

#37
I agree. Oil fights are too easy. Water of life fights are another issue altogether.

#180 waiting on the westcoast on 01.26.16 at 10:03 am

Earnings are showing a resilient US economy. But check out CNBC.com for El-Erian discussion on the fork in the road we are facing in the next three years because the Fed (and other CBs) took you long to normalize rates.

#181 AB Boxster on 01.26.16 at 10:23 am

So the Canadian dollar is in the tank.
Oil prices are in the tank.
The Canadian economy is in the tank.

And the feds are now picking fights with the west over oil.

Who says history never repeats.

T1 was a disaster.
T2 is a bigger disaster.

Invest elsewhere.
Canada is doomed.

#182 fancy_pants on 01.26.16 at 10:39 am

these guys have other predictions about your long retirement future
http://thebulletin.org/doomsday-dashboard

#183 squished18 on 01.26.16 at 10:41 am

Thanks Garth for your regular advice. Reminded me to move some more from cash to VFV and XIC.

#184 Noel on 01.26.16 at 10:56 am

Great post today Garth, although I disagree on one small point. You state the gov’t will not be there to save us – I bet they will be ‘saving’ people to a far greater degree than now, through enhanced social programs.

People are living longer and businesses are much more productive due to automation. Somethings gotta give, and I hope it favours the greater good. The smartest man in the world agrees with me:

“If machines produce everything we need, the outcome will depend on how things are distributed — everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.

So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.”

– Stephen Hawking

#185 Bram on 01.26.16 at 11:06 am

Now here’s a graph for you (China).
Sure it went down hard today, but really: a market that goes from 2000 to 5000 within a year cannot be trusted.

That crash should not have come unexpected to anyone paying attention.

https://lh5.googleusercontent.com/-kaGBbvcEpVI/VqeXzdIPv4I/AAAAAAAADbM/KrZU6bj4sMk/w1140-h1244-no/Screen%2BShot%2B2016-01-26%2Bat%2B7.50.56%2BAM.png

Bram

#186 MF on 01.26.16 at 11:08 am

#165 Metaxa on 01.26.16 at 3:23 am

Dark place? The CBC has a daily article about the refugees, and they usually do show large families. The last one was about a large family unhappy with the hotel accommodations.

None of this changes the fact that the whole idea was an election ploy for votes, and a poorly thought out one at that. It was maddening hearing the huge numbers being thrown around by the NDP and Libs during the election. 50000 here 75000 there as if it was nothing. Anything for votes eh?

Then the Paris attacks happened and the whole plan was thrust to the spotlight. Oops. bad timing for Justin and anyone that supported this clear debacle in the making.

After Paris, it was even more obvious how poorly thought out the whole thing was, and it also became clear more and more people opposed it. It was so pathetic watching this government try to backpedal. Whoops. And all this in the face of constant propaganda from news outlets like the CBC, which is actually had the opposite effect.

MF

#187 BobC on 01.26.16 at 11:14 am

#164 Mark

Smaller and smaller clique as time passes. Easy to understand why so few will comment. Hell, who wants to be attacked? Correcting someone helps all. Attacking someone is immature.

#188 Lillooet, BC on 01.26.16 at 11:24 am

#60 Shawn on 01.25.16 at 7:30 pm

Garth’s chart is completely honest and does show the flat S&P 500 from about 1965 to 1980 with periods of tremendous growth before and after the flat period.

Below is a link to my own chart which shows the same thing in real dollars adjusted for inflation and includes GOLD.

Guess what? The S&P 500 wins, hands down:

http://investorsfriend.com/wp-content/uploads/2015/01/SBBIlo2.jpg
*************************

Really like your witty comments!

A question: how do you balance your positions? Or do you basically buy and hold forever?

#189 Chris on 01.26.16 at 11:35 am

“More of the ultimate risk – running out of money, which for millions of Canadians, especially women, lies in the years ahead. So if you’re somebody on a miserable and inadequate public pension, forced to live off your dwindling savings, it’s a financial death sentence. Stats tell us there are far too many in this boat.”

Millions of Canadians risk running out of money?? Financial death sentence?? Stats?? Where are these stats Garth – me thinks you are a drama king. The poverty rate of seniors is lower than ever, social safety abounds. I agree that keeping tens or hundreds of thousands in bank accounts isn’t the best choice, but please. Show me those stats you speak of.

#190 meslippery on 01.26.16 at 11:37 am

Imagine the soccer mom getting into a driverless car
after smoking man just exited?
The smell of tobacco and J D.
All hell would break loose.

