So far this year the Canadian stock market’s been hotter than Rachel Notley. Which, after the Dipper Gabfest this weekend, seems to be smokin’. (Poor Tom. Maybe he can start a blog.)
The TSX has gained almost 3% after a double-digit cratering in 2015, while US stocks in comparison are ahead YTD a scant 0.2%. Bay Street, in fact, is currently among the sexiest markets in the world.
How did this happen? Can it last? Did T2 do it? Should you invest? Or instead spend all your money on a moldy million-dollar piece of crap in East Vancouver, like this one?
The Canadian market has been pacing commodity prices, mostly oil. Crude has risen an astonishing 60% since scraping bottom in early February – from the mid-$20 US range to almost $40. Going up with it has been the dollar, with the loonie at 77 cents US, after credible predictions during the winter that it would sink to sub-sixty.
So the market, heavy on energy stocks and the financials supporting them, has benefited from that commodity surge. Where oil goes from here is completely unknown, since global supplies keep swelling and demand is trailing. Meanwhile the new tax-and-spend government in Ottawa has been doing exactly that and plans on a lot more, as shown by the stats released to the Parliamentary budget watchdog Friday night after the markets had closed. The federal deficit will touch almost $30 billion this year, with another $84 billion in debt to be added by 2020. The hope of a balanced budget any time before your five-year-old gets lucky for the first time is pretty much kaput.
This is called stimulus, and markets like it – for the same reason they love cheap interest rates. While the US has been systematically scaling back monetary stimulus for the past three years, Canada will be layering on fiscal stimulus in the form of overspending. This is also a reason stocks have been on the advance.
In fact, maybe a little too much. The TSX is now over-valued compared to the US markets, by about 14% when price-earnings valuations are applied. But wait. What about that jobs report that rocked things higher on Friday?
Canada added over 40,000 jobs last month, gaining back most of the 35,000 full-time positions wiped out in February. The jobless rate dipped to 7.1%, which is good but still higher than last year’s 6.8%. Most of the new jobs were created by the private sector (good), but also primarily service positions (not so hot) while another 32,000 paycheques were lost in manufacturing (bad). The energy business shed 2,000, and construction almost 6,000.
The dollar jumped on the news (as it did with the budget deficit number) because it means the Bank of Canada will not drop its key interest rate when the latest policy’s announced on Wednesday. Things were also bolstered by preliminary data showing the economy sucked less than had been expected in January.
Put it all together, and you get a market advance. It was somewhat inevitable – which is why this pathetic blog counselled you a couple of months ago not to abandon maple in your portfolio. The weightings suggested for the growth portion of your portfolio (Canada 17%, US 21%, International 18%, 4% alternative) still hold.
So did Trudeau do this? Are things okay now that a stake’s been driven through the heart of Harpercon policies?
Meh. Careful.
The March jobs number is an aberration, suggest several economists. It brings the six-month trend to the level of 11,000 a month, which is only half that of the US but still far ahead of the weak fundamentals of the Canadian economy. There’s a strong feeling the real misery from the two-year-long collapse in oil prices has yet to be felt in the oil patch, as companies seriously curtail spending plans and key workers continue to drift out of the industry. More of these corporations have been defaulting on loan payments as banks choke off credit and junior producers head for bankruptcy.
There will be consequences. “We expect the national unemployment rate to drift a bit higher in 2016, as weakness in oil-producing provinces leads to knock on effects in other sectors,” say the economists at Scotiabank. Meanwhile oil’s rapid ascent over the last two months could easily be reversed and then, ya know, there’s always Donald Trump, Rachel and the Blue Jays to worry about.
For those who took the advice to maintain a rational exposure to Canadian assets, this has been a sweet spring. Plus, the decision of the Bank of Canada not to drop rates, and the impending US increases in 2016, will Viagratize your preferred shares. But we aren’t out of the woods yet, and goosing your domestic exposure could bring a lot more churn than profit.
Wait. By the end of the year you’ll be shocked, like Tom, at a few things.
141 comments ↓
I see nowhere in their budget provisions for CMHC bailout.
How about 100-120 billions in the next 5 years? Or 200?
Now, we understand that the drama teacher is a figure head and a complete dilettante who never worked real work in his life, but how about the financial minister who has supposedly ‘Bay street experience’?
It seems these days that a taxi driver has more common sense than the ruling politicians at the highest level of power.
So when it hits the fan it will be epic.
I will be watching offshore.
Good luck.
Read article today on CBC “Trudeau promises money for hard-hit First Nations to flow this year”
FLOW? Isn’t it easy to spend money when it’s not yours? I mean how many of us see something that we like at a mall and think I’ll buy it even though I don’t have monies for it. Our projected deficits can exceed 150B in the next five years (1) Trudeau is burning money like it’s out of style. Taxpayers are sick of the “Pay For My TWO Nanny” State and we need to get rid of him and his “nice hair” during the next election; too bad the Liberals have bought votes through Syrian migrants that they purposely situated in various Conservative stronghold constituents
References 1:
http://www.thestar.com/news/canada/2016/03/01/ottawa-headed-for-150b-in-deficits-over-next-5-years-td-bank-forecast.html
A moment of silence for all fallen bearded politicians…
Here in Calgary, they continue to break ground on new condos. They just keep coming and coming. Who the hell are buying these things, is what I’d like to know. But as this blog likes to say, “this won’t end well.”
I thought the exact same thing Garth did when I saw the tear the TSX was on. I didn’t seem to be based on anything founded in reality. Reality might come calling soon.
First!!
So in short: we’re on a rollercoaster, wear brown shorts.
For those who took the advice to maintain a rational exposure to Canadian assets, this has been a sweet spring.
—————————————————————-
I would suggest that there are very few investors who remain underexposed, with respect to Canadian assets in their portfolios. On the contrary, most Canadian investors tend to remain overexposed to maple, in both the growth and fixed income portfolio components.
There are three primary reasons for this. First, the power of the always-sexy dividend tax credit. Second, the long gone 30% foreign content rule in RRSPs remains (strangely) in the asset allocation consciousness of many, hovering around like some Dickensian ghost. Likewise, in TFSA’s, many investors continue to be spooked by the dark grip of the withholding tax. Thirdly, the bizarre home-bias psychology that suggests any investment that is not Canadian is not as well-known, and therefore carries more risk.
Millennial reporting. Tangerine’s index at 50% maple still seems to be dropping :(. Planning on sticking with it long term regardless, but I am still concerned about its long term performance with all this aggressive spending from Ottawa.
Thanks so much for your work Mr Turner, this millennial will continue reading daily :).
Wow, garth – you really twist and bend over backwards to give yourself a pat on the back whenever possible.
How are those prefers doing the last three years? Funny we don’t hear much self back patting on that one. WONK.
You buy preferreds for income, and that has never changed as dividends have been paid out consistently. The BoC cuts in 2015 hurt capital values, but while you are collecting a 5% yield, why would you sell? Hold them and smile. It will all come back. — Garth
First? The preferreds are already coming back; just look at CPD over the last few months. Growth plus income…. What a combination! Cheers and good luck to all the dogs.
Garth, if somebody buys that little beauty in Vancouver they better bring lots of earplugs ,its on one of the busiest st’s in Vancouver.
Lipstick on a pig if you will. The T2 honeymoon isn’t over yet but it’s coming. Refreshing to say the least to have the commies sent packing and a pretty boy at the helm. Just hold tight for the heartache as there will be ample to go around as the Alberta layoff lanslide gathers momentum.
The latest job numbers are for the common sense deficient. I bet if you tracked the fast food providers,walmart expansions, seasonal startups and slurpee sales associates you would clearly see the numbers. As for stable full time manufacturing, tech, etc. well those jobs were offshored ages ago.
An economy in all reality sliding backwards will justify the healthcare job numbers higher as medical conditions such as depression, addiction, mental health problems and treatment will follow the dissappearing jobs. As for poor Tom’s job, you could tell him there is always gay porn.
The future is so bright that I bought a pair of $5 sunglasses at Walmart.
# 1 Sheane Wallace
EEEASY there, what’s that supposed to mean that most cab drivers are stupid? There’s tons of cab drivers out there with degrees that can’t get a job in their profession. I resemble that remark.
