Stark choice

mom-modified

“But what,” she asked, for the first time in our conversation looking truly freaked out, “if I lose it all in a crash?”

Donna has two million dollars, a windfall from selling a long-held house in hot nook of the GTA to people with more money (and debt) than brains. Not bad for a woman who never earned more than $60,000 a year. And while a financial ingénue, she grasped my logic. Houses have never cost more largely because money’s never cost less. That created a speculative bubble, driving citizens insane and pushing prices higher. And now, as conditions start to rapidly change, real estate is smothered in risk.

A smart woman with two mill, a modest pension and three decades of life left needs two things. Income and diversification. Plowing it all back into a house (as she first wanted to do) gives her neither. But still, investing is scary.

Well, actually, there’s a lot less to be worried about as 2016 grinds to a conclusion. In fact, 2017 has the potential to dazzle. Financial markets learned a lot this year about politics, for example. Just look at the big vote in Italy on the weekend which resulted in the prime minister being punted. “After Brexit, it took three days for markets to shake it off, with Trump it took three hours, with Italy it took three minutes,” said a German trader who oversees $260 million. “The outcome was not as much of a surprise as many expected it to be — markets learned their lesson.”

You bet. And the world’s changing for the better because of it, at least for investors.

The US economy (like ours) is showing marked strength all of a sudden. The latest gauge of manufacturing has shot higher. Corporate earnings in the latest quarter, expected to decline by 1% or 2%, actually finished ahead 4.6%. Look at this chart my nerdy portfolio manager partner Ryan just ran around the office with, giggling…

earnings

There’s no denying what’s happening with stock markets. Bay Street’s been hotter than a retriever in heat so far this year with a 15% gain on the back of oil prices almost doubling since last winter. Since Trump, US markets have been in a month-long cavort, with the S&P, the Dow and the small-cap Russell 2000 all busting out to make new highs.

So far, Trump has insulted China (the world’s second-biggest economy), penalized Mexico (by blocking corporate expansion there), claimed millions of people cheated in an election he won, put a suspected white supremacist in the White House and appointed a guy called “Mad Dog” to be in charge of the world’s biggest military. And still markets rise.

Here’s another of Ryan’s charts. He’s now apoplectic.

s-and-p

So while there’s no guarantee where markets will head, this is what we expect: more inflation thanks to accelerated government spending in both Canada and the US. Higher interest rates (and lower bond prices) as the Fed tries to counterweight rising prices and our central bank eventually follows. Lower American taxes, leading to higher corporate earnings. Lots more protectionism, less globalization, more populism, more alt-right leaders – all ensuring less efficiency in the world and higher costs as the flow of labour and capital is restricted.

For people like Donna, the choice becomes starker. Stick with real estate, and gamble that higher mortgage rates over time, epic debt and a slower economy – thanks to less free trade with our biggest partner – won’t impact prices. Or, diversify, invest in a sane portfolio of financial assets and muster the emotional courage to stay calm even when volatility hits.

Will financial markets crash? Unlikely. The worst hit in a generation came in 2008-9, and any investor with a balanced account saw a 20% decline, then a rapid recovery. In the three years ending with 2010, investors in a properly-balanced portfolio actually made an average of 5% annually – without selling a single thing. Only those fools who followed the crowd and sold at the bottom – like the herd buying houses at the top – were creamed.

The biggest obstacle to success is not a crazy world. It’s our own nature.

Sadly, that ain’t changing.

138 comments ↓

#1 Haselcheck on 12.05.16 at 6:46 pm

Virgin Wool comes from Ugly Sheep

#2 For those about to flop... on 12.05.16 at 6:49 pm

Well,the 11 finalists for Time’s person of the year have been announced.

Mark Zuckerberg

Donald Trump

Hillary Clinton

Vladimir Putin

Narendra Modi

Beyonce Knowles

Nigel Farage

Recep Tayyip Erdogan

Simone Biles

and two groups of people…

CRISPR Scientists

The Flint Whistleblowers

They won’t win, but I vote for the Flint Whistleblowers.

Heck, even the water in Flint ,Michigan is cleaner than a lot of these nominees…

M42BC

#3 Alberta Ed on 12.05.16 at 6:51 pm

Sounds like Donna has taken a smart first step to financial independence: finding a trusted, licensed financial advisor with a proven track record.