#191 Dogman01 on 01.26.16 at 11:38 am

Been a while since we saw some gold old house porn to lust over;

http://bc.ctvnews.ca/23-8-m-west-vancouver-mansion-comes-with-yacht-garage-1.2750072

#192 Noel on 01.26.16 at 11:44 am

I wonder what the cross-over is btwn the ‘ignorant’ people who are hoarding cash now and the ‘ignorant’ people that bought houses 5 years ago. I bet they’re not as stupid as portrayed on this blog, despite their financial success.

Ignorance and stupidity are not the same thing, unless you prove me wrong. — Garth

#193 Water cat on 01.26.16 at 11:46 am

Lol to all. Luv it and u.

Btw probably a good time to put Water Cat on the payroll for smart shoppers. Not looking for much.

#194 Water cat on 01.26.16 at 12:07 pm

My qualifications are – self proclaimed forensic fudge analyst

#195 Capt. Obvious on 01.26.16 at 12:17 pm

I wonder what the cross-over is btwn the ‘ignorant’ people who are hoarding cash now and the ‘ignorant’ people that bought houses 5 years ago. I bet they’re not as stupid as portrayed on this blog, despite their financial success.

Two things:
1) The jury is still out. Most of these people are not selling their houses today.
2) You can have the wrong strategy and in spite of yourself be successful. We’re always talking about expected returns for a reasonable level of risk. Random shit happens.

#196 Shawn on 01.26.16 at 12:36 pm

#188 Lillooet, BC on 01.26.16 at 11:24 am

responded to me as follows:

#60 Shawn on 01.25.16 at 7:30 pm

….

Really like your witty comments!

A question: how do you balance your positions? Or do you basically buy and hold forever?

**************************************
I can tell by your question that you are an astute judge of the quality of commenters here.

Personally I am rather unbalanced, though in a different way than Tony (who responded to me also at 146).

I sort of buy and monitor which can mean holding for a long time but also trimming as stocks go higher and buying on dips. Sometimes of course I sell out of a position.

I invested a good chunk in U.S. and would have rebalanced faster to Canadian but hate to pay excessive currency transfer fees charged by my broker. In this case that has worked out but now I may be a little too heavy into U.S. dollars.

My preference would definitely be to rebalance out of U.S dollars the lower the Canadian dollar goes.

#197 pinstripe on 01.26.16 at 12:38 pm

The talk at the coffee shop this morning was all about the management style of harpo cpc’s and Justin liberals.

harpo did an excellent job with do as I say and not do as I do. Divide and conquer was a masterpiece. An excellent job at pitting one group against another. 10 years and NO pipeline eto move AB oil but a lot of good fights in the meantime. the reform of the civel servants produced a worse civil servant moving forward. the senate reform resulted with 3 senators given full pay and will be able to keep their jobs anyway with increased corruption in the system. The business practice of Fear Mongering was well executed by all the CPCs. Harpo was very successful in losing ALL Trust and Confidence in government. Overall an EXCELLENT report card for a CPC Party.

OTOH, Justin is bringing people and regions together to undo the damage done by harpo and then focus on bring bigger and better processes to make Canada ready to compete in the global economy. Justin is excellent in getting the message out that HOPE is far superior to FEAR with today being better than yesterday. Justin and the liberals are forced to recover the LOST-10 Years mandated by harpo. Overall a good start for most Canadians living in the global economy. Change is good.

#198 Capt. Obvious on 01.26.16 at 12:41 pm

The poverty rate of seniors is lower than ever, social safety abounds.

While this is true (the percentage of low income after tax 65+ people has dropped over the last 20 years), I don’t think most people aspire to live just above the poverty line. However, if we consider that many people in ordinary life struggle to make an adequate income, we would expect those people to simply continue on in older years at the same level. Actually, owing to OAS I’m guessing, the percentage of people living on low income is lower for 65+ than younger people on an after tax basis. Again, that is not a level to aspire to just exceed.

#199 waiting on the westcoast on 01.26.16 at 12:41 pm

In the spirit of learning (as opposed to denigrating – thanks BobC)…

Mark – you have pointed out a number of deflationary forces but ignored or dismissed the other inflationary pressures.

Think of the economy like the membrane of the balloon. There are various forces inside that are inflating it and many outside that are trying to contract it. While a future drop in real estate values (not current or over the past two years as you continue to espouse) is deflationary, there are also many forces that are inflationary (like our losses against the US$ – or largest trading partner and the price of which most internationally traded products are priced in). There overall balance is currently inflationary.