Hmm, I remember mainly you telling the opposite, Garth, and reduce maple-portfolios, and bring in more US exposure.
Which I always found odd, as TSX P/E is better than the US P/E ratio.
And also, you called it on jan1: TSX outperforming S&P500:
http://www.greaterfool.ca/2016/01/01/el-predicto-3/
Also, in the other news: I thought this was an interesting analysis of CMHC by an economics professor.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/cmhc-reserves-revisited.html#
Since he did that, the numbers from CMHC have gotten only better: insured amount is now smaller, and reserves have gotten larger. So I think the tax payer is safe.
Bram
For the last three years my weightings have not changed, even if you have. — Garth
Sorry Mulcair you just weren’t radical enuff ! Liberals did a reverse-takeover of the NDP, just like they did in Ontario.
So did Trudeau do this? Are things okay now that a stake’s been driven through the heart of Harpercon policies?
Meh. Careful.
———————————————————–
Careful with those Conservative talking points, Garth.
Haven’t you been one of those busy blaming Notley for all of Alberta’s troubles, mere hours and days and weeks after her election?
And yet Justin gets no credit for good things, after being in office for six months?
Post hoc ergo propter hoc – if you are going to resort to such fallacies, at least be consistent.
Just saying…………………….
An unliveable tare down on a 33″ lot located on the most unattractive streets and busiest truck routes in Vancouver, Knight Street. Only a million? Lets see if it goes over asking. How could you pass up having your living room 15 feet from 6 lanes of truck traffic. Sounds like a steal compared to the $4 million Dunbar bungalow. At least the most you can lose is a million.
I see an 80% plus correction in the Van SFH market coming. The Dunbar house at $800k and this house at $200K would still be overpriced.
If you want to become really angry, and you know a bit about fiduciary relationships, listen to this:
http://beta.images.theglobeandmail.com/static/interactive/audio/20151014_2.mp3
Preferred shares..well, double digit paper loss but they still pay a dividend every month so no worries as long as you don’t need to sell them. I’ve selected a few REITs in Jan ( in TFSA)…they all up 6-14% YTD….so that makes a pain of paper losses from preferred shares a bit easier to look at this year….and tax free dividend is nothing to complain about.
Atta boy, Justin!
Text of above audio recording, translated to English is here (for those of us who can’t speak Mandarin):
http://www.theglobeandmail.com/news/investigations/inside-a-fast-growing-bc-firm-that-has-home-sellers-crying-foul/article29578417/
You knew Mulcair wouldn’t last long when the T2 Liberals won with policies for the most part to the left of the NDP. Expect a real hard core commie to be running the NDP soon.
Everybody should be working if the system was run right but it isn’t. Will it change, with a fight it will.
TSX up, my guess, the borrowed money for infrastructure across Canada, follow the money trail. My guess.
As for the leader Tom Mulcair, he did an excellent job as opposition to Steven Harper. Where were the Liberals? When listening to a debate look at the ones who are not speaking and to why!?! Is it because they have nothing to say or they agree with the one of two and don’t want to acknowledge it. Be careful of the silence! The TPP is an excellent example. The Liberals are awfully quite but yet when Tom Mulcair questioned the TPP, T2 stood right along Mulcair.
As for losing the federal election, Tom Mulcair said that he would balance the books, critics questioned that, and would-be voters questioned that, then along come T2 with we will go into a deficit spending. And oh, the promises along with that thinking. Wonder how many promises have been broken so far? What also helped was the Jack Layton impersonation and look.
Also, the Conservative party were failing and the two choices left were Liberals (similar to them) or the NDP (too far for them). When the NDP were in the lead at the beginning of the election a lot of the conservative supporters swayed voters towards the Liberals.
Looks to me that the Conservatives and the Liberals are bully pals to keep the NDP out. When was the NDP in power federally?
The system needs to change for the people of that nation, to work alongside our once beautiful earth (it cannot take it anymore).
Oh yes. You will be surprised by the end of the year. When the economies of the world melt down in a derivative nightmare- oh we are SOO close. Australia just had their first-NOT-last bail-in.
http://www.zerohedge.com/news/2016-04-10/austria-just-announced-54-haircut-senior-creditors-first-bail-under-new-european-rul
Coming to a bank near you.
China takes control of the gold fix price on April 18th. DB is in meltdown after offloading a few trillion in derivatives onto the USbanks/citizens. Fed scheduled an emergent meeting tomorrow. We need a good culling. I for one am looking forward to it- to many sheep that can’t think for themselves and stuck in cognitive dissonance- they will be the first to go. BAA BAA- Garth- Got Gold??
You guys are consistent as you are funny. — Garth
Thanks, but sticking with 25% U.S., 15% Int’l and 15% Maple. Would be nice to recover the 30% slaughter of ZPR.
USD Alert!!
I just watched on CNN as Janet Yellen (and former Fed leaders) gave her account of the US economy.
Talk about a deer in the headlights!!
Holy crap, this woman is clearly filled with terrible fear and uncertainty about the US economy. She fudged all her answers badly, including about the degree to which the US is now in a dangerous bubble.
http://www.cnn.com/shows/fareed-zakaria-gps
If you were thinking the US is not heading for disaster, this will change your mind :(
#17 BS on 04.10.16 at 5:17 pm
An unliveable tare down on a 33″ lot located on the
most unattractive streets and busiest truck routes in Vancouver, Knight Street. Only a million? Lets see if it goes over asking. How could you pass up having your living room 15 feet from 6 lanes of truck traffic.
I agree, it is hard to find a less desirable SFH in East Van.
But somehow, there must be, judging from the stats.
Apparently, someone bought a detached home for < $700K in East Van, last month. How is that possible?
http://maggie-chandler.myrealpagewebsite.com/_media/Documents/2016%20graphs/vaneast032016.pdf?inline=false
Furthermore, 4 people bought an E Van detached for less than $800K last month? I don’t think laneways are ever sold separately? Are there houses on lease-hold ground in East Van or something?
Or are these people selling to relatives, and trying to evade the BC tax man by paying less property transfer tax?
Bram
Get rich or die tryin Bitchez :) – greed is one of our species great qualities – that and apathy
Garth, just checking, is 5-10% gold still the recommendation? Even though it’s been $hit-kicked in US dollars over the last few years in CAD the damage hasn’t been that bad. Still down but not as bad.
Physical gold weighting is zero. Owning the TSX is all the exposure you need. — Garth
Re: #14 Bram on 04.10.16 at 4:57 pm
Garth stated at the start of January this year that the TSX would outperform the U.S. stock market indexes this year.
Garth what is the latest consensus opinion on the odds of another US interest rate hike this year?
Currently a majority sentiment is for two hikes later in the year. — Garth
NDP on self destruct mode.
Hark!
Begone bearded bum that bought in Quebec votes and seats.
Getting rid of Mulcair just helps the Liberals more. Or if things go bad, the BQ.
“Wait. By the end of the year you’ll be shocked, like Tom”
Why is Tom the only one to be shocked that the NDP is a 3rd place, going nowhere party. Canada has seen the movie many, many times before.
Garth, Do you think Mulcair being voted out of the NDP will be a catalyst for a Pop in the TSX tomorrow since the Corporate Tax rate increases are definitely off the table now with his mandate defeated?
And so if a Portfolio is 17% Maple and Gold is 5-10% of the tsx, then Gold is like 1-2% of a Portfolio. This is what Garth is recommending folks! Personally I hold a little more but I am not a professional!!
Boss, you could have given me an assist on finding that crummy house on Knight st instead of leaving me stranded on 99 points but I forgive you.
Interestingly enough there are 2 or 3 more like that for sale a couple of block stretch.Also a couple of new builds are completed and for sale but as people have pointed out you effectively have a truck route running through your living room.
Also there has been some major land assembly on 41st ave between Cambie and Main so something bigger than expected could be coming there.
If I delve back into my memory bank I vaguely remember Knight st was named the busiest and noisiest one in the Couv a few years back with 40k vehicles a day.
