Apocalypse later

PIANO modified

 

The four horsemen are riding our way.
DOUG By Guest Blogger Doug Rowat

Don’t take my word for it. None other than Warren Buffett said the same thing in his most recent Berkshire Hathaway (Buffett’s company) shareholder letter:

“There is…one clear, present and enduring danger to Berkshire against which [we are] powerless. That threat to Berkshire is also the major threat our citizenry faces: a “successful” (as defined by the aggressor) cyber, biological, nuclear or chemical attack on the United States. …what’s a small probability in a short period approaches certainty in the longer run. (If there is only one chance in thirty of an event occurring in a given year, the likelihood of it occurring at least once in a century is 96.6%).There is no way for American corporations or their investors to shed this risk.”

But why would you plan your life around this inevitable but unpredictable outcome? When the apocalypse comes, I’m simply going to take my best bottle of Macallan single malt, sit on the curb and watch the fireworks. Until then, you gotta live! And invest.

Certainly Warren Buffett has been unafraid to do this. He didn’t accumulate a net worth of US$66 billion because he sat around fearing the end of the world. In fact, the remainder of his newsletter is actually incredibly optimistic. Becoming consumed with fear is the biggest hindrance to wealth creation. It’s not a bear market, recession, speculative bubble, or even Donald Trump who will make you poor. It’s fear.

Lacking the courage to get invested and stay invested is what costs investors the most. We occasionally have clients wanting to “go 100% cash” after every bump in the road with 2015 being the most recent example. These are such poorly considered and extreme reactions. Ryan (the other guy you’ve been fileting here on Saturdays) and I have been studying markets for a long time, but, to be blunt, we have no hope whatsoever of timing them on a week-to-week or even month-to-month basis. Therefore we would never make such a drastic wager with our clients’ asset allocation. But you say you personally know a guy who went to 100% cash right before the credit crisis? Good for him. Did he get back in again at the bottom? And can he consistently repeat this successful timing over and over? He cannot.

If you want to prosper, you have to participate in markets—even bad ones. Your advisor can help you adjust your asset allocation based on prevailing market conditions, but this is a process of careful hedging not of making large and absolute bets. If risks are building, perhaps you increase your cash weighting from 5% to 15%. But you should never take your portfolio to 100% cash or even 50% cash. Why? Because extreme positions are dumb and markets, the vast majority of the time, move higher.

Yet despite the overwhelming evidence that this is the case, there will always be fear mongers trying to convince you that the end of the world is coming. Ignore them. I’ll quote myself (I’m pretentious that way) from a newsletter I wrote a while back:

“Focus on the basic probabilities. The S&P 500 has data going back decades over countless economic cycles. Without over-complicating the matter, look simply at full, calendar-year returns. How often does the market trade higher? Over the past 75 years, more than 73% of the time. In other words, the odds are clearly in your favour that during any given year, you’re likely to make money.

“If your holding period is longer—10 years for example—the odds of a positive return are even more stacked in your favour. The S&P 500 virtually never records an annualized loss over a rolling 10-year holding period. Historically, the odds of the S&P 500 recording an annualized positive gain over 10 years are 90%. (Create a balanced portfolio with some bonds and fixed income exposure to offset the negative equity periods and your odds of recording a positive annual gain increase even more.)”

I also found this recent chart interesting. It juxtaposes the quotes of some fear-peddling ‘experts’ versus what the market itself actually did. The lesson? Fear might sell, but its accuracy sucks.

Still, the world will end. Someday. But when the nukes sail past, it’s over anyways. There ain’t anything that’s going to save your investments. Not government bonds (what government? have we learned nothing from “The Walking Dead”?) and certainly not real estate (have you seen the buildings after Hiroshima?). But until The Big Day arrives, you have to make the best of it and invest your money. And keep it invested.

Prefer to go to cash and wait it out on the sidelines? Nice view from there. You can watch braver, more disciplined investors get richer.

Doug Rowat,FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

137 comments ↓

#1 TurnerNation on 08.20.16 at 3:26 pm

Let’s make this weblog great again.

“Dave’s not here man”

“And then we Cheeched”*

*1puglife

#2 salonist on 08.20.16 at 3:33 pm

soros & zika

richer is better by how much.spin it

#3 For those about to flop... on 08.20.16 at 3:36 pm

Hey Doug,I never had the chance to thankyou for the piece of mind your first posting gave me a couple of weeks ago.

As my blog buddies know ,my wife had a fall on our recent trip and after hobbling around for a couple of days on crutches and doped up on ibuprofen ,I said lets get a hotel room for the night.

After all,two people sleeping in the back of a campervan can be “cosy” at the best of times.

I sometimes wake up with indentations from the kitchen cupboards on my forehead that Charles Manson would be proud of.

Anyway we got into bed and I decided to catch up on the blog.
My wife was wide awake and then I got to your first contribution and I decided to read it out loud to show my wife the difference the Headmaster and the two Vice Principals.

A couple of paragraphs later she was fast asleep and said it was the best sleep she had on the trip.

Just so you don’t go all Lewenza on me ,yes I am joking and yes I am glad you two guys are on board.

I look forward to the day I can joke with you guys and not add a disclaimer…

M42BC

#4 Deano on 08.20.16 at 3:41 pm

Well said, sometimes it’s hard to stomach, but keep on keepin’ on!

#5 AK on 08.20.16 at 4:16 pm

“There will always be fear mongers trying to convince you that the end of the world is coming.”
———————————————————–
Marc Faber and Peter Schiff.

Gold and more Gold.

#6 BOOM! on 08.20.16 at 4:18 pm

Hi Doug,

Nice to have you back, you guys are a nice change of pace, though Garth is no slouch.

I tend to agree with you.

I DID get out of equities in early 2008 when Bear Sterns’ two subprime equity funds started taking on water. At the time the bulk of our retirement savings were in my employer’s 401K style plan which offered only 5 options: 3 equity and 2 bond index funds.

I switched to bonds. Did start venturing back in Dec 2008 and the rest in 2009 after the low re-test was successful.

Retired since then. As a retiree, my needs for preservation more than pure ‘growth’ is higher. Being one of the lucky who has both a modest defined pension, social security, as well as a throw off (under 4%) of my portfolio, I can be ok with a 60/40 or even a 70/30 portfolio. I am ok with the risk.

YES!! It is time IN the market, much more than ‘timing’ the market that is most important.

Will I suffer suck years? 2015 was not a ‘high water’ mark was it? Of course there will be suck years. Maybe my selected ETF’s/Funds that make up my 60/40 will prove to be less than stellar, too. That can, does, and HAS happened. It’s called ‘risk’ I guess.

Life is risky.

Driving, walking, boating, sky diving, smoking, alcohol, drugs, overeating are risky as well. Most of us drive, and walk the rest are all personal options.

No, we won’t get out of it alive, but much more fun to be debt free, and be decently provisioned when our end comes!

All we can do is try to do our best. Fear never pays!

#7 BOOM! on 08.20.16 at 4:22 pm

Doug,

Interesting chart. Surprising how many of the same idiots are quoted at different times in that chart.

What are these guys selling? An investment ‘newspaper’ or, are they market pundits? Oi recognize a few names, but as I don’t follow them I don’t know what’s ‘in it’ for their views.

#8 Randy on 08.20.16 at 4:32 pm

Hillary Clinton, Bill Clinton and George Soros are in my 2016 Death Pool…

#9 Freedom First on 08.20.16 at 4:41 pm

FIRST…

#10 Doug Rowat on 08.20.16 at 5:07 pm

#7 BOOM! on 08.20.16 at 4:22 pm
Doug,

Interesting chart. Surprising how many of the same idiots are quoted at different times in that chart.

What are these guys selling? An investment ‘newspaper’ or, are they market pundits? Oi recognize a few names, but as I don’t follow them I don’t know what’s ‘in it’ for their views.

Money. You don’t have to make too many clicks on the Harry Dent banner ads, for example, before you’re asked to give your credit card info to receive his newsletter that will, of course, save you from the impending market disaster. Only US$49.95, I believe.