#200 Blogbitch on 01.26.16 at 12:44 pm

I agree with your counter comment to #192 that ignorance and stupidity are not the same thing. Nicely said.

#201 TurnerNation on 01.26.16 at 12:45 pm

Today’s Camel Toe day on the market boys.
Place your trades.

#202 hope & ruin on 01.26.16 at 12:47 pm

Am I the only one noticing more debt-consolidation and related services being advertised?

I started noticing more and more on the radio/tv. Now there’s a billboard in my town. Could be some confirmation bias but it has me worried.

#203 Eddie on 01.26.16 at 12:47 pm

I can relate this fact – when you have zero income, money you have disappears fast. Real fast.

I think that for those of us in their 30s and 40s, something called “retirement” will only happen if you own money generating assets. Retirement will be impossible unless you have an income stream that doesn’t require you to go to work.

#204 Shawn on 01.26.16 at 12:52 pm

#164 Mark on 01.26.16 at 3:20 am
“I been tempted to try to come back a few times if only to plead with Mark to seek help and an honest assessment of how his approach to life holds him back.”

I used to have a significant amount of respect for you and you blog. But when you come out with comments with nonsense such as the above, below the belt sort of stuff, you’ve lost all that I once had.

Perhaps try using your stature to raise the level of discourse rather than dropping yourself to the level of the usual trolls who, as usual, simply have no idea what they’re talking about and thus engage mostly in personal attacks.

*************************************
Mark, this will be my last comment about it. I am genuinely concerned by your approach which in my experience (several years of reading your comments, though I have to skip most of them due to sheer volume) includes:

Your addition to this blog and apparently others which appears to me to be wasting much time daily.

Your apparent reflexive approach of correcting just about everything you see and as Garth has pointed out in one of his responses your inability to help yourself from doing so.

One does not win friends and influence people or even likely have good career outcomes by constantly pointing out to others how smart you are and how wrong they are. I have some experience in this myself especially earlier in my life. I have learned not to do that (well not as often at least).

You are smart and have a lot of knowledge but, in my experience, you don’t restrict your comments to things you actually know much about and very seldom provide backup.

Seeing you behave the way you do day after day on this blog does concern me. My concern is genuine if not appreciated.

#205 Lolo on 01.26.16 at 12:54 pm

#195 Capt. Obvious
2) You can have the wrong strategy and in spite of yourself be successful. We’re always talking about expected returns for a reasonable level of risk. Random shit happens.
****************
True, that. I thought i had the right strategy in life. Was mobile, went where the jobs were (in ON), rose up the corporate ladder. Didn’t overspend on real estate. Invested, maxed out RRSP/RESP/TFSA. Renting now in YVR. Doing ok. My three other siblings stayed in YVR. Bought detached homes. Their net worth eclipses mine, though my salary has always been significantly higher than theirs. Not implying their strategy was wrong….they saved well and are now mortgage-free. But now they tell me I should have bought when we were house-hunting in 2009. Well, considering we didn’t have a crystal ball, I think we made the right decision knowing what we knew, but in the end, we’d be further ahead had we bought.

#206 pwn3d on 01.26.16 at 1:01 pm

#151 AB Boxster on 01.26.16 at 12:43 am
#21 Mark on 01.25.16 at 6:30 pm
The low rate environment has basically been nirvana for seniors
———————————————
Mark that comment is nonsense.

Seniors are savers, and not consumers.
———————-
Mark hates old people so you have to discount his theory on what is good for them. He’d rather they were all homeless so he could find an affordable house to buy.

I’m no Carnac but dude should be careful how he treats poor old people because it’s his future.

#207 Cheese on 01.26.16 at 1:02 pm

The real question from a moist millennial is, invest in indecies now? Or wait :P

#208 JSS on 01.26.16 at 1:03 pm

#63 Shawn on 01.25.16 at 7:36 pm
I got kicked off this additive Blog a good while back and that was okay really. Saved me a lot of time…


Shawn, are you still bullish on Canadian Western Bank? Or do you think they are doomed for failure due to Alberta’s recession.

#209 Noel on 01.26.16 at 1:07 pm

#195 Capt. Obvious

But at what point is random shit not random and a pattern? There are so many indicators – that have been in play for a decade – that point to another strong year for housing in select areas, but its always drowned out by doom and gloom on this blog.

Also a lot of these people are selling their houses, unit sales reached a 6 year high in the 4th quarter of last year.