I live six blocks away and sometimes at night you can hear the muffled rumble,either that or my wife is raiding the fridge in the middle of the night…
M41BC
P.S. I don’t get on with the guy ,perhaps because my wife is an Education Assistant but if you are sincerely sick Smokie/Joking Man I wish you a speedy recovery.
Disagreeing with someone even if they are a persona is no reason to wish ill on anyone.Good Luck brother…
Physical gold weighting is zero. Owning the TSX is all the exposure you need. — Garth
————————————-
Gold is up 15 % ytd, gold stocks – 50 %, TSX – 3 %.
As the numbers show, gold is definitely not behaving as a commodity lately.
As a commodity priced in USD, it is. — Garth
“Physical gold weighting is zero. Owning the TSX is all the exposure you need. — Garth”
Ok, thanks. I suppose that makes sense because that’s where most of the “big gold” stocks are listed.
#8 That guy on 04.10.16 at 4:26 pm
//////////////////////////////////////////////
Why are you such a douche ?? Do your comments make you feel better?
As a commodity priced in USD, it is. — Garth
———————————–
It would be entirely arbitrary to define which is the measure and which – the commodity.
Don’t get me wrong, I own USD and US stocks, they are significant part of my portfolio but this is the equivalent of saying that 1 m (one of the basic standard measures in the international system SI) is /1.80 of the height of an average american male, at age 24.
Garth, a jobs a job…your words
A word to the wise, if you are a politician and have a beard, you better be wearing skinny jeans and a scarf too.
What are good, bad, and ugly aspects of starting investment with iShares AOA, AOR, AOK, AOM specifically with AOM (long term is alright) [for TFSA?].
Apparently, AOM is US heavy with minimal exposure to Canada (am I missing anything here). Sure, I have my own opinion trying to justify and trying to see what points did I miss. is AOA better for RRSP?? (what are your points)
#14 Bram on 04.10.16 at 4:57 pm
Hmm, I remember mainly you telling the opposite, Garth, and reduce maple-portfolios, and bring in more US exposure.
Which I always found odd, as TSX P/E is better than the US P/E ratio.
And also, you called it on jan1: TSX outperforming S&P500:
http://www.greaterfool.ca/2016/01/01/el-predicto-3/
Also, in the other news: I thought this was an interesting analysis of CMHC by an economics professor.
http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/cmhc-reserves-revisited.html#
————————
If CMHS business was legitimate assessment of risk it would have been covered by private mortgage insurance.
Government/CMHC is there not to provide reliable mortgage insurance but to cover the losses for the lenders when TSHTF.
Just disband CMHC and watch how much the amount of ‘prudent loans’ issued by lenders declines, this alone will drive prices down at least 3 times in To and Van, maybe even more if lenders are on the hook for the loans.
No sane private mortgage insurer in the work will come near close to even thinking to be exposed of these loans, including the MBS backed by this entity/CMHC.
So say these are toxic loans is to put it mildly.
To be approved for 1 mln mortgage with 120 k income is insane and criminal.
Oh my god, it just hit me, it is not all the offshore buyers of questionable merit. It is greedy ol’ us.
How do you like that?
On a side note, in contemporary politics, the beard will always eventually bring you down. History, 120 years of it, tells us so. Now some may blame high moral character or grand ideals but nah, that is just scapegoating. It is the damn beard.
Garth, I never thought I would be saying this but……you make me want to cuddle up in your lap and just purrrrrrrrrrrrr !!
It’s been 6 WHOLE DAYS, a full WEEK as of tomorrow, without a single picture of some stupid, mentally defective dog!! The only featured animal has been a brilliant kitty!!
MMMMmmmmmeeeeeoooOOOOOWWWW!!!!!!!!!!
I can’t begin to tell you how utterly refreshing this has been for all of us in the superior domestic animal class, Garth!
It’s like you have personally given me and my furry friends a wholistic colon cleanse, removing every little clump of canine detritus. (And not like dogs do, licking each other’s arses, either!)
Thanks Garth – keep it up. Maybe we won’t scratch off your beard next time we invade your backyard after all.
MEOW!
#24 Doomtard
What is it about you lot that live in North America ?
Australia / Austria it is all the same in your minds I guess ?
https://www.cmhc-schl.gc.ca/en/co/moloin/
Mortgage Loan Insurance
Everything you need to open new doors
Buying a home is exciting — but it can also be challenging. With so many details to consider, how can you be confident you’re making the right decisions?
Canada Mortgage and Housing Corporation (CMHC) is here to help. Drawing on more than 70 years of experience, we offer you peace of mind, working with you to demystify all aspects of homebuying to help you enjoy an informed and assured homebuying and homeownership experience.
I know Garth hates Zerohedge, but he will like this one:
http://www.zerohedge.com/news/2016-04-10/vancouver-home-just-sold-more-1-million-above-asking-price
For his part, real estate agent Brandan Price is incredulous. “For it to go over $4 million is remarkable. I had five offers,” he said. “These were local buyers just looking to make a shift who wanted to move into this area.”
If low interest rates have created inflated real estate prices in Vancouver .What would cause a correction as interest rates will not increase any time soon
Ace, Rube, Sky High – all the same poster. Future comments will be quietly deleted. — Garth
Grab your 5 best friends on this blog get a down payment together start buying up all the pieces of crap on the east side of Van wait a year cash in then repeat.
Stop posting under multiple names. Bad enough once. — Garth
Grab your 5 best friends on this blog get a down payment together start buying up all the pieces of crap on the east side of Van wait a year cash in then repeat.
“Physical gold weighting is zero. Owning the TSX is all the exposure you need. — Garth”
So counterparty risk is all the rage – Again ?
A balanced portfolio these days needs allocation to an asset that can be safely held outside of the financial system that bears no counter-party risk.
You are way too dismissive of precious metals Garth – considering how house horny you lot are….we Australians are just as loony as you Canadians when it comes to real estate…..
If our RE markets ever go full mental retard on the downside chances are you will be ruing your reluctance not to take out a bit of financial insurance…
Here in Australia our big 4 banks have more than 65% of the asset side of their ledgers exposed to residential mortgages. Australians have the highest household debt in the world, you guys are not far behind.
And if that debt has to be assumed by our governments in the event of a collapse then we are both toast – without a financial backstop the pain will be magnified….
This is how currency dies:
http://www.zerohedge.com/news/2016-04-10/vancouver-home-just-sold-more-1-million-above-asking-price
“…in the form of overspending.” Cheap interest rates, fiscal stimulus, over-spending at both FED and provincial levels.
Yeah, same stuff here. Cheap interest rates might, or might NOT be corrected by Yellin, and that gang of data dependent cowards, plus a new “Know it all President” come November whomever that may be.
Yes, it is VERY hard to please the masses entirely, yet no one I know has picked up a pitchfork toward any local, state, or Federal politician. Therefore, they are either satisfied, or placated through medication or inebriation.
Political circus continues, and markets are much better than where they had been. We have a lot of year left to live before we close out 2016, much will happen.
It is such easier to spend other peoples’ money, but sooner or later, one realizes “other people” are you.
We will probably be disappointed in the two candidates we get to ‘choose’ from in November. I’m disappointed in the four still standing (sigh). Few original thoughts, just business as usual, and we will get TPP & related, shoved up our bums before its all done. It’s the way big business, big money, big politics likes things.
Let’s just hope there is a surprise awaiting.
“This is how currency dies:”
Hardly. That’s how you get deflationary collapses. Because eventually the leveraged speculators can’t speculate anymore, and wham, prices collapse and drag everything else with it. Currency is basically the ‘last man standing’.
Didn’t the US collapse teach you anything? Canada is in for a period of accelerating deflation going forward.
“If low interest rates have created inflated real estate prices in Vancouver .What would cause a correction as interest rates will not increase any time soon”
Falling RE prices. Everyone knows that its basically just the Vancouver speculators passing properties amongst themselves. Eventually they’ll run out of credit as falling/stangant prices and negative cashflow catches up with them. And down prices will go.
Throw in vibrance in some other speculative sector (gold and silver miners are now starting to power up), and speculative capital could leave RE very quickly.
