New highs! What’s the problem?

BEAR FISH modified

RYAN This is Ryan Lewenza. He used to be Chief Canadian Equity Strategist with Raymond James Canada, was a big honcho at TD Bank for over a decade, is a regular on BNN and a few months back joined Turner Investments as a Portfolio Manager, looking after hundreds of millions in client assets. Therefore Ryan thinks he matters. Poor boy. He has accepted my invitation to be a guest blogger, alternating weekends with Doug Rowat, whom we will poke in subsequent days. I trust you will show him all of the incredible respect, hero worship and absolute subservience you demonstrate here daily.  — Garth

By Guest Blogger Ryan Lewenza:

GreaterFool is now seven days a week! For the last nine years Garth has been educating and entertaining us with his six blog postings per week. The slacker took one day off, presumably to recharge the batteries and take his trusty dog Bandit for a long walk. Well we’re happy to announce that the GreaterFool blog will now be seven days a week with his two Portfolio Managers (Doug Rowat and myself) filling in the gap and writing the Saturday edition. While we are unlikely to live up to the witty and humorous prose you have become accustomed to with Garth’s blogposts, we hope we can still provide some insightful comments on the economy and markets.

Before we get into today’s commentary I thought a short bio would be helpful. I have nearly 20 years of experience in the financial industry with the first 16 years working at a major Canadian bank (the big green one). Two years ago I moved over to Raymond James Ltd. as Chief Canadian Equity Strategist. As the Strategist I was responsible for analyzing, forecasting and publishing research on the global economy and financial markets. Over this period I’ve managed a number of different equity and balanced investment portfolios. Finally I hold both the CFA and CMT designations which have allowed me to develop a unique investment approach combining both fundamental and technical analysis.

I can say that over my near 20 years of market experience I have never seen a more hated and feared bull market. Since the 2009 market bottom the S&P 500 has returned an incredible 225% and there have been no shortage of “permabears” calling for a top and inevitable crash along the way. Well, just like those bears have been wrong for years, here we are again with the S&P 500 breaking out and making new all-time highs with the bears out once again in full force predicting yet another imminent bear market decline. We disagree.

First, in our view the stock market (S&P 500) is breaking out to new highs in part because the economic data is getting better. Whether it’s US housing data, consumer spending, manufacturing activity, etc., it has all strengthened in recent months. This can be captured in the Citigroup US Economic Surprise Index which measures whether economic data is beating or missing economists’ expectations. As illustrated below the index has surged higher as economic data has come in above expectations, which has in turn helped drive the S&P 500 to new all-time highs. Stocks typically lead changes in the economy by 6 to 9 months so in our view stocks are breaking out on expectations that stronger growth should result in higher corporate profits down the road.

RYAN CHART

Now the bears keep trumpeting that equity valuations are too high and will inevitably correct, bringing stocks down with them. But are they? Currently the Price to Earnings (P/E) ratio for the S&P 500 is 20x, which granted, is at the high end of its historical range. However, this does not take into consideration the very low interest rate and inflation levels which are supportive of higher valuation levels, in our view. One way to adjust for this is a measure called the “Rule of 20”. This financial measure adds the S&P 500 P/E ratio to CPI inflation levels, and when they sum up to 20, equity markets are deemed to be “fairly” valued. Currently this measure sits at 20.5x, slightly above “fair” valuation of 20x and is well below typical peak levels of 24x to 28x (see chart below). Yes, valuations are at the high end as a result of the strong bull market, but less so when considering the low inflation levels.

RYAN CHART 2

Finally, we believe another hole in the bear case is that they seem to focus exclusively on absolute equity valuations and not how stocks compare to other investments. At the end of day money will go to where investors perceive better value and opportunities. Put another way, equities look attractive when compared to other asset classes such as bonds or Canadian housing. There are a number of ways to compare stocks to bonds but one easy way is to simply compare dividend yields on stocks versus the yield on government or corporate bonds. Historically government bond yields have been significantly higher than the dividend yield on the S&P 500. But currently with the S&P 500 dividend yield at 2.2%, it’s above the US 10-year Treasury yield at 1.4%, a phenomenon not seen in decades. Put simply, from a cash flow perspective equities are yielding above government bond yields which we believe helps to support the stock market. Of course, when this changes and bond yields head higher as the Fed hikes interest rates, this could be the catalyst for that often prognosticated bear market correction.

But until that happens, why not ride this bull market higher and rejoice the new all-time highs? We believe this bull market has more room to run before the next bear market correction occurs. Until then, enjoy the new highs and rising portfolio values, and stop being such a Debbie Downer!

RYAN CHART 3

186 comments ↓

#1 Jimmy on 07.30.16 at 3:27 pm

FIRST!!!!!

#2 Jimmy on 07.30.16 at 3:28 pm

Did I mention that I am First?

#3 Context on 07.30.16 at 3:44 pm

This is an excellent presentation and noticed you use the inflation rate as a guide. How do you rationalize the official inflation rate with the real inflation rate in your equation?

#4 For those about to flop... on 07.30.16 at 3:51 pm

Ryan,as my buddy Heath Ledger once said ” Why so serious?”

Thanks for the hard and fast facts ,but this is Greaterfool,you have to mention Sex,Drugs and Rock&Roll at least once each post.

I’m sure you will loosen up over time and find your own groove,maybe you’ve already found it.

Welcome to the blog ,but the next time I’m at the Doctors office and my Doctor tells me to relax I’m am going to tell her that I’m having a severe case of Lewenza…

M42BC

#5 Harbour on 07.30.16 at 3:54 pm

I guess everything has a high valuation now a days from real estate to the stock market and everything in between except of course personal income.

#6 Melvin on 07.30.16 at 3:58 pm

Good post. Taking the cowboy approach to investing I have done very well investing in 100% equities (with the occasional rush to cash) for the past decade as I have always put my money to work where I felt it would return the most. I don’t see the value in bonds or real estate at these valuations, and I am sure I am not alone. The longer stocks continue to offer higher yields the higher I think they will go. Also a giant run up usually preceeds any major correction or crash, and we are yet to see that.

#7 Steuy on 07.30.16 at 4:03 pm

Thanks for the 1st. Post!
So, should invest in marijuana stocks for a higher high?

#8 Josef on 07.30.16 at 4:04 pm

Josef welcomes you to the blog. Oh YEAH BABY!!! YEAH!!!

#9 Aggregator on 07.30.16 at 4:19 pm

Nice. Fresh meat. I’m going to rip him apart Garth.

#10 Bottoms_Up on 07.30.16 at 4:20 pm

And the financial side of Garth’s housing and financial blog just got a double-dose shot in the arm.

Interesting analysis and thank you for sharing some of the important metrics that you consider.

#11 Freedom First on 07.30.16 at 4:21 pm

Welcome, Ryan!

Debbie Downer. Perfectly said!

#12 mitzerboy aka queencitykid on 07.30.16 at 4:23 pm

welcome ryan
thank you for the free information

#13 jim on 07.30.16 at 4:23 pm

U guys got your Short Canadian Real-Estate Fund setup yet?

#14 TurnerNation on 07.30.16 at 4:25 pm

Has he reached shaving age?

M40ON

#15 TurnerNation on 07.30.16 at 4:42 pm

Possible alert – from the weekend paper edition of IBD:

Blackstone group (smart guys in the room) now is selling houses (not buying) in USA: how kind of them to offer this service to renters…so kindly:

http://www.investors.com/news/real-estate/invitation-homes-tenants-bidden-to-buy-their-rental-houses/

“Melissa Suniga and her mother had been renting a three-bedroom Phoenix house for less than a year when their landlord, Blackstone Group’s (BX) Invitation Homes, gave them the chance to buy it.

Suniga, a 40-year-old child-care worker, used her security deposit and $2,000 she’d saved from her income-tax refund, along with a county grant and a credit from Invitation Homes that together provided her with $10,600 more for her down payment and closing costs on the $150,000 house.”

#16 Setting the Record Straight on 07.30.16 at 4:44 pm

A serious question

You quote a P/E ratio.
Is that trailing for using forward estimates?

Is it GAAP or non GAAP?

How are we supposed to tell?

#17 mouldyinyvr on 07.30.16 at 4:47 pm

Sure thing honey…will you be holding my hand on the way down?
So cute…I will definitely read on Sat…even if I don’t believe a word of it! Debbie

#18 Catalyst on 07.30.16 at 4:48 pm

Appreciate the insight and welcome to the blog aka 2nd circle of Dantes’ Inferno.

#19 Mark on 07.30.16 at 4:50 pm

The ‘problem’ I have with the US markets, and even the alleged “20X P/E ratio” of the S&P500 is the pervasiveness and ubiquity of “financial engineering” used in the US economy. And the significant exposure of S&P500 listed firms to consumer spending on credit.

The US economy, for the past 35 years, has enjoyed a dramatic tailwind due to falling long-term interest rates. Practically every interest rate sensitive asset has gone up. Short-term borrowers have been rewarded handsomely and massively through a progressive series of lower finance costs. Long term borrowers, particularly consumers, were able to exercise the options in their mortgages for early re-payment, and were able to refinance progressively into a series of less expensive obligations. All the while, experiencing asset inflation.

What happens when this comes to an end, or even reverses? The result, I would submit, is a dramatically more austere US consumer.

Contrast this with Canada, where the business culture of financing long-term assets with short-term debt never existed to such an extent. As most small business owners can attest, the Canadian banks are stingier than nuns handing out the holy wine when it comes to granting credit. The only sector of the Canadian economy that seems to be overly engrossed with credit appears to be the residential RE mortgage sector, and its fairly easy to see that such is primed for collapse, if not already collapsing.

How do you rationalize the official inflation rate with the real inflation rate in your equation?

There’s a difference? The official inflation numbers look pretty real to me. No pun intended.

#20 Quebec is Great on 07.30.16 at 4:50 pm

Hey, cool post and good insight. Today I Learned the rule of 20 :)

#21 Bismack on 07.30.16 at 4:52 pm

If I can’t sleep I’ll know what to read…sheesh

#22 Aggregator on 07.30.16 at 5:00 pm

So Ryan. Tell us why you feel a passive 60/40 rebalancing strategy is a safe bet when almost every money manager is doing it? Chart

#23 Lillooet, BC on 07.30.16 at 5:05 pm

welcome on board Ryan!

#24 TRT on 07.30.16 at 5:10 pm

Question for you:

Do you think foreign money plays a significant role in the Vancouver detached home housing market? Yes or No

#25 Randy on 07.30.16 at 5:19 pm

“I hold both the CFA and CMT designations which have allowed me to develop a unique investment approach combining both fundamental and technical analysis.”

…Ryan, seems like a waste having all that knowledge when the markets are rigged and on life support.

