Critics

condoms

Sometimes I wonder, why bother? Sigh.

Late last week this pathetic blog offered a guide on how to build the fixed-income (safe stuff) portion of a balanced portfolio. The advice was simple. Own some bonds to reduce volatility and counterweight inevitable plops on the growth side. Mix the bonds up between federal, provincial corporate, high-yield and real return (if you have enough dough). And embrace preferreds, with their 5% tax-reduced yield and potential for capital gains as rates eventually rise.

Experience has shown me that people think (a) investment-grade bonds are like savings bonds (you buy the thing, hold it to maturity then cash it in); (b) when interest rates move up or down bond yields change along with them; (c) bonds don’t give capital gains, only interest; (d) you only buy preferreds because, like stocks, they might rise in value: and (e) all bond values drop when rates rise.

Actually, not quite true. The majority of people, I betcha, have no idea what a bond is. Or a preferred. Or where to buy some. Those who do (think they) know something about investment assets delight in further poisoning the knowledge pool of the innocent by coming here to dis my words. So, last week the stock-pickin’ cowboys, bullion-lickers and GIC braindeadheads piled on to spread misinformation. I could correct the little peckers, but there’s no real point. They won’t change.

Bonds are debt obligations so when you buy some you’re handing over money to a government, utility or corporation in return for regular interest. But with rates in the ditch, it makes no sense to collect interest, which is fully taxed anyway. Bonds also have prices, so while the yield a bond pays you never changes, the value of the bond does. Prices rise when rates fall and vice versa. So as rates move higher in the future, bonds are worth less. The ‘longer’ until the bond matures, the more its price falls. So bonds with ‘short duration’ (closer to maturity) are safer in these times.

However, bond prices are also dictated by demand. When stocks are scary, money flows into bonds seeking safety, and the price of the bonds pops higher. So when equities tank for a while (like after Brexit), bond prices inflate. If you hold exposure to both in a balanced portfolio, one move helps cancel the other so overall volatility is sharply reduced. With less volatility you’re not so inclined to run around screaming, sweating profusely, scaring animals and pounding your keyboard with ‘sell’ orders.

So there’s a role for bonds. Government ones are the safest (federal or provincial), followed by utilities and investment-grade corporate bonds. Also have some managed high-yield debt (sometimes called ‘junk bonds’) in the portfolio – money owed by less creditworthy debtors (like Air Canada or Ford Credit – hardly big risks) who are willing to pay several times the interest. And real-return bonds increase their effective yield every time inflation spurts, and are government-backed.

As for preferreds paying more than 5%, sending cash into your portfolio every 90 days and offering a dividend tax credit at the end of the year, why would you not want to own some? Sure, the value of rate-reset preferreds declines when interest rates are cut, but I think we all know this is the bottom (or close to it) of the interest rate cycle. While prefs paid a juicy return last year, their capital values were whacked when the Bank of Canada chopped rates twice.

So now you have the best of both worlds – a far bigger yield than a GIC produces (without locking up your money) plus the potential of capital gains as rates inexorably creep higher over the years to come. Together with the bonds, the fixed-income part of your portfolio should be delivering a 4% return – twice that of any GIC, with 100% liquidity and less taxation (plus reduced volatility and the potential for capital gains).

The way to do this? Through ETFs, not via individual bond purchases or by buying the preferreds of any one company. When you do, pay attention to the duration of bonds, and the kind of the prefs in the exchange-traded funds, as well as the embedded fees and the liquidity. Ensure the bond debt lives inside an RRSP so interest is sheltered, and the prefs go to your non-registered account, generating the tax credit. Then rebalance as required by markets and events. If all that’s too damn much work, hire an advisor.

Here’s Kyle with a good question (after the obligatory suck-up):

“I have not missed a blog post for nearly 3 years which is a testament to my outlandish lifestyle. I am a millennial (27yo) and own 2 dogs, a golden retriever named Harvey and a lab/retriever mix named Dexter. They are also big fans and get up early with me to look at the pictures you include in your posts.

“Where I get lost is asset allocation. Assume a $300k portfolio spread over registered/unreg accounts, maxed out TFSA’s, wiggle room left with RSP’s and about $140k unregistered. All your loyal readers are aware of basic allocation strategies, 60/40, rule of 90, keeping interest bearing investments (lol) in registered accounts etc. Where I get lost and other novices I am sure, is how to allocate based on the type of the account. For example, is a 60/40 split referring to the entire portfolio or each individual account? Obviously growth stuff in a TFSA makes sense but to prevent myself from rambling, I think it would be a good idea for a post as it nicely compliments the main narrative of your blog. A response would be awesome.”

That’s easy. The 60/40 portfolio mix should apply to your entire portfolio – the cash account (always make it joint with your squeeze), RRSPs, tax-free accounts, plus any LIRAs from previous jobs or RESPs for the kids (never put GICs in there). The point is to ensure a holistic approach to your finances – to blend performance with tax avoidance, and ensure your finances are overall balanced, diversified and liquid. Don’t segregate pots of money – such as for retirement, house money or escort services – since volatility will swell and you’ll end up screaming and sweating.

Reading this blog has essentially the same effect, of course. But you came here.

105 comments ↓

#1 Randy on 09.25.16 at 5:05 pm

Google scientists invented the driverless car and got the idea after watching the Obama presidency & the Wynne Liberals Ontario Govt

#2 Cloudy on 09.25.16 at 5:05 pm

First-rate post. Thanks, Garth, as always!

#3 For those about to flop... on 09.25.16 at 5:15 pm

Hey boss, you cleaned this place up a bit.
Maybe if you have some spare time you can be a consultant for Easyhome…

M42BC

http://www.ctvnews.ca/canada/canadian-company-pulls-ad-over-offensive-acronym-1.3086956

#4 Joe on 09.25.16 at 5:18 pm

3 things:

1) We have a 40kg German Shep/Rhodesian Ridgeback named Harvey!
2) Garth, my wife and I have a mix of RRSP, RESP, DB and DC plans. Would your firm take into account, manage and structure all of our accounts?
3) If we were currently doing the smith manoeuvre, would your firm manage that as well?
Ciao
Joe

I wouldn’t touch the Smith move with a barge pole. Dogs okay, though. — Garth

#5 SitesTree.com on 09.25.16 at 5:24 pm

If 60/40 is to take the entire portfolio including RESPs then what kind of asset should be kept for RESPs?

TFSA: CDN + USA (TSX listed USA ETFs) + International + REITS (if RRSP fund is fully used)

RRSP: Bonds + REITS and US listed ETFs ( if any NYSE or Nasdac listed ETFs)

Non Reg: Preferreds (what is for the business/corp account? still preferreds?) CPD seemed to be good as 25% (or similar are in Perpetuals).