As I said many times: save your money while you can outside of this place:
http://hedgeaccordingly.com/2016/04/toronto-heading-for-another-record-year-in-existing-home-sales.html
In place with average household income of 70-something k average detached house is over 900 k.
And this is called prudent lending and insurance as CMHC states in the link above.
#56 Mark on 04.10.16 at 9:01 pm
“This is how currency dies:”
Hardly. That’s how you get deflationary collapses. Because eventually the leveraged speculators can’t speculate anymore, and wham, prices collapse and drag everything else with it. Currency is basically the ‘last man standing’.
Didn’t the US collapse teach you anything? Canada is in for a period of accelerating deflation going forward.
—————————-
It seems the mental institution that you reside at has another holiday.
Sigh…
If over-lending was the way to strengthen your currency Venezuelan Bolivar would be worth 1000 dollars, not the other way around.
There is nothing that is deflationary these days, except in your delusions.
Pass around what you have been smoking, boy.
BTW I did not know that CMHC stands also for ‘Community Mental Help Centre’. Just google it damn it.
This would never happen here….
http://beforeitsnews.com/opinion-liberal/2016/04/banking-crisis-explodes-in-europe-on-a-sunday-afternoon-austria-orders-first-ever-bank-bail-in-takes-depositors-money-for-failed-bank-2526191.html
http://www.bloomberg.com/news/articles/2016-03-11/austria-heta-creditors-open-new-chapter-in-12-billion-face-off
I don’t know how anyone can be surprised that the NDP delegates told the Cheshire Cat to take a time out after the last episode of the Orange Blush…
M41BC
USA GDP Q116 estimated at 0.1%, that is pretty much recession levels. Q216 will be worse. Why is it difficult to see that we are entering another global recession??, the Fed will do all it can to avoid it before the election, but I won’t be able to. The same sequence of events is happening as in 2008, so easy to predict that it is comical that some people still see hikes this year. Garth is right, a lot of people will be shocked by the end of the year, him included.
QE4 or any kind of helicopter money strategy coming..just watch and learn.
Q116 was the turning point, Bank of America reports that the smart money is leaving their main funds, highest rate in its history. Dumb money piling in, that is how it always works, and the popolus never learns.
As for YVR RE market, this is the euphoria phase, people will be in tears in next few years, Canada politicians to blame as they allowed this to happen, either due to their incompetency or stupidity, or both.
Stay liquid, no equities, no bonds, no RE. Smart money is leaving, don’t be the last fool. Watch and see what will happen.
Garth will say that I’m crazy, he will also be shocked end of the year.
I like this blog, Garth keep it going, I agree with a lot you say in RE, but in terms of no recession coming, rates hikes, and no HAM in YVR, you are definitely not right. Wait and see till end of the year, in the meantime, you can ridicule me, no problem :-)
Happy week
#59 Sheane Wallace on 04.10.16 at 9:28 pm
#56 Mark on 04.10.16 at 9:01 pm
“This is how currency dies:”
////////////////
There is nothing that is deflationary these days, except in your delusions.
Pass around what you have been smoking, boy.
——————
ummm, you prob don’t want any of whatever he is smoking.
the speculator nonsense is the new sales mix nonsense.
(lately i’ve been taken by the LACK of the orange death mesh on old timer sales in the comm dr area – met 3 new owners on my block and they are all moving in , much to my surprise)
oh, and, go to van , not sask for good weed :)
……
emergency meeting monday plus weak start to earnings = most everything going on sale this week.
http://business.financialpost.com/personal-finance/mortgages-real-estate/homebuyers-ask-questions-as-toronto-based-urbancorps-troubles-keep-piling-up
Warped, grey plywood lines Curzon Street in the east end of Toronto. The fence ends at a gate, which is padlocked. Behind the gate rises a neighbourhood of prime three-storey townhomes in black brick, which appear largely complete, with wood railings separating one unit’s rooftop terrace from the next. Paper taped in the windows indicates the number of each dwelling: “515,” “508,” “205” and “202.” In the mud and gravel around the homes lie a discarded shovel, an orange hardhat, lengths of pipe and plastic chairs, along with a stop sign of the sort workers use to direct traffic when trucks enter construction sites.
But there are no workers here now. A man who lives across the street says he last saw crews in January. “We were looking forward to families with kids moving in,” he said.
Urbancorp, one of Toronto’s busiest condominium and townhouse developers, markets this development as “The Neighbourhood of Leslieville”; its website depicts photos of nearby attractions such as The Friendly Thai and the Leslieville Cheese Market. But today the 56 purchasers here are not sure when — or if — they will ever get the keys to their dream homes.
I’m worried that smoking man has been abducted by nectonites, I hope we still get that novel though.
y on 04.10.16 at 8:32 pm
#24 Doomtard
What is it about you lot that live in North America ?
Australia / Austria it is all the same in your minds I guess ?
////////////////////////////
They can’t be the only person that gets confused, as when I was in a gift shop in Vienna there were signs for sale that stated ” There are no Kangaroos in Austria” on one of those yellow signs you see when driving down the highway with a picture of the animal.
Surely not that shops biggest seller…but you never know…
M41BC
“If over-lending was the way to strengthen your currency Venezuelan Bolivar would be worth 1000 dollars, not the other way around.”
There was very little credit in the Venezuelan economy, especially consumer credit. With the lack of a collapse in consumer credit to drive consumer demand truncation, as well as a physical shortfall in domestic supply, hyperinflation was an inevitable outcome.
Compare and contrast this with Canada which enjoys a surplus of physical production, and consumer credit numbers in nosebleed territory, primed for a collapse.
Sure, hyperinflation could happen in Canada, but it would take years of collapsing credit and collapsing domestic production to cause this.
Both are incredibly unlikely, as there are market based mechanisms to prevent both from occurring. Mild deflation is a likely outcome for the Canadian economy.
A proof that tat the debt bomb was created intentionally by the politicos:
http://www.macleans.ca/economy/economicanalysis/the-household-debt-bomb-why-banks-want-saving-from-themselves/
and a statement from Morningstar that CA Real estate can crash easily by 30 % (in 2014)., 50 % by now from the top, by my estimate 70 %.
http://www.macleans.ca/economy/realestateeconomy/why-canada-isnt-immune-to-a-u-s-style-housing-crash/
opinions expressed already by mainstream media.
Short the sucker any way you can.
#68 Mark
I have seen first hand hyperinflation when abroad and you have not, this is the difference.
House price increase of 400-500 % in 15 years is unsustainable, if and when prices of everything else catch up in a more volatile manner just watch out.
And if everything collapses in a deflationary move (highly unlikely) as you insist on, just watch out.
Canada manufactures nothing except cheap stuff for the states, like chips, exports some commodities.
The majority of the GDP is not manufacturing, but financials, housing, retail and services. Have you been to Sears lately? I encourage you to go and see the state of retail in Ca,
The only viable chain left is Costo.
Yesterday’s post:
#160 Exurban on 04.10.16 at 12:01 am
Very interesting comments: high security condos, gated communities……
But what would happen to all those nice SFH neighbourhoods? And do build schools and community centres behind the gates? Oh boy…..
Thank you very kindly for all that you do. Your site is one that i visit daily.
Illegitimi non carborundum.
It must just be a coincidence that my entire suburban neighborhood is being bought up by HAM, and not indicative of any trends in the lower mainland.
Seeing is not believing
HAM really just 5% ?
Globe and Mail article about New Coast Realty:
http://www.theglobeandmail.com/news/investigations/inside-a-fast-growing-bc-firm-that-has-home-sellers-crying-foul/article29578417/
Some excerpts:
A 2014 article in New Coast’s bilingual publication talks about selling to Chinese citizens who want a “safe house for their wealth.”
“The already lively real estate market in Vancouver is further taking giant leaps forward as a result of the Chinese anti-corruption policies,” the article says.
“Experts predict that with the increasing strictness of the anti-corruption policies in China it will continue to cause cash flow into the Vancouver housing market. Tapping into the patterns of these trends will help both buyers and sellers make the right and easy choice.”
…
Bill Messer, the managing broker who helped them set up the firm, says it had “multi-millionaire” backers from China.