#4 CL on 12.05.16 at 7:05 pm

I’m always learning. Investing is a constant learning exercise in my head on controlling emotion. I’ve now got to a place where I look forward to volatility. Embrace it, it means opportunity.

I agree with your cohort’s analysis. I think after 8 years of constant walls of worry we might finally see reprieve from it all starting in 2017. My portfolio is telling me this. It’s also tax loss season and I don’t see any indication of sell offs really especially with bond money entering the equity markets now.

#5 RE Bear on 12.05.16 at 7:05 pm

The shady real estate industry is upping their propaganda war.

https://betterdwelling.com/media-manipulation-101-how-real-estate-developers-are-crafting-the-narrative/https://betterdwelling.com/media-manipulation-101-how-real-estate-developers-are-crafting-the-narrative/

#6 John on 12.05.16 at 7:07 pm

My understanding from this blog is that most of the authors are money managers as well. It comes as little surprise that most of the advice that ensues is to remain ‘invested in something’, as this is a bias all money managers are prone to given that a client with only cash holdings would provide little for a manager to do.

While investments in a mixed bond/equity portfolio over the long run WILL undoubtedly provide a positive return, the situation described in this post is a perfect example of the bias described above. The woman has $2million and some form of pension income and ~30 years left for that to cover her. Without any pension income she has roughly $70,000 annually of after tax income to support herself (closer to $100,000 pre-tax). Why anyone would suggest to this person to do anything aside from maintain her liquidity is contrary to her interests. Her goals are already met, as they have been described above.

A debate about historically low interest rates, which have increased correlations between bond and equity prices to small changes in those rates through discounted cash flow sensitivities is not needed in this example, although for other potentially younger people in the same position as the woman above, you MAY end up with a substantially larger long term return if you WAIT one or two years on the gamble that rates will rise and asset prices will fall. Or you can take the advice of the blog authors and invest now in a mixed portfolio which will still produce positive gains in the long run, but possibly much less than could have been generated by waiting.

#7 President Trump on 12.05.16 at 7:08 pm

Isn’t President Trump a great leader! He’s going to make everyone wealthier yet most lefties will still be critical of him. (Lefties should move to China and walk the talk for a change!)

#8 Context on 12.05.16 at 7:09 pm

Left to Right: Do not exceed temp, no bleach, iron at medium, dry clean with caution, no tumble dry, and dry natural flat down. :)

#9 mark on 12.05.16 at 7:11 pm

The CAPE 10 ratio, is signalling danger, with over valuation in U.S. market, hair cut time.

#10 Bram on 12.05.16 at 7:13 pm

All valid points, but….

that graph…

It looks suspiciously like ‘technical analysis’ which is straight up witch doctor stuff.

This blog has always been about rational arguments using fundamentals. Let’s keep the pseudo scientific technical analysis out of it, please.

‘Analyzing trend lines’ is in the same league as practicing homepathy or reading horoscopes. Hogwash. I would have expected better from Ryan.

#11 toronto1 on 12.05.16 at 7:15 pm

Money markets are the place to be, if Trump follows through and cuts corporate tax rate, the US will see a massive boom.

the housing run is over– was a good place to be in the last few years, not anymore. Im still worried about Canada and Ontario’s debt going forward- still think we are at risk for a sovereign debt issue in the next 2-3 . years. but if your diversified it wont matter.

most people will never invest because they want something tangible, but when they have it, they wont sell. number one rule in any market, commodity etc.. is that unless you sell, you never made any money.

#12 InvestorsFriend on 12.05.16 at 7:15 pm

Trading Range?

Value investors tend to tune out as soon as they hear those two words together.

For value investors the concept does not exist.

Technical analysts get aroused by “a new recent high” whereas value investors get more aroused by “a new recent low”.

Never the twain shall meet.

#13 waiting on the westcoast on 12.05.16 at 7:21 pm

Snow in Vancouver… But it is sunny and warm in Uruguay (so days my wife as I am back in Van for another week.

We are enjoying Uruguay so far but still leaning to come back in mid 2017. Still wanting to see a more significant correction within a year of our return. Still cannot rationalize the prices people are paying here for farmland.

Went to a regional conference for our businesses in Vancouver. The Vancouver area Franchise Partner said his revenue declined YoY in October and was flat in November… tough times.

We are still growing well in the US. I will get numbers in another week to share.