–Doug

#11 Brazil ex-pat on 08.20.16 at 5:20 pm

Easy for Buffet to say. The old fart will be dead in a few months….

#12 wantinthegame on 08.20.16 at 5:21 pm

pundit: learned; wise….according to the chart you posted, learned and wise don’t always mean right! I’ve yet to get into the “market” and will be doing so with my savings in a month or so thx to your great way of spelling out the obvious…you can’t win if you don’t play

#13 Love my Kia on 08.20.16 at 5:22 pm

“There will always be fear mongers trying to convince you that the end of the world is coming.”
———————————————————–
Marc Faber and Peter Schiff.

Gold and more Gold.
**************
and real estate?? lol.

Love the catchy title today.

#14 Brazil ex-pat on 08.20.16 at 5:33 pm

Take out all the wallstreet banker stock market manipulation and that chart would be valid. So in other words….its not a valid chart.

#15 Andrew Woburn on 08.20.16 at 5:42 pm

“If you tell people what they want to hear, you can be wrong indefinitely without penalty. This explains the careers of many pundits.”

“Recessions and bear markets are very easy to predict, except for the timing, cause, magnitude, duration, location, and policy response.”

Things I’m Pretty Sure About
Morgan Housel (TMFHousel)

http://www.fool.com/investing/2016/08/10/things-im-pretty-sure-about.aspx

#16 AndrewGr on 08.20.16 at 6:13 pm

#5 AK
Should the day come, when it all comes down….gold will not help you. Might I recommend having unadulterated seed for growing your own food. That might be the best consideration of wealth. No, I don’t have that put aside. We don’t really prepare for disasters like those countries who border the oceans and are typically hit with tidal waves. And Vancouver is definitely not prepared for that either.

#17 Doug t on 08.20.16 at 6:16 pm

I have no faith anymore in our banks or the system that makes the rich richer – I am tired of the old “invest and leave it and watch it grow” talk especially now when the world markets are so messed. I am enjoying sitting on the sidelines and watching the circus swing around and around. I have what I have and don’t really give two shits to play in the casino.

#18 earthboundmisfit on 08.20.16 at 6:21 pm

Someone has good taste in whiskey. Some Macallan is going to go very nicely with the Tragically Hip concert from Kingston tonight. Must remember not to mix the grape and the grain. A wee toot might be in order as well.

#19 NoName on 08.20.16 at 6:26 pm

America’s Top Fears 2015

Canada is not much different i guess, except me thinks fear of judgment would scorre lot higher here.

https://blogs.chapman.edu/wilkinson/2015/10/13/americas-top-fears-2015/

#20 NoName on 08.20.16 at 6:30 pm

It is funny how running out of money scored “low” 9th place.

#21 Fausto on 08.20.16 at 6:37 pm

Never been a better time for Hamilton real estate.

#22 Smoking Man on 08.20.16 at 6:49 pm

Doug, attributionaly speaking who’s better you or Ryan?

If I put in play 5 million with you and 5 with the other guy, Over 5 years. Which one of you slays the Benchmark better.

Great minds want to know….

#23 JB Bloggins on 08.20.16 at 6:58 pm

Cheers Doug,

The more ‘laymans’ tone, and informal prose is an improvement over the previous ‘rigid’ analytics presented.

For whats its worth I think this was a good read.

#24 Tony on 08.20.16 at 7:09 pm

From what I’m seeing there’s a mass exodus out of stocks into bonds and alternate investments. That’s not to say you can’t play stocks long and short at the same time or hedge the market. I’ve actually made money being short the market since the DOW was at 8,000. You can always short very small cap stocks which don’t move a lot with the general direction of the major market indexes.

#25 Smoking Man on 08.20.16 at 7:17 pm

Doug one thing I noticed. Ryan is alot faster at replying to comments.

You on a bender somewhere?

The only reason I’m considering dropping 10 Mil between you too. I’m a demented board rich bastard, who drives around in a Ford ranger with a cracked windshield and no air conditioning, it died two months ago.

This nut case in me thinks he’s Hunter S Thompsons reincarnation. Great martial to write about is what I’m thinking.

Every quarter I get to ivesarate one of you on here. Not sure either of you could take it.. But then again fees wise, that is one hell of a family vacation….

You’ll be able to stand it..

Boy’s if you want to do better that 8%,a year…. When ever I make a statement ending with. Bet Accordingly. Pay attention..

8% analy. Now that’s painfull.

Dr Dyslexic Smoking Man
PhD of everything…

#26 Context on 08.20.16 at 7:31 pm

Doug is back with his words of wisdom; give him the hook and bring back Ryan. His major premise is have no fear and he should have been here a few days ago when two big men showed up. I have a rather large air conditioning unit that had to be pulled for an annual cleaning adventure, and what did they find. Doug would have been first to hit the door when they brought in the spray can as needed to kill the Queen. A hornet’s nest as big as a grapefruit and they were living rent free.

Doug’s theme about fear in his twisted essay is a bit bent. He is suggesting for those that own condos in the core area of Toronto to fear not, sell not to rent, but sit back on your investment and all will be fine as values will adjust back to normal as they always do and don’t cash out – amazing!

#27 Smoking Man on 08.20.16 at 7:38 pm

After 90k for a killer dock, 40k in renovation charges inside a muskoka cottage bought for 490k Small frontage. Will sell for 1.2 million.

Ryan, Doug, that’s like a 100%, I think.

Took my 5 hours to drive from muscooked movie star insanity land to Senica, my first home..

Working on another drunk……

Sadly that crazy werdo who dances with himself here every Friday and Saturday night is gone…

Sort of worried.. If he’s gone. Something happed to him?

That leaves the werdo who gets blits by himself sitting in an empty booth educating the mindless on Greater Fool every weekend.

Talk about performance pressure..

Smokey over and out..

#28 Doug Rowat on 08.20.16 at 7:46 pm

#18 earthboundmisfit on 08.20.16 at 6:21 pm

Someone has good taste in whiskey. Some Macallan is going to go very nicely with the Tragically Hip concert from Kingston tonight. Must remember not to mix the grape and the grain. A wee toot might be in order as well.

A fine way to spend the evening! A toast to Gord.

–Doug

#29 Who luvs ya baby on 08.20.16 at 7:47 pm

Hey Smoker Dude….

Did you get one of those naked Trump statues in all his glory for your new cottage? Would make a fantastic garden ornament… howdy neighbours.

#30 bill on 08.20.16 at 7:54 pm

hmmm clearly some sort of Morris extremist group is responsible for this outrage….
they always had it in for Citroens….

#31 Smoking Man on 08.20.16 at 7:55 pm

Doug. You’ve had like 26 comments since you posted this hours ago.. Watch you back…

That’s pretty shity considering 5 where mine.

Creative writing class is what I’m thinking…

Trade with Garth. Get him to teach you creative writing skills while you teach him about long branch real estate and the markets.

#32 nonplused on 08.20.16 at 7:59 pm

That poor piano! Thank Dog the car was there to break its fall! Hopefully all it needs is a tune.

Doug, good piece today. I guess the way you are looking at the bomb thing is the way you have to. We have been living with the threat of nuclear war since the 50’s with the count down clock at minutes to midnight the whole time but so far we’ve avoided total annihilation. Lots of returns since then.

Hopefully the bombs continue to stay in their silos because an all out war at this point can’t be survived not even by the folks in their bomb shelters. The bombs are orders of magnitude more powerful and numerous than they were in the 50’s and 60’s, but that isn’t the worst of it. Now we also have 70 years worth of accumulated nuclear waste just sitting around mostly above ground from the nuclear power industry that will be vaporized by any large scale war. Some people think if you vaporize something with a nuclear bomb the matter vanishes but it doesn’t, it gets spread into the air. Worse, exposing waste nuclear materials to that much radiation can cause further reactions. So think up to 400 Chernobyls or Fukashimas in addition to the bombs themselves, and then no one around to do cleanup and containment so the storage pools don’t get saved. It’s an automatic doomsday machine that not even Dr. Strangelove could have imagined and both (or I guess all 3 sides counting the Chinese) have even if it wasn’t intentional. There will be no life on the planet after WWIII if it involves the major powers fighting each other. But, I think the top thinkers on both sides are well aware of these facts which is why the bombs don’t get used. Hopefully they don’t for another 70 years.