…
In an interview, Ms. Yang said Mr. Wu told her he is helping an investor from China buy $50-million worth of Vancouver-area homes quickly – with the intent of flipping them for a profit, using his company’s agents.
“[The investor] would make $200,000 to $300,000 for the flip on every property,” Ms. Yang said. “They are buying a lot of houses. One night on Mr. Wu’s table, I saw more than 10 property information sheets there.”
Ms. Yang said Mr. Wu has his sights set on the condo market next: “That is the real gold.”
#70 Sheane Wallace on 04.10.16 at 10:45 pm
I have seen first hand hyperinflation when abroad and you have not, this is the difference.
Just curious, which country / at what time?
Personally, I think the only thing that can make Vancouver R/E land ‘softly’ is some hefty monetary inflation that could bring back the ‘real prices’ of R/E and make it more in line with family incomes.
Monetary inflation can actually deflate that bubble without a deafening pop.
But it needs to be a heck of a lot more than 2% consumer price index growth that we seem to have at the moment.
Monetary inflation would also make paying down that principle a lot easier.
Monetary deflation would make that pretty much impossible on those meagre wages and sky high mortgages.
Extremely unlikely, but I am hoping for +15% CPI per year in the not too distant future, paired with a flat House Price Index.
That would be bad for people with savings, but excellent for people with crushing debt.
Bram
#52 sockeye sam: I would rather start a lottomax pool. Odds of winning are not great but the payout would be bigger, and at only a few bucks per ticket I would be better able to eat the total loss of my share. The chance of living my life in regret would therefore be lower, even with the odds of winning being what they are.
Prefs coming back
“You buy preferreds for income, and that has never changed as dividends have been paid out consistently. The BoC cuts in 2015 hurt capital values, but while you are collecting a 5% yield, why would you sell? Hold them and smile. It will all come back. — Garth”
They have come back to match yield of the new issues, which means that the face value of these things is not coming back – they will stay around 12-13 bucks, so if you bought these things higher (which most did) your chance of getting that back means holding them for at least 10-20 years just to get back the money you lost.
For those not aware – the banks to lock in the face value decline, quickly issued billions in pref to take massive gains on the old issue. This all went to institutional demand, leaving retail hold the CPD gas bag hoping that one day they can come, they cannot, simple math.
How the hell can the TSX be overvalued if it is only up 3% after a double digit cratering in 2015 ? It has been on a downward trend actually since the high was hit in the summer of 2014 . I’m not as balanced as I should be as merket losses have only been offset by new cash contributions but I am hoping that a bottom has already been found . And now we’re overvalued already ?
Looks like Garth might be invited to co-host “Shark Tank” soon:
https://www.youtube.com/watch?v=Tq-JOFViE9M
http://www.macrobusiness.com.au/2016/04/chinese-investment-in-aussie-housing-explodes/
Rents in Vancouver are absolutely skyrocketing.
The influx of overseas temporary residents is creating huge imbalances. Locals are in on the frenzy as well by buying homes with 2 suites to rent out.
They pocketing rent in cash and saying screw CRA so not reporting income.. Cant blame them after the Panama papers.
Its a gong show out here. T2 better do something or YVR is gonna be a simmering powder keg.
#67 For those about to flop
The yanks are far worse.
Took me 3 goes when asking for directory help before they put me thru to the Australian Embassy…..
Next time I do a road trip in the states I wants me one of those signs.
Had to laugh at the sign.
In Britain ale is served warm and you send it back to the bar with a complaint if it is served cold!!!
Cheers
Something is afoot in America, a closed door meeting tomorrow right at the start of earnings season. Looks like NIRP is NOW not the first quarter of 2017. Big interest rate cuts coming soon to Americans.
Food for blog thought:
http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/a-millennials-guide-to-buying-a-house/article29580376/
28 and 30, and now $630,000 in debt. In Whitby, of all places. What do you want to bet they put their entire life savings into this house, they have both been working less than 5 years, and neither of them has any idea how much money $630,000 really is or how long it takes to pay that off, with interest and income taxes?
Oh well. We are looking at a group of very energetic millennials. When I was their age, I was humming and hawing about borrowing $5000.00 to buy a second hand car (ended up not doing it because I figured it was too much money to owe and I wanted to be “free”).
Oh and one more thing regarding this:
http://www.theglobeandmail.com/globe-investor/personal-finance/genymoney/a-millennials-guide-to-buying-a-house/article29580376/
10% down means they used CMHC. So add an additional $15,120.00 in CMHC premiums to the purchase price. Yes, that’s right, these wise folks paid the price of a new economy car, in mortgage insurance. I’m not even kidding you. Calculate the premium for yourself here: http://www.cmhc-schl.gc.ca/en/co/buho/buho_023.cfm
#11 tundra pete on 04.10.16 at 4:44 pm
“Lipstick on a pig if you will. The T2 honeymoon isn’t over yet but it’s coming.”…….
….”I bet if you tracked the fast food providers,walmart expansions, seasonal startups and slurpee sales associates you would clearly see the numbers.”…..
…..”medical conditions such as depression, addiction, mental health problems and treatment will follow the dissappearing jobs.”
All good points – over the past few months, I’ve picked up a stream of conversations by service employees (mainly in coffee shops of all stripes) about how many hours they’ve succeeded in getting. This generally benefit-deficient, subsistence level, grinding work is the raw material for all kinds of misleading msm, ministry of truth bs. These jobs don’t improve nor energize the economy, they are a net drag, given the additional use of social programs to compensate for a crappier life, as you accurately point out.
House pumpers, realtards and greedy sellers will attempt to rock the bejeezus out of that highly misleading stat, but most people with the means to buy re are astute enough to know full well that it is simply another bs clot of sales device.
Good luck getting a mortgage if you sling coffee or stock shelves for a living – especially part time.
Banks are quite aware of the potential for very long term oil and quality jobs attrition.
My Canadian Dr were ready call Atlanta Centers for Disease Control and Prevention for advice as they were stumped. No idea what was causing this fever.
Having a high fever is like an acid trip, your mind drifts from joy and pleases to fits of terror. that times 8 days is a trip around the world.
So I ask the doctors what was it, they dance the question, I ask more forcefully go on what was wrong with me.
The one Dr says, Pneumonia very disbelieving.
I have a theroy, for later, the above took alot out of me,
#12 Randy on 04.10.16 at 4:46 pm
“The future is so bright that I bought a pair of $5 sunglasses at Walmart
Good one! But, I gotta brag…..yesterday, I bought a pair of Guess by Marciano shades, #GM693, optics by Carl Zeiss vision, in perfect nick for $8.00, tax-in at my favourite hunting ground, a second-hand store. Retail: $170.00, PLUS tax. 96% off! Counter staff thought they retailed for about $40.00……..
Buy low, bank the rest….and the future is bright….for crafty spenders, savers and investors.
It’s begun in earnest and will continue:http://business.financialpost.com/news/retail-marketing/sobeys-price-cuts-on-8500-items-in-quebec-could-trigger-grocery-war
If only for research purposes, take a peek inside a second-hand store or two, or their parking lots: they are now mainstream and busier than the majority of retail.
Who’s Tom? A leftie punching-bag, or a composite effigy of tired shopworn canards and baseless screeds?
“2009 was a bad year for CMHC losses. But despite that $1.1 billion in Net Insurance Claims expense, CMHC reserves increased by over $1 billion both in 2009 and in 2010. It would take something much worse than 2009, at least 10 times worse, to wipe out CMHC’s reserves.” Source: http://worthwhile.typepad.com/worthwhile_canadian_initi/2014/01/cmhc-reserves-revisited.html#
Lol!! 2009 ‘a bad year’!! Lol!!!
“How the hell can the TSX be overvalued if it is only up 3% after a double digit cratering in 2015 ?”
Its not. The TSX is priced at levels similar to that of a decade ago, and is historically “cheap” based on P/E, P/B, dividend yield relative to T-Bonds, CAPE, and practically every other metric I can think of.
Why? Because speculative enthusiasm in Canada is vested with the housing sector and the debt that finances it. Which is sitting within earshot of all-time highs, albeit housing prices have stagnated/slightly fallen since the 2013 apex.