What goes into RESPs then? I guess Equities/Growth part when the kids are infants and then what when they grow up? Bonds ? preferreds?

#6 SitesTree.com on 09.25.16 at 5:26 pm

Emergency fund should be segregate – I think? how much should be the emergency fund?

None. That’s was a LOC is for. — Garth

#7 Not a big deal on 09.25.16 at 5:29 pm

The problem is the age of investing is fast coming to an end. No big deal right?

#8 Bram on 09.25.16 at 5:39 pm

I wonder if I was regarded to be one of the pool-poisoners.

Just for thinking that investment-horizon (e.g. years-until-retirement) should influence how much risk you can bear and how much to diversify?

Take RESP for a toddler, e.g…. University is so far away, is an all-stock portfolio really so bad for that? If so, meh, still keeping that all-stock for at least a decade. The toddler can afford ups/downs on that.

#9 TurnerNation on 09.25.16 at 5:47 pm

It is useless.
We have:

Investment Condos [sic]
Rent is throwing money away.
You can’t live in paper assets.
Housing is good safe long term investment.
Buy now or be priced out.
Something you can see and touch.
Stock market is rigged/risky.
Somewhere to raise a family.
They aren’t making more land.
You can’t time the market.
Uppa up.

The way I see it we will have but three options going forward:
1. Government sponsored weed.
2. Government sponsored Assisted Dying.
3. Balanced portfolio.

So, pick your poisson: which is more likely to pay off long term.

Others will go straight to scotch: Ruby, Gold, Sienna or Amber!?

#10 SitesTree.com on 09.25.16 at 6:00 pm

If 60/40 is to take the entire portfolio including RESPs then what kind of asset should be kept for RESPs?

TFSA: CDN + USA (TSX listed USA ETFs) + International + REITS (if RRSP fund is fully used)

RRSP: Bonds + REITS and US listed ETFs ( if any NYSE or Nasdac listed ETFs)

Non Reg: Preferreds (what is for the business/corp account? still preferreds?)

What goes into RESPs then? I guess Equities/Growth part when the kids are infants and then what when they grow up? Bonds ? preferreds?

#11 Ole Doberman on 09.25.16 at 6:05 pm

The bond market and RE are toast over cooked. Why not go all in on equities for most bang for the buck.

Rising rates will destroy bonds and RE.

#12 espressobob on 09.25.16 at 6:06 pm

If investing isn’t hard enough. Taxation adds a whole new slant on what investments are in which account.

This can get complicated. Having Canadian content in ones TFSA or prefs in an RRSP doesn’t make much sense.

Finding these things out the hard way can be a real heartbreaker. Or hire a pro, much easier.

#13 Mark M. on 09.25.16 at 6:13 pm

Garth, why are investors buying negative yielding debt? Not just in government bonds, but also corporate debt with negative yields. Who wants to be guaranteed to lose money?

After you answer this, tell me again how the only bubble on the horizon is Canadian housing.

Oh, and recently WalMark and The American have been posting again, still waiting for an explanation after last week’s latest Fed punt.

How about it boys? Oh I know, December right?

#14 Sheane Wallace on 09.25.16 at 6:15 pm

I agree on preffereds.

Great way to make money in a ZIRP environment.

—————————————

But on the case of investing in government bonds I totally disagree.

They yield nothing (in many cases negative rates) while inflation is rampant.

The case for bonds would be strong if we are at 3 % talking about increase to 4 in cases of crisis.

We have not of these.

Government bonds are time bomb that will explode.

The case of lending somebody 100 $ that are worth 20 gallons of milk in order to get back $97 (in nominal values)) 10 years from now that will be worth 10 gallons of milk is not very convincing.

Try harder.

#15 cd on 09.25.16 at 6:16 pm

not sure how much a teardown in vancouver is going for nowadays but for 1.55M USD you can get this 6700 sqr ft mansion that was once owned by bill ford. its nice.

http://www.freep.com/story/money/real-estate/michigan-house-envy/2016/09/24/grosse-pointe-shores-real-estate/90839738/

#16 Metaxa on 09.25.16 at 6:16 pm

@ #3 Flop:
From the online story you linked:
“and a Facebook user said they had to explain the acronym to their children.”

No, no they did not. They may have done so but they sure didn’t have to. What a vacuous cop out when one pulls the “think of the children” meme out.

Garth: maybe the folks who don’t/won’t understand bonds are on the same portion of the Venn diagram as those who do it themselves because they know better than to pay someone else to do it.

#17 Cecil Henry on 09.25.16 at 6:31 pm

I don’t understand. You mention the ‘Smith move’ in your book Money road, don’t you??

You explain how to make a mortgage tax deductible by getting a home equity loan and then deducting the interest (by investing in stocks) instead of having a bank mortgage.

(I assume you can only do this if you can buy most of your home at purchase.)

Why the disconnect now??

That is decidedly not a Smith manoeuvre, which involves systematic withdrawal from funds to cover debt payments. I have never recommended it. — Garth

#18 hope & ruin on 09.25.16 at 6:36 pm

I like this article very informative and you break it down for an 8 year old to read. This is why I keep coming back. Thanks.

@ Randy: lol.

#19 Self Directed on 09.25.16 at 6:41 pm

If rising rates will destroy bonds, why are they already so cheap in a low interest environment? If fixed rate mortgages are tied to the bond market and rates go up, do bond prices also go up? I bought ETF [VSB] last week. Looked cheap at $21.64.

#20 For those about to flop... on 09.25.16 at 6:51 pm

#16 Metaxa on 09.25.16 at 6:16 pm
@ #3 Flop:
From the online story you linked:
“and a Facebook user said they had to explain the acronym to their children.”

No, no they did not. They may have done so but they sure didn’t have to. What a vacuous cop out when one pulls the “think of the children” meme out.

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

Hey Metaxa, I actually seen the story on the idiot box last night and the main thing that was running through my pea brain was, they could have just put OMG and had the same affect of trying to connect with the younger crowd.

I’m not cool enough to use OMG,lol ,MRW and all that other trendy stuff, I will stick with my simple speak.

As far as my portfolio, I have not given up on bonds but after taking counsel from some of the more experienced members of the blog I have slowly been moving to a 70/30 mix partly because of bonds and partly to make up for having mutual funds instead of ETFs.

I have to be realistic with my retirement goals and I am trying to find a way of trying to scramble to 500k.
Mrs Flop is trying to match this goal.
Freedom First said he will kick in $1000 if we are still married at retirement time.

What will a million dollars get us in 2040….who knows…

M42BC

#Boomihopeyouralright

#21 Self Directed on 09.25.16 at 6:57 pm

Sorry, i meant $24.64 on VSB.