It’s so weird we are even in this tense stand off with Russia. During WWII, the Russia was our ally, even if it was an uneasy relationship. The Russians established the Soviet Union after the war to put a buffer between them and Europe to prevent another invasion. (Russia gets invaded by every major European power, check your history they know it so should you. They’ve always prevailed but at great cost in lives and infrastructure. Much human suffering but they always drive the invaders out. However after WWII, they lost so many people either in battle or to starvation they said never again.) Anyway I digress, it seems now that they’ve given up their buffer and trusted their former allies, (yes, NATO is for all intents and purposes a former ally of Russia), NATO is moving tanks right to their border. Seems insane to me, and probably does to them too. Why? Russia is going to invade the Ukraine? Why would they want to? That place is a disaster. It’ll just cost them money they could be spending on BMW’s. I can’t see why the would want the Ukraine unless they feel so threatened by NATO they think they need to re-establish a buffer from Germany at all costs. (Germany is after all where most of the American troops are.)

Anyway, whatever is really going on over there is stupid and the potential outcome of a conflict is frightening. Happy thoughts, happy thoughts, 70 more years, 70 more years….

#33 For those about to flop... on 08.20.16 at 8:07 pm

O.k. I’ve done my ratbag post for the day I will give you guys something semi useful to look at.

Where I got it from some obvious things were pointed out like the lines are about to cross again and what happened around the time of the Great Depression.

I was having a blast back then…

M142BC

https://imgur.com/a/VFGp8

#34 Keith in Calgary on 08.20.16 at 8:07 pm

Go all cash and then trade the cash. That is what I did a decade go.

Learn how to trade forex.

Beats the hell out of messing with stocks or other “securities”. Stocks et al are worthless IMO, nothing more than a legal and government supported ponzi scheme now……..but, money is always money, until the county that printed it becomes the equivalent of a Weimar Republic. At least you get much more warning than with stocks, when a currency collapses.

Gold is also money. I bet none of you fancy pants suited up money pimps has ever gone to the Louvre and asked to see the FIAT money exhibit…..LOL !!! But, they will have armed guards around the 5,000 year old gold.

Funny ‘dat.

#35 Doug Rowat on 08.20.16 at 8:08 pm

#22 Smoking Man on 08.20.16 at 6:49 pm

Doug, attributionaly speaking who’s better you or Ryan?

If I put in play 5 million with you and 5 with the other guy, Over 5 years. Which one of you slays the Benchmark better.

Great minds want to know….

An Oleksiak-Manuel finish.

–Doug

#36 Bram on 08.20.16 at 8:09 pm

#16 AndrewGr on 08.20.16 at 6:13 pm
We don’t really prepare for disasters like those countries who border the oceans and are typically hit with tidal waves. And Vancouver is definitely not prepared for that either.

It looks like my house is 60m above sea level, so that would have to be the mother of all tidal waves to reach that high. I don’t think that’s possible?

http://www.floodmap.net/Elevation/ElevationMap/?gi=6173331

I guess english bay could get flooded.

#37 Smoking Man on 08.20.16 at 8:09 pm

#11 Brazil ex-pat on 08.20.16 at 5:20 pm
Easy for Buffet to say. The old fart will be dead in a few months

He’s the only reason Keystone died.. He owns all the rail roads on the monopoly board game..

Hope he dies soon. Young Alberta families, I got your back..

Shit, forgot about T2 And Butts.

Butts that asshole who T2 SUCKS UP TOO cares more about ducks, birds, and trees more than human beings….

Young hard working young Canadian families..

FKING TEACHERS.

#38 D.D. Corkum on 08.20.16 at 8:12 pm

“If there is only 3% chance of an event in a given year, the likelihood in a century is 96.6%,” (paraphrased).

—-

There are many assumptions in this sentence rendering it unsound.

1) The odds must remain 3% each year, neither diminishing nor increasing.

2) The odds must be totally independent from one year to the next, with actions in one year not having an influence on following years.

3) The odds must be 3% in this current year, to begin with. Frankly that seems a bit high.

#39 JacqueShellacque on 08.20.16 at 8:14 pm

Hi Doug,

Does that also apply to diversifying into US-dollar-denominated assets as well? I follow Garth’s rules, but to this point I’ve only bought index ETFs that are sold in Canada, in Canadian dollars. Especially for the fixed income side, I’d like to get into US preferred and high-quality bond index ETFs – sold in US dollars. Should this be avoided? Would purchasing a US equity index ETF best be done in Canadian dollars, or American?

#40 Pepito on 08.20.16 at 8:18 pm

The Nikkei went up and up until it didn’t. It has now been over 25 years since that high mark of close to 40,000. I bet that pretty well all the financial guys in the 1980s said that historically the odds of THAT happening were zero.

#41 For those about to flop... on 08.20.16 at 8:19 pm

#28 Doug Rowat on 08.20.16 at 7:46 pm
#18 earthboundmisfit on 08.20.16 at 6:21 pm

Someone has good taste in whiskey. Some Macallan is going to go very nicely with the Tragically Hip concert from Kingston tonight. Must remember not to mix the grape and the grain. A wee toot might be in order as well.

A fine way to spend the evening! A toast to Gord.

–Doug

//////////////////////

I,ll toast to that.

Earthbound ,if there is a guy singing “I said it’s the sales mix” over the top of the lyrics of “Ahead by a century ” you’ll know it’s Mark as he said he was going to Kingston too.

Also the guys got Vancouver 2013 trampstamp…

M42BC

#42 Context on 08.20.16 at 8:36 pm

I should invite Doug to a high stakes poker game some night as he wouldn’t know when to hold or fold them. We would send him home cashless as accept no IOU’s at this private club by invitation only. The minimum stake to take a seat is 50K, but the butler will give him his choice of drink for free as he exits in despair.

#43 Smoking Man on 08.20.16 at 8:38 pm

Oleksiak-Manuel- Doug

An Olympian….. You listening to this shit Ryan. I beilive you’ve been smoked.. Can’t wait till next week.

Love it.

#44 ww1 on 08.20.16 at 8:39 pm

YouTube link for the live stream of the final Tragically Hip concert : https://www.youtube.com/watch?v=n6pwkHjRWuM

#45 O boy on 08.20.16 at 8:40 pm

This blog is starting to feel more and more like a corporate blog, aimed at attracting customers. That is not the fault of the guest bloggers, it is Garth’s. It is now also abundantly clear that this has been the objective all along, until recently you had most of us fooled. Well, at least I can commend you, Garth, for being more forthcoming about your business motives. I will keep coming back to this blog because of the various news tidbits which remain of interest, but will be doubly cautious in how I will interpret the related advice. I take it you will treat that as a fair position, as opposed to deleting this comment.

Did I make you come here? Do you pay anything for seven original content pieces a week? Have you ever seen a commercial on this blog for my day job? And why have you used six names here in the last two months? I use my own. Says a lot about ethics. — Garth

#46 conan on 08.20.16 at 8:43 pm

Stock markets are all about buying and selling.

I like market timing and portfolio shifting. I also use currency values to determine when i get in and get out of international markets. I find Canada just awesome for parking investments while I wait for the value of the Canadian dollar to get where I want it to be, and then I make the move into international. I also do this in reverse. Never buy international holdings when the Canadian dollar is in the dumps. Your investing dollars immediately start in the hole.

Buy and hold is for ETF unit holders. Your adviser is not going to recommend any other strategy because they do not receive compensation to guide you.

Surprised people pay any fee at all for them in addition to the basic fee that comes with the fund.

I am not trying to diss anyone. But, every ten times this blog whales out on managed funds , I am doing the reminder post. You recently hit 10 again.