“Expedited Procedures Meeting” today at the Fed for the Board of Governors.
To be followed up by “unexpected” get together between Obama and Yellen.
Why you may ask?
Could be the revised Atlanta Fed forecasting GDPNow data.
Eight weeks ago GDPNow was at 2.5%
Four weeks ago the Fed was still forecasting 2.3%
As we move to the present:
The Atlanta Fed has revised its GDP growth rate to just 0.1%.
Atlanta Fed GDPNow:
https://www.frbatlanta.org/cqer/research/gdpnow.aspx?panel=1
Broken model or mirage breaker?
Not a number derived by American haters, the zero guy or conspiracy theorists…
By the end of the year you’ll be shocked … at a few things.
As hours, days and months roll by unceasingly, I totally agree that some shockers are on the horizon; in particular for the west. Just a gut feeling based on the course we are charting politically, socially and in particular morally.
There are powers who want nothing less than to eliminate the west and it’s allies but the glasses of political correctness are blinding us to it.
A stage is being set. We are invited not as the guest but as dinner. Your appetite may vary.
B.C. real-estate firm put on short leash over controversial training
KATHY TOMLINSON and MIKE HAGER
VANCOUVER — The Globe and Mail
Published Sunday, Apr. 10, 2016 9:53PM EDT
Last updated Monday, Apr. 11, 2016 7:05AM EDT
http://www.theglobeandmail.com/real-estate/bc-real-estate-firm-put-on-short-leash-over-controversial-training/article29582286/
http://www.theglobeandmail.com/news/investigations/inside-a-fast-growing-bc-firm-that-has-home-sellers-crying-foul/article29578417/
======================================
The housing appraisers warned us about the crisis but we didn’t listen
by William Black / on 11 July 2013 at 14:30 /
“From 2000 to 2007, [appraisers] ultimately delivered to Washington officials a petition; signed by 11,000 appraisers…it charged that lenders were pressuring appraisers to place artificially high prices on properties. According to the petition, lenders were ‘blacklisting honest appraisers’ and instead assigning business only to appraisers who would hit the desired price targets” (FCIC 2011: 18).
Note that the appraisers’ petition began in 2000 and was public. When the regulators and prosecutors did nothing in response to the appraisers’ warning the appraisers delivered it to government officials to ensure that no one could say they were not warned.”
https://www.creditwritedowns.com/2013/07/housing-appraisers-warnings-fraud-crisis.html
How does that Flanders Field thing in the Canadiens’ dressing room go? “From failing hands…”
Someone’s picking up the ball you dropped 20 years ago buddy. Attaboy Garth.
http://www.thestar.com/news/canada/2016/04/11/high-risk-taxpayers-offshore-tax-havens-part-of-ottawa-crackdown.html
CMHC’s reserves will NEVER be wiped out.
Currently a majority sentiment is for two hikes later in the year. — Garth
_________
No longer true after the minutes from last week.
No chance of a hike this month.
No hike a few days before the Brexit vote in June.
That leaves July, Sept, Nov & December – think they’ll hike twice in two meetings after one hike in 2015 caused a huge capitulation in the S&P 500? I don’t think so, and neither do the majority of those polled on Bloomberg as of today.
One hike this year, and that’s a big maybe. Global conditions are too weak, and the Fed is loath to let their currency get too valuable against the Euro.
Garth, you know you post those little pics about some funny sign or whatever, but the truth is, all that advertising even as crazy as it is actually hooks some people. And the more sophisticated stuff hooks even more, like into RE and such.
http://www.businessinsider.com/blackrocks-larry-fink-on-negative-rates-2016-4
“…a 35-year-old looking to generate $48,000 per year in retirement income beginning at age 65 would need to invest $178,000 today in a 5% interest rate environment. In a 2% interest rate environment, however, that individual would need to invest $563,000 (or 3.2 times as much) to achieve the same outcome in retirement.”
The cards are falling…
Amazing how often persons banned from financial services end up flogging real estate: Just how safe is the ‘safe’ world of syndicated mortgages?
““…a 35-year-old looking to generate $48,000 per year in retirement income beginning at age 65 would need to invest $178,000 today in a 5% interest rate environment. In a 2% interest rate environment, however, that individual would need to invest $563,000 (or 3.2 times as much) to achieve the same outcome in retirement.””
So many logical flaws with this statement, I don’t even know where to begin. First, “interest rates” and “returns” are two completely different things. People who invested in a 10% interest rate environment enjoyed not only their 10% coupons, but capital gains on their fixed income investments over the years if they didn’t allow the duration on their portfolio to decay away.
Additionally “interest” assumes that one will invest the entirety of their investment portfolio in one asset class — interest bearing “investments”. This is quite illogical as most don’t — most invest in a variety of asset classes that may reasonably proximate a ‘balanced portfolio’ (although as Garth et al point out frequently, many are frequently highly imbalanced).
5% is not a sustainable rate of interest in an economy which only grows at 3-4% nominally, and for which a long-term equity risk premium needs to be accorded to those who take equity risk (which has to come from a reduced return on less risky investments).
Besides, “low interest rates” have upsides elsewhere. Just because short-term fixed income doesn’t perform well doesn’t mean that there aren’t other asset classes performing well. Those who complain that ‘interest rates are too low, savers are starving’ seem to magically assume that the only place that savers can put their money is into cash in a bank. When in reality, that couldn’t be anything further from the truth.
IMHO, I wouldn’t feel too bad for the 35-year-olds of today. They have an opportunity to buy many asset classes at generational lows, and given that a 35-year-old of today was born in 1980 (a local ‘bottom’ for birth-rates), they are likely to do quite well for investing. Able to buy investments on the cheap from baby boomers selling (ie: equities today). Able to sell to a much larger cohort born later.
An oddly Asian-looking Sherry Cooper on G&M video this morning, apparently implying (though not outright saying) that
“housing won’t correct the way that stocks do… because houses are more uniform than stocks… and less liquid”
Goes on to suggest some ‘good markets to buy’ in Ottawa, Moncton, and Windsor… and other, smaller areas.
To be fair, she does disclose that she works for ‘Dominion Lending Centres’, the ‘take the equity out of your house, using a reverse mortgage, guys.
http://www.theglobeandmail.com/real-estate/real-estate-video/video-carrick-talks-money-stock-markets-correct-why-not-housing/article29528151/
Not really an accurate assessment. A 2% interest environment indicates much lower inflation or even deflation compared to a 5% environment. The $48,000 after 30 years of very low inflation will buy a lot more than $48,000 after 30 years of normal inflation.
#102 Mark on 04.11.16 at 11:43 am
———————————————
That was said tongue-in-cheek right?
What assets are at ‘generational lows’? How can a young Gen X’er ‘make money’ off those that already have all the money (those older than them) or off of those that have no money (those younger than them?).
You are one confused person.
“On Monday, Revenue Minister Diane Lebouthillier will announce specific ways the government will crack down on tax avoidance — schemes that arguably respect the letter of the law, but violate its spirit.”
http://www.thestar.com/news/canada/2016/04/11/how-the-cra-crackdown-on-tax-dodgers-stacks-up.html
You still feel like recommending aggressive tax avoidance, Garth? Picking a stock with an eligible dividend as opposed to one without is one thing… But some of the more creative stuff… maybe not so much anymore.
Re: #92 Mark on 04.11.16 at 8:48 am
Like I already stated before and to you. The TSX generally follows the American stock indexes. Presently the U.S. stock market indexes are the most overvalued in history.
““housing won’t correct the way that stocks do… because houses are more uniform than stocks… and less liquid””
Bizarre and embarrassing.
#95 Jess – It’s a sad state of affairs when it requires Globe and Mail reporters investigations to get those who should be keeping watch over this industry to do what they are supposed to do. Makes one wonder if the whole regulation thing is based solely on appearance. It’s about darn time that these people got off their hands and started doing something. Same thing applies to the financial industry as well. eg: Bernie who Madoff with billions of peoples investments over a period of many years. And many others in this country as well over the years.
March jobs number is certainly an aberration! – I completely agree Garth. The Canadian economy has not seen the full effects of the oil fallout yet:
http://www.bloomberg.com/news/articles/2016-04-04/canada-s-ever-shrinking-oil-industry-braces-for-more-job-cuts
Get ready for lots of doom and gloom later this year and years ahead..