#26 Buddy O Pal on 07.30.16 at 5:27 pm

Aggregate
Because stock picking doesn’t work? Hotshot.

#27 AK on 07.30.16 at 5:31 pm

“Since the 2009 market bottom the S&P 500 has returned an incredible 225% and there have been no shortage of “permabears” calling for a top and inevitable crash along the way. ”
====================================
This is nothing. Numerous clowns have been calling for a $10,000.00 Gold since 1980 and has yet to happen and will never happen.

#28 MF on 07.30.16 at 5:36 pm

Thanks for doing this Ryan and giving us a chance to hear your insight.

#167 DON on 07.30.16 at 3:48 pm

Well put.

MF

#29 Lulu on 07.30.16 at 5:42 pm

Oh my!! i like what I see!! and you fed them well.. Ryan, Now, we’ll see what Doug bring to the table next Sat.

Have a good long weekend!

Thanks Garth for bringing some Fresh tender meat to us, although I’m not a meat eater ;-)

#30 Directm on 07.30.16 at 5:43 pm

I just looked at the benchmark comparison against my portfolio and according to BMO’s stats the S&P’s year to date performance is -3.09%…not very impressive. Is BMO’s stats off the mark?

S&P YTD +6.34%. — Garth

#31 Nemesis on 07.30.16 at 5:56 pm

“Until then, enjoy the new highs and rising portfolio values, and stop being such a Debbie Downer!” – Ryan’sBuyin’…

#”HotDamn!”,Or… #NoCountryForLeprechauns?

https://youtu.be/ji6JBVEn15Y

#32 not 1st on 07.30.16 at 5:57 pm

Umm, Ryan, nice TA and all that, however, the US GDP is stuck in total neutral at 1%.

Now that doesnt meant the S&P cant go higher especially if the US and others keep flattening the bond curves. But lets get the fundamentals straight. US is hovering to recession.

#33 Entrepreneur on 07.30.16 at 6:01 pm

Welcome Ryan and relax; we are not that bad, we just like the communication and freedom of speech (to a limit).

Many of us are old and investors but do you acknowledge that the youth are having a hard time finding jobs, buying houses, starting families (the ones who do, have high debt)? Canadians that were raised here, grew up here now either working in a big company or government or on social assistance of somekind. What is your stance on the Trump move to rip international trade agreements as he mentioned are not helping the people?

You have the experience in the financial, world and that is how you earned your income, but what do you think of Brexit separating from the EU?

Shake, rattle and roll.

#34 Donna Swanson on 07.30.16 at 6:05 pm

A number of clowns were predicting a 30,000 Dow Jones in 2000 and never happened.

This is the most manipulated, central bank controlled and pumped by them and most artificial gain in world history.

Good luck to 2016 and beyond.

#35 Mark on 07.30.16 at 6:06 pm

“This is nothing. Numerous clowns have been calling for a $10,000.00 Gold since 1980 and has yet to happen and will never happen.”

I’m not sure what exactly this sort of comment brings to the table. I’m sure only the fringe were calling for gold to be $800 back in the early 1970s. Yet a decade later…

One thing that’s “interesting” about gold right now is that almost nobody owns it. And even with the gold stocks, the brokers aren’t willing to lend much against the stocks. I have a few gold/silver stocks in my account (a modest allocation, not the crazy amounts that the crazies advocate!), and when I run the margin report, most of them are listed as requiring 70% margin (ie: a 70% down-payment).

Can you imagine what Canadian RE would be priced at if the required down-payment was 70%? Now think for a moment, if the required down-payment on gold stocks went from 70% down to even a more paltry 50% (or down to 30% as is customary for most mid to large Canadian stocks) — how much upside there would be?

#36 Paully on 07.30.16 at 6:17 pm

I have always understood that “20 years experience” = 1 year experience, 20 times.

#37 CJBob on 07.30.16 at 6:20 pm

#35 Mark on 07.30.16 at 6:06 pm
I’m not sure what exactly this sort of comment brings to the table.
_____________
That’s ironic, that’s the exact thought may of us have every time you post. Tell us again how real estate has been falling for three years and how pigs can fly.

#38 common sense on 07.30.16 at 6:32 pm

Who is this “Garth” guy moderating comments at #30?

Let Ryan put on his big boy pants and handle the comments section.

Enjoy this lovely evening, with a nice walk with the dawg and maybe a drive for a Ice cream cone.

#39 Shawn on 07.30.16 at 6:34 pm

The S&P 500 P/E ratio is actually 24…

#16 Setting the Record Straight on 07.30.16 at 4:44 pm asked…

A serious question

You quote a P/E ratio.
Is that trailing for using forward estimates?

Is it GAAP or non GAAP?

How are we supposed to tell?

****************************************
The trailing GAAP P/E ratio is over 24. Forward non-GAAP earnings are an irrelevant fantasy as the estimates are always inflated.

http://ca.spindices.com/documents/additional-material/sp-500-eps-est.xlsx

Still, with record low interest rates the S&P 500 is not at bubble levels at all.

#40 Tony on 07.30.16 at 6:36 pm

Starting this October commodity prices will collapse and by February 2017 all commodities except the precious metals will all be at new lows. Like I said before I’m shorting Teck Corporation starting this October 03, 2016 and buying the shares back at 5 dollars Canadian a share in January 2017 or early February 2017 at the latest. Anyone long stocks will work ’till the day they drop for being so utterly stupid. Short term, medium term and long term stock market indexes will move downward. Conversely gold, silver and platinum which generally move opposite the market indexes will move upwards short term, medium term and long term. The U.S. dollar will crumble as the rig artists kill the U.S. dollar in a last ditch effort to keep the DOW above the 10,000 level in 2017.

#41 Shawn on 07.30.16 at 6:40 pm

Experience Matters?

#36 Paully on 07.30.16 at 6:17 pm said:

I have always understood that “20 years experience” = 1 year experience, 20 times.

***************************************
I once suggested to a man of 40 years experience that maybe he really had five years experience eight times.

But then I grew up and wised up and stopped making rude asinine comments like that.

Most people really do continue to learn after one year and five years and ten years. But it depends on the complexity of the job.

It is better to be wise then a wise guy.

#42 Tony on 07.30.16 at 6:40 pm

Re: #35 Mark on 07.30.16 at 6:06 pm

Buy physical gold and physical silver not gold or silver stocks. If you have to buy gold or silver stocks try to pick the the 100 to 500 fold winner from the venture exchange. The worldwide stock markets are the most overvalued in history. As seen during the ’87 crash gold stocks fell 30 percent that day even with a huge run-up in gold.

#43 Ponzius Pilatus on 07.30.16 at 6:45 pm

A short while ago Garth threatened to close the blog down.
Now he’s open on Saturday.
Likely to lose all his Jewish posters.

#44 MF on 07.30.16 at 6:45 pm

Gotta agree with a few posters on here. This market is a manipulated joke. One morning i saw an article on CNBC titled: “Jobs report a huge miss. Market surges”.

That says it all. Without trillions of dollars of “stimulus”, it would all fall apart in a puff if smoke. How can the economic indicators be so rosy yet we are still stuck at “emergency” interest rates? We have been at emergency levels for 8 years now actually. What about the unprecedented trillions of US debt? Was there ever an 800 billion dollar bail out before 2008? And what about the QE..? of course there will be repercussions from artificially buying billions of bonds and doing it for years.

The Trump factor gives us another sign. If things were so rosy why is there this unprecedented anti establishment leader running for president with tons of support?

It all doesn’t add up, and it’s clear that this economic manipulation is in unprecedented territory. This blog talks about minimizing risk. Given all the manipulation and market highs, there seems to be lots of it right now.

MF

#45 westcdn on 07.30.16 at 6:49 pm

An other of my favorite movies – the soundtrack grabs me. So does the Lord of the Rings.

https://youtu.be/Kq7LHBNdAqQ

#46 conan on 07.30.16 at 6:51 pm

Maybe a couple of bong hits before you write the article?

Welcome Ryan

#47 David on 07.30.16 at 7:05 pm

All good. Why would anyone put their money in anything other than blue chip dividend-paying stocks? It’s real easy to get four percent from large companies which are rock solid and will never cut their dividends. As long as one resists the temptation to buy shaky shares paying more than they can afford you can’t go wrong.

#48 wussmode on 07.30.16 at 7:06 pm

Boooooorrring! Garth, if this is how the blog roles on Saturdays, then I am out (for Saturdays that is).

Good job with your numbers and analysis, but what about all the artificially low rates (and negative rates), slow recovery despite the accommodative Fed, and the fact that Trump could be the next president? I believe this puts all your so called fancy numbers in the toilet.

Garth, keep this chap on a tight leash at Turner Investments.

#49 Context on 07.30.16 at 7:07 pm

Ryan its time to come clean. Do you rent or own your residence?

#50 Diversified in Oakville on 07.30.16 at 7:11 pm

Welcome Ryan,
And may I suggest that you NEVER read the comments section, EVER!
Enjoy the Long Weekend everyone!

#51 dontcallmeshirley on 07.30.16 at 7:13 pm

US indexes have a tighter correlation to margin debt than aggregate p/e + inflation.

#52 RayofLight on 07.30.16 at 7:30 pm

VIX is near all time low at 11.8. It is now time to accumulate cash, and wait for the next earth shattering crisis. Italian Bank debt bringing down Europe anyone?

#53 Rural Rick on 07.30.16 at 7:32 pm

Just curious Ryan do you get to pick the picture or does the bearded one select it?

#54 crowdedelevatorfartz on 07.30.16 at 7:42 pm

Welcome Ryan , excellent advice but………

I’m shocked! Shocked I say!
Not ONE blog dog has pointed out how sexist and misogynistic the term “Debbie Downer” is!
With all the Freudian “connotations” that it alludes to…….
I dread to think what’s next on this pathetic , non politically correct, sexist blog……
Its only a matter of time before there’s people Smoking!
Usually MEN!
God help us all……

#55 Zen Headspace on 07.30.16 at 7:44 pm

In the current 2016 market environment, I am taking a zen-like approach to investing.

While some managers indeed outperform the market, even the most respected (and high-priced) stock pickers made quite a mess of things last year.

in a raging bull market, sophisticated hedge fund strategies are costly and unnecessary. When the market is moving in the right direction constantly, investors’ best bet is to simply be at peace and be one with it. Complex derivatives, swaps and the like simply get in the way.

There is a Zen concept, however, that applies here: The idea of impermanence, that everything is in a state of flux. All investors should remember this, too, as they contemplate getting Zen with their portfolio in 2016.