#47 Smoking Man on 08.20.16 at 8:45 pm

Jesus in my book, chapter one.. When little brain is talking for big brain…. It called out for 3 thin ones and one huge fat one..

On the dance floor right now Sherry Valentine.. 3 thin ones and a huge one…

I want to approach in my foggy disposition, will it be life imitating art, or art saying, wtf….

Better to stay sitting and Smoking. Who let the skunk in the building…

#48 jfish on 08.20.16 at 9:04 pm

Gold up year to date Canadian 17.7%. And you can actually see and feel it. Only been the worldest all time unit of weath. Good luck with your useless paper entity. Oh ya Turner, we know you don’t like it.

#49 WUL on 08.20.16 at 9:06 pm

During that span of five seasons, Barilko and the Toronto Maple Leafs were Stanley Cup champions on four occasions 1947, 1948, 1949, 1951. The last goal he ever scored (in overtime against the Montreal Canadiens’ Gerry McNeil in Game 5 of the Stanley Cup final, on April 21, 1951) won the Maple Leafs the Stanley Cup.

Kingston = Confederation

#50 Doug Rowat on 08.20.16 at 9:07 pm

#38 JacqueShellacque on 08.20.16 at 8:14 pm

Hi Doug,

Does that also apply to diversifying into US-dollar-denominated assets as well?

We currently have our client portfolios weighted about 20% to US$ ETFs. This provides an effective hedge against weakness in the oil price and the C$.

–Doug

#51 ANON on 08.20.16 at 9:13 pm

Doug,
I remember expensive houses and extreme optimism about the future during my childhood years, then cheap houses after the 89 bust in Easter Europe (about a month salary for a house), the the same old (and now decrepit houses) during the credit boom of the 2000s, selling for mind-boggling prices and being renovated, expanded, wall demolished, the works. A new paradigm!
Wealth is a state of mind, money is a promise of more, a measure of trust in the narrative. Once the narrative falls apart, you can do absolutely nothing about it.
There will be no nukes (those require credit to sail past, and many may even no longer be operational, we’re talking really old technology here), no zombies (those require food and medicine), just extreme poverty. No Hollywood apocalyptic grand finale, the four horsemen take their sweet time when charging. Everything will be tried to keep some kind of narrative alive, look at the past depression, especially in Europe.

#52 Cam on 08.20.16 at 9:25 pm

Just dropping by to say best post ever!

#53 Context on 08.20.16 at 9:27 pm

This will happen at an appropriate time as was looking at about 100 pictures last night of open concept high rise condos in the Toronto central core and something caught my eye. I need to find the room displays at pre-sales when so many were taken in at the VIP parties to
rush the signing of contracts. The developers over the past few years were cutting corners for profits as the square footage was out of balance to build more units per floor. Some of you have been had by buying junk units that need to be sold which is why they have thrown a kitchen against the wall. Need to do more research in this sordid matter of creating rooms out of thin air the cheap way for an illusion.

#54 WUL on 08.20.16 at 9:30 pm

I am leaping from one bandwagon to another. Sorry Toronto. You lack grit. I like grit. Cleveland has grit.

It is not you Toronto. It is me. We can still be friends.

Go Indians.

#55 acdel on 08.20.16 at 9:33 pm

#18 earthboundmisfit

Listening and watching it as I type; legends.. Awesome show.

#56 ww1 on 08.20.16 at 9:34 pm

One more reason to invest and stay invested. Global peace has never looked better.

Battle Deaths in State Based Conflicts (1946-2013)

Unless you believe “war is good business – invest your son” that is.

#57 not 1st on 08.20.16 at 9:39 pm

Seriously, I am more afraid of central banks than any terrorist on the planet. Thats where the real damage is being done ever day.

#58 BOOM! on 08.20.16 at 9:43 pm

#44 O Boy

Your “interpretations” are not needed, nor welcome.

just my opinion.

#59 not 1st on 08.20.16 at 9:50 pm

Doug seems like a nice guy, hate to do this to him.

TSX circa Sept 2000 – 11388
TSX circa Jan 2016 – 12073

TSX circa May 2008 – 14984
TSX circa August 2016 – 14687

Right….

#60 Sheane Wallace on 08.20.16 at 9:51 pm

Doug,

Since you (and Ryan) have been studying markets for quite some time, please remind me of any prolonged time period in history when interest rates were close to zero and even negative on majority of government debt in the developer countries worldwide.

That’s right – there is not other such period.

The idea that you can create virtual money (with no savings behind it), lend them out at zero interest rate while destroying savings and then demand higher rates (or threaten with such) increasing the ‘value’ of money is well while providing zero cost financing for government debt is well, that: insane.

I care not what you measure your profits in, but any market that is credit related (housing mostly) will be destroyed, real economy will dive, only defensive stocks will thrive as well as any real asset, including commodities.

I saw 500 (that’s right, five hundred) CAD running shoes (not even leather!) at Hudson’s bay at the Yorkdale mall on the weekend, normal shoes are 3-4 times more expensive than 15 years ago.

Now I am not sure what kind of frozen brain idiots you can convince with the idea that you can actually make money in this economy in any real terms (apart form any ‘nominal’ gains) but it is definitely not me.

#61 ANON on 08.20.16 at 9:52 pm

#55 ww1 on 08.20.16 at 9:34 pm

Global peace has never looked better.

Right on the mark, except for the wrong reasons.
The pattern was always depression first (the Long, The Great, The “communism” which was in fact a localized economic depression, commies are merely those who are no longer able to expand the credit, the promise of more, because they see and feel clearly the disconnect between the narrative and the reality) then war (for those who managed to believe the narrative that other dudes were responsible, and expanded promises -war bonds- that all will be fine if their noses were punched really hard).
Indeed, global prospects for peace have never looked better. However, prospects for prosperity are becoming an endangered species.

#62 eddy on 08.20.16 at 10:00 pm

just when you thought things could not get creepier
cfr does a psa
About the Council on Foreign Relations

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

#63 Sheane Wallace on 08.20.16 at 10:03 pm

#50 ANON

exactly,

Witness first hand here. One can tell exactly when it starts based on experience, but nobody will believe you until too late. Human nature.

So let the people have their sweet dreams, enjoy the present, imagining sweet future for their kids… we know what will follow very well..

In preparation for the s..tstorm I am simply moving out.

#64 Dick Assman on 08.20.16 at 10:07 pm

Dick Assman, Regina gas station attendant and Letterman guest, dies at 82

http://leaderpost.com/news/local-news/dick-assman-regina-gas-station-attendant-and-letterman-guest-dies-at-82

#65 Wallflower on 08.20.16 at 10:07 pm

Get lost, O boy.
Very lost.

#66 Sheane Wallace on 08.20.16 at 10:09 pm

BTW the only reason for Warren Buffet’s ‘success’ is simply access to cheap credit. He is banking insider. Period.

As for how much of his money are really his I have my doubts.

No sane investor would hold IBM stocks as he did and does, period.

I did hold stocks in almost every major company that he bought outright.

#67 Context on 08.20.16 at 10:44 pm

Smoking Man :- Your application at the York Club has been approved and you will need some green for the initial fee by the end of the month.

#68 Dwilly on 08.20.16 at 10:52 pm

Contradiction. (honestly not being a dink here, help me understand). You say (correctly) that you have no ability to time markets. Therefore, correctly, there is no way to tell anyone the exact moment to buy or sell.

But then you say that an advisor can help you adjust allocations based on prevailing market conditions, and maybe go from say 5% to 15% cash.

Here’s the contradiction. If you cannot predict timing then you don’t know when its time to do that. 5%, 15%, 100%, it’s all the same. So basically, by your own admission, you should not be attempting to adjust allocations like that because you have no ability to predict. Am I wrong??

#69 A Canadian Abroad on 08.20.16 at 10:54 pm

“When the apocalypse comes, I’m simply going to take my best bottle of Macallan single malt, sit on the curb and watch the fireworks. ” – Doug

Hmmm, makes me think that I need to do some research into what I need to buy for that “big day” myself.