All I know is, i bought it to balance out my portfolio. Also because i heard short term bonds are better. Plus it has a dividend just over 2%. But if rates go up, say a full percentage point, what could happen to VSB? Could it see new 5 year lows?

Also, VSB has only been around since 2012 so its always lived in a low rate environment.

#22 History on 09.25.16 at 7:05 pm

Just wondering if you could share what your Balanced Portfolio averaged over the past ten years. thx.

#23 Jungle on 09.25.16 at 7:19 pm

I wouldn’t feel comfortable holding rate reset preferred shares especially because this week a top bond trader on BNN said there is an now a (40%) chance the BOC will cut rates again, due to low inflation and economic data.

I think secretly they want this because if us raises rates in DEC and BOC drops, our dollar could tumble into the 60’s.

I have no problem holding 50% of our portfolio in US and INT stock market because it’s all traded in USD.

#24 Millenial on 09.25.16 at 7:40 pm

Hey Garth,

What percentage of one’s worth should be allocated to physical precious metals (i.e. coins/bars in hand)?

Outside of your teeth, you mean? — Garth

#25 not 1st on 09.25.16 at 7:42 pm

Owning govt debt is a foolish move. How does the govt generate a yeild? by taxation of course. When you buy a bond, you give the govt money to do all sort of stupid stuff with now and then tax you later to pay back your yeild.

Why get into bed with the other 12 trillion dollars of dumb money out there? if it isnt going to pay you to own it, its a poor investment. Gold or even land are much better bet.

But corporate or preferred are tied to profits of actual companies so those have merit.

Yes, who in their right mind would hold some risk-free assets that pay you something, reduce volatility and can provide a capital gain? — Garth

#26 Cory on 09.25.16 at 8:01 pm

It wouldn’t matter how much financial information is given away here for free on this blog because I would bet that less than 0.10% of readers/posters would ever learn or act on it.

Excellent blogs this last week.

#27 OffshoreObserver on 09.25.16 at 8:07 pm

I’m 80 per cent in stocks – am I taking too much risk?

(Story in The Globe and Mail.)

My comment:

Most people don’t appreciate that their government pogey is really a “bond-like” component of their portfolios. When cashflow from, say, CPP, OAS, maybe even a disability pension and/or GIS is capitalized.

For example: I am 63 and receive CPP of $358/month or $4,296 per annum. In two years, I will receive $550/month in OAS. These sources will total $10,896 per annum.

Using a capitalization rate of 3% yields a present value of $363,200, assuming a perpetual yield, from these two sources.

Assume I have equities of $500,000.

The Balance Sheet would look thus:

Bond-like assets……………..$363,200 (42%)
Equities……………………….. 500,000 (58%)
Total Assets………………$863,200 (100%)

I think my CPP is about half the “average” amount.

So, the, again, “average” Canadian upon turning 65 will have at least this Balance Sheet:

Bond-like assets:
CPP……………..$286,400 [$716*12 = 8,592/annum–“capped” @3%]
OAS……………. 220,000 [$550*12 = 6,600/annum–ditto]
Sub Total $506,000
Equities……………………….. [fill in your figure.]

So, the take-away is: You are probably richer than you think.

But, temper this with how much you owe of Canadian government liabilities.

#28 espressobob on 09.25.16 at 8:19 pm

Bonds act as a buffer especially in an RRSP. A place to stash cash when taking profit. And a good source of capital during a correction.

A lot like a reverse rebalance. Sounds weird but it is profitable. It’s what contrarians do.

#29 Sheane Wallace on 09.25.16 at 8:26 pm

#25 not 1st on 09.25.16 at 7:42 pm
Owning govt debt is a foolish move

absolutely agree.

————–

Yes, who in their right mind would hold some risk-free assets that pay you something, reduce volatility and can provide a capital gain? — Garth

———————

David Rosenberg of Gluskin Sheff whom I happen to know (have you been at the last 2 floors on 333 Bay street? amazing modern concept office comparable only to the KMPG offices in Toronto) calls government bonds return free risk. Can’t agree more.

http://www.businessinsider.com/david-rosenberg-on-government-bond-yields-2016-3

————————–

#27 OffshoreObserver

exactly,

with the twist that CPP actually has some real assets at the moment, but it’s boss resigned recently, I am wondering what our beautifully minded politicians have in mind for CPP… Such chunk of real assets in the hands of the plebs. Steve H’s hemorrhoid’s must be hurting big time.

#30 Sebee on 09.25.16 at 8:27 pm

So while we dump on the RE cartel, it turns out that thanks to non-GAAP earnings has become a frankenumber of it’s own.

#31 crowdedelevatorfartz on 09.25.16 at 8:38 pm

If “Kyle” is 27 yrs old and already has 300k invested……he’s way ahead of the plebian curve.

Well done Kyle.

You’ll be retired way ahead of your friends….

#32 TurnerNation on 09.25.16 at 8:40 pm

So…you think live in a democracy.

Stop paying land rent to the Royal Family and see what happens.
Indigenous people tried that…and they got put into Reserves/Concentration Camps, where things are so bad kids huff gasoline to try and escape.

(Yet billions in taxes is taken from us for “Indian Affairs” but the corruption skims it off the top).

Say how do you think the Queen got her mug onto our coinage? That they’re just us nice folks? Or centuries of blood conquest?

Look overseas at what the warplanes are doing as we speak. Yep it works. What we are ruled by.
Realize this and everything get much easier.

#33 Say What? on 09.25.16 at 8:43 pm

“While prefs paid a juicy return last year, their capital values were whacked when the Bank of Canada chopped rates twice.” – Garth

————————————————-

More cuts are coming.

#34 Smoking Man on 09.25.16 at 8:45 pm

Strip bonds are sexy..

I bet 99% of the dogs here have no idea what they are.
I would tell you if the pit boss on a crap table at Seneca didn’t say put away the phone or you’re murdered.

#35 Say What? on 09.25.16 at 8:50 pm

“So now you have the best of both worlds – a far bigger yield than a GIC produces (without locking up your money) plus the potential of capital gains as rates inexorably creep higher over the years to come.” – Garth

———————————————————–

Garth, you obviously really believe this nonsense. Can you please explain, in a balanced, non-smartass way, why? Do you believe that growth and inflation will creep up and force higher rates.

#36 not 1st on 09.25.16 at 8:55 pm

Lets apply some (much needed) logic to this blog.

Central premises;

1. GICs are dumb because they are low return and tie up your money with the bank for 3 years.

2. Govt bonds are desirable asset class even though they pay little return and tie up your money with the govt for 10 yrs.

Huhh????

This is on par to Ryan’s explanation that QE that pumps equity and bond markets was great but QE that raises consumers housing wealth is bad.