Before you completely lose yourself to the idea of passive wu-wei investing, remember that things are bound to change eventually.

http://www.jadedragon.com/archives/june98/tao.html

Make no mistake, active management will likely have its day again. But as we progress through a fantastic year for the stock market, I have a feeling that 2016 will be another year where Zen-like strategies continue to pay off.

Now, Ryan, please grow a cool beard and get some serious manly abs. Great post!

#56 crowdedelevatorfartz on 07.30.16 at 7:45 pm

@#48 Wussmode
“if this is how the blog roles on Saturdays, then I am out (for Saturdays that is)…..”
*******************************************

Dont let us stop you….take the rest of the week…..no, on second thought, take the month and …..after that……..take the year.

#57 Andrew Woburn on 07.30.16 at 7:55 pm

This OECD presentation shows the projected percent of STEM graduates for selected countries by 2030.

China, 37%; India, 27%; US, 4%

Canada, 0.8%

Too bad we can’t export condo’s.

https://gallery.mailchimp.com/451473e81730c5a3ae680c489/images/9a84e291-07ac-4390-b6cb-143e43a8a23e.jpg

#58 Andrew Woburn on 07.30.16 at 7:59 pm

How a new source of water is helping reduce conflict in the Middle East –

“The Middle East is drying up,” says Osnat Gillor, a professor at the Zuckerberg Institute who studies the use of recycled wastewater on crops. “The only country that isn’t suffering acute water stress is Israel.”

That water stress has been a major factor in the turmoil tearing apart the Middle East, but Bar-Zeev believes that Israel’s solutions can help its parched neighbors, too — and in the process, bring together old enemies in common cause.

Bar-Zeev acknowledges that water will likely be a source of conflict in the Middle East in the future. “But I believe water can be a bridge, through joint ventures,” he says. “And one of those ventures is desalination.”

http://www.businessinsider.com/how-a-new-source-of-water-is-helping-reduce-conflict-in-the-middle-east-2016-7

#59 David W on 07.30.16 at 7:59 pm

Re: Post #4

Too funny, gave me a nice chuckle :)

#60 salonist on 07.30.16 at 7:59 pm

climate change

corn sweat

http://www.usatoday.com/story/weather/2016/07/22/corn-sweat-iowa-midwest-heat-wave-evapotranspiration/87442376/

#61 AK on 07.30.16 at 8:03 pm

#42 Tony on 07.30.16 at 6:40 pm
“If you have to buy gold or silver stocks try to pick the the 100 to 500 fold winner from the venture exchange.”
====================================

LMFAO…

#62 Life among the Stars on 07.30.16 at 8:05 pm

#40 Tony on 07.30.16 at 6:36 pm

Starting this October commodity prices will collapse and by February 2017 all commodities except the precious metals will all be at new lows. Like I said before I’m shorting Teck Corporation starting this October 03, 2016 and buying the shares back at 5 dollars Canadian a share in January 2017 or early February 2017 at the latest. Anyone long stocks will work ’till the day they drop for being so utterly stupid. Short term, medium term and long term stock market indexes will move downward. Conversely gold, silver and platinum which generally move opposite the market indexes will move upwards short term, medium term and long term. The U.S. dollar will crumble as the rig artists kill the U.S. dollar in a last ditch effort to keep the DOW above the 10,000 level in 2017.

What a ridiculous statement.
Obviously Oct. 2, 2016 is the day to load up on gold bars.

#63 NoName on 07.30.16 at 8:18 pm

#44 MF on 07.30.16 at 6:45 pm

Hello MF

i opid and paste your text in to cyber Sigmund Froyd and interesting results came out

Whats going on my cyber friend, why so angry?

https://tone-analyzer-demo.mybluemix.net/

#64 Victor V on 07.30.16 at 8:18 pm

Enjoyed your first post, Ryan and looking forward to hearing more of your insights in the coming months. I’d be particularly interested in hearing your thoughts on pref ETFs given the current interest climate/outlook.

Thanks.
VV

#65 wallflower on 07.30.16 at 8:19 pm

I’m with commenter #4.
Never forget, the unwashed We come here for the humour and the dogs.
The bear is okay.

#66 Sue P on 07.30.16 at 8:21 pm

What?

#67 Lily Joe~ on 07.30.16 at 8:21 pm

Thank you for the much needed post! Looking forward to were you gentleman take this blog. I read it every night! Please keep up the humour & dog related content! Good luck~

#68 not 1st on 07.30.16 at 8:25 pm

If Ryan is a former TD insider, I would be interested to know what banks are thinking when giving out all these bogus loans especially in Vancouver where the income and and source of funds is suspect.

Is it all just a dump off on CMHC if it goes wrong?

http://www.theglobeandmail.com/real-estate/vancouver/meet-the-wealthy-immigrants-at-the-centre-of-vancouvers-housingdebate/article31212036/

#69 [email protected] on 07.30.16 at 8:26 pm

Pretty Charts.

#70 Smoking Man on 07.30.16 at 8:31 pm

Ryan Lewenza

Writers write.
Drunks Drink.
Gamblers gamble.
I got it all.

Portfolio Managers flip coins based on historical paterns and a guess on the future. They hope they can get more head than tails.

If you want to be a rock star with your clients.

Pay attention to my posts. Lots of garbage, I’m an apprentice fiction novlist. I don’t make calls that often. But when I do they’re bang on. Usually well inadavance giving you lots of time to place your bet before post time.

Just ask Gartho….

Welcome to my comment section….

#71 El Presidente Trump on 07.30.16 at 8:37 pm

#1 Jimmy on 07.30.16 at 3:27 pm

FIRST!!!!!

Get a grip Jimmy…. Only I am first.. everyone else is a TOTAL LOSER.

#72 Self Directed on 07.30.16 at 8:37 pm

The pic doesn’t match the story. Are you guys seriously picking up new clients and taking a Bullish approach? I guess it’s not your money.

C’mon, give us some conservative investment ideas. Talk about how we should balance our asset classes, what to buy today, and what to flip it into, when the Bear comes.

#73 DON on 07.30.16 at 8:38 pm

Welcome aboard Ryan.

#74 Smoking Man on 07.30.16 at 8:39 pm

#44 MF on 07.30.16 at 6:45 pm
Gotta agree with a few posters on here. This market is a manipulated joke. One morning i saw an article on CNBC titled: “Jobs report a huge miss. Market surges”.

That says it all. Without trillions of dollars of “stimulus”, it would all fall apart in a puff if smoke. How can the economic indicators be so rosy yet we are still stuck at “emergency” interest rates? We have been at emergency levels for 8 years now actually. What about the unprecedented trillions of US debt? Was there ever an 800 billion dollar bail out before 2008? And what about the QE..? of course there will be repercussions from artificially buying billions of bonds and doing it for years.

The Trump factor gives us another sign. If things were so rosy why is there this unprecedented anti establishment leader running for president with tons of support?

It all doesn’t add up, and it’s clear that this economic manipulation is in unprecedented territory. This blog talks about minimizing risk. Given all the manipulation and market highs, there seems to be lots of it right now.

MF
……

Obviously. Everything you think. Everyone you hate or love is a manipulation by the machine.

Billions are spent every year mining thoughts and mind fking the herd.

Your pension fund depends on it…

Your in good hands with.

Dr Smoking Man
The only living entity on earth with a
PhD in Herdonomics and a plasma flier.

#75 John in Mtl on 07.30.16 at 8:48 pm

#37 CJBob on 07.30.16 at 6:20 pm

#35 Mark on 07.30.16 at 6:06 pm
” I’m not sure what…”

“Tell us again how real estate has been falling for three years and how pigs can fly.”

Well pigs did fly at the Battersea power station. Twice!

#76 John in Mtl on 07.30.16 at 8:50 pm

Welcome to the blog, Mr Lewenza. I hope you’re not too “square” as they used to say, things can get pretty out of hand here sometimes -;)

#77 MF on 07.30.16 at 8:53 pm

#63 NoName on 07.30.16 at 8:18 pm

Cool link. Analytical score of .8

Not bad “analysis” i would say.

#74 Smoking Man on 07.30.16 at 8:39 pm

Listening to the media gush over the DNC. It was so obvious who they are supporting. Someone has to be slow to not see the manipulation.

Trump says something and it’s bigotry, sexism, xenophobia. Clinton and the Dems get caught in a major scandal and it’s only “politics”. It’s so obvious.

MF

#78 pdog on 07.30.16 at 8:55 pm

All this relevant market talk….can some start talking about doom and gloom and gold.

#79 Smoking Man on 07.30.16 at 8:58 pm

So dad’s funeral is set for Tuesday. If you dogs could only be a fly on the wall when I was messing with my funeral directors mind.

I’d ask questions like what’s the decomposing rate embalming vs nothing. 700 bucks is a shit load of loot. If I have a closed casket who’s going to know.

He dosent fit into his only suit. Do I need to buy a new one. Or can we just put him in with a sheet or something.

Scum bags they are… Upselling to your most weakend state of mind…

Come on honey give me a deal. I’m homeless lost my job.

Well sir there is that blue steel coffin.. Or the cardboard box…

What would your dad want she asks….

Knowing him he would wish you had this job in Nazi Germany in the late 1930s you would be a much nicer person now.

#80 Smoking Man on 07.30.16 at 9:14 pm

At Senica tonight while dads body is in a freezer.

I had shades on all night at my God daughters wedding last night for obvious reasons..
I got em on now at Stir nightclub.

It may seem callus to normal people. But Im not normal. What he gave me was freedom to do what I want without judgement or opinion, or discipline.

He was perfect dad..

I’m really going to miss him spend the rest of my days trying to teach his message..

Love is all you need…. And he was born before the beetles..

#81 Post on 07.30.16 at 9:21 pm

Sounds good if you’re already invested – stay the course.

But would you put a large amount of new money to work today? Let say you bailed out of your one asset strategy in Toronto or Vancouver and you’re now looking for other investment classes. I think is is the big dilemma for folks that are seeing the high water mark for both real estate and equities. They don’t see stocks and bonds as an alternative. They’re staying put.

#82 Interstellar Star Stuff on 07.30.16 at 9:27 pm

#80 Smoking Man on 07.30.16 at 9:14 pm

At Senica tonight while dads body is in a freezer.

I had shades on all night at my God daughters wedding last night for obvious reasons..
I got em on now at Stir nightclub.

It may seem callus to normal people. But Im not normal. What he gave me was freedom to do what I want without judgement or opinion, or discipline.

He was perfect dad..

I’m really going to miss him spend the rest of my days trying to teach his message..

Love is all you need…. And he was born before the beetles..

But you hate everybody!

Now, are you going to finish this g’damn fkg book fer f’ing sakes.. … it must be tens years now you’ve been yammering on about it.