Doug you are right on the button. I’ve made more money trading/buying/investing into fear and BTFD and even more this year than any year in the past. Easy to say. But it takes grandes bolas to do it when things are falling apart.

Trick is to NOT SELL and hold those buys for the long term.

As Garth says, get out when things are OVERBOUGHT (like Van/TO RE) at the top and don’t be a fool and ride it to the bottom.

#70 D on 08.20.16 at 10:56 pm

Hey Doug:

Absolutely nothing wrong with Macallan enjoyed it on many occasions, I consider myself fortunate to have been weaned on the Glens.

May I suggest an exceptional Irish brew called “Red Breast”, if you haven’t yet tried it I guarantee you will be sorry you haven’t.

This whiskey is truly something to behold.

Cheers

#71 JM on 08.20.16 at 10:58 pm

Interesting topic thanks Doug,
Just curious because I struggle with market timing, how often is a portfolio rebalance appropriate?
Great blog and comments love you guys, even you smoking man ;)

#72 Ace Goodheart on 08.20.16 at 11:07 pm

RE: (If there is only one chance in thirty of an event occurring in a given year, the likelihood of it occurring at least once in a century is 96.6%).

This is actually not true. Chance can’t be evaluated like this (in percentages) unless all of the variables in the system are known.

You also run up against the problem of the point spread getting larger, each time you go up a percentage (ie, for an event that is 30% likely to happen in ten years – and for which you actually know all the variables and can accurately predict this – if you expand the spread to 100 years, then your variables become huge (ie, there is so much more going on in a 100 year period, than in a 30 year period) and even if you knew all the variables, in the 30 year period, chances are you are not going to also know all the new variables added by increasing the time spread by 70 years.

This is junk science. Systems are incredibly difficult to predict at a small scale (ie, how many more swings will that pendulum have, before it stops). When you expand the scale, you cannot predict them. Too many variables.

#73 Bottoms_Up on 08.20.16 at 11:22 pm

The last concert of the Hip shines a spotlight on the importance of moments.

Sure in most cases it makes sense to plan for the longer term. But never lose sight of what is very much more important. Enjoy the moments.

#74 Bram on 08.20.16 at 11:23 pm

#39 Pepito on 08.20.16 at 8:18 pm
The Nikkei went up and up until it didn’t. It has now been over 25 years since that high mark of close to 40,000. I bet that pretty well all the financial guys in the 1980s said that historically the odds of THAT happening were zero.

Interesting!
I didn’t know that.

On the other hand: in a country with deflation, stocks do not have to rise.
They can stay flat, and you will still get richer.

Add to that the dividends, and you should be fine.

http://www.inflation.eu/inflation-rates/japan/historic-inflation/cpi-inflation-japan.aspx

Bram

#75 Bottoms_Up on 08.20.16 at 11:28 pm

#44 O boy on 08.20.16 at 8:40 pm
———————————-
No one would invest 7 years of their time in a sinister plan to “hook” investors after all that work.

Do you even know why Garth got booted from parliament? He loves to engage Canadians, to help people, and he loves to write. He is just doing what he loves, and most of us are thankful for it.

#76 NEVER GIVE UP on 08.20.16 at 11:33 pm

BC Gov is not finished its job.
Now they have to put in legislation forcing cities to process building permits in 3 months.

All the little empire builders who want to be nimbys and keep out too much development have to realize they were once looking for a home.

Selfish cities. Think about your own children? Where are they going to live?

#77 Doug Rowat on 08.20.16 at 11:36 pm

#67 Dwilly on 08.20.16 at 10:52 pm

Contradiction. (honestly not being a dink here, help me understand). You say (correctly) that you have no ability to time markets. Therefore, correctly, there is no way to tell anyone the exact moment to buy or sell.

But then you say that an advisor can help you adjust allocations based on prevailing market conditions, and maybe go from say 5% to 15% cash.

Here’s the contradiction. If you cannot predict timing then you don’t know when its time to do that. 5%, 15%, 100%, it’s all the same. So basically, by your own admission, you should not be attempting to adjust allocations like that because you have no ability to predict. Am I wrong??

I said we can’t time markets short term. I like to think we have some directional accuracy when measured in quarters or years.

–Doug

#78 ANON on 08.20.16 at 11:37 pm

#62 Sheane Wallace on 08.20.16 at 10:03 pm

In preparation for the s..tstorm I am simply moving out.

I’m prepared to move out also (48 hours tops, no real ties, no debt, and used to the psychological trauma of moving, which ain’t easy in my experience), but I’ll wait for the start of the decline before taking any action. I never give advice, because I know better, I simply point cold hard facts, everyone can judge for themselves. Right now I’m waiting to see what the response will be to the credit crash, because is crucial IMHO. Liquid and mobile, that is all I figure is best for me (&Co) to do at the moment. That, and clinging to the job, for as long as possible. Good luck, buddy!

#79 Doug Rowat on 08.20.16 at 11:45 pm

#58 not 1st on 08.20.16 at 9:50 pm

Doug seems like a nice guy, hate to do this to him.

TSX circa Sept 2000 – 11388
TSX circa Jan 2016 – 12073

TSX circa May 2008 – 14984
TSX circa August 2016 – 14687

Right….

Your time periods are arbitrary, don’t include dividends and assume you would only build a portfolio of Canadian stocks. I also said it was a high likelihood, not a certainty, of a positive return if you held a single equity market long term.

–Doug

#80 Ronaldo on 08.21.16 at 12:18 am

#47 jfish on 08.20.16 at 9:04 pm

Gold up year to date Canadian 17.7%. And you can actually see and feel it. Only been the worldest all time unit of weath. Good luck with your useless paper entity. Oh ya Turner, we know you don’t like it
——————————————————-
The better investment was in the companies producing the stuff which are up many many times more than the price of bullion. Most have missed out on this rare opportunity once again.

#81 stage1dave on 08.21.16 at 12:20 am

Took the day off from wondering about investments, monetary return, and whether I might starve to death at some point in the future and watched The Hip tonite…found out my soundbar ain’t loud enuff.

Halfway thru the show wife asks me why I’m wearing a Rush tour t…I can’t remember everything, fer chrissakes…

Guess all TTH stuff is hangin’ up or in the wash…anyway, I’m gonna miss these guys

#82 BillyBob on 08.21.16 at 12:27 am

#62 Sheane Wallace on 08.20.16 at 10:03 pm

In preparation for the s..tstorm I am simply moving out.

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

As someone who “moved out” (left Canada and cut all tax ties) over a decade ago, my question to you is…when?

You’ve been saying the same thing for the years I’ve been reading this blog but never do it.

Just an observation.

#83 Ronaldo on 08.21.16 at 12:30 am

#35 Bram on 08.20.16 at 8:09 pm

” It looks like my house is 60m above sea level, so that would have to be the mother of all tidal waves to reach that high. I don’t think that’s possible?”
——————————————————————
This was the mother of all tidal waves.

https://www.youtube.com/watch?v=yN6EgMMrhdI

#84 TheUnhealthy on 08.21.16 at 12:31 am

Great write up today!
Thanks.

#85 Carly Smithers on 08.21.16 at 12:35 am

A stock I’ve owned for twenty five years has given me an simple 8.6% yield averaged, and much higher if I bothered to figure in the multiple stock splits and compounding of dividends reinvested. No need for balanced investing if you’re bright enough to concentrate on the right stocks. Even Buffet hasn’t figured this out, but bless him for his 66 billion, until we find that many many of those billions have come from playing paddy cakes with a series of Democratic Presidents giving him many many billions in subsidies for Warren supporting their various wacko agenda’s over the years. Warrens latest bunk partner, Obama, has handed over billions to Warren to build dark windmills that produce no power. Warren uses the money to smooth out losses in his mostly failing companies. How did I get a 15% return annually over 25 years on a single stock? You probably do business with them or drive by one of there branches every day.