#14 Sue Gergely on 12.05.16 at 7:24 pm

Garth, are you advising a woman with $ 2 million is cash to go ahead and invest in real estate today? This is a stark change from your articles leading up to today. So many Canadians are carrying far too much debt and will need to divest their interests in real estate in 2017. There will be time to invest in real estate but I this is not the opportune time. Patience is still a virtue.

#15 Andrew Woburn on 12.05.16 at 7:32 pm

You know, Garth might be right. Remember all those American millennials, cowering in their parents’ basements, avoiding calls from education debt collectors?

They’re buying RV’s.

“Millennials Hit the Road in a Sleek New Generation of RVs. Bose Bluetooth and Italian cabinetry are driving sales of the once-maligned family camper.”

“The Basecamp and a crowd of models like it have pushed an already brisk business to historic highs. Americans are expected to buy about 420,000 homes-on-wheels by the end of the year, more than since Gerald Ford was president (That was the mid-1970s, millennials). The Recreation Vehicle Industry Association expects sales to increase by another 4.4 percent next year. In short, the mood was giddy last week when the country’s RV dealers gathered for their annual trade show in Louisville, Ky., to check out the newest models and place orders for the spring.”

“We thought it would be a good year,” said RVIA spokesman Kevin Broom. “We just didn’t expect it to be this good.”

#16 Technical analysis?.. on 12.05.16 at 7:34 pm

what?….it works or doesn’t?

to be used when convenient?

#17 Andrew Woburn on 12.05.16 at 7:46 pm

I guess perma-doomsters won’t like this either, but here is one small reminder that technology continues to evolve in beneficial ways few of us could foresee.

“Boffins in Bristol Create Nuclear Powered Battery from Radioactive Waste

A team of scientists at Bristol University have developed a technology that uses radioactive waste to create a nuclear powered battery encased in man-made diamond with a potential lifespan of thousands of years.”

https://waste-management-world.com/a/video-boffins-in-bristol-create-nuclear-powered-battery-from-radioactive-waste?utm_source=Waste+Management+World&utm_campaign=1575b6b6d2-EMAIL_CAMPAIGN_2016_12_02&utm_medium=email&utm_term=0_ce30fc7bcc-1575b6b6d2-111707321

#18 Andrew Woburn on 12.05.16 at 7:52 pm

#1 Haselcheck on 12.05.16 at 6:46 pm
Virgin Wool comes from Ugly Sheep
====================

I always heard it came from the sheep that ran the fastest.

#19 Smartalox on 12.05.16 at 7:53 pm

Sue #14;

Garth wasn’t recommending that his client mentioned in the intro invest in real estate. I suspect that he was recommending the opposite. $2M invested wisely will generate plenty of income for renting, if renting is worthwhile, or buying, if need be, once prices come down in 2017 – 2018.

#20 When Will They Raise Rates? on 12.05.16 at 7:56 pm

“Houses have never cost more largely because money’s never cost less. That created a speculative bubble, driving citizens insane and pushing prices higher. And now, as conditions start to rapidly change, real estate is smothered in risk.”

An argument can also be made that other assets, including equities have never cost more because money’s never cost less (ie, cheap money inducing corporations to do stock buy backs, pushing prices higher)… Equities too may be smothered in risk at these historically high valuations, at least, that’s the message according to Goldman Sachs:

“S&P 500 valuation is stretched relative to history on nearly every fundamental metric. At the aggregate level, the S&P 500 index trades at the 85th percentile of historical valuation relative to the past 40 years. For portfolio managers, the more important fact is that the median S&P 500 company trades at the 98th percentile of historical valuation..

A balanced and diversified portfolio does not = the S&P. It is but one asset class contained therein. Remember – never exit an asset class. — Garth

#21 ronh on 12.05.16 at 7:57 pm

Confirmation?

http://www.kitco.com/commentaries/2016-12-01/Trump-Makes-the-US-Stock-Market-Great-Again.html

#22 Andrew Woburn on 12.05.16 at 7:59 pm

“Ever lower vacancy rate puts squeeze on Victoria renters

High demand for rental units pushes vacancy rate in Victoria down to 0.5 %, CMHC says”

http://www.cbc.ca/news/canada/british-columbia/victoria-rental-vacancy-rate-1.3879719

#23 TurnerNation on 12.05.16 at 8:00 pm

#9 mark why not email someone who cares. Become a crank. Hoist placards.

https://www.mta.org/

#24 TurnerNation on 12.05.16 at 8:01 pm

^Oops haha that is in response to #10 Bram,

(This blog anyway has conditioned me to dislike Marks )

#25 Hogtown Indebted on 12.05.16 at 8:03 pm

It would be good if a sensible ruling comes out of this, and soon:

http://www.theglobeandmail.com//report-on-business/competition-bureau-treb-head-back-to-court-over-online-data-dispute/article33201790/?cmpid=rss1&click=sf_globe

It is a little too obvious what a desperate grab this is by the real estate industry.