#83 fancy_pants on 07.30.16 at 9:42 pm

Garth said you cant time the top. But sure, lets all ride the endless wave. Probably good advice though since we both know low rates are here to stay while inflation numbers are squeezed under the floorboards. so QE will keep gassing stock markets while the lemmings on the hill kick the hot RE seeking HAM in the face.

#84 Smoking Man on 07.30.16 at 9:43 pm

82 Interstellar Star Stuff on 07.30.16 at 9:27 pm
#80 Smoking Man on 07.30.16 at 9:14 pm

At Senica tonight while dads body is in a freezer.

I had shades on all night at my God daughters wedding last night for obvious reasons..
I got em on now at Stir nightclub.

It may seem callus to normal people. But Im not normal. What he gave me was freedom to do what I want without judgement or opinion, or discipline.

He was perfect dad..

I’m really going to miss him spend the rest of my days trying to teach his message..

Love is all you need…. And he was born before the beetles..

But you hate everybody!

Now, are you going to finish this g’damn fkg book fer f’ing sakes.. … it must be tens years now you’ve been yammering on about it.
……

Having grown up with no disapline, your adoring patients eyes just loving you all the time and not saying shit..

Book writing requires disapline.. Something I have no understanding of. I will be there when the time is right…

Lots of shit in the greatet Fool archives to keep you amused till my next inspiration.

#85 acdel on 07.30.16 at 9:48 pm

Hello Ryan, good analysis on what you know.

My question (which Garth seems to always trumpet on how great the U.S. economy is doing; which is a complete sham) what is your take on an economy that is closely 20 trillion not billion in debt; take in the U.S. unfunded liabilities; it’s 102 trillion. Check it out: http://www.usdebtclock.org/

I love Garth’s blog but he depends too much on made up graphs that truly do not reflect the real scope of the U.S. or world economy with the exception of Canadian real-estate.

Where do you see (with 20 yrs experience) the world economy going? Thank you.

#86 salonist on 07.30.16 at 9:48 pm

Cross post from r/DNCleaks….
DNC CHANGES THE DATE ON CONTRIBUTIONS! [emailid 21847]
SUBVERSION OF CAMPAIGN FINANCE LAWS

https://www.reddit.com/r/The_Donald/comments/4vbo4x/cross_post_from_rdncleaks_this_is_really_big_dnc/

#87 acdel on 07.30.16 at 9:58 pm

#85 acdel

Well, you posted it but did not answer my questions.

People on this blog; it’s up to you on how decipher this; I give up!

#88 fancy_pants on 07.30.16 at 9:58 pm

Oh. And welcome the land of misfit toys, leftist loonies, the right and tight, and the guy who smokes too much but has a valentine hottie. And of course the bearded oracle who has you working saturdays. Investments slow? Any chance he has you selling ice cream on sundays and walking the furry family member on weekdays?

#89 Mitch on 07.30.16 at 10:02 pm

Garth & company:

What do you make of Calgary’s Sales-to-New-Listings ratio being 0.64 for July (according to the CREB)?

Why have things failed, so far, to turn more closely to a seller’s market? That ratio is very close to categorizing Calgary as a buyer’s market, nearly 2 years after the oil price crash. It’s a bit mind boggling.

#90 NoName on 07.30.16 at 10:03 pm

#77 MF on 07.30.16 at 8:53 pm

#63 NoName on 07.30.16 at 8:18 pm

Cool link. Analytical score of .8

——————

Language Style
Analytical score of .8

that define only how you write, does not confirms how wrong or how right is your analysis.
All this time under SM wing, and …
Maybe you are like my son, slow, you need just bit more time.

#91 Craig on 07.30.16 at 10:03 pm

Re #52 Ray0fLight

At this point I’m over weighted in cash and waiting for another buying opportunity. So many people are focused on ridiculous house prices and the inevitable effect on the economy when prices start to cave in and rightfully so, but I think that #52 RayofLight has hit the head on the nail. Has anyone taken a serious look at the balance sheets of any of the major European Banks because many of them are atrocious. Hard to believe that an institution like Deutsche Bank traded at $145 USD before the financial crisis and is now at $13.50 . Several banks in Italy , Spain, Ireland and Austria just to name a few faired poorly on the recent stress tests. Sorry to be a Debbie Downer but look out if the dominoes start to fall.

#92 Ben Hoylake on 07.30.16 at 10:07 pm

Ok Ryan,

If you did get a signal with your charts that the markets were getting toppy or frothy would you actually make a case for that on here? This blog is about ETFs, 60/40, Rule of 90 for real estate, rebalancing once a year, Fee only advisors etc..how much can you really sway from these Garthisms?

Garth said it is better to sell too early than too late. If that is the case how much notice would we get on here? Probably whence it’s the latter not the former? This adage sounds great but when analysts say the bull has room to run is that a pump n dump?

Anyways to balance this Debbie D start to my post I’d like to say thank you for Joining Big G and giving us one more day to banter.

Signed Ben Hoylake

#93 DON on 07.30.16 at 10:08 pm

#38 common sense on 07.30.16 at 6:32 pm

Who is this “Garth” guy moderating comments at #30?

Let Ryan put on his big boy pants and handle the comments section.

Enjoy this lovely evening, with a nice walk with the dawg and maybe a drive for a Ice cream cone.
*******************

Must be for reasons of liability or just Ryan’s personal sanity. lol

#94 Bytor the Snow Dog on 07.30.16 at 10:12 pm

Wow. Dry.

How dry? Well let me tell you.

#95 rosie on 07.30.16 at 10:17 pm

#54 crowded…

I concur. Let’s correct this attack on all the Debbies. I give Donny Downer.

https://i.kinja-img.com/gawker-media/image/upload/s–8U4Qhe97–/c_fit,fl_progressive,q_80,w_636/1320466457291157138.jpg

#96 Linda on 07.30.16 at 10:48 pm

An interesting post, but perhaps misses some key points. I submit the aging population & the search for perceived ‘safe’ havens for money have been responsible for at least some of the market growth. When all else fails or is in actual negative return territory, people put their money where they think they might get the best value. Right now the market is the only viable game in town. You have scores of about to retire Boomers trying to find some way to ensure they do not end up 1) working until they are too disabled to work or death, as they can’t afford to retire or 2) choosing between eating or paying some bill, as their retirement savings (if any) are inadequate & any pension they might receive for less than had been anticipated. The much touted plan to sell the family home will of itself trigger the housing apocalypse predicted on this very blog – obviously if thousands or tens of thousands all try to sell up are roughly the same time housing values are not going to be what the sellers were counting on.

The US economy is a very important factor, but does not in any way guarantee Canadians will do well thereby. Plus if ‘the Donald’ wins in November, all bets are off other than the near certainty he will do something catastrophic out of pique. Yeah, yeah, Hillary is the daughter of Satan & can’t be trusted, but at least we have a fair idea of how things would shake out if she got in. Plus apparently markets love Democrats but are less than fond of Republicans.

#97 JustaReader on 07.30.16 at 11:00 pm

Well done Ryan. Well written and insightful. Looking forward to your upcoming entries.

#98 Ace Goodheart on 07.30.16 at 11:15 pm

Interesting read, until I came to this:

“At the end of day money will go to where investors perceive better value and opportunities. Put another way, equities look attractive when compared to other asset classes such as bonds or Canadian housing.”

I have been in the venture capitalist game for 20 years and I have never, ever, ever seen this. Money usually follows the same rule as followed by a pack of lemmings. Over the cliff. I refuse to believe that human beings are capable of intelligent allocation of capital.

This opinion of yours actually scares me a little. If you honestly think that people are investing like this, that means you are expecting markets to behave rationally and investors to behave intelligently.

In my experience, that never happens.

Investor behaviour is based predominantly on fear, anxiety, and the feeling that a person does not want to “miss the boat” or “be left out”.

What an intelligent, contrarian investor is trying to do, is figure out which boat these fools and lemmings will want to all jump into, before the fools and lemmings know that.

The intelligent, contrarian investor then rides the wave, until things get too scary up there, and jumps out.

#99 Ponzius Pilatus on 07.30.16 at 11:27 pm

Good job, blog dogs on giving the rookie a good hazing.
Show a graph to 10 different FAs and you’ll get 10 different interpretations.
Shoeshine boys, barbers and cab drivers have a better track record.

#100 Ronaldo on 07.30.16 at 11:27 pm

#42 Tony on 07.30.16 at 6:40 pm

”Re: #35 Mark on 07.30.16 at 6:06 pm

Buy physical gold and physical silver not gold or silver stocks. If you have to buy gold or silver stocks try to pick the the 100 to 500 fold winner from the venture exchange. The worldwide stock markets are the most overvalued in history. As seen during the ’87 crash gold stocks fell 30 percent that day even with a huge run-up in gold.”
———————————————————
Glad I’m not taking advice from you Tony. I bought the RBC Global Precious Metals fund back in January. Up 112% YTD. Just think about what a boost that gives a portfolio at even 5% of the total. I went with 7%.
The other 93% is up 6.53% YTD on a 50 fixed/50 equity and heavy on Maple and light on the Yanks. Had you listened to Mark back in December and bought the junior producing miners you’d be laughing all the way to the bank. There was little to no risk left in that sector that had been decimated by about 90%. Many are up 300 to 400% and more YTD. Next week is rebalancing time.

http://quote.morningstar.ca/quicktakes/Fund/f_ca.aspx?t=F0CAN05NGC

#101 MF on 07.30.16 at 11:35 pm

90 NoName on 07.30.16 at 10:03 pm

Doesn’t tell you how correct my prediction for the future is? Website is lousy then.

MF

#102 Ponzius Pilatus on 07.30.16 at 11:39 pm

#1 Jimmy
First!
Jimmy you are the best First ever.
Congrats.

#103 John in Mtl on 07.30.16 at 11:54 pm

#79 Smoking Man on 07.30.16 at 8:58 pm

… “700 bucks is a shit load of loot. If I have a closed casket who’s going to know.

He dosent fit into his only suit. Do I need to buy a new one. Or can we just put him in with a sheet or something.” …

Geez, Smoking man, what happened to all that loot you keep bragging about: those millions made playing the Forex, those lucrative coding contracts paid in USD, those killer “apps”. Is a measly 7-hundred-bucks + 300 bucks for a new suit gonna put you in the poor house? If you loved your dad so much, a few bucks spent on his last voyage from earth to Nectonite surely can’t be that expensive for you!

#104 Mark on 07.30.16 at 11:59 pm

“I think is is the big dilemma for folks that are seeing the high water mark for both real estate and equities. They don’t see stocks and bonds as an alternative. They’re staying put.”

The TSX is at levels less than it was in 2008 (ie: 8 years ago), and since 2000, has quadrupled its index earnings.