#210 IHCTD9 on 01.26.16 at 1:12 pm

#184 Noel on 01.26.16 at 10:56 am
Great post today Garth, although I disagree on one small point. You state the gov’t will not be there to save us – I bet they will be ‘saving’ people to a far greater degree than now, through enhanced social programs.

People are living longer and businesses are much more productive due to automation. Somethings gotta give, and I hope it favours the greater good. The smartest man in the world agrees with me:

“If machines produce everything we need, the outcome will depend on how things are distributed — everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution.

So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality.”

– Stephen Hawking
____________________________________________

Hawking got this wrong. The machine owners will be successful in collecting wealth, and avoiding “redistribution”.

No question about it.

The real question is what everyone else does. There is usually a bad end when one entity has everything and everyone else lives hand to mouth.

If it ever came to that, all the socialist lefties will be pretty happy they never got gun control to work…

Someday, everyone will have a “replicator” like on Star Trek [Tea… Earl Grey… Hot], and industry and government will shrink like the ant man.

#211 MF on 01.26.16 at 1:21 pm

#197 pinstripe on 01.26.16 at 12:38 pm

“OTOH, Justin is bringing people and regions together to undo the damage done by harpo and then focus on bring bigger and better processes to make Canada ready to compete in the global economy. Justin is excellent in getting the message out that HOPE is far superior to FEAR with today being better than yesterday. Justin and the liberals are forced to recover the LOST-10 Years mandated by harpo. Overall a good start for most Canadians living in the global economy. Change is good.”

I’m sorry but what did I just read? Justin lives in a dream world of fantasy, rainbows and hugs. The older folks usually get this, which is why I am surprised at your comment.

#201 TurnerNation on 01.26.16 at 12:45 pm

Interest piqued. What is a cameltoe (in financial jargon…. obviously)?

MF

#212 common sensed on 01.26.16 at 1:40 pm

Well when Janet speaks tomorrow Canada is saved. Oil up higher, CDN dollar up as well.

“Due to excessive volatility in the financial markets and a downward trend in mfg, our stance on maintaining
interest rate hikes in 2016 will take a breather until further notice.”

AKA, We had to raise to show our credibility but look what it did to our dollar and oil prices. Retreat. If we
keep the rates up, more US banks who bet on big oil will go bust and we are protecting our banking system.

Resume your lives…

She will say nothing of the sort. — Garth

#213 Shawn on 01.26.16 at 1:54 pm

#208 JSS on 01.26.16 at 1:03 pm
#63 Shawn on 01.25.16 at 7:36 pm
I got kicked off this additive Blog a good while back and that was okay really. Saved me a lot of time…


Shawn, are you still bullish on Canadian Western Bank? Or do you think they are doomed for failure due to Alberta’s recession.

***************************************
Garth will not likely want us to get too far into discussing individual stocks.

Banks tend to recover from price declines except in really disastrous scenarios. Banks are leveraged typically at least 10 times on common equity and so really big write-offs can mean they go under though that is very rare.

Could a western bank go bust or at least suffer a fairly permanent price drop Maybe. I am not expecting it though.

CWB also has some loans in other provinces. They are well managed and have lived through past recessions.

#214 S.Bby on 01.26.16 at 2:03 pm

#138 Liberal Crisis
Trudeau has a crisis on his hands in Vancouver.

He has sent 2000 refugees here so far. Problem is the average family size is 7!
===================================
T2 never thought the Libs would win, especially with a majority. So he makes all kinds of outlandish promises that he knows will sound good to attract the simpleton voters but which he knows will be next to impossible to keep. Next thing he knows is, holy sh!t we just won with a majority! Now he has to make good on all those outlandish and not well thought out election promises.

25,000 Syrian refugees by XMas? Where will we put them?
Legalize pot? They won’t let me.
Pull the fighter jets? Oops didn’t anticipate the France terrorist attack.
Balance the budget by the 4th year? The budget will balance itself. Good luck with that and with all that deficit spending.

Welcome to the real world Justin.

#215 Smoking Man on 01.26.16 at 2:13 pm

Damn CIA giving people advice on how to find Nectonite’s

Disclosure is near.

https://www.cia.gov/news-information/blog/2016/take-a-peek-into-our-x-files.html

https://www.cia.gov/news-information/featured-story-archive/2016-featured-story-archive/how-to-investigate-a-flying-saucer.html

#216 Shawn on 01.26.16 at 2:33 pm

Wealth Distribution

The commenter named after a 1960’s bulldozer at 210 said:

The machine owners will be successful in collecting wealth, and avoiding “redistribution”.