Bonds are 100% liquid, reduce volatility and have capital gain potential. Read my words. — Garth

#37 Vetran Will Gable on 09.25.16 at 8:56 pm

Garth, Have the number of comments lessened since you put your foot down recently?

And for those of you who ask about gold, remember Kevin O’Learly always keeps 5% of his holdings in Precious GOULD! He says it reduces volatility in his accounts.

And as for the bonds, where to keep them? In Cash Account they are fully taxed. In TFSA, you are wasting room that could be devoted to growth equities although bonds income are not taxed there. In RRSP same thing. Hard to know where to hold the bonds is right!

As stated, in your RSP. — Garth

#38 Mark M. on 09.25.16 at 9:03 pm

Bonds are 100% liquid, reduce volatility and have capital gain potential. Read my words. — Garth

Until the bubble pops.

#39 Andrew Woburn on 09.25.16 at 9:09 pm

The European Union was born out of the rational desire to avoid another catastrophic European war. Still I wonder if the weakness at the heart of the EU is not the Euro or overbearing Brussels bureaucrats but the growth in globalism which may have undercut its defining purpose.

Before World War II, trade followed the conquering flag. Before free trade many economies were closed off by tariff walls or cultural resistance to foreigners. Business benefited from war not only by selling munitions but also in getting trade concessions in the overpowered country. In a globalized world benign trading into peaceful countries pays better than war. Iraq may be an object lesson.

The seminal event of the 20th century was World War I which led straight into WWII. Many observers of the WWI armistice negotiations, including John Maynard Keynes, said the harsh economics of the peace terms would lead inevitably to a resumption of the war within 25 years.

There was no one cause of WWI, and most historians say it was a huge miscalculation on all sides, but an essential precondition was the unification of modern Germany. The 1866 Prussian conquest of a cluster of loosely confederated feudal estates begat a “German Empire” giddy with power and new riches which immediately launched into the Franco-Prussian War of 1870. Its business classes wanted in on the colonial wealth enjoyed by other leading European powers so they supported the construction of a powerful navy to challenge the British trade hegemony. In the end, their desire to profit from militarism brought the 1919 “peace” terms which ruined them and Germany. You already know the rest.

Today, if you are a Chinese billionaire who wants some American apple pie, you just list your company on the New York Stock Exchange. If you are an Austrian software entrepeneur, forget Brussels, you finance in London. Other than “defence” contractors, no businessman anywhere wants his government to invade his customers. Europeans typically vacation or own property in other states they once considered hostile. No one can say there will never be another European war but interconnected European millennials are simply not going to worry about it as much as their boomer politicians still say they do.

So will Europeans really be safer from inter-European conflict if they acquiesce to the “ever closer union” promoted by current elites or can they live just as safely as reasonably independent members of a trade group in a globalized world. Perhaps this is the underlying challenge of Brexit which may point away from an ever-federalizing Europe back to a less constraining and more productive economic/defence association.

#40 cowtown cowboy on 09.25.16 at 9:24 pm

TORONTO PRICES CRASH 35%!!!!

House sells for almost $9MILLION LESS than asking…

http://www.theglobeandmail.com/real-estate/toronto/which-high-profile-musical-couple-now-owns-rosedales-curvy-castle-of-calculus/article31983170/

#41 Smoking Man on 09.25.16 at 9:24 pm

As stated, in your RSP. — Garth

GARTH What does yiur mean. A writer wants to know.

#42 acdel on 09.25.16 at 9:44 pm

Have not said it in a while, good post Garth and yesterdays.

As I have mentioned before, people are just tapped out; systematically we are being taxed to death by levels of politician’s who just do not grasp it. Now we are all paying for the lovely (sarcasm) royal family to enjoy a lovely vacation, flown by government jet, expenses paid by us suckers.

It is so frustrating for all of us hard workers just trying to get ahead or stay at the status quo.

Always appreciate your views Garth.

#43 John in Mtl on 09.25.16 at 9:49 pm

#41 Smoking Man on 09.25.16 at 9:24 pm
GARTH What does yiur mean. A writer wants to know.

The answer, SM, is written on the yurinal wall at Seneca.

#44 Sheane Wallace on 09.25.16 at 10:01 pm

Bonds are 100% liquid, reduce volatility and have capital gain potential. Read my words. — Garth

——————————–

Capital gains potential from here means:
1. Rate cut, including into negative territory,
and/or
2. Some type of capital control, including one time wealth tax, mandatory permanent purchases of government bonds at zero or negative rates.

or variances of the above.

In any of these cases miners will quadruple, at least.

#45 AfterTheHouseSold on 09.25.16 at 10:01 pm

GM workers ratify deal.

http://www.theglobeandmail.com/report-on-business/ontario-plant-workers-ratify-labour-deal-with-general-motors/article32046547/?reqid=f7e6cb17-7781-418e-a263-370f5bef880d

#46 Selfie politician on 09.25.16 at 10:05 pm

No, not T2… Hillary goes crowd selfie. She is testing a new platform she can step on.

Her campaign is clearly run by Millennials now, panic has set in.

http://www.zerohedge.com/news/2016-09-25/hillary-2016-caption-conest

#47 Nodebt on 09.25.16 at 10:16 pm

Hey smoky, can u please explain strip bond smoky I know nothing about them
Thx
Nodebt

#48 MF on 09.25.16 at 10:21 pm

#117 Sheane Wallace on 09.25.16 at 4:43 pm

Exactly. It’s all debt driven. I know a few immigrant families here in the GTA who borrowed to the max in order to buy a tiny house in Scarborough. Literally 25k down payment on a 525k house. Lots of folks have rental properties and condos, which they are basically placing their retirement hopes on. One crack and this speculation goes poof. This is driving a lot of the so called insatiable demand Ace was talking about.

MF

#49 WalMark of Sadkatoon on 09.25.16 at 10:30 pm

Smoking man for as much as he gets deleted, has most of the calls right. He called Vancouver and Toronto to run on years after people thought it would crash. He called the fed out too.

Don’t forget his epic call on the USD CAD pair last year. He made a killing and helped a lot of us do so as well!

Having said that I’m not convinced of his Trump call. If he nails that one I’ll call him god

#50 joblo on 09.25.16 at 10:35 pm

Saw Snowden movie, Oliver Stone directed.
Freedom…what’s that?
https://www.rt.com/usa/360391-obama-surveillance-stasi-snowden/

#51 not 1st on 09.25.16 at 10:41 pm

Bonds are 100% liquid, reduce volatility and have capital gain potential. Read my words. — Garth

—-

GICs are guaranteed ROC + interest in a short time frame and a perfect fixed income instrument unaffected by central bank machinations. Banks use GIC deposits to lend out into the economy to stimulate growth.