I think a big part of the problem is that people look at the price of their *Canadian* RE, but tend to consume US financial media and US-centric financial advice which rightly shows that the S&P500 is richly valued (as Shawn states, P/E of 27, or even the P/E of 20 as quoted by the author here).

Also, very few people are capable of calculating a P/E ratio on their RE investments. Especially if its a principal residence where we’re not generally accustomed to thinking in terms of imputed rent and estimations of long-term maintenance expense tend to be understated (we’re not used to thinking of houses as depreciating assets either!). So this inability compounds into bad decision making.

For example, I even have relatives who swear up and down that their RE with a cap rate of 4%, provides a higher return than a stock index with a Schiller P/E of 15. People tend to be inherently backwards, not forwards thinking. Its such thinking that usually leads to grave investing mistakes, even though for the moment they feel good about riding the momentum of their trade if it has worked out in their favour. It takes a strong gut to double down on what hasn’t been working out too well (ie: stocks) over the past number of years. Yet as we’ve seen with the gold/silver stocks this year, there can be some spectacular rewards to being contrarian.

#105 Sheane Wallace on 07.31.16 at 12:01 am

Pretty boy. Nice suit. Little substance.

1. The CPI is a lie, it understates the inflation.
2. Yes, stock market is up and will go higher in nominal terms, not when compared to arbitrary independent anchor/measure e.g. land.
3. The future of currencies will be determined by the demand for loans. Once inflation shows rampant, they loose the battle for the bond market, and stocks along with real assets e.g. real estate, land, etc. will be the only place to be. Hard, real assets and productive economy.

Bond markets and currencies are doomed.

#106 Sheane Wallace on 07.31.16 at 12:07 am

#19 Mark on 07.30.16 at 4:50 pm

There’s a difference? The official inflation numbers look pretty real to me. No pun intended.

———————————-

The ability to maintain productive economy in a country full of idiots like you in an open competitive worlds is limited. Hence they turned to financialization.

Inflation is huge, as I mentioned a friend of mine from Texas coming for a visit literally refused to eat while in Toronto. He was absolutely shocked by our prices.

#107 Sheane Wallace on 07.31.16 at 12:24 am

#40 Tony

The stock market will keep going go up in nominal terms. It is still good mid to long term investment, specially in defensive stocks.

If they convince enough people to take on huge loans while preventing crash of the currencies, things will be fine. Well, not for everyone but for the economy in general. The economy of the real world not the debt-slave-unproductive-extraction economy of our frozen North which is doomed no matter what happens.

But if/when we have currency crises it will become interesting, really interesting.

Land and gold will have it;s day but so will defensive stocks, specially booze and food companies.

#108 ANON on 07.31.16 at 12:37 am

Is that a bear, or a metaphor for bearing?

#109 Kilt on 07.31.16 at 12:54 am

Bullish on stocks. But, also bullish on rate increases. Won’t rate increases drive up bond yields. Stocks are undervalued because dividend rates are higher than those of bonds. Won’t rising bond yields send money fleeing riskier assets like the stock market and into bonds?
Kilt.

#110 Turtle on 07.31.16 at 12:58 am

I like it. Different from Garth’s, but still good.

Ryan, welcome! Maybe next time try to be more human… Tell us how you wake up … what you drink… what you drive… We all know that you are smart and good looking (you work with Garth)… Some of us need to relate to you on another level.

#111 Fleurdeslis on 07.31.16 at 1:01 am

Hi Ryan

Good first post.

I am a bit concerned about s&p in last month however I have to admit all the evidences are against (except trump)

I am out of maple for at least a couple of years. I think Canadian banks cannot survive a double stress (energy plus housing)

Good luck with the Saturdays

#112 Metaxa on 07.31.16 at 1:03 am

My first car was an old but gold Hudson Hornet.
It belonged to a judge who had the summer house next to ours at the lake.
His wife taught me how to drive in it and when time came to grab an actual learner’s license the judge took me up to Fort Qu’Applle where the guy asked the judge if I could, in fact, drive.
With the answer in the affirmative I handed over my $5 and was issued a full driver’s, 15 years old. Then the judge gave me the car…

Anyway, seat belts were non existent or an option then. Long distance phone calls were carefully measured for time and going out to a restaurant was a once or twice a year occurrence even if you were well off.

Point being times sure have changed and in my opinion very much for the better…except for the ongoing ruination of true conservatism.

Second point being a lot of this crowd needs to relax.

It will all be fine in the end.

I just came in from my deck, dinner was a couple of fresh Dungeness crabs followed by fresh Sockeye salmon steaks from the grill, grilled asparagus and steamed new potatoes all washed down with a surprisingly nice white. I prefer red wine but our guests brought the wine along and I decided to play nice and choke it down.

Tomorrow I’m smoking some ribs and making potato salad for some more friends and on Monday I think mom and the sons and I are out for dinner and then the fireworks down on the harbour. All in walking distance from the homestead.

Life is good. If it isn’t make it so.

Oh, and somewhere in there we hope to drop the kayaks into the ocean and go for a tootle…

If I can do it, anyone can. Trust me on that.

#113 For those about to flop... on 07.31.16 at 1:04 am

Damn,I wasted money on energy drinks.
I thought we were in for an all nighter being the first Saturday night and it gets shut down at 10:17.E.T

Maybe we are now running on Mike Duffy time…

M42BC

#114 Silent the people on 07.31.16 at 1:05 am

Welcome Ryan! Cut the charts and leave that for the posters! Talk straight talk and cut the sales pitch! Garth has learned the blog does not follow him but is a self contained metamorphosis! Enjoy it! Your best days will be your first and last!

#115 Cici on 07.31.16 at 1:07 am

Great post Ryan, and thanks for taking the time to bring some new, fresh perspectives to the table. Although I really hope that you won’t waste your time/life reading the comments section like most of us low-lives do

#116 For those about to flop... on 07.31.16 at 1:17 am

Well guys,at first light tomorrow I am off camping for two weeks,destination Olympic Peninsula.

Mark wants to come too ,but I told him he will have a hard time pitching his tent if he keeps trying to put square pegs into round holes.

Anyways ,thanks to the couple of guys that got a kick out off my # 4 post.This blog puts a smile on my face each day so I try to repeat the favour.

I have welcomed/stirred Ryan and sent Garth some funny photos to keep you guys amused,that’s all I can do for now.

Peace, Flopper

M42BC

#117 finally on 07.31.16 at 1:27 am

We welcome you Ryan, as the old host is becoming boring, houses overvalued, no Guangzhou speculators in Surrey, keep money in mattresses etc…
Quick questions:
1. Who wins Stanley Cup? Toronto or Vancouver?
2. Where houses drop 40% first ? Toronto or Vancouver?
3. Dogs or cats?

#118 Ronaldo on 07.31.16 at 1:29 am

And here she is, Debbie Downer

https://en.wikipedia.org/wiki/Debbie_Downer#/media/File:Debbie_Downer.PNG

#119 DON on 07.31.16 at 3:19 am

@ MF

I agree with your line of reasoning on the DNC scandal.

In light of this scandal and several others – I have a question for Ryan.

Question: In the past you could trust the data you were given. Can you trust the data in this today, knowing full well there are instances in which people have manipulated the data you use to make your projections.

Sincere question. In science you must normalize and scrutinize the data presented. Can you trust the data you have to work with?

#120 DON on 07.31.16 at 3:22 am

#96 DON on 07.31.16 at 3:19 am

@ MF

I agree with your line of reasoning on the DNC scandal.

In light of this scandal and several others – I have a question for Ryan.

Question: In the past you could trust the data you were given. Can you trust the data in this today, knowing full well there are instances in which people have manipulated the data you use to make your projections.

Sincere question. In science you must normalize and scrutinize the data presented. Can you trust the data you have to work with?

******************
Not as articulate I have had envisioned…but then again it’s after midnight. You get the point.

#121 DON on 07.31.16 at 4:31 am

@ (friday) #71 NEVER GIVE UP

I can understand where you are coming from. This housing bubble should have been regulated a long time ago – it has become extreme. Your family is caught in the middle, most are. Hang in there. The way the economy looks at the moment on both local and global scales, there is little to keep this bubble afloat. Plus the Chinese Government searching for those who were engage in embezzling money. The media is all over it as they can no longer suppress it. They are actually treating it like it just became an issue. Cute/Sad/funny and heart breaking at the same time.

We really do need more responsible media in this country. Then again we have this blog, medium seems to be changing, no longer need MSM.

#122 Arfmooocat on 07.31.16 at 5:07 am

SELL EVERYTHING

http://finance.yahoo.com/news/sell-everything-doublelines-gundlach-says-202955293.html

#123 NoName on 07.31.16 at 6:45 am

“The trio will be among the first senior bankers globally to be jailed for their role in the collapse of a bank during the crisis.
The lack of convictions until now has angered Irish taxpayers, who had to stump up 64 billion euros – almost 40 percent of annual economic output – after a property collapse forced the biggest state bank rescue in the euro zone.”

http://www.reuters.com/article/us-ireland-banking-court-idUSKCN10912E

#124 NoName on 07.31.16 at 7:06 am

#100 MF on 07.30.16 at 11:35 pm

90 NoName on 07.30.16 at 10:03 pm

Doesn’t tell you how correct my prediction for the future is? Website is lousy then.

MF

————–

You are not predicting anything, you are just stating the obvious. Go and ask your mentor how good new cold war will be. He can explain it to you better that i can. Its all about money, not whats right what wrong…

press play
https://youtu.be/uP0sC_s5EfE

——
side note
http://www.bbc.com/news/world-europe-36933239

#125 maxx on 07.31.16 at 8:40 am

Just the sort of investment advice I run screaming from. Risk or zero reward. Comme d’habitude.

Thank goodness I saw the coming shtf around the time Greenspan pirouetted on stage. I smelled a rat. A large one and planned accordingly.

Since the early 90’s, we’ve seen a huge increase of indebted home ownership (Greenspan’s dream), enormous volumes of earned income (blindly) poured into equities (another of his dreams and much of it beyond risky) and tons of personal wealth evaporate. Repeatedly.

Today, debt is far beyond healthy and is bleeding back into the economy at large. Legions of boomers and Millennials are practically living hand to mouth and hope, let alone optimism is largely a thing of the past.

So no, I won’t “invest” in “equities”. “Equities”, by definition, are meant to be equal in value and I believe that cash is still worth more (and certainly on a day-to-day basis) than “equities”.

So, if you have enough or more cash than you need, think carefully, very carefully about risking it.