And BTW,,,Warren Buffet and George Soros are real monsters when it comes to their plans to create social chaos for their own benefit. Think the Rockefellers want to green Canada, nope they fund Canada Hating green groups so they can end up owning our energy industry just like John T do before them

#86 Interstellar Old Yeller on 08.21.16 at 12:44 am

If you want to prosper, you have to participate in markets—even bad ones.

I liked this bit. Good guest post today, Doug.

——

#58 not 1st on 08.20.16 at 9:50 pm

You need to account for dividends, too.

#87 Squish on 08.21.16 at 1:21 am

#47 jfish on 08.20.16 at 9:04 pm. Re: Gold.

“Only been the worldest all time unit of weath.”

—–

I mean, you gotta admit, folks, it’s pretty hard to argue with this logic.

#88 A Canadian Abroad on 08.21.16 at 1:45 am

#67 Dwilly
#70 JM

Market Timing.

I’m a technical (analysis) trader, so all those boring ticks/candle sticks and moving averages actually get me excited!

So market timing (I find) isn’t hard for a technical trader like myself as I watch the market tick-by-tick daily. But that requires dedication.

The MOST basic way to “know” when to get into the market is to watch the 20/50/200 moving averages. Google Finance can show those to you on any ETF/Mutual Fund/Stock. When it goes under the 50 or 200, that’s a nice BUY signal.

Also when people SELL, you BUY; but only after a 5%+ dip; like my BREXIT call I did here the week before. Man, that was sweet buying the 2 days after the vote.

My next guestimate to get in to the markets is October to November as that’s SEASONAL technical analysis on when the markets dip most + add in the USA elections = volatility (which is OPPERTUNITY).

I think I need to change my name here to:
“That Technical Analysis Guy” or something like that.

#89 will on 08.21.16 at 1:59 am

“and markets, the vast majority of the time, move higher.”

I’m going to be a prick here. Let us make a crucial distinction. It’s the indexes that the vast majority of the time move higher. You know why? Because underperformers get booted off the index and get replaced with another symbol that has better prospects.

A guy a number of years ago was fired up about the fact that Kodak was booted from the DJIA. He said that one of the purposes of a stock market index is to give a general picture of the economic climate in a nation. He was saying that Kodak was indeed reflective of general business conditions in the usa: lack of innovation and failure to grasp industry trends followed by many insightful words about the rust belt.

Anyone remember the TSE 300 Composite Index?

Yeah. That one. And what do we have now? An index dominated by banks and so-called “materials” which to me the vast majority look like mining companies.

So I guess that’s why Garth and co recommend etfs. Because you don’t know which symbol will be dumped. But if you weren’t in Maple or were light on Maple this year (as advised by Garth and co.) then so far anyway you missed out on the best performing index in the world. It makes no difference if the S&P500 or the DJIA are hitting new highs.

We live in a diversified economy less and less. Same as the usa. Speak to me about the index. As a participant in the market for stocks, I will make up my own mind. It’s not enough to say that the index (or in your words “the market”) goes up over time. I need a big picture to buy into.

Some of us out here need a big picture as opposed to the faith based “markets, the vast majority of the time, move higher.”

Love, -will (my own name btw.)

#90 hh on 08.21.16 at 2:40 am

#52 Context on 08.20.16 at 9:27 pm..

If you’re looking to purchase in the TO condo market – buyer beware. I recently stayed a week in a spanking new downtown unit, a stone throw from the ACC…. and (language Timothy) the quality of the unit and building as a whole was/is sh_t.

“Cutting corners” is too kind a way of putting it.

#91 Well, that was cheery... on 08.21.16 at 3:34 am

Buffet forgot about “Space” and its numerous asteroids, comets and other mass extinction event space debris.

From your chart I conclude the Doomers/Gold Pushers are consistent in their assertions, if nothing else.

So Doug, are there any other cheery/uplifting topics you want to share with us today, other than Armageddon?

#92 Larry Laffer on 08.21.16 at 6:30 am

SM#36
He’s the only reason Keystone died.. He owns all the rail roads on the monopoly board game..

Too much of a shortcut.

Buffet’s BNSF hauls some Bakken crude but the volumes are about half they were two years ago. So far, BNSF is hauling very little, if any, Alberta crude. CN and CP do haul some Alberta and Saskatchewan crude, but most of it is bound for East coast destinations not served by BNSF.

Alberta bitumen should not be hauled in pipelines anyway, since it must be diluted with highly-volatile and explosive naphta-like substance. Hauling undiluted, solid-state bitumen in railcars would be a far safer option than any pipeline.

#93 Honey Dripper on 08.21.16 at 7:16 am

Thank you for more great free advice shared publicly. I don’t know how anyone could think that this advice would harm the long term outlook for their investments. I prefer a dividend growth strategy but that’s just me.
I’m always 100% invested too!

#94 Ronaldo on 08.21.16 at 7:29 am

#44 O Boy

”I will keep coming back to this blog because of the various news tidbits which remain of interest, but will be doubly cautious in how I will interpret the related advice.”

I doubt that anyone on this blog gives a hoot whether you come back or not. I have been coming to this blog since the fall of 2008 and have gained a great deal of enjoyment and knowledge from it especially from the many contributors. Even Smoking Man. You can leave anytime and as Garth has said before, watch that the door doesn’t slam you in the butt on the way out. You would not be missed. And by the way, I am not a customer of Garth although I believe that people would be making a wise decision if they decided to be. Real financial advisors with the knowledge that Garth has are hard to come by and we are getting this knowledge for nothing. You sound like a very jealous dude.

#95 Ronaldo on 08.21.16 at 7:38 am

”Your time periods are arbitrary, don’t include dividends and assume you would only build a portfolio of Canadian stocks. I also said it was a high likelihood, not a certainty, of a positive return if you held a single equity market long term.

–Doug”

One other thing that is important to note is that in March of 2000 when the TSX hit 10000 for the first time, Nortel made up nearly 1/3 of the index by itself at the time. Take that out and see what you get.

#96 Alex on 08.21.16 at 8:37 am

Fact: the global real estate bubble will not burst until the global stock market bubble bursts. Then the global bond market will also burst.

#97 Doug Rowat on 08.21.16 at 9:00 am

#71 Ace Goodheart on 08.20.16 at 11:07 pm

RE: (If there is only one chance in thirty of an event occurring in a given year, the likelihood of it occurring at least once in a century is 96.6%).

This is junk science. Systems are incredibly difficult to predict at a small scale (ie, how many more swings will that pendulum have, before it stops). When you expand the scale, you cannot predict them. Too many variables.

When you ‘expand the scale’ the outcome actually becomes more predictable. This is why the best poker player becomes evident the longer the game goes or the more games you play. Regardless, take it up with Mr. Buffett.

–Doug

#98 maxx on 08.21.16 at 9:19 am

#17 Doug t on 08.20.16 at 6:16 pm

“I am enjoying sitting on the sidelines and watching the circus swing around and around. I have what I have and don’t really give two shits to play in the casino.”

I couldn’t have put it better.
I respect those who take well calculated risks and make a point of reading the data of global affairs and how it impacts markets.
Some risk investments are sensible, however, many who have ample to finance their lives prefer to avoid market gyrations and the concomitant msm, finance industry and cb spin .
A highly irritating characteristic of today’s post is the exclusive focus on the old “no one really knows what life will bring” crap (duh) as opposed to the near impenetrable opacity of FIRE. People have been burned repeatedly by this industry for well over 30 years, so they will be forgiven for being cautious. Or choosing to stay the he!! out of the casino.

“You can watch braver, more disciplined investors get richer.”

Cute, but no cigar…….those with more than enough don’t give a rat’s a$$ and prefer to watch their laptop monitors for the next great travel opportunity or whatever suits.

Same $hit you hear from [email protected] all the way up to the hallowed halls (cough) of “Private Investor Banking”.

Cheap and socially divisive. Reeks of realtard-speak. You might have a chance of attracting this demographic with a new and convincing message…..and while you’re at it, throw in a performance contract.

#99 Shawn on 08.21.16 at 9:58 am

Yes, the bond market is the perfect illustration of fear. But it looks like July 2016 may have finally been the top (yield bottom). Govt bond yields look like their about to break out (ie 10-year+).