*************************************
If true, and if as individuals we have to live in that world then the logical solution is to try to be a machine owner.

How do you that? By investing in equities.

As Warren Buffett says own your share of “corporate America” (also applies to corporate Canada and corporate the rest of the world). Buffett has said that people would be wise to own a piece of corporate America.

Or just buy your own bulldozer, I guess. (Going cheap at auction these days)

#217 Chris on 01.26.16 at 2:35 pm

Stock charts like that are almost meaningless. All it shows is that the value of an index has increased. That could mean any number of things, none of which lead to the conclusion that if a person purchases stocks, their value will increase exponentially, over a period of years, with the occasional correction followed by recovery to new heights.

There is a simple way to say this, and I have said it before. When you are buying a stock, you are buying a piece of a company. So it makes sense to know as much about the company as you can. If it is publicly traded you can know everything, the rule is full disclosure.

You are trying to buy solid, well managed companies with good return on investment, a stable cash flow, goodwill, and a firm hold on their target markets.

You want to buy these companies while people are dumping stock (ie, like right now) because a market index is falling due to an economic contraction.

You want to hold on to them forever.

That is all. If you can do that, then you can put your money in a stock market and it will do well. If you are worried about graphs or charts or “moving averages” or other nonsense like that, I would suggest gambling or going to Vegas, the odds are likely better.

The chart is of an index, not a stock. You have no point. — Garth

#218 Leo Trollstoy on 01.26.16 at 2:42 pm

#204 Shawn on 01.26.16 at 12:52 pm

good advise. but you’re talking to low bar. words have no impact. remember. he thinks its hard to get an interview. forget all that interprofessional mumbo jumbo. there’s no experience he can relate to in ther. he will always be the same. hard to get hr call back. hard to find job. hard to invest. typing is his only escape. let him b

#219 Leo Trollstoy on 01.26.16 at 2:44 pm

Seeing you behave the way you do day after day on this blog does concern me. My concern is genuine if not appreciated.

definely not appreciated. ignored. rfd has evidence of poor investing and thinking. 26k posts of them. low bar. let it b.

#220 Leo Trollstoy on 01.26.16 at 2:47 pm

#164 Mark on 01.26.16 at 3:20 am

pls dont b mean. its not nice. every1 wants to help u be higher bar. try. thanks

#221 Anewblogname on 01.26.16 at 2:52 pm

Hey Mark, you’re in IT as an engineer right? You seem to have a wide range of knowledge.

#222 AB Boxster on 01.26.16 at 2:53 pm

#197 pinstripe on 01.26.16 at 12:38 pm

Justin is excellent in getting the message out that HOPE is far superior to FEAR

——————————————————-
Yes, the 100,000 plus unemployed in Alberta have ‘HOPE’ and ‘FEAR’.
‘HOPE’ that Justin is a one term wonder.
‘FEAR’ for the future of the country with him as PM.

HOPE, FEAR,(diversity, equality, feminism, resourcefulness, blah, blah) Canada loses with Mr Selfie at the helm.

#223 James2 on 01.26.16 at 3:08 pm

#143 Smoking Man on 01.25.16 at 11:27 pm

Man that loves his wife, Wife loves her man.

You want the same for your kids.

Home school them.

Dr Smoking Man
Phd Herdonomics.
,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
Or as you would often say
“Man that loves his hag, Hag loves her Man”

#224 IHCTD9 on 01.26.16 at 3:29 pm

#197 pinstripe on 01.26.16 at 12:38 pm
The talk at the coffee shop this morning was all about the management style
harpo did an excellent job with do as I say and not do as I do. Divide and conquer was a masterpiece. An excellent job at pitting one group against another. 10 of harpo cpc’s and Justin liberals.
years and NO pipeline eto move AB oil but a lot of good fights in the meantime. the reform of the civel servants produced a worse civil servant moving forward. the senate reform resulted with 3 senators given full pay and will be able to keep their jobs anyway with increased corruption in the system. The business practice of Fear Mongering was well executed by all the CPCs. Harpo was very successful in losing ALL Trust and Confidence in government. Overall an EXCELLENT report card for a CPC Party.

OTOH, Justin is bringing people and regions together to undo the damage done by harpo and then focus on bring bigger and better processes to make Canada ready to compete in the global economy. Justin is excellent in getting the message out that HOPE is far superior to FEAR with today being better than yesterday. Justin and the liberals are forced to recover the LOST-10 Years mandated by harpo. Overall a good start for most Canadians living in the global economy. Change is good.