#102 Mark on 04.11.16 at 11:43 am
““…a 35-year-old looking to generate $48,000 per year in retirement income beginning at age 65 would need to invest $178,000 today in a 5% interest rate environment. In a 2% interest rate environment, however, that individual would need to invest $563,000 (or 3.2 times as much) to achieve the same outcome in retirement.””
So many logical flaws with this statement, I don’t even know where to begin.
===
Yes Mark, we know…
Please stick it to Larry Fink… what would he know… he just runs Blackrock, which makes him the world’s largest asset manager.
Enlighten him about all the logical flaws he has…
Interesting article:
https://ca.finance.yahoo.com/news/revenue-agency-targets-2-6b-missing-taxes-over-151615082.html
GT, Would you enlighten us as former chief of CRA on how exactly they intend to implement the tax avoidance part. Tax evasion is clear. But tax avoidance? I thought RRSPs are for that.
Who is the idiot here? The reporter or CRA?
“What assets are at ‘generational lows’? How can a young Gen X’er ‘make money’ off those that already have all the money (those older than them) or off of those that have no money (those younger than them?).”
Gold miners were at generational lows a couple months ago, decent quality ones having made an easy double already with plenty to go. And the TSX hasn’t been this cheap on a P/E, P/B, dividend yield relative to T-Bond basis for most of my life.
Yes Mark, we know…
Please stick it to Larry Fink… what would he know… he just runs Blackrock, which makes him the world’s largest asset manager.
Enlighten him about all the logical flaws he has…
I already wrote you an essay on why “interest rates” are meaningless for determining investment returns. Not sure what more I can add. The example, which purports to rely upon interest rates for a long-term return, is flawed for that reason.
Even our very own Garth has shown us many times how 7-8% long-term is not only very realistic, but actually achievable with a balanced portfolio and appropriate rebalancing. He and other professionals employing balanced strategies achieve those results actually taking less risk than having it “all” in exclusively interest-bearing investments.
Like I already stated before and to you. The TSX generally follows the American stock indexes.
Nope, it tends to disconnect at times, and severely outperform (or alternatively, underperform) the US markets. For instance, in the 1970s it was outperformance. In 1980-present, the TSX has lost about half its value relative to the Dow.
TSX ~= 2000 in 1980. Dow ~= 1000 in 1980.
Or RRSPs are tax deferrals?
“You still feel like recommending aggressive tax avoidance, Garth?”
What “tax avoidance” has Garth ‘recommended’? Everything I’ve read from him here has only been an education on the very basics. Such as structuring one’s affairs to ensure that money borrowed is for eligible investment purposes to facilitate tax deduction of interest. And use of the TFSA and the RRSP in a full, appropriate, and gainful manner.
The sort of tax avoidance that the government is looking to crack down on relates to offshore accounts/trusts, abusive transfer pricing schemes, shareholder-depriving stock option schemes, and the underground economy, etc. Not the stuff that Garth has talked about which is just common sense and not aggressive in the least.
I sawThe Big Short on the weekend. Wish there was a way we could short YVR and 416/905 RE. Might have to wait a year or two also, but ROI would be worth it.
Like some in the movie, even if you make a fortune your heart still has to go out to the average Joe family-man who will lose everything when the bubble collapses.
“You still feel like recommending aggressive tax avoidance, Garth?”
————————–
Tax avoidance is apparently legal:
https://en.wikipedia.org/wiki/Tax_avoidance
Tax avoidance is the legal usage of the tax regime in a single territory to one’s own advantage to reduce the amount of tax that is payable by means that are within the law.
#2 Eddie Wong on 04.10.16 at 4:02 pm
Read article today on CBC “Trudeau promises money for hard-hit First Nations to flow this year”
FLOW? Isn’t it easy to spend money when it’s not yours? I mean how many of us see something that we like at a mall and think I’ll buy it even though I don’t have monies for it. Our projected deficits can exceed 150B in the next five years (1) Trudeau is burning money like it’s out of style. Taxpayers are sick of the “Pay For My TWO Nanny” State and we need to get rid of him and his “nice hair” during the next election; too bad the Liberals have bought votes through Syrian migrants that they purposely situated in various Conservative stronghold constituents
References 1:
http://www.thestar.com/news/canada/2016/03/01/ottawa-headed-for-150b-in-deficits-over-next-5-years-td-bank-forecast.html
_____________________________________
150 Billion now? I can’t keep up with this guy. A neandercon like myself would more often be pinned to grossly overestimating lefty government spending, not grossly underestimating it.
I said to myself months back, “100 Billion minimum”, then ” Naw, make that 125 Billion”, Now It looks like I’ve shot low twice with this guy.
So here formally for the third (maybe fourth) time, I reassess deficit spending as a result of T2 leadership at…
Get ready…
200 BILLION new debt by 2020.
If I am low on this one, I am going to extoll the growing list of virtues for leaving Canada to my kiddies.
Remember not that long ago T2 promised no more than 10 Billion deficit spending in 2016, and for it to decline year over year for the next 3 years?
And ending in a balanced budget?
L to the M to the A to the O !
I shudder to think what would have happened if T2 were running the show throughout the GFC via a majority government.
Come on libs, – let’s hear the Outrage!!!
Cramar,
Who says it’s not you who will lose his shirt having to rent from these people in YVR or 416/905? This could go on for another decade if governments have their way. By then, who knows? People have been predicting a crash since 2000 in these cities. I think slowly people will adjust. Also, every time there is a crash/correction people learn a little bit. Buyers or their parents will remember that 1994-1997 eventually passed. They will rob from Peter to pay Paul for a few years until the pain passes. All along their mortgage debt will drop. Their equity will eventually return. All along you will be slugging it out for a 4-5% return on a relatively small equity or ETF balance. I wonder how that will end?
3 Gregor Samsa on 04.10.16 at 4:14 pm
A moment of silence for all fallen bearded politicians…
Here in Calgary, they continue to break ground on new condos. They just keep coming and coming. Who the hell are buying these things, is what I’d like to know. But as this blog likes to say, “this won’t end well.”
I thought the exact same thing Garth did when I saw the tear the TSX was on. I didn’t seem to be based on anything founded in reality. Reality might come calling soon.
———————————————————-
Yep I’m seeing cranes popping up in downtown Calgary, likely condo projects. Then I had 3 houses for sale near my street – sold in a short time. Sheesh where is this 30% decline in sales?
I’ve said it before and I’ll say it again, they are letting foreign capital support the market, it was the plan all along. Things just got carried away in Vancouver and Toronto and now trying to turn of the tap, but no matter damage is done to locals looking to buy.
Same will happen in Calgary.
“Yep I’m seeing cranes popping up in downtown Calgary, likely condo projects. Then I had 3 houses for sale near my street – sold in a short time. Sheesh where is this 30% decline in sales?”
Of course. The developer that converts his inventories of labour, land, plant, factories/machines, and other capital to cash “first” wins. All that stuff is otherwise worthless if a developer doesn’t produce housing to market. Last ones to deliver go bankrupt, and don’t get to live to fight the next battle when there is inevitably another upcycle at some distant point in the future.
With the significantly reduced cost of labour in Calgary, all this new supply will be able to undercut existing supply. Thus precipitating a price spiral which will continue until such a point that capital within the supply chains has been fully depleted. Typically it takes significant insolvency for this to happen in the construction/development sector.
As my family took advantage of in the mid 1990s in the GTA, the prices available when developers go bankrupt or are on the verge of bankruptcy can be absurdly low on almost-completed new builds.
All along you will be slugging it out for a 4-5% return on a relatively small equity or ETF balance.
I think you might want to look at equity market returns in that era. They were a heck of a lot more vigorous than 4-5%, and for a good reason — speculative enthusiasm that was lost in the housing market ended up being vested in other asset classes.
Ole Doberman
you are delusional. there is zero foreign interest in calgary, step outside of canada and no one has heard of or cares about calgary. sorry to break it to you, the sub-1million market will not see 30% drops, 10-15% maybe. the big discounts will be 1.5mill+
#119 lee on 04.11.16 at 1:14 pm
Do you always comment on things to which you know nothing about? Especially my situation?