Bonds are the new stocks. It’s time to get seriously overweight the new bonds – equities.

#100 Shawn on 08.21.16 at 10:05 am

There is a very good case to be made that the present market environment is similar to the early 90s. Investors who bought bonds or stayed in cash missed the greatest 10 year period for stocks.

#101 crowdedelevatorfartz on 08.21.16 at 10:18 am

Doug.
Great post. Confirms what many of us have been thinking.
As for the MACALLAN. What age? Ive tried the 10, 12 and 18 year old and found the 12 yr old about the best bang for the buck. Price wise AND flavour.
Ever tried Highland Park? I have a 12 and a 35 year old (for special occasions like Brazil Ex Pats deportation back to Canada for beastality with amazonian tree dwelling furry animals aka dwarf sloths).
Anywho.
Highland park ….A bit more “peaty” than MACALLAN but overall not that bad.

#102 NoName on 08.21.16 at 10:27 am

10 Things You Should Be Very Scared Of

https://youtu.be/s6oZ7i1-LuA

#103 A box in the sky on 08.21.16 at 10:41 am

#59 Sheane Wallace on 08.20.16 at 9:51 pm

I saw 500 (that’s right, five hundred) CAD running shoes (not even leather!) at Hudson’s bay at the Yorkdale mall on the weekend, normal shoes are 3-4 times more expensive than 15 years ago.

—————————–

As usual you have no clue what you’re talking about.

Your average runner who puts in say 200 to 300 km/month on the pavement can still go and buy shoes in the $125 to $150 range like they could have done for the past 15 years. Ie. The Brooks Ghost series.

Heck if you go to a large running focused store like Running Free in Markham you can buy last year’s shoes for less than $125.

To say that running shoes have increased in price 3-4x in 15 years is such garbage.

The price of clothing is one of the biggest areas of deflation in general. Whether it’s fast fashion, online or whatever the prices are more competitive than ever.

#104 Scott on 08.21.16 at 10:44 am

Way to go,Garth!

#105 Julie K. on 08.21.16 at 10:54 am

So, if I finally woman-up and “sell” my sidelined cash-o-la to a sexy investment dude, go all in courageously because that is the “recommendation”, what % of my capital will be preserved whilst making those sweet gains?

I am willing to lose about 1% but not a nickel more.

Give me the hard numbers, bro, or forever hold your piece.

#capitalpreservation

#106 Doug Rowat on 08.21.16 at 11:04 am

Doug.
Great post. Confirms what many of us have been thinking.
As for the MACALLAN. What age?

For special occasions, like the end of the world, I’m partial to the ‘Ruby’.

–Doug

#107 Apocalypse2016 on 08.21.16 at 11:15 am

“The four horseman are riding our way”

Absolutely right, Doug.

Rio’s Olympic closing will be shortly followed by revolution and chaos. South America will implode, nation to nation.

Zika is just starting.

Drought has its shark’s teeth gripping North America. The Summer of Hell IS just beginning – it will last until October at least.

America faces electoral chaos, assassinations and more terrorism in the weeks ahead.

Markets will absolutely implode by October.

Britain spiralling into depression, Europe soon to follow.

Government debt hitting the wall in Ontario and Canada.

Household debt grinding the middle class into dust in Canada.

The YVR housing market cratering as we speak.

Toronto’s will follow by September.

People, yo

#108 Damifino on 08.21.16 at 11:16 am

#105 Julie K

Your post speaks loud and clear to the fact you are not a suitable candidate for working with a fee-based advisor.

I recommend you stay in cash and forever drain your capital.

#nogaurantees

#109 Apocalypse2016 on 08.21.16 at 11:19 am

“The four horseman are riding our way”

Absolutely correct, Doug.

But it will be much worse than that.

The Summer of Hell is about to become a firestorm, within hours of the Rio Olympics closing.

Wait.

Watch.

Have a plan.

Save water and food.

Get out of all markets.

ASAP.

#110 Ace Goodheart on 08.21.16 at 11:21 am

RE: #97 Doug Rowat:

“When you ‘expand the scale’ the outcome actually becomes more predictable. This is why the best poker player becomes evident the longer the game goes or the more games you play. Regardless, take it up with Mr. Buffett.”

True, but poker is one of the small, mostly controlled systems, with a limited number of variables, that I was talking about. Yes, it is predictable. A person can actually predict the hand he/she will get, with an increasing degree of accuracy as more cards leave the deck. This is known as “counting cards”.

Ask yourself this, how did we come up with the 30% chance of an attack? Where did that number come from? Look at the figures behind that. Likely they are based on events that have happened in the past 10 or 15 years. They may be even more limited, depending on who did the research.

Go back 200 years, and ask yourself if anyone at that point would have predicted how things are today? Likely not. There are just too many variables. The future is not predictable 100 years ahead. It is hard to predict it 5 years ahead.

I make money in the stock market, because I am able, with a large degree of accuracy, to predict the future 6 months to a year ahead. It would appear to me that not many people are able to do even that (based on the prices that I am currently buying my next “big plays” at).

#111 Context on 08.21.16 at 11:52 am

For those that have a condo listed for sale why not go on a little adventure today. My target is a shopping center to see by subway or car with lots of public parking below in midtown Toronto. Across the street is the entrance way to one of the largest ravine parks in the city or go around the corner for another entrance. Its seconds away from Moore Park which has a direct link into Bayview Avenue into the city with a link to Bloor Street on the right or to the left Queen Street East to the beaches area. The shopping center has one leg in the city and the other in a residential area which is unique; all modes of transportation are covered; the national known grocery store is there; goods and services are at hand; and restaurants abound with one of the largest UK pubs just minutes away. Coming out of this center copy down the company which you can find on the web and then look up. The second level are all offices and keep looking as you will find the upper levels of great interest. This adventure can be discovered at 77/81 St. Clair East and is my #1 location for mid-town Toronto.

#112 For those about to flop... on 08.21.16 at 11:52 am

“A box in the sky ” and Sheane ,I posted this a couple of days ago it shows how the general cost of things has changed the last 20 years.

I would guess as most charts I dig up that it relates to the U.S

I buy 85/90% of my clothing in the U.S

Don’t forget about the Walmart factor as well for price manipulation…

M42BC

http://imgur.com/flDg7mC

#113 crowdedelevatorfartz on 08.21.16 at 12:02 pm

@#105 Julie K

The ONLY garantee that your financial advisor is legally allowed to give you regarding investments is……your “cash position” is garanteed to lose money due to inflation…..
Long term….. statistically speaking….is a wise investment…..unless of course, your holding Brazilian stock of any kind and expect the govt. and judiciary there to work in your best interest……..

#114 Give me the hard numbers on 08.21.16 at 12:03 pm

#105 Julie K.

So, if I finally woman-up and “sell” my sidelined cash-o-la to a sexy investment dude, go all in courageously because that is the “recommendation”, what % of my capital will be preserved whilst making those sweet gains?

I am willing to lose about 1% but not a nickel more.

Give me the hard numbers, bro, or forever hold your piece.

#capitalpreservation

—-

I doubt you will get the “hard numbers” and no way any bro will guarantee the maximum 1%.

#115 NoName on 08.21.16 at 12:08 pm

#105 Julie K. on 08.21.16 at 10:54 am

just by keeping it cash, you are loosing 2% a year.

https://youtu.be/XwhFAuBSl9g
#inflation

#116 NoName on 08.21.16 at 12:10 pm

and this
https://youtu.be/3qv7E2yIiw4

#117 For those about to flop... on 08.21.16 at 12:11 pm

05 Julie K. on 08.21.16 at 10:54 am
So, if I finally woman-up and “sell” my sidelined cash-o-la to a sexy investment dude, go all in courageously because that is the “recommendation”, what % of my capital will be preserved whilst making those sweet gains?

I am willing to lose about 1% but not a nickel more.

Give me the hard numbers, bro, or forever hold your piece.

#capitalpreservation

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JulieK,this topic has been talked about by myself and a few others a couple of times recently so I will give you the short version.