#126 WallOfWorry on 07.31.16 at 9:09 am

Morgan Stanley doesn’t seem to share your views?

http://www.bloomberg.com/news/articles/2016-07-30/morgan-stanley-warns-currency-traders-worst-to-come-for-dollar

#127 MF on 07.31.16 at 9:54 am

#124 NoName on 07.31.16 at 7:06 a

Cold war? I assume your talking about my support of more conservative leaders like Trump or Harper, which is the same as SM’s?

Byw, what does that have to do with the econimc situation in the US?

No worries.

I do not see a cold war coming. That’s just fear mongering from the leftists who can only hurl insults like xenophobe and nothing else.

The world today is much different than in the past because of a number of things. The first is the internet. The free flow of ideas across the globe is what will keep people together. Yes the internet can be used to spread hate, but i believe more often than not the importance of working together with your fellow man is also on full display. There are millions of websites that show the gory details of war or of what a depression is like as an example.

By the way who would this new cold war be against? Russia? China? The entire mideast? I dont know you about you but here in the GTA we have lots of people from all those countries, so this idea that the whole US/western world would just turn against Russia (as an example) is so well, 1950’s. If you are alluding to Trump, specifically his idea of proper vetting of refugees coming from a war zone or making sure illegal immigrants are dealt with, then yes it’s a smart thing to properly screen. Whether the left wants to admit it or not, all people are not automatically good and some are a security threat. Doesn’t matter where they are coming from. Also illegal immigrants in the US do drive down wages. It still is that Citizenship is not a right and has to be earned and valued. Just look at Europe the disaster to see why.

Actually look at the results of more liberal economic and social policies as a whole to see where they lead. This is what Hilary more closely seems to align with. This is also why i am taking issue with the current administration in the US and the disastrous policies it has adopted.

Facts remain:

-Economic stimulus after stimulus after stimulus and very anemic growth to show for it.
-Huge debt that my millennial self and my kids/grandkids will be stuck with
-stock market at all time high (bubble)
-real estate bubbles all around the western world
-reduced wages/benefits for the middle class
-creeping socialism
-terrorism/division

I believe if these conditions persist and the debt gets bigger and the stimulus continues, the US will hit a wall and it will all come crashing down again like 2008. The difference is this time we have no ability to paper over it with 800 billion dollar “bailouts” like we did 8 years ago.

It’s all about risk. How can you not see any risk currently?

MF

#128 Life among the Stars on 07.31.16 at 10:41 am

Crazy dude scored a bullseye without a parachute…

I wonder what he thinks of all these sky high markets

http://www.theglobeandmail.com/news/world/skydiver-luke-aikins-becomes-first-person-to-jump-without-using-a-parachute/article31214355/

#129 crowdedelevatorfartz on 07.31.16 at 10:50 am

@#95 rosie

Excellent photo of Donnie Downer

https://i.kinja-img.com/gawker-media/image/upload/s–8U4Qhe97–/c_fit,fl_progressive,q_80,w_636/1320466457291157138.jpg

But how did you get ahold of one dated Nov 6, 2016 ?

#130 Life among the Stars on 07.31.16 at 10:54 am

Empty swimming pools of stagnant water in Florida foreclosed houses helping to spread mosquito viruses…. debt fueled house hornyness is going kill us all!

https://www.washingtonpost.com/posteverything/wp/2016/07/29/how-foreclosed-homes-and-used-tires-can-affect-public-health-in-the-age-of-zika/?hpid=hp_no-name_opinion-card-a%3Ahomepage%2Fstory#comments

#131 Let's be honest on 07.31.16 at 10:56 am

Dear Mr Ryan

I’m noticing a very selective cherry picking of data to support your “buy stocks now” conclusion. Here’s an important data point that you missed: US corporations have had declining profits for 4 quarters in a row, and based on how retail sales have been dropping for more than half a year, there’s every reason to suspect we are soon going to look at 5 quarters in a row of declining corporate profits. On this backdrop, you say we should buy, because although the big daddy of all fundamentals (P/E ratio) is saying “danger”, you have a way of “correcting” for the low interest rates so that you reach a different conclusion.

That’s exactly like saying “yea houses cost more and more as a multiple of incomes and rent, but once you consider the low interest rates we can adjust these multiples in such a way that it looks like now is the time to buy”.

The opportunistic use of low interest rates to support your “buy stocks now” recommendation smells a lot like the tactics real estate agents are using to argue that housing is a good buy even as the grand daddy of housing fundamentals is also screaming “danger” (price to rent and price to income ratios).

I always suspected, and today I have confirmed, that the people Garth hangs around with are responsible for solidifying an unyielding ideological worldview where stocks are good and housing bad. It is perhaps a mere coincidence that you Mr Ryan as well as Garth profit immensely from increased investment in stocks, but don’t profit from increased investment in housing. You not only make money if more people invest, or if those that already do invest put in more money, but you also have substantial stock holdings of your own and demand for stocks is where your capital gains come from.

This repeated mantra of “housing bad, stocks good” sounds a lot like Orwell’s “4 legs good, 2 legs bad”. A self serving ideological refrain that serves an ulterior purpose.

The fact is that the general population’s trust in financial ANYTHING is very low and continuing to drop. After shit like Enron where pensions disappeared, after shit like GAAP vs IFRS vs non-GAAP-bullshit and other trickery, it’s hard even for an expert to accurately gauge the health of a company. So if an expert has difficulty, how about a regular person? Your solution is to go into “technical analysis” which drops any pretense of objective valuations and goes straight into “I’m buying it not because I think it’s worth what I’m paying but because I think some sucker will pay more for it later and I’ll make money that way”.

So if stock speculation is ok and desirable, why is housing speculation different?

You guys are no better than the real estate agents. Just like them, you have an agenda and are pushing a narrative that makes you profit.

#132 crossbordershopper on 07.31.16 at 10:57 am

why is no one talking about the 10 year canadian bond yields will be less than 1% this week. 1% per year, for 10 years, and you get your money back,
it could be that we see .5 on the 10 year bond near the bottom, i dont see us going negative, but i see .5 to .6 % for a 10 year canadian bond.
this completely changes everything for long term values and interest rates.
the whole world is a mess, .5% for 10 years, why even save,

#133 PE ratio on 07.31.16 at 11:07 am

Where are you getting a PE ratio of 20? It’s 25.. which is in the. Nosebleed territory

#134 Bill Silverman MD on 07.31.16 at 11:07 am

It’s a worthier blog post if there is author commentary in the comments section like Garth does in the itallics. Hope to see some blog authored comments in future Saturday postings I’m talking to you Lewanza and Rowat.

#135 WallOfWorry on 07.31.16 at 11:08 am

San Fran residents need to make $216 K a year to afford rent on a 2 bedroom apartment.

http://www.marketwatch.com/story/the-salary-you-need-to-afford-the-rent-in-these-15-cities-2016-05-17?link=sfmw_tw

#136 “Jobs report a huge miss. Market surges”. on 07.31.16 at 11:10 am

Gotta agree with a few posters on here. This market is a manipulated joke. One morning i saw an article on CNBC titled: “Jobs report a huge miss. Market surges”.

—-

“Market” rewards corporate profit.

Reduced labor cost (“jobs report”) improves corporate profit, the “market”.

#137 liqudincalgary on 07.31.16 at 11:14 am

TurnerNation on 07.30.16 at 4:25 pm
Has he reached shaving age?

M40ON

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

he is disguising his lust for you by NOT shaving his head, like yours

#138 Self Directed on 07.31.16 at 11:35 am

#131 Let’s be honest on 07.31.16 at 10:56 am

You make sense to me.

These all time highs make me feel very uneasy.

#139 AK on 07.31.16 at 11:43 am

#133 PE ratio on 07.31.16 at 11:07 am
“Where are you getting a PE ratio of 20? It’s 25.. which is in the. Nosebleed territory”
====================================
Forward PE is currently @ 18.42. That’s where market generally trade at.

#140 maxx on 07.31.16 at 11:47 am

Here’s an economic indicator for ya:
Saturday evening, ran into a major supermarket for last-minute purchases.
The man ahead of me buys a pack of hot dogs and large bag of chips.
I walked out to find him biting open the plastic package of wieners behind some bushes near the parking lot. He couldn’t eat fast enough, he looked so hungry.
Took a closer (albeit discreet) look and his clothes were practically hanging off of him.

As a side note, I talk to everyone in retail. From top dogs to the floor sweepers. It’s probably common knowledge on this blog, but I consistently hear that supermarkets throw out tons of food rather than discount it. That way, they can keep prices jacked.
I’ve almost completely disconnected from this obscenely wasteful system.
Supermarkets may think they run a cartel (food is necessary to life and all that), but they most certainly do not.
Buycott the fools.

Buycott, buycott, buycott.

#141 Crestie Velvet on 07.31.16 at 11:47 am

Lewanza looks like Bill Ackman.

#142 BlueOstrich on 07.31.16 at 11:47 am

From the Wall Street Journal, no less:
“Seven Years Later, Recovery Remains the Weakest of the Post-World War II Era”
http://blogs.wsj.com/economics/2016/07/29/seven-years-later-recovery-remains-the-weakest-of-the-post-world-war-ii-era/

#143 Julie K. on 07.31.16 at 11:49 am

When is the GreaterFool pin-up calendar going to be published?

New dude is HOT! And I though Silver was spurned around here.

#silverfox

#144 Vamanos Pest on 07.31.16 at 11:58 am

Welcome Ryan!

“hated and feared bull market”-agreed, and well said

hey, can the rule of 20 be used to predict tops? i.e. is there a a sum of P/E and CPI at which we start to see probabilities in corrections or bear markets increase?

Next time, you need to insult someone. Trump, Trudeau, Brexit-ers, old people, young people, heck even Bieber, someone’s gotta be thrown under the bus on a daily basis around here. Tell Doug.

#145 MVP Tommy on 07.31.16 at 12:13 pm

I will keep sticking to my investment plan —>global portfolio, diversify (asset, region and B&H/Tactical), with simple rules, low ME, re-balancing every year, long term view and stick to the plan.

It is impossible to guess the top. The S&P ‘s CAPE valuation now is about 90 percentile. May be it is on the expensive size, but it is hard to time the market, and the CAPE can reach 40,50 and even 100 (japan bubble) before a more than >30% correction.

#146 Shawn on 07.31.16 at 12:19 pm

Mark and the TSX Index earnings….

Mark said: “The TSX is at levels less than it was in 2008 (ie: 8 years ago), and since 2000, has quadrupled its index earnings. ”

***********************************
Do you have a link or source for TSX index earnings?

Over the years I have found those earnings very hard to find and some of the few sources available will give some adjusted view of earnings rather than GAAP as reported earnings.

Even when I purchased earnings data from the TSX itself a few years ago I was not confident that the earnings were not adjusted in some way.

TSX earnings are highly volatile. Were the year 2000 TSX earnings at a representative level or a dip far below the trend?