Bonds are dead money supporting various govt schemes, have zero capital appreciation and without a certainty, your 1.1% “yield” will be paid back in a much higher tax environment.

A political, not a financial view. You were completely wrong on bond liquidity nor do you understand bond pricing. Just give up. — Garth

#52 Irent on 09.25.16 at 11:29 pm

Hi Garth, At what age does it stop making sense generally speaking to own real estate as residence and form of investment. Applied the rule of 90 and should have 50% in home. But that will only be a fraction if going to buy a home in GTA

#53 Jessica on 09.26.16 at 12:37 am

@#13 Mark M. Corporations and larger investors invest in negative-interest bearing financial assets because 1) they must park the money somewhere (it cannot be stashed under a desk at head office) and 2) they can deduct the losses at tax time.

-——–-
Thank you Garth for these last couple blogs on bonds. We are not all 1%ers on this blog, as I think many of us who are beginning investors or don’t have much saved yet to invest tend to lurk silently.

I have a question as to why you suggest that a couples’ cash account be held jointly. As a divorcee who did that, I most likely wouldn’t do it again except for ease of bill payments (my salary would not go in there). But that aside, it seems like this could be a ticking time bomb in terms of income attribution for tax purposes. If the cash account is joint how can you show that it is the lower income spouse who came up with the cash on his/her own for his/her investments? Anyway, if you could explain why you recommend that, it would be much appreciated.

#54 Bob dog on 09.26.16 at 12:37 am

I’m sick and tired of emergency interest rates sodomizing people who act responsibly while rewarding tools who take on huge risk because they have nothing to lose. I was layded off from my tech job 2 weeks ago in Vancouver. I had my first interview within 6 hours of starting my job hunt and a job offer within 8 work days. I have elected to turn down the offer of 95k in favour of collecting EI at 1800$ per month. Until the terrorists operating the criminal banking cartel normalize rates and allow the housing market to correct, I flat out refuse to work or pay income tax in Canada. Working is futile while inflation is at 20% and interest is 1%. When will people wake up and demand our politicians be accountable for their horrendous crimes against theall young Canadians.

#fcanada

#55 A Yank in BC on 09.26.16 at 12:46 am

#22 History
“Just wondering if you could share what your Balanced Portfolio averaged over the past ten years. thx.”

Not hard to look-up..

For the ten-year period ending 08-31-16, the Vanguard Balanced Index Fund (an excellent 60/40 indexed approach) had an average annual return of 6.81%, irrespective of dividends paid. This period included the very severe 2008 correction, which is testimony to just how well a balanced portfolio works.

#56 South Etobicoke Trump Campaign Central on 09.26.16 at 1:00 am

GICs are literally the AIDS of the financial asset world.

BTW, I’m taking bets for tomorrow’s debate. If Hillary dies tomorrow, Trump can be defeated by Kaine.

If she lives, we’re looking at a landslide, Colorado and Illinois, two battleground states, are polling within a margin of statistical error between the two candidates. Florida is firmly red. If we secure just ONE of either PA, Il, or CO, we’re looking at a sweep not seen in recent times.

#57 Bob dog on 09.26.16 at 1:05 am

I have been watching game of thrones for years now and I find it fascinating. Today members of house Windsor were visiting Vancouver and hundreds of people were camping out to catch a glimpse. My only thought was, why has no other house attempted an ambush in an attempt to wipe out the Windsors and sieze control of the throne? That’s just about the only thing that would make the whole royal nonsense interesting. The real estate gains alone would make the risk worth while.

#58 Freedom First on 09.26.16 at 1:13 am

#34 Smoking Man

Yes.

I bought 10&20 year Real Return Strip Bonds. Had to sell the 20 year one after it went up 25% in 30 months.

Of course I know you know why it went up Smokey.

I also know that you know you have to able to hold em for the duration in case of_________________

Not an investment for the unliquid. As Garth says, most people should buy the ETF Real Return Bonds. Depends on the net worth. Canadian version of TIPS.

#59 Kenny on 09.26.16 at 3:09 am

Why the advice to have all the cash joint with your squeeze? In my case my buddy’s sister…

Why pay the costs of another account just for the sake of being a joint account?

Seems like giving the bank more than necessary….

Please explain the reason

Thanks Garth!

#60 Dave in Kincardine on 09.26.16 at 4:57 am

# 6 Emergency Fund, Hey Garth, In theory having a LOC for emergencies is sound but my experience is that this is like the crack in the dike. People justify expenditures of a LOC for everything. Need a vacation because I am stressed out – LOC, car repair – LOC, new siding on house – LOC. LOC are just poison. Our parents did not have one and they did OK. History lesson. Thanks and keep up the good work.

#61 Shannon on 09.26.16 at 5:59 am

BOC Poloz the clown prince, says he’s “shocked” by the lo inflation and lousy production numbers all around. The Liberals are borrowing hundreds of billions , they’ll keep rates on a downward bias. There will be a bottom for preferred shares, when Trudum announces negative rates. Meanwhile, that w ovule be positive for short term bonds. Expect the peso to be into the 60’s mid way through the Alvie gangs mandate. Get yer money out of Canada.

#62 Grey Dog on 09.26.16 at 7:39 am

Brilliant Garth! I never understood bonds; thanks for the tutorial.

#63 pBrasseur on 09.26.16 at 7:48 am

Garth is dead wrong on bonds.

Rates at historical lows mean bond prices are at historical highs. Chances for capital gains are limited while chances for capital loss are much greater (either way this is speculation, not investing, there is a difference).

If that’s not enough yields often lower than inflation mean you are losing money in real term.

Bonds are liquid until they turn less liquid, then prices can drop, fast.

There are many trillions worth of debt out there, much of it will never be repaid, it will drown in inflation and be wiped with defaults, the big losers: the LENDERS, don’t be among them.

If more people avoided bonds the world would be a better place.

Incorrect. The weighting in government bonds is low, and they’re in a portfolio for the specific reasons I mentioned. There’s zero risk and they are 100% liquid. You err in that comment. All you do on this blog is pump stock-picking which is wholly inappropriate for most people. Their best bet for stable returns is a balanced and diversified portfolio. Stop being a cowboy. — Garth

#64 The American on 09.26.16 at 8:05 am

Mark M. (and the other four handles your use), hey dipshit you’re not getting an explanation from me because I already told you no less than three times the rate hike wouldn’t happen prior to the election. You are one stupid sob, with zero reading comprehension. So I’m still RIGHT.