Myself and another guy on here MF decided to go all in after not having a Tfsa,instead of slowly building up we bought slightly different versions of a b and d portfolio

From what I gather MF followed Garth’s version a lot closer and had some rough time with Preferreds and the market in general was in a rut.

I on the other hand am wet behind the ears so I am presently doing the mutual fund thing for which I receive great fan mail for.

Anyway, the last time I checked in with MF he had recovered from the rough start and I pumped this years money into CAD equity and CAD small cap which has proved to be a good choice.

Overall I still make tonnes of mistakes and am not intelligent enough to be a prudent investor but even with all the drama going on and my short comings my tfsa is up around 4% and that is with my Europe and India funds down around 10%.

I doubt it but I hope this helps…

M42BC

#118 Real financial advisors on 08.21.16 at 12:15 pm

Real financial advisors with the knowledge that Garth has are hard to come by…

That’s quite sad, if true, considering what the job of financial advisors is neither creative art, nor rocket science.

Holistic money management, weaving investment, tax, budgetary, insurance, retirement, real estate, family financial and estate advice and management together is indeed creative, detailed and complicated work. Making money grow is the easy part. You obviously do not have an advisor. — Garth

#119 Real financial advisors on 08.21.16 at 12:27 pm

#108 Damifino on 08.21.16 at 11:16 am
#105 Julie K

Your post speaks loud and clear to the fact you are not a suitable candidate for working with a fee-based advisor.

I recommend you stay in cash and forever drain your capital.

====

You sound like a soul needing serious investment.

#120 Context on 08.21.16 at 1:03 pm

#105 Julie K:- This is the type of woman that my mother warned me about but I didn’t listen to her words of wisdom and paid the price. Julie all is not lost as the stock and bond specialist is Ryan who will be up next and he alone can answer all your questions. He will have a good essay for us all unless he doesn’t show up.

#121 Penny Henny on 08.21.16 at 1:12 pm

Real financial advisors with the knowledge that Garth has are hard to come by…

That’s quite sad, if true, considering what the job of financial advisors is neither creative art, nor rocket science.

Holistic money management, weaving investment, tax, budgetary, insurance, retirement, real estate, family financial and estate advice and management together is indeed creative, detailed and complicated work. Making money grow is the easy part. You obviously do not have an advisor. — Garth
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What. No dating advice?

#122 Russ on 08.21.16 at 1:20 pm

Doug wrote:
” Still, the world will end. Someday. But when the nukes sail past, it’s over anyways.
There ain’t anything that’s going to save your…”

A minor correction needed here, nukes don’t sail. They fly.
As in,
Time flies like an arrow
A nuke flies like an arrow
Fruit flies like an apple

I hope that helps clear things up.

#123 Russ on 08.21.16 at 1:27 pm

Real financial advisors with the knowledge that Garth has are hard to come by…

That’s quite sad, if true, considering what the job of financial advisors is neither creative art, nor rocket science.

Holistic money management, weaving investment, tax, budgetary, insurance, retirement, real estate, family financial and estate advice and management together is indeed creative, detailed and complicated work. Making money grow is the easy part. You obviously do not have an advisor. — Garth
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Hi Garth,

Weaving investment has no place in a normal portfolio. It should be there for personal gratification only. A lifestyle choice, similar to owning a motorcycle.

I can tell you that my wife’s looms and fibre stash depreciate more than an automobile. :)
Like spending135 bucks an ounce for muskox down fibre!

#124 waiting on the westcoast on 08.21.16 at 1:38 pm

Doug says… “When you ‘expand the scale’ the outcome actually becomes more predictable. This is why the best poker player becomes evident the longer the game goes or the more games you play. Regardless, take it up with Mr. Buffett. –Doug”

Baam!

Exactly – but even knowing that certainty, it would be a mistake missing out on the market. Except real estate of course… ;-)

I prefer to follow value rather than trends and staying in the market. If something is priced below its value, buy it. If its priced too high relative to its potential, sell it. The trick is seeing stuff the herd has missed or is too optimistic/pessimistic on. Fortunately – I have Smokey to give me those insights here… ;-)

#125 A box in the Sky on 08.21.16 at 1:50 pm

This was a good blog post.

The most important thing about investing is just blocking out the noise and sticking to the gameplan, and not panicking. This sounds so simple, but it’s by far more important than arguing over a 60/40 vs 70/30 or if you should use a market cap index fund or an equal weighted index fund.

Unfortunately we humans are both emotional and irrational. And that’s where the financial charlatans step in.

You need to realize that charlatans like Faber, Schiff, Dent etc are basically the exact same grifters as those right wing media grifters (Limbaugh, Coulter, etc) who peddle fear to old people.

#126 Context on 08.21.16 at 2:03 pm

#121 Penny Henny:- I will give you the ultimate secret of getting lots of dates. Now get yourself a T-shirt made with the printing caption on it saying I am the Dutch Treat Girl.

#127 8% analy. on 08.21.16 at 2:27 pm

# Smoking Man
8% analy. Now that’s painfull.

===

If you say so.

#128 Penny Henny on 08.21.16 at 3:07 pm

#126 Context on 08.21.16 at 2:03 pm
#121 Penny Henny:- I will give you the ultimate secret of getting lots of dates. Now get yourself a T-shirt made with the printing caption on it saying I am the Dutch Treat Girl.
//////////////////////////////////////

Hey Context, why did you give up on the handle ‘Old Man’?

PS. you are still boring

#129 Getting old on 08.21.16 at 3:09 pm

http://www.wdunning.com/docs/2016-02.pdf

Synopsis: The slump in the price of oil is causing
big changes in inter-provincial migration and
provincial rates of population growth, but we don’t
have any real data to tell us how big those
changes are. I am optimistic about the GTA housing
market outlook.

#130 Metaxa on 08.21.16 at 3:18 pm

#125 A box in the Sky

This was a good blog post.

I agree.
The real estate stuff is fine and dandy but an uninterrupted onslaught, day after day, makes these weekend financial posts very refreshing.

#131 Context on 08.21.16 at 3:27 pm

#128 Penny Henny: – I never find you boring in the least as you make me laugh. One minute your calling Doug a sexy investment dude and then make a Freudian slip of telling him to forever hold his piece.

#132 Prince Polo on 08.21.16 at 3:48 pm

#43 Smoking Man on 08.20.16 at 8:38 pm

Oleksiak-Manuel- Doug

An Olympian….. You listening to this shit Ryan. I beilive you’ve been smoked.. Can’t wait till next week.

Love it.

====================
I believe the Oleksiak-Manuel reference means that both Mr. Rowat & Mr. Lewenza are gold medalists in any theoretical portfolio competitions.

#133 Context on 08.21.16 at 3:59 pm

Penny Henny you know I really mean’t Julie K don’t you but frankly can’t tell the difference.

#134 Chance on 08.21.16 at 6:48 pm

Hello

Doug’s article on market performance over time ignores the difference between probability and expectations. Also, past performance is not an indicator of future outcomes.

Nicolas Taleb’s ‘Fooled by Randomness’ addresses Doug’s statistical oversight and Daniel Kahnemen’s ‘Thinking, Fast and Slow’, the biases underlying his optimism.

Regards.

#135 only in Moncton on 08.21.16 at 7:14 pm

Like the writing style and the message…… meets what I expect from hearing you speak on the weekly turner cast. Enjoy the writing, so far you almost make sense..ha

#136 Bram on 08.22.16 at 6:41 pm

#134 Chance on 08.21.16 at 6:48 pm
Doug’s article on market performance over time ignores the difference between probability and expectations. Also, past performance is not an indicator of future outcomes.

Like Doug said: take it up with Warren Buffet.
He’s just quoting.

#137 The Awakened One on 08.23.16 at 1:51 pm

“… I watch a snail… crawling along the edge of a straight razor (i.e. the S&P500)… crawling… and surviving along the edge of a straight razor… that’s my dream, that’s my night mare…” – Col. Kurzt ~ Apocalypse Now ~