#119 lee on 04.11.16 at 1:14 pm
Buyers or their parents will remember that 1994-1997 eventually passed. They will rob from Peter to pay Paul for a few years until the pain passes. All along their mortgage debt will drop. Their equity will eventually return.
—————————
Interest rates can’t fall like in the 90s, only rise or stay flat and low-growth environment too. Basically, It’s not the 90’s anymore. And even those house prices didn’t recover until 3 years into a 15 year bull-run on house prices. You’re banking on a repeat of this scenario? You’re a braver man than me.
#107 TONY
I don’t know where you have received this information, but it is not correct.
Pull your head from your rear, wipe off your eyes, and read other credible sources.
We have room to grow, as well as to fall before any buying opportunity for me may arrive. In the meantime, I remain 90% invested in a nicely balanced portfolio.
Always can make more when times are crispy, the ‘fear’ emotion seems a bit stronger than the ‘greed’ one, though not by much.
Keep hiding under your rock, that might win someday.
“This is called stimulus, and markets like it – for the same reason they love cheap interest rates. While the US has been systematically scaling back monetary stimulus for the past three years, Canada will be layering on fiscal stimulus in the form of overspending. This is also a reason stocks have been on the advance.”
YEAH BABY !!!!
And this is EXACTLY why we’ll see a big crater in the ground for the financials :)
When ? Who cares ? Important is it’ll happen.
Unless Canada is so special.. more special than US, Ireland, France, Italy, Portugal, Greece…etc.
US-Canada copy paste: near zero interest rates, dabt galore and ..yeah… stimulus baby.
Housing bust ? HA! That will be the least of the busts that we will see.
I am drooling !!!!!!
Gartho baby.. You know what this is ?
http://www.businesswire.com/news/home/20160304005402/en/Issuance-IAU-Gold-Trust-Shares-Temporarily-Suspended
…he he he
I think I’m a loser
Its April 2016 and the same Semi Detached that I looked hard ( Oct 2014 ) and never ended up buying in Mississauga,ON for $460,000 is now listed for $639,000.
So Garth what happens …….am I totally locked out of the dream of owning a house now……
I sometimes wish I hadn’t come across this blog for home buying advice …..kept postponing my buying decision from 2009 onwards after being a regular on this blog for a while and here I am still a renter ….
The crash …..The Slowdown …..The Sluggish Sales ain’t gonna happen …..
Its just going up and overall the consesus is that the rate of increase of house prices might just slow down …..but it will still increase overall
Sorry but totally disappointed with this waiting for the last few years….
“The Canadian market has been pacing commodity prices, mostly oil. Crude has risen an astonishing 60% since scraping bottom in early February – from the mid-$20 US range to almost $40. Going up with it has been the dollar, with the loonie at 77 cents US, after credible predictions during the winter that it would sink to sub-sixty.” GT
Just a thought…
A ‘credible’ prediction becomes NOT credible when is proven to be very, very, very WRONG.
I think you meant to say the ‘consensus’ prediction (and we all know that the majority can’t win at this game, don’t we?).
#MondayMischief…
#HeapBigWampum!,Or… #WestSideLandGrab:NotTheUsualSuspects…
[CBC] – After First Nations purchase, what’s in store for Jericho Lands?
…”Three British Columbia First Nations have paid nearly half a billion dollars for a prime piece of real estate on the west side of Vancouver…
…Squamish Nation Chief Ian Campbell told CBC News that the three First Nations will bring bring more to the area “than the average developer.”…
http://www.cbc.ca/news/canada/british-columbia/jericho-lands-purchase-first-nation-1.3529169
#NewSlogans!…
[Xinhua] – Insight: Slogans need to be updated
…Zhu Lianqing, with 40 other members of the Chinese People’s Political Consultative Conference (CPPCC) National Committee, raised a proposal to clean up outdated slogans promoting birth control and to improve family planning services to boost fertility during the CPPCC’s annual meeting in March…
OldSlogan: “Raising more children is not as good as raising more pigs.”
“The new slogans should be more interesting, vivid, and well received,” said Zuo Dongling, a deputy of the National People’s Congress (NPC).”….
http://news.xinhuanet.com/english/2016-04/11/c_135268259.htm
#142 – Crappy
Rates did not fall much in the 90s. They were about 9.5 in 1992, and still about 7.5 in 2001. This is a very marginal rate reduction percentage wise. They have of course fallen about 1 point every year or two since then. We will not get a drop in rates, but I don’t believe we will see more than 1-2% increase over 5 years. This is long enough for people to adjust. Everyone has their eye on this moving target. A 3.0% increase would more than double most people’s recent mortgage payments. This will simply not be permitted to occur. Still, this is the discussion: will people learn from the 90s and not dump their properties at a bargain discount when prices do move downward a bit.
Get well Smoking Man, if the problem is something to do with the liver check out Dr. Weil on milk thistle and dandelion. Your weird style (and your expertise) adds colour to the lackluster black and white. Take care and come back soon!
I think I’m a loser
Its April 2016 and the same [NFLX stock] that I looked hard ( [Apr] 2015 ) and never ended up buying [on the NYSE] for [$70/share] is now listed for [$100/share].
So Garth what happens …….am I totally locked out of the dream of owning a [Netflix] now……
I sometimes wish I hadn’t come across this blog for [investing] advice …..kept postponing my buying decision from 2009 onwards after being a regular on this blog for a while and here I am still a [balanced portfolio owner] ….
The crash …..The Slowdown …..The Sluggish Sales ain’t gonna happen …..
Its just going up and overall the consesus is that the rate of increase of [NFLX] prices might just slow down …..but it will still increase overall
Sorry but totally disappointed with this waiting for the last few years….
There, fixed it for you.
#128 Deepak Rai: you need to look further than the numbers right now. If you owned that house, would you be selling right now? If not, that number wouldn’t help you. How are your savings and investments doing? Remember you could lose your job tomorrow and dip into those with relative ease. If you lost your house it would be traumatizing plus you would then need to find a rental anyway.
The point: home ownership may or may not fit into your life goals, but it should never BE your life goal. If it is, you need to reflect on what is important to you and find a new life goal. If you can’t find it in yourself to care about something other than owning a house, you will lead a sad life.
I’m getting drunk in Mexico and still reading stupidity like this…
http://torontolife.com/real-estate/houses/the-chase-trinity-bellwoods-semi/
I think I have a problem. But not as big as Toronto home buyers are gonna have…
was WalMark diagnosed with PTSD or was it the other psychological disorder?
WalMark suggested himself that he had PTSD but a physician in the RFD thread didn’t agree and suggested that it was another psychological disorder and recommended counselling
This meme ends today. No more making a career out of dissing other guests on this site. That’s my job. — Garth
109 Ronaldo on 04.11.16 at 12:27 pm
indeed! Remember Citibank? Refresh your memory.
…”According to journalists who have seen the documents that were leaked by an unknown source, there were 617 “banks, law firms, accountants, company incorporators and other middlemen” operating in the United States that are implicated by the document leak in terms of helping clients conceal their assets.
Senator Elizabeth Warren Asks Jack Lew, Who Owned an Offshore Account at Citigroup, to Investigate Panama Papers
By Pam Martens and Russ Martens: April 8, 2016
http://wallstreetonparade.com/
#89 maxx on 04.11.16 at 8:23 am
… order your groc ‘s online /delivered by uber
ceo is sayin’ that this poolin’ will take cars off the road;^)
http://www.alternet.org/labor/uber-nightmare-theyre-selling-big-lie-and-new-york-times-keeps-buying-it
”This meme ends today. No more making a career out of dissing other guests on this site. That’s my job. — Garth”
Thanks Garth, it was to say the least, getting to be a bit monotonous, and childish. Some people never seem to grow up.
dr jeff morgan…bubbles in a perfect storm.
http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
This is crazy. 10% of condo buyers in Toronto are foreign?
http://bloombergtv.ca/2016-04-07/news/industries/real-estate/widening-disparity-in-canadas-housing-market/