#147 Nelley on 07.31.16 at 12:23 pm

Welcome Ryan-I like your style-you stick to the point without venturing off into irrelevancies like racism blah blah blah-and you don’t resort to childish insults. Cheers.

#148 TurnerNation on 07.31.16 at 12:27 pm

It’s of importance to remember that social media fully is weaponized now.
If you make a comment contrary to chaos, or expressing an opinion over a perceived unhealthy lifestyle you will lose your job – driven out of office or let go with corporate Newspeak. Your business will be boycotted. Everyone is monitored and recorded.

In face I’m starting into a camera and mic on face of my phone as I type this.

Essentially unless you espouse a the Party’s view you will be hunted down and they’ll take your assets. (As the Communists did to my grandfather.)

I fully expect to die under communism as he lived.

#149 maxx on 07.31.16 at 12:27 pm

#91 Craig on 07.30.16 at 10:03 pm

…but, they have Mario!

Oh yeah………….right.

#150 7 days a week on 07.31.16 at 12:31 pm

Hi Ryan,

Welcome to the fools… and the 7 days a week working world.

#151 MF on 07.31.16 at 1:15 pm

#136 “Jobs report a huge miss. Market surges”. on 07.31.16 at 11:10 am

Except of course that if enough jobs disappear then less people buy products/services these companies are selling which impacts earnings.

Don’t worry though people can live off their investment income…oh yeah rates are still at “emergency” levels and yields are garbage. Maybe they can buy stocks for dividends? Oh yeah you need tons of savings to be able to invest enough to have a decent income from a 5% dividend. Where do the savings usually come from? That’s right a job.

MF

#152 A box in the sky on 07.31.16 at 1:18 pm

Very solid first post. But I don’t know why you guys even bother – 95% of the comments here are from mouthbreathers that aren’t going to change their opinion, regardless of the info you present.

You could’ve put up a 100 year chart of the stock market as well as the 100 year returns of a 60/40 portfolio and you’d still get the same garbage comments.

#153 Ryan Lewenza on 07.31.16 at 1:49 pm

Setting the record straight. “You quote a P/E ratio.
Is that trailing for using forward estimates? Is it GAAP or non GAAP?”

I’m using 12-month trailing operating or non GAAP earnings. I prefer trailing earnings given the longer track record (forward earnings estimates started in the early 1990s) and its actual earnings rather than estimates. While I look at both reported (GAAP) and operating (non GAAP) earnings I generally focus on operating since that’s what most people use. Yes, yes I know, operating or non GAAP earnings can be manipulated by companies claiming items are non core (Alcoa is terrible for this) but I still believe its the best measure of earnings. – Ryan L

#154 Freedom First on 07.31.16 at 2:00 pm

#65 wallflower on 07.30.16 at 8:19 pm

I’m with commenter #4.
Never forget, the unwashed We come here for the humour and the dogs.
The bear is okay.

FF007

I come for the chicks.

#155 Freedom First on 07.31.16 at 2:09 pm

#110 Turtle on 07.31.16 at 12:58 am

I like it. Different from Garth’s, but still good.

Ryan, welcome! Maybe next time try to be more human… Tell us how you wake up … what you drink… what you drive… We all know that you are smart and good looking (you work with Garth)… Some of us need to relate to you on another level.

FF007

Can you cook? Do you still live with your mom? Have you ever had a pet rabbit? We wanna go deep Ryan, just let us in. Don’t be shy. Let down your defenses and we’ll be BFF’s.

#156 Ryan Lewenza on 07.31.16 at 2:11 pm

Aggregator “So Ryan. Tell us why you feel a passive 60/40 rebalancing strategy is a safe bet when almost every money manager is doing it?”

First, the chart you cited measures how much money is flowing into passive funds like ETFs versus active funds like mutual funds. It’s not referencing how much is flowing into a 60/40 model or any asset allocation model. At Turner Investments we believe in active management while using passive investments like ETFs (this lowers the cost to investors). We’re paid 1% for this service to actively select our fixed income and equity exposures. Our 60/40 portfolio is the long-term or strategic asset mix. But we can make tactical moves around this 60/40 mix and we actively determine which equity and fixed income exposures we want. We believe we can add “alpha” through this approach. Second, you mention how is a 60/40 portfolio a safe bet. The answer is in the asset mix that we use. Because we have 40% in fixed income or the safer part of the portfolio, we believe the portfolio is safer than a 100% equity only portfolio. Returns will be lower as a result, but definitely safer than just buying equities. Last year the TSX was down 8.5% including dividends versus our model at basically flat and many client portfolios down 1% after fees. We’re not promising or trying to hit home runs. We’re just trying to invest the money prudently, not incur large drawdowns and over the long-run return roughy 6%. – Ryan L

#157 Happening now on 07.31.16 at 2:16 pm

Not only did the BC land registry system crash this week due to being overloaded but the government workers are working this weekend to deal with the panic !!!…..since when did they work weekends ???

#158 tkid on 07.31.16 at 2:18 pm

Hi Ryan,

three quick requests:

Could you put in a Crayon Explanation* for some of the technical terms in your posts? For this one, a Crayon Explanation for “Price to Earnings (P/E) ratio for the S&P 500 is 20x”, “CPI inflation levels” would be enormously helpful, not least because I would get a measure of what both terms mean to you.

Two, is there a page on the Turner Investments where we could reference the terms quoted and what the current figures are?

Rule of 20 was very well explained, and really appreciated. The graph, am I correct in thinking that normal valuations were between 15 and 25, with over 25 as an over-valuation, and under 15 as an under-valuation?

And your explanation on how bonds have an interest rate below equities’ rates and this isn’t how things normally are – I really would appreciate another post elaborating further on this.

I liked hearing about the Citigroup US Surprise Index; I didn’t know it existed.

Regards,

tkid

*Crayon Explanation: an explanation so simplified that you may as well be writing it with crayon on kraft paper.

#159 Jimmy on 07.31.16 at 2:18 pm

#155
Ryan within Ryan within Ryan?

#160 Ryan Lewenza on 07.31.16 at 2:23 pm

Randy “….Ryan, seems like a waste having all that knowledge when the markets are rigged and on life support.”

Randy that’s the exact point of the blogpost. Investors and so called experts have been saying this for years. That the market is on life support and due for a crash. These are the same investors who are sitting in cash and missing out on the incredible gains. I’m not saying that we’re not going to see an inevitable bear market correction. These happen on average every 4-6 years and we’re in the 8th year of this bull market. But bull markets can last much longer than the average (1982 to 2000 being the last one) and bear markets are generally brought on by aggressive Fed tightening or some shock. We don’t see aggressive Fed tightening and shocks are impossible to predict. So stay with the trends. The stock market remains in a long-term uptrend, inflation is low which allows central banks to remain accommodative, the economy is slowly recovering, and with interest rates so low this helps support stocks. Don’t fight the Fed and the trend! And I agree the stock market is somewhat rigged. That’s why you need an advisor to help you navigate through this complicated and fast moving market.

#161 Freedom First on 07.31.16 at 2:24 pm

#142 Julie K. on 07.31.16 at 11:49 am

When is the GreaterFool pin-up calendar going to be published?

New dude is HOT! And I though Silver was spurned around here.

#silverfox

FF007

I’m hot Julie. I’ll gladly send you my picture. I’ve been told I have the best comb over…ever!

#162 Ryan Lewenza on 07.31.16 at 2:33 pm

Not 1st “Umm, Ryan, nice TA and all that, however, the US GDP is stuck in total neutral at 1%. Now that doesnt meant the S&P cant go higher especially if the US and others keep flattening the bond curves. But lets get the fundamentals straight. US is hovering to recession.”

Yes I agree that we’re not seeing robust economic growth, but we’re no where near a recession in my view. US initial jobless claims are near record lows. The yield curve remains upward sloping. Consumer spending remains quite strong. US housing continues to improve. Does this sound like an economy heading into recession? I think a key point that people miss is that a slow economy is a good thing for the stock market. It allows the Fed and other central banks to keep rates low and accommodative. History shows that recessions and bear markets are caused by aggressive Fed tightening. Slow economy means slow rate hikes. Again enjoy the new highs and portfolio values and stop being a Debbie Downer. – Ryan L

#163 Ryan Lewenza on 07.31.16 at 2:46 pm

Self Directed “The pic doesn’t match the story. Are you guys seriously picking up new clients and taking a Bullish approach? I guess it’s not your money. C’mon, give us some conservative investment ideas. Talk about how we should balance our asset classes, what to buy today, and what to flip it into, when the Bear comes.”

Outside of a few short-term technicals calls, I’ve been bullish since April 2009 when I published a report stating the market bottom was in. I remain bullish as outlined in the blogpost. A lot of investors and clients have benefited from my bullish calls since 2009. With respect to conservative recommendations, to start how about using a 60/40 model. The 40% in safer assets like some government bonds, investment grade corporates, and preferred shares are some ideas. We particularly like prefs given their high yields, underperformance last year, and our belief that interest rates are near a bottom. For equities we like REITs which are generally lower risk than the overall stock market. So there’s some ideas. For what to do when the next bear market comes. We’ll I guess you’re just going to have to stay tuned. – Ryan L

#164 Ryan Lewenza on 07.31.16 at 2:53 pm

Kilt “Bullish on stocks. But, also bullish on rate increases. Won’t rate increases drive up bond yields. Stocks are undervalued because dividend rates are higher than those of bonds. Won’t rising bond yields send money fleeing riskier assets like the stock market and into bonds?”

Yes but down the road. I specifically referenced that in the blog post. We at Turner Investments see one more hike this year, likely December after the election. And a few more next year. If this occurs then it will weigh on the stock market, but not likely until later 2017 or early 2018. So stick with the current trends. Economy is getting better, inflation is relatively low, central banks remain accommodative, and the technicals are looking good. Until these change, stay long! – Ryan L

#165 Ryan Lewenza on 07.31.16 at 3:11 pm

Let’s be honest. “I’m noticing a very selective cherry picking of data to support your “buy stocks now” conclusion. Here’s an important data point that you missed: US corporations have had declining profits for 4 quarters in a row, and based on how retail sales have been dropping for more than half a year, there’s every reason to suspect we are soon going to look at 5 quarters in a row of declining corporate profits..You guys are no better than the real estate agents. Just like them, you have an agenda and are pushing a narrative that makes you profit.”