#65 WallOfWorry on 09.26.16 at 8:22 am

Deutsche Bank very volatile due to solvency concerns. German government has stated that it will not bail out DB. Looks like the “bail in” clause provide get clarity in real life application. The solvency concern can’t be because of the $14 B penalty as DB is the largest European bank and $14 B while a large sum of money is hardly enough to topple. Could it be the Buffett coined weapon of mass destruction derivatives are ready to explode?

#66 Wrk.dover on 09.26.16 at 8:30 am

Bonds are debt obligations so when you buy some you’re handing over money to a government, utility or corporation in return for regular interest. But with rates in the ditch, it makes no sense to collect interest, which is fully taxed anyway. Bonds also have prices, so while the yield a bond pays you never changes, the value of the bond does. Prices rise when rates fall and vice versa. So as rates move higher in the future, bonds are worth less. The ‘longer’ until the bond matures, the more its price falls. So bonds with ‘short duration’ (closer to maturity) are safer in these times

This paragraph rolls right over my pointy head. I can do many things, but I can’t crack the code on how the price of a bond changes while the yield is constant, with out a whole lot more tutorial apparently.

Unrelated to that, telling people not to hold a float, but relying on an LOC is not going to cut it when credit squeezes in the next Hank Paulson type hat in hand moment the day DeutzeBank implodes.

Yeah Garth I don’t know a bond from a hole in the ground, but I do know I have sure missed out on my turn to collect interest for eight years after being a good sport and paying it out at double digits for ten years to get me going….a DB failure would not surprise me in the least after the surprise that my $ could be ignored by needy borrowers by printing other $ from thin Ponzi air eight years ago.

The new normal is dishonesty in accounting, so maybe I don’t need to understand bonds anyhow….but I just wish I could, seeing I can afford some if I need to.

#67 ferrisWheel on 09.26.16 at 8:33 am

“always make it joint with your squeeze”. Actually NO! If you have a Joint Savings account, who claims the interest on their income tax? Not the lowest income individual! It has to be prorated based on contributed amount. Too much headache.

Incorrect. And I was not talking about a savings account. — Garth

#68 Mark M. on 09.26.16 at 8:33 am

The only handle I use is Mark M.

#69 pBrasseur on 09.26.16 at 8:36 am

If more people treated the stock market as a way to buy into great businesses instead of a casino they would get better results. If you treat the stock market like a casino it will reward you by treating you like a casino’s costumer… But that’s another story.

Nothing is risk free and that includes bonds. Logically even more so in today’s market in which bonds are pretty much the most expensive they have ever been.

Sure many bond are liquid and will remain so, that’s mostly true of government bonds because governments can print money, provided governments don’t default (which happens more than most think) liquidity is assured. But of course there is a price to pay for this certainty and that’s extremely low yields, which means you capital is not safe (in real money) neither is you long term investment goal. You greatest risk is after all to run out of money…

For other types of bond (municipal, corporate, etc…) it’s a similar story (except for the money printing and its impact on liquidity) , if you want liquid and safe you can buy Apple’s bonds which pay next to nothing or if you want yield you can go with Bombardier… There is no free meal out there, if the yield on a presumably «safe» asset is good it is there to compensate some kind of risk, just because your «advisor» doesn’t explain it to you doesn’t mean it’s not there.

I encourage people to see the big picture, the developed world is drowning in debt, it is also ageing fast and plagued by bad policies from socialist or populist politicians, in other words it is very unlikely there will be enough growth to repay all that debt without massive loss for the lenders (who else?), that huge debt is anything but safe, if you think so you are a fool.

#70 pBrasseur on 09.26.16 at 9:08 am

I understand the need to preserve capital, at least some of it for near or medium term use, say 1, 2 or 3 years. I think this is an important topic especially for those near or in retirement. I also agree that it can be psychologically important to keep access to some capital without risking a capital loss.

But is such cases I would suggest to invest in something where capital loss (at least in nominal term) is excluded and that disqualifies bonds.

Frankly if the difference is only 1 or 2% and were are talking about a relatively small amount for a couple years I would consider a simple savings account and cash. There is a price tom pay obviously but you know what you’re paying for and that’s ok.

#71 Sheane Wallace on 09.26.16 at 9:40 am

Incorrect. The weighting in government bonds is low, and they’re in a portfolio for the specific reasons I mentioned. There’s zero risk and they are 100% liquid. You err in that comment. All you do on this blog is pump stock-picking which is wholly inappropriate for most people. Their best bet for stable returns is a balanced and diversified portfolio. Stop being a cowboy. — Garth

—————————

Correct, there is zero risk, but 100 % certainty that there will be large losses on government bonds.

Liquidity? Why would you need liquidity in your portfolio? For margin calls on options?

Wouldn’t short term cash, even GIC with higher return than bonds be more liquid?

Besides central banks who else is buying government bonds? Corporate bond and bank bond ETFs are much more tempting.

so governments can shove these up, well, they know where.

#72 pBrasseur on 09.26.16 at 9:43 am

#66 Wrk.dover I can’t crack the code on how the price of a bond changes while the yield is constant

If fresh bonds arriving on the market have less or more yield than bonds already in circulation that will affect their price to compensate the difference. For example if you attempt to sell your 10y Canada bonds before term when more recently emitted 10y bonds yield more you will not get your full capital back. Bond funds manager try to circumvent that problem by buying new issues to compensate the potential loss with the better yields, still you can see how a bond bear market (yields up, price of existing bonds down) is not a happy proposition for the people holding the massive amount of existing bonds.

The last (current) bond bull market started in the 80s and lasted to this point of extremely low (sometimes even negative) interest rates. This is not economically sustainable and this huge market will turn eventually, many say it already has.

#73 Sheane Wallace on 09.26.16 at 9:45 am

Buying bonds at these rates is rewarding people like Poloz. The one who told you that you will never retire.
Would you buy his bull crap?

Let him buy the bonds through BOC, as no sane market participant will touch these with a stick,

#74 Renting article on 09.26.16 at 10:07 am

Great article on renting vs. buying…send to all millenials and gen-Y’ers

https://ca.yahoo.com/finance/blogs/Insight/home-prices-making-you-sick-renting-is-always-an-125344032.html

#75 Sheane Wallace on 09.26.16 at 10:34 am

In attempt to prevent bond market from melting central banks will keep interest rates low, even negative to foster ‘capital gains’ in bonds which of course will drive inflation and destruction of currencies.

Anything, besides bonds and currencies, I would not sell, including real estate, that is paid off.

There is no way to satisfy both bank’s appetite for risk-less profits and indebted governments at peak debt while maintaining economy and ‘growth’.

Inflation we are going to get, that is for certain and it will not be pretty.