__________________________________________

You don’t say? I was down at the coffee shop this am as well, and the talk was all about the results obtained by the harpo cpc’s vs Justin liberals thus far).

One guy with cold coffee was pretty pissed that Justin’s “revenue neutral” tax cut for the middle class has now been shown to have actually cost Canadians near 10 Billion by the time his term is up.

Another fellow munching down an apple fritter was greatly annoyed that T2 has agreed to flush Billions down the shitter chasing lower C02 emissions targets for Canada – a country which produces next to nothing on a Global scale C02 wise. And right when our economy has a defibulator on stand-by.

A guy just walking out muttered, Trudeau blew 3 billion right out of the gate on foreign countries to “fight Climate change”.

The cashier was pissed T2 tossed the 10 Billion deficit cap out the window almost immediately after being elected.

The guy mopping the floor was pissed that Trudeau is on track to take Harper’s 941 million federal deficit, and turn it into a near 20 Billion federal deficit —– in one bloody year!

The shop owner was angry T2 bailed on the poor victims of ISIS, leaving.. well… the rest of the world to deal with it.

A shift worker at the counter was mad that Trudeau cut the TFSA limits in half.

Unlike your coffee shop, everyone in mine was pissed-off! I decided to lighten the mood by injecting some sunny stuff into the conversation. So I chimed in and said:

“At least I got a tax cut, and more cash because I have kids! Damn glad I make more than 45K a year!”
“Come on guys, hope is far superior to fear! Today is better than yesterday! Guys! 2016 has been great so far for Canadians in the global economy! Change is good guys! It’s good!” (and I said all that other stuff you said too.)

Back outside, picking myself up off the ground, I was thinking we need some patrons from your coffee shop to come visit mine.

The folks in my coffee shop put WAY TOO MUCH emphasis on results and reality as opposed to that happy-time stuff your coffee shop likes to talk about!

#225 Bottoms_Up on 01.26.16 at 3:47 pm

Anyone with investments should print out that 50 year chart of the S+P500 and place it above their computer. And financial advisor should be mailing that chart to their clients when they phone them up telling them to sell everything.

#226 Dups on 01.26.16 at 3:48 pm

Ignorant home owners sell their homes when the market is at its low and downwards spiralling. Now that the market is at the top and about to crash they are still holding to the bricks and mortar. Just like the dumb investors and the stock market theory. They sell when they panic and buy at the top of the bull. Can not fix stupid.

#227 Bottoms_Up on 01.26.16 at 3:49 pm

#217 Chris on 01.26.16 at 2:35 pm
——————————————-
You can buy an ETF that mirrors the action of the S+P500.

#228 Dups on 01.26.16 at 3:51 pm

Feds to announce tomorrow:

MBA Mortgage Applications
[Bullet7:00 AM ET

New Home Sales
[Report][Star]10:00 AM ET

EIA Petroleum Status Report
[djStar]10:30 AM ET

2-Yr FRN Note Auction
11:30 AM ET

5-Yr Note Auction
1:00 PM ET

FOMC Meeting Announcement
[Report][Star]2:00 PM ET

And the market shall breathe fresh air and see green horizons everywhere…

#229 maxx on 01.26.16 at 3:57 pm

#174 maxx on 01.26.16 at 8:27 am

“I regret your family made a poor choice and suffered a negative experience. Your generalization, however, is just that – an emotional fog that masks today’s reality. Compared to real estate (for example), the financial business is pristine, ethical, massively skewed to consumer protection and regulated in extremis. Try to broaden your horizon and experience. Your view is debilitating. — Garth”

My family didn’t make a poor choice, rather the choice they elected was poor. Big difference. Operational perfection produces garbage results if opacity prevails.
As for the emotional fog thing, a redux would read: “once bitten….” and compared to re, almost anything else is more ethical, but holy mahoney Garth, “pristine” and “regulated in extremis”?

#230 Retired Boomer WI on 01.26.16 at 4:06 pm

#201 MF

The term “Camel Toe” and “Batman” have been used here previous by Smoking Man in reference to stock charts (Index charts) movements.

I do not know, or claim to know what the terms mean.

Chart movements, and the claim of knowledge of future directions based on prior movements, is best placed in the category which includes how to read chicken droppings,
Bat scatter, cow pies, horse apples, in other words most don’t know their shit….

One thing I find very useful:

The more stocks go UP, the likelihood of making money from buying more of them diminishes.

The more stocks go DOWN the higher the likelihood to make money buying MORE of them.

in essence, buy low(er), sell high(er)……

Broad Based INDEXES work best, but also applies to many individual blue chip dividend payers as well.