Ouch, that’s harsh and inaccurate! First, I agree that corporate profits have been weak. The strong US dollar, weak oil prices, and sub par economic growth have weighed on corporate profits. But some of these trends are now reversing, and why we believe the corporate profits recession is near an end. Stocks don’t care about levels (ie GDP growth, corporate profit Y/Y growth) they care if things are getting better or worse. We think things are getting better. Second, we’re not pushing any narrative. We’re using our years of experience and making a “call”. And this call is intended to make our clients money in a world where interest rates are at record lows and housing is grossly inflated. Do we get everything right? Of course not, but we strive to invest our clients money in a prudent, analytical and unemotional way. Lastly, we’re not selling anything to “make a profit”. Actually we eschew charging clients commissions and pushing trades. We earn 1% to manage our clients money. If we do a good job they remain clients, grow their nest egg to help fund their retirement, and in return we earn 1%. So our goals are aligned and I would add that we charge one of the lowest fees on Bay St because we believe that’s whats fair to our clients. – Ryan L

#166 crowdedelevatorfartz on 07.31.16 at 3:19 pm

@#156 Happening Now.
“the government workers are working this weekend to deal with the panic !!!…..since when did they work weekends ???”
********************************************

Since they are probably getting paid double and triple time for their “efforts”.
Dont forget.
They have obscene mortgages to pay

#167 Entrepreneur on 07.31.16 at 3:34 pm

#159 and #161 Ryan Lewenza…liked the comeback answers, more human.

#156 Happening now…”government workers are working this weekend…since when did they work weekends.” Unless contract workers, government workers who work this weekend will see an increase in their hourly wage substantially. Also, this is a statutory holiday weekend for government workers and they get paid for not working, what is it, the Friday or/and Monday. Correct me if I am wrong.

The PM Trudeau was elected on promises on borrowed money, debt, and gives away promises on more debt. Talk about putting us Canadians in a pickle, we can feel the acidity. We all know that debt is wrong and now we overboard in it, pickled. Next, deep fried.

#168 Shawn on 07.31.16 at 3:37 pm

S&P 500 P/E Ratio

Ryan explained:

I’m using 12-month trailing operating or non GAAP earnings. I prefer trailing earnings given the longer track record (forward earnings estimates started in the early 1990s) and its actual earnings rather than estimates. While I look at both reported (GAAP) and operating (non GAAP) earnings I generally focus on operating since that’s what most people use. Yes, yes I know, operating or non GAAP earnings can be manipulated by companies claiming items are non core (Alcoa is terrible for this) but I still believe its the best measure of earnings. – Ryan L

**************************************
Thank you for the explanation.

Fair enough.

My concern with operating earnings on the S&P 500 has nothing to do with whether or not each company has claimed some expense to be unusual and non-recurring.

My concern would be that for 500 companies a certain amount of “unusual” expenses are surely usual and will happen every year. So unusual becomes usual when it comes to the index?

Another concern would be comparing the lower operating earnings P/E of right now to the historic GAAP P/E of the index.

#169 Ryan Lewenza on 07.31.16 at 3:37 pm

Ryan–Thanks for your contribution–I hope you are receiving double time for split shift weekend work.

First, Denis Ouellet, who uses both the PE 20 rule and the interest rate spread 120 rule seems to be getting very uneasy about market signals. Given we are at a moment of an historic interest rate situation, does that 120 rule still apply?

Second, in looking at the much beloved 60/40 rule, how do you treat the capitalisation of defined pension income streams? GT has seemed very reluctant to capitalize these and treat the value (adjusted down for the risk associated with the previous employer) as a fixed income component of investments in determining asset allocations?

#170 Shawn on 07.31.16 at 3:40 pm

Earnings measurement has changed…

Today’s earnings can include truly bizarre things like a gain on a debt liability because the company’s credit rating deteriorated. So a credit downgrade can literally lead to an earnings gain and the opposite.

Hopefully on an index like the S&P 500 much of this sort of nonsense gets averaged out.

#171 Context on 07.31.16 at 3:45 pm

Ryan that is a big bear behind you and a big fish you are holding which was a good catch for the day. I wonder if the women in this room have noticed you have big hands too.

#172 WUL on 07.31.16 at 3:46 pm

Hi Ryan. Nice to meet you.

Just as the Ft. Mac fires caused a contraction in GDP growth over the last little while (with a million bbl/d of oil temporarily shut in), the recovery and rebuild will create a boost to GDP over the balance of this quarter and over the fourth.

12,000 refrigerators were hauled to the landfill. Every restoration, disaster recovery, furnace and duct cleaning company in Canada seems to be here (New Brunswick, Quebec, Manitoba and B.C. plates on the trucks). 2400 foundations have to be poured anew. Portland cement and aggregate will enjoy a boost as will the likes of Inland, Lehigh and BURNCO (a few rolling mix concrete trucks will be purchased). Then those 2400 structures have to be built. Many are multi-unit and include at least three hotels. Out of town construction labour will fill the hotels, restaurants, honky tonks and roadside dives.

#173 Dan.T on 07.31.16 at 4:26 pm

Really like the post Ryan. Also really love the comment #4. Welcome to the blog.

I’m looking forward to more Saturday posts! Good financial insights.

#174 Brett in Calgary on 07.31.16 at 4:32 pm

Thanks for the info Ryan, you seem like a level headed, clever fella!

#175 my house is my friend on 07.31.16 at 4:50 pm

77 MF on 07.30.16 at 8:53 pm
“Listening to the media gush over the DNC. It was so obvious who they are supporting. Someone has to be slow to not see the manipulation.

Trump says something and it’s bigotry, sexism, xenophobia. Clinton and the Dems get caught in a major scandal and it’s only “politics”. It’s so obvious.

MF”

Listen to this rant from former reporter at CNN
http://usawatchdog.com/weekly-news-wrap-up-7-29-16-greg-hunter/

#176 westcdn on 07.31.16 at 6:28 pm

I pay for mistakes in the markets. But sometimes I hit it of the park – pays for those errors. Latest win is CZO – covers a lot of my mistakes…

#177 the Awakened One on 07.31.16 at 7:48 pm

Garth,

Ryan actually sounds smart & knows what’s he talking about.

But he did not bring treats for the blog dogs !! Give us free coupons or something man…

#178 BOOM! on 07.31.16 at 8:38 pm

Well, Ryan-

Here is my never so humble opinion. First, a little background story.

I’m an American, RR worker then switched to Federal service for 25 years. Get the US FERS pension, which if you know anything about gov’t pensions is basically a dog-bone, BUT it came with this fabulous 401-K plan invested in the absolutely lowest cost index funds (.025% per anum) but, also with limited selections.

I bailed at 60 because I ‘could’, rolled over my funds and later my wife’s, and self direct them, also taking roughly 4% to supplement the dog-bone & early social security (I at 63 wife at 62).

We have house, cars, crap, hold no debt, and the portfolio has grown to over 700K presently. Not a fortune, but what the hell…

I liked the content of your first post, it was as exciting as a dry fart! No humor, no poking fun at Boomers, or the young. You’ll get it, first time at bat-ball one.

As you get to know this audience of misfits, miscreants, and the delightful miss judged, who shall remain clueless you’ll loosen up. Garth has provided decent, actionable advice. Not all translates from beaver to eagle, but that’s ok. I’m mostly on the same page, except i love to buy cheap dividend paying stocks when the street gets a bit bloody. (Sell some short bonds, if i need cash to buy).

Interest rates are not going anywhere, despite the FED hocus-poke-us. Call me in December if Yellin has a movement..

M64WI

Welcome aboard, Ryan.

#179 Adam on 08.01.16 at 9:08 am

Sad to see Garth’s blog devolve into market predicting crystal ball territory. The truth is nobody knows how long this bull market will last and we should invest by keeping our asset allocations in check.

#180 Moron Face on 08.01.16 at 1:55 pm

Excellent post. I look forward to more posts like this!

#181 Jonathan Galt on 08.01.16 at 2:23 pm

In 1974 my mother sent me to the store with a letter to mail and to buy her a pack of cigarettes. She gave me $2.

The cigs were 99 cents.
The stamp was 8 cents.
The Bazooka Joe gum was 2 cents.
The Spiderman comic was 25 cents.
The Hershey Bar was 25 cents.
The 8 oz bottle of Coke was 35 cents.

An ounce of gold back then was $154.

I’m 44 years older now and if I add a 0 to the end of each price and it’s almost accurate to today’s prices.

Except for the Spiderman comic. They don’t make those anymore, now they’re $15 a ticket at the movies. But chocolate, gum, pop and cigarettes….still popular.

What was your mom’s income in 1974? — Garth

#182 Moron Face on 08.01.16 at 3:45 pm

Hi Ryan,

Can you post a similar p/e + cpi chart for MSCI World Ex-US & emerging market equities?

Thanks!

Shawn

#183 Ryan Lewenza on 08.01.16 at 5:57 pm

Moron Face “Can you post a similar p/e + cpi chart for MSCI World Ex-US & emerging market equities?”

I’ll see what I can do tomorrow with this. I’m not sure if there are recorded inflation levels for the world and EM. I’ll check tomorrow and publish the chart if we have the data. – Ryan L

#184 Ryan Lewenza on 08.01.16 at 6:05 pm

Adam “Sad to see Garth’s blog devolve into market predicting crystal ball territory. The truth is nobody knows how long this bull market will last and we should invest by keeping our asset allocations in check.”

I agree that nobody knows for sure how long this bull market will last hence why we include technical analysis in our approach. This removes opinions and conjecture and it keeps us focused on the long-term trends which are positive. And I completely agree that one’s asset mix is key to long-term portfolio returns. We have our 60/40 asset mix and rebalance on a semi annual basis. For some of our clients this has recently resulted in triming US equities and REITs, while increasing our exposure to EAFE. – Ryan L

#185 Ryan Lewenza on 08.01.16 at 6:12 pm

“First, Denis Ouellet, who uses both the PE 20 rule and the interest rate spread 120 rule seems to be getting very uneasy about market signals. Given we are at a moment of an historic interest rate situation, does that 120 rule still apply?”

I’m not familiar with the interest rate spread 120 rule, but I believe Denis is referring to the US yield curve spread, and when it gets to 120 that its concerning. Historically recessions and bear markets were preceded by an inverted yield curve, which is far from where we are currently. Yes it has flattened and is something to monitor, but we’re still well off from an inverted yield curve so I think this indicator remains bullish and supports our positive equity market outlook. – Ryan L

#186 TCContrarian on 08.02.16 at 5:40 pm

“But until that happens, why not ride this bull market higher and rejoice the new all-time highs? We believe this bull market has more room to run before the next bear market correction occurs. Until then, enjoy the new highs and rising portfolio values, and stop being such a Debbie Downer!”

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Sorry, but risk/reward favours selling SP500 than buying (or holding).

But I don’t manage “hundreds of millions ” like the author does. That’s what makes a market: people of differing opinions playing with their clients money.
I’m using MY money and don’t like to ‘play’ – this is serious business! :-)