#76 For those about to flop... on 09.26.16 at 10:57 am

#54 Bob dog on 09.26.16 at 12:37 am
I’m sick and tired of emergency interest rates sodomizing people who act responsibly while rewarding tools who take on huge risk because they have nothing to lose. I was layded off from my tech job 2 weeks ago in Vancouver. I had my first interview within 6 hours of starting my job hunt and a job offer within 8 work days. I have elected to turn down the offer of 95k in favour of collecting EI at 1800$ per month. Until the terrorists operating the criminal banking cartel normalize rates and allow the housing market to correct, I flat out refuse to work or pay income tax in Canada. Working is futile while inflation is at 20% and interest is 1%. When will people wake up and demand our politicians be accountable for their horrendous crimes against theall young Canadians.

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

It sounds like you are terrorizing yourself…

M42BC

#77 Berniebee on 09.26.16 at 11:13 am

#66 Wrk.dover “I can’t crack the code on how the price of a bond changes while the yield is constant, with out a whole lot more tutorial apparently.

It helps if you know which “yield” the author is talking about. I can’t help you with that, but here are some tidbits which some readers might find useful:

Yield To Maturity- is what profit you make if you choose to buy and hold a bond for it’s lifetime.
YTM includes the “nominal yield” (ie: the interest on the bond) and what you gained/lost in the bonds price.
Yield to Maturity is the usual meaning if an investor is talking about bond yield.

Nominal yield – is the annual interest rate on that bond.

Effective yield = Current yield – is the interest rate divided by the bond’s current value. Ie: You bought a 5% bond a year ago for $1,000. It’s now worth only $950.* The new current yield is 5% divided by $950/$1000 or 5.26%.

*How can bonds be worth less than what you paid for them? A rise in interest rates. Let’s say that six months after you bought your 5% bond, new bonds were issued at 6%. A buyer for your bond is going to demand a discount on your bond to compensate for the fact that it pays less interest than newer bonds.

#78 TurnerNation on 09.26.16 at 11:20 am

That time when America was great:

Lynyrd Skynard live in 1977 (I was 2)

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

Music died with the death of Zep’s John Bonham a few years later.

#79 O Canada on 09.26.16 at 11:29 am

Why is Justin Trudeu always talking about transgenders and refuges? Doesn’t he have anything better to talk about? You think he would be talking about how he can get the economy strong. Instead he’s in bc kissing royal anus….. What a pethic leader he is, just like his old man.
His speeches are pathetic how he talks and caters to world leaders. Maybe it’s time to move to austrilaia where the have a pair.

#80 Jack Qunitel on 09.26.16 at 11:45 am

Bond yields are dropping again like a stone. The 10 year is 1.0% and the 30 year is 1.66%.

These were 1.23% and 1.85% just about a week or so ago.

So much for higher interest rates!!!!!!

#81 bdwy sktrn on 09.26.16 at 12:10 pm

things are looking up at broadway skytrain (the place, not me) these days.

the strange smell is gone, the safeway finally unchains it’s damn shopping carts, and now the royals are dropping in for visits.

i thought i saw a very well dressed couple carefully choosing a bbq chicken in the deli section yesterday.
i guess royals need to eat too.

across from safeway is the new bldg they visited, generally nondescript but has a big red sign that says ISS of bc (i see ISIS everytime until i look closer) welcome centre.


new millennium line operation will put thousands daily stepping off a train at this particular skytrain stn.

a new mini city coming to the safeway/pkg lot with multi towers (will all be snapped up so fast your head would spin)

brentwood (sold out)going mega urban density.

even my damn marina pkg spot in horseshoe bay is going underground/condo. (will sell out fast)

RIP outdoor parking lots in 604. sad.

“must have more condos”

#82 For those about to flop... on 09.26.16 at 12:10 pm

The rumour is that the royal couple are trying to conceive a third child on this trip to Canada.

I’m not too sure hanging around Christy Clark for a week would put me in the the mood for such a deed.

Then again she has been giving the people of B.C a pretty good shafting for the last while,so maybe there are some lessons to be learned…

M42BC

#83 Karl hungus on 09.26.16 at 12:23 pm

You wouldn’t touch the Smith maneuver but in the past you have advocated borrowing against your home to invest. What’s the difference?

They bear no relation to each other. Bad question. — Garth

#84 Wrk.dover on 09.26.16 at 12:28 pm

@pBrasseur#72&Berniebee#77, a buyer for my bond….so a bond is just as pointlessly worthless as a stock certificate is if nobody is buying the day I choose to sell?
Hoy yoy yoy. This just keeps getting better. So the excess earnings I have tied up in cash right now, so I won’t need to work for more later are that fragile no matter where I park them?
I Think I’ll join the Hells Angels and cover my ass ets investing in drugs and alcohol if it is that bad.
What ever happened to saving for the future, as in what ever happened to the future worth saving for?

#85 For those about to flop... on 09.26.16 at 12:38 pm

CNN seems to think gender will play a big role in tonight’s presidential debate.

I’m don’t think it will be that big a deal ,as the the next President of the United States will still be wearing pants…

M42BC

#86 Victor V on 09.26.16 at 12:39 pm

Canadian workers can forget getting a raise next year, says new poll

http://business.financialpost.com/news/economy/canadian-workers-can-forget-getting-a-raise-next-year-says-new-poll

Don’t expect a raise from your boss next year, says a new survey from Aon Hewitt.

The human resources firm polled 347 Canadian companies about their salary intentions for 2016 and 2017. It found that variable pay is expected to average 15.4 per cent of payroll in 2017 — unchanged from this year.

Flat salaries are the result of economic uncertainty, says Aon Hewitt, as Corporate Canada continues to grapple with the crash in oil prices and a deteriorating labour market.

#87 Dogman01 on 09.26.16 at 12:47 pm

39 Andrew Woburn on 09.25.16 at 9:09 pm

Short, concise but broad.
Makes me inclined to support globalism.

Similar themes:
The War of the World: Twentieth-Century Conflict and the Descent of the West -by Niall Ferguson

http://www.goodreads.com/book/show/8907.The_War_of_the_World

#88 eddyo on 09.26.16 at 1:02 pm

Can someone clarify this for me….

When interest rates go up, 2 things happen.

1- the yield on bonds goes up
2- bond prices goes down

I’m assuming the change ratio is fairly even ( is it?). So over the long run does this cancel each other out. In other words, if my bonds are worth less but yielding, aren’t the end results the same?

#89 CJBob on 09.26.16 at 1:15 pm

#79 O Canada on 09.26.16 at 11:29 am
Why is Justin Trudeu always talking about transgenders and refuges?
______________________
A leader sets the tone and direction. Our leader is talking about equality and compassion. That’s my Canada. Lots of us like him. You obviously don’t. Ok. Do you have anything else to add regarding investing?