(note: does not mean “every dam stock out there”)

RB

#231 Rian O'Maoilchonaire on 01.26.16 at 4:09 pm

Some slight good economic news—you can get a no-fee chequing and savings from Coast Capital Savings, which gives you 3.25% on your “high-interest” savings account. I have no affiliation other than being a satisfied customer. As far as the risk of stocks as investments, everybody that runs the economy and every major organisation from pension funds to trade unions to charities relies on their investments. If the stock market completely fails, the economy fails. I think if you invest wisely, you stand to make more money, and even by investing safely you can lose a lot just by currency fluctuations. Stocks outperformed property since the last recession.

#232 Canadian on 01.26.16 at 4:20 pm

It is quite distracting watching the handbag sissy-fight occurring between Mark’s bizarre advice and Leo Trollstoy’s apparent learning disability that prevents him from using grammar and punctuation. takes up a sizable portion of the comment section these days.

When are you going to get tired of this pollution Garth?

#233 Lew Waskado on 01.26.16 at 4:34 pm

Stay the course ladies and gentlemen. Because after the Fed Meeting announcements the economic conditions will be re-affirmed for slow positive growth. Hold Strong my friends!

#234 hope & ruin on 01.26.16 at 4:47 pm

#222 AB Boxster on 01.26.16 at 2:53 pm
#197 pinstripe on 01.26.16 at 12:38 pm

Justin is excellent in getting the message out that HOPE is far superior to FEAR
——————————————————-
Yes, the 100,000 plus unemployed in Alberta have ‘HOPE’ and ‘FEAR’.
‘HOPE’ that Justin is a one term wonder.
‘FEAR’ for the future of the country with him as PM.
____________________________
#211 MF on 01.26.16 at 1:21 pm
I’m sorry but what did I just read? Justin lives in a dream world of fantasy, rainbows and hugs. The older folks usually get this, which is why I am surprised at your comment.
_____________________________

hence my name.

#235 Bottoms_Up on 01.26.16 at 4:49 pm

#230 Retired Boomer WI on 01.26.16 at 4:06 pm
————————————————————-
For lack of a better description, here’s what an Inverse Batman (basically a ‘double bottom’) looks like on a stock chart:

v-^-v

It is probably successful as a technical indicator (ie, might be able to be traded with success greater than 50% of the time) because it gives support at that bottom price. Not sure if other positive TA indicators are required in order to ‘buy in’.

#236 A Canadian Abroad on 01.26.16 at 5:05 pm

Fed Announcement tomorrow:

My guess is that the FED will be bullish/hawkish on the USD and the economy. Job reports are strong. Will continue the rate hikes into 2016 as scheduled.

#237 Herb on 01.26.16 at 5:22 pm

#224 IHCTD9,

you write good fiction for a dipstick!

#238 TurnerNation on 01.26.16 at 5:30 pm

MF you must check Smoking man’s blog for that description piece. ;-)

#239 Mike in Toronto on 01.26.16 at 6:17 pm

#226 “Ignorant home owners sell their homes when the market is at its low and downwards spiralling.”

No…. When the market is low and spiraling downwards, all the buyers sit on the sidelines to “wait and see”. The sellers hold because they don’t want to “take a loss”.

Nobody actually sells until they’ve lost their jobs and are forced to. At that time, they’re pressed into offering it lower and lower as what they thought was reasonably low, was reasonable last month… but is not low enough next month.

After a few years, the dust settles, and normal buyers who just want to live in a f*ing home come back to the market. Speculators are sick of real-estate, and relieved when they get a good fraction of what they put into the place.

And then, because this is Canada, it begins again.

#240 waiting on the westcoast on 01.26.16 at 6:24 pm

#236 A Canadian Abroad

I agree with your assessment that the Fed will raise in March and voice warm/fuzzies.

While people are feeling the fear in the US a bit, the data is still showing growth. The Fed needs that story to keep moving rates up so they have some kind of ammo in the future if things go south.

#241 Gramps on 01.26.16 at 6:29 pm

Garth, seems like we’re not talking enough about holding USD currency to balance out volatility in the CAD. What’s your ideal USD holding in your balanced portfolio? I love the idea of USD dividend streams given the current FX environment…

#242 Tony on 01.26.16 at 6:34 pm

Re: #240 waiting on the westcoast on 01.26.16 at 6:24 pm

The tightening cycle ended last December and Yellen will reaffirm that in her speech tomorrow. Next move in American interest rates is down then negative rates in 2017. Big whipsaw in the markets tomorrow with the oil draws down then straight up after Yellen’s speech.