They only want to “protect” the privacy of sellers so they can market their exclusive access to those private details to their future clients.

This appears to be the last stand of the industry, a pathetic admission of how little value-added realtors bring on average to a transaction. They need an oddly ironic ruling to justify their existence.

I think it’s too late.

Say goodbye to 5%…………………………

#26 Inconsistency on 12.05.16 at 8:12 pm

So, Garth, why are you so quick to point out the horrendously overpriced housing markets, but at the same time don’t seem at all concerned about high equity valuations?

I suspect the reason for the latter is that you’re a boglehead at heart — diversification, staying the course, “invest we must”, etc. But then why the technical analysis charts, prognostication, and partners who try to model the market’s future? Is this just what clients expect from your firm? It just seems a bit inconsistent to me.

[I also had the same WTF reaction as Bram to that technical analysis graph. Seriously?]

#27 bb on 12.05.16 at 8:14 pm

buy a 250k condo then invest the 1.75M. Mortgage free lifestyle!

#28 time machine on 12.05.16 at 8:15 pm

#123 Capt. Serious on 12.05.16 at 12:49 pm

Bought a bigger house on 65×120 lot 5 minutes from subway, 24 Hour bus service in Toronto for 275K just 15 years ago, stretched to our financial limits at that time, even pulling 20K from my RRSP.

I would do it again.

Useful if one has a time machine, I suppose.

There was no machine to see the future, either, I can tell you.

It was considered crazy risky at that time .

Just check out the archive of this blog, conveniently located on the right side, one click away.

#29 Hotdogs from Heaven on 12.05.16 at 8:18 pm

#14 Sue Gergely on 12.05.16 at 7:24 pm

———————————————

Did you even read Garth’s blog?
It’s the absolute, exact and total opposite of what your comment stated.

#30 John in Mtl on 12.05.16 at 8:20 pm

@ #6 John on 12.05.16 at 7:07 pm

Read the article again. She sold her house (primary residence), it is not earned income. So she will never pay any “income tax” on that so 100,000.00 per year is = to 100,000.00. She had the good sense to sell. Without any investment nor interest of any kind, at 70,000.00 to spend per year, that will last her 28.58 years!

#31 Foreign buyer tax way overdue on 12.05.16 at 8:27 pm

416 and 905 stats for November clearly show the Vancouver money that left town is driving up prices here….

Wynne and Tory continue to do nothing … Probably paid off by realtor cartel…

Toronto and surrounding areas being sold out
to scumbags who don’t live here…

Disgusting…

Non-GTA residents are ‘scumbags’? You seriously said that? — Garth

#32 acdel on 12.05.16 at 8:33 pm

Yeah all those that purchased at peak housing will get creamed if they decide to sell; how about all those that purchased after 2009 and sold; they made a killing.
My point is, no one can predict where the future is going; too many changes and obstacles; inflation, wasn’t the big story last winter on $7 cauliflower?? If you wish to purchase to flip then you deserve what is coming to you; for those who wish to buy a home (minus condo’s) enjoy your future..

#33 diharv on 12.05.16 at 8:36 pm

#2 What the hell has Zuckerberg done this year except continue to propagate to developing narcissism of our society with Facebook ? What has Beyonce done except create more crap that is passed off as music and yet another forgettable Super Bowl appearance ? May as well round out the list with that imbecile Kanye . Trump WILL be Time magazine’s person of the year , you can take that to the bank. It won’t be Hillary , remember , she lost.

#34 Doghouse Dweller on 12.05.16 at 8:37 pm

financial ingénue, apoplectic…..
Literary e-learning, reason enough to hang around this pooch parlour.