Yes, actually. Where’s the infrastructure spending? — Garth

#90 pBrasseur on 09.26.16 at 1:16 pm

Bond yields are dropping again like a stone. The 10 year is 1.0% and the 30 year is 1.66%.

Not that I’m speculating on this in any way but I still think we’re at or near bottom. Not to mention negative yields elsewhere this nominal 1% is in fact negative yield, definitely not sustainable unless we slip deep into deflation which I suspect is very unlikely.

I wouldn’t be surprised to see the US economy start to show (a bit) more life in the second half, that, along with the Fed response could prove defining. Anyway, it’s just a matter of time, low/negative yields are not economically sustainable (lenders cannot continuously lose money and keep on lending!).

#91 For those about to flop... on 09.26.16 at 1:29 pm

#89 CJBob on 09.26.16 at 1:15 pm
#79 O Canada on 09.26.16 at 11:29 am
Why is Justin Trudeu always talking about transgenders and refuges?
______________________
A leader sets the tone and direction. Our leader is talking about equality and compassion. That’s my Canada. Lots of us like him. You obviously don’t. Ok. Do you have anything else to add regarding investing?

Yes, actually. Where’s the infrastructure spending?-Garth

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

It’s in Indonesia,isn’t it…

M42BC

#92 pBrasseur on 09.26.16 at 1:46 pm

#88 eddyo

Interest rates and bond yields are actually the same thing. When your savings account starts paying you 3% or more it will be because the bond market behind yields more.

Central banks do not control interest rates, they control (sort of) bank reserves which are used by the banks to backup lending. The Fed can influence lending and lending rates by «playing» with the reserves (the rates at which banks can exchange reserves or since 2008 in the US the interest the Fed pays on reserves). The Fed can push up lending rates, or allow them to be lower, but in the end it’s the bond market that makes the whole thing work (the Fed could lower rates to zero but if the bond market say no there is no lending).

#93 Sheane Wallace on 09.26.16 at 2:12 pm

bond yields fall while currency tanks? Hello?

https://ca.finance.yahoo.com/q?s=CADEUR=X
2 % drop in 2 days against the Euro? and inflation is 1.1 %?

Wow!

#94 ShawnG in TO on 09.26.16 at 2:49 pm

I made a quick shot against the ontario savings bond that day, but i want to clarify that while i’m against “investing” in the ontario savings bond, i have a healthy amount of investment bonds in my portfolio in different varieties
– short, long
– gov, corporate
– domestic, global
– junk
– floating
the only thing i don’t know if i have is real return bonds

the biggest problem with the savings bonds is that they are illiquid, you can only buy 1 time a year, and sell 2 times a year, and you can’t even redeem fixed term savings bonds at all until maturity. when you need to rebalance your portfolio savings bonds will not help you.

look, Garth is providing us a tremendous public services here, for free no less.

if you have 10 million dollars cash and 65 and retiring tomorrow, good for you, put all of it in GICs if that makes you happy.

for the rest of us, Garth is showing us how to squeeze a few more percentages out of our hard earn money every year on avg for the next few decades — working + retirement years and avoiding unforeseen surprises, and turn them into opportunities.

a few extra percents compounded for decades will mean the difference between a comfortable living, and stockpiling crates of kd, from costco, with your kia.

Garth already gave a lot of details, but if you are still not comfortable ( or be disciplined enough ) doing this, send an email, pay his a visit. just bring some treats for Bandit, it will all workout

#95 Bottoms_Up on 09.26.16 at 3:06 pm

Yes, actually. Where’s the infrastructure spending? — Garth
————————————
Garth, you obviously haven’t driven around Ottawa in awhile. Dozens of rail, road, bike and bridge projects.
The money is flowing and being spent.

Just what the nation needs. Bike trails in Ottawa. Well done, T2. — Garth

#96 For those about to flop... on 09.26.16 at 3:08 pm

Shawng
Garth already gave a lot of details, but if you are still not comfortable ( or be disciplined enough ) doing this, send an email, pay his a visit. just bring some treats for Bandit, it will all workout

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

I don’t have enough money for Garth’s services,however Bandit has a lower threshold.

I like Bandit and trust his financial advice,however the one thing that I am worried about his portfolio recommendations is that he is overweight in Petco…

M42BC

#97 joblo on 09.26.16 at 3:55 pm

Yes, actually. Where’s the infrastructure spending? — Garth

I imagine it takes a while to line up all the Lieberal cronies who will benefit from massive overuns in spending tax $’s.

#98 Victor V on 09.26.16 at 4:16 pm

Finance minister ‘pleased’ by banks’ restrictions on foreign home buyers

http://www.theglobeandmail.com/news/politics/finance-minister-pleased-by-banks-restrictions-on-foreign-home-buyers/article32054269/

#99 Ole Doberman on 09.26.16 at 5:02 pm

Clinton is so toast at the debate tonight. Trump’s gonna send her away with her tail between her legs.

#100 Sheane Wallace on 09.26.16 at 6:37 pm

Just what the nation needs. Bike trails in Ottawa. Well done, T2. — Garth
————————————-
And transgender washrooms.

The boy is serious about investing in infrastructure.

Well somewhere else but it does not really matter, the boy is serious.

https://www.libertarian.ca/wastewatch

More waste characterizes Trudeau’s first month in office

Prime Minister Trudeau has wasted no time in quickly dolling out public funds in an extremely wasteful manner. In just over a month, Canada’s new Prime Minister has enacted the following policies that blatantly disregard the value of hard earned tax dollars:

A $2.65 Billion cheque for aid to developing nations to combat climate change
A $13 Million cheque for Vietnamese farmers
A $15 Million cheque for job training in Africa
A $14.25 Million cheque for infrastructure in Indonesia

#101 Sheane Wallace on 09.26.16 at 6:59 pm

look at the comments:

http://www.theglobeandmail.com/news/politics/finance-minister-pleased-by-banks-restrictions-on-foreign-home-buyers/article32054269/comments/

#102 bcweatherman on 09.27.16 at 12:33 am

thanks Garth… Finance is starting to make sense.

#103 Bond Junkie on 09.27.16 at 8:59 am

Wow 66/34 in favour of Trump on CNBC with an 832k sample. Time to sell credit…

#104 sean on 09.27.16 at 2:56 pm

UBS says Vancouver’s property market is the world’s bubbliest:

http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouver-tops-international-list-of-bubble-cities-on-global-real-estate-risk-index

#105 Tyler Durden on 09.27.16 at 4:24 pm

Hi Garth,

Thanks for sharing your ideal asset allocation of the balanced portfolio.
If you look at the portfolio a different way than equity/fixed income (60/40), how should a portfolio be allocated in terms of income generating/capital gains generating assets? Should REITs hold as big a weighting as preferreds for the income?