#243 Tony on 01.26.16 at 6:45 pm

Re: #236 A Canadian Abroad on 01.26.16 at 5:05 pm

Take a look at the hit the U.S. dollar took today. The insiders already know the speech she’ll make. The opposite will happen I guarantee it. Put another way no matter what Yellen says the street will take it as the interest rate hike cycle is over and the next move in interest rates is downward. Yellen could say nothing not a single word and the bottom would still fall out of the U.S. dollar.

#244 the Jaguar on 01.26.16 at 8:12 pm

#173 Billy Bob

Doesn’t change the fact that all my favourite disaster movies are the ones about airplanes in crisis. Air Force One, all the ‘Airport’ movies, especially the first one where George Kennedy implies a Boeing 747 pulled itself out of the snowbank because it couldn’t read its own manual. Or the one based on the Air Canada Gimli Glider landing. Or the one with Kurt Russell where he lands the airliner taken over by terrorists.
Where’s the popcorn? I love them all so much. And I used to pass out with joy on September long weekends when the Lancaster Bomber flew over at the Toronto International Airshow. Prop planes are the most exciting. When they fly overhead on their way to the NWT I faint all over again. It’s the sound of the engines…. who cares about finance. Let’s talk airplane disaster movies…

#245 Craiger on 01.26.16 at 8:17 pm

Re MF #134 great rant I enjoyed that.

Folks there are plenty of great ETFs out there paying solid yields that can rise over time with inflation such as XRE. Although not always recommended for novice investors if you do your homework you can also find great individual buys and eliminate the annual fees. Riocan (Canada’s largest REIT) pays a monthly dividend equal to about a 5.8% yield. If you look at their investor presentation they have great opps in repurposing their existing prime real estate locations.

My 2 cents.

#246 Armando on 01.26.16 at 9:09 pm

I can only speak for the US markets, but there are 2 important points:

a. In spite of the minor YTD dip, US stocks remain overvalued using any number of valid metrics (e.g. Shiller’s CAPE10, etc.) and poised to deliver nominal returns of around 2.5% per annum over the next decade (including dividends).

b. As a number of commentators and studies have pointed out, the best predictor of total returns going forward for intermediate term bonds (e.g. AGG) is the current yield. Given low current yields, this means estimated annual returns over the next decade or so of are about 2% per annum. Note that this conclusion is generally independent of future inflation and bond yields, because if rates/inflation go up you reinvest interest payments at higher yields, and if they go the other way, your yield goes down even though you may make a bit in capital gains.

BOTTOM LINE: A diversified portfolio of US stocks + bonds should only be expected to deliver slightly over 2% per annum over the coming decade. Maybe things will be better in Canada (especially if measured in Canuck dollars), but in this overvalued artificially low interest rate environment I wouldn’t count on it! So Boomers beware: Even a Garthian portfolio may not save you….

#247 SquareNinja on 01.26.16 at 10:48 pm

#173 BillyBob on 01.26.16 at 8:03 am

No.

Completely false. Sorry. Please don’t pass out information that is 180 degrees opposite of the truth. There is no “automatic takeoff”, and even so-called “autoland” is simply autopilots being monitored by humans who intervene to avoid catastrophe if any malfunctions occur so close to the ground.

-A Commercial Airline Pilot

(Is this what Garth feels like reading idiocy in his field of expertise?!)

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

Isn’t “autoland” exactly what I said exists? You’re just there “in case” something happens? You just confirmed what I said about planes being able to self-fly! Thank you for the response.

#248 BeSmartRich on 01.27.16 at 11:42 am

You are totally right. People will really need to learn that money in the saving accounts always lose its value over time. Investing in good portfolio of stocks seem scary but all they need to do is buying good diversified ETFs, keep buying them over time and forget about them until they retire. This will at least save them from the misery when they retire.

Thanks for sharing!

BeSmartRich

#249 Dogman01 on 01.27.16 at 12:54 pm

A while back while driving on the outskirts; my wife made the connection; what is with all the new Home Construction in Calgary?
Who is buying this stuff?

http://www.cbc.ca/news/canada/calgary/calgary-real-estate-cmhc-q1-assessment-2016-1.3422069

“Another red flag has emerged in Calgary’s real-estate market, with the Canada Mortgage and Housing Corporation (CMHC) now saying there’s “strong overall evidence” the city is entering a “problematic” situation that could lead to a sudden collapse in prices.”