#35 acdel on 12.05.16 at 8:43 pm

This is a serious issue in Montreal, never mind what is going on elsewhere, ha,ha, too funny!

http://news.nationalpost.com/news/canada/it-is-not-beautiful-montreals-charlie-brown-christmas-tree-the-target-of-jokes-ridicule

Bah __________

#36 time machine on 12.05.16 at 8:45 pm

#10 Bram on 12.05.16 at 7:13 pm

This blog has always been about rational arguments using fundamentals. Let’s keep the pseudo scientific technical analysis out of it, please.

‘Analyzing trend lines’ is in the same league as practicing homepathy or reading horoscopes. Hogwash. I would have expected better from Ryan.

—-

Have you, personally studied extensively enough the specific subject to come to your own conclusion about “hogwash”, “pseudo science”?

#37 april on 12.05.16 at 8:48 pm

#14- you have misread Garth’s post.

#38 cramar on 12.05.16 at 8:57 pm

It hasn’t dawned on Donna… yet! That she won the lottery. She is a real, honest-to-goodness millionairess. She made it! She won! She has done what the 99% will never accomplish. She has no financial worries for life. Wow!

#39 Catalyst on 12.05.16 at 9:02 pm

I hope that second chart isn’t “Technical analysis”. I throw up a little when I see those guys spinning their yarn.

#40 Jungle on 12.05.16 at 9:06 pm

Actually if anything “is” a sell out, its putting tolls on the DVP so 905’s can pay for Toronto’s shortfall.

FYI there is still talks of foreign dude tax in Toronto coming, (more cash for TO budget shortfall) and talks of a $500-$1000 TO tax thrown on your tax return to come up with the ($800M?) short fall that tolls wont even touch.

#41 Basil Fawlty on 12.05.16 at 9:10 pm

Trumps tax cuts and infrastructure spending, plus the increasing interest rates, will cause massive increases in the US debt. Oh well, what’s a few more Trillion?

#42 yorkville renter on 12.05.16 at 9:16 pm

#31 probably not foreign money… probably people getting in before mortgage rules changed + different sales mix.

#43 Brian Ripley on 12.05.16 at 9:19 pm

“…Corporate (U.S.) earnings in the latest quarter, expected to decline by 1% or 2%, actually finished ahead 4.6%” Ryan/Garth.

I looked at several Canadian corporate earnings reports and it’s a mixed bag and I doubt if on a relative basis, Canadian corporations are doing as well as U.S. counterparts.

Canadian exports are not gaining significantly from the low CAD/USD… yet … will they in 2017?

If employment is a telltale, it’s not a bullish story. I updated my chart with the November data here:

http://www.chpc.biz/earnings-employment.html#Rate

Employment is down Y/Y adjusted and not adjusted seasonally in both Toronto and Calgary. It’s up in Vancouver.

I include a productivity chart on the same page. Companies are investing in 24/7 machine productivity.

That does not bode well for semi-skilled workers who will have to get additional training and upgrade. If the U.S. is going to launch a fiscal spending moonshot, I suggest that Canadian skilled workers will be very tempted to head south where demand for skills is YUGE and the USD is on an uptrend.

#44 Smoking Man on 12.05.16 at 9:31 pm

#31 Foreign buyer tax way overdue on 12.05.16 at 8:27 pm
416 and 905 stats for November clearly show the Vancouver money that left town is driving up prices here….

Wynne and Tory continue to do nothing … Probably paid off by realtor cartel…

Toronto and surrounding areas being sold out
to scumbags who don’t live here…

Disgusting…

Non-GTA residents are ‘scumbags’? You seriously said that? — Garth.
…….

Laughlin Con where have you been.

#45 ChrisPitzel on 12.05.16 at 9:36 pm

The US economy (like ours) is showing marked strength all of a sudden. The latest gauge of manufacturing has shot higher. Corporate earnings in the latest quarter, expected to decline by 1% or 2%, actually finished ahead 4.6%.

And not just manufacturing. Check out services (the vast majority of the economy) surge higher!

The US is BOOOOMING!
http://www.forbes.com/sites/timworstall/2016/12/05/us-economy-growing-strongly-as-services-the-vast-majority-of-the-economy-surge/#77fb52491e3c

#46 Foreign buyer evidence everywhere.... on 12.05.16 at 9:42 pm

Investigative reporting at its finest….enjoy folks….free of charge! Garth has to buy me a starbucks holiday latte though…

Part 1 …the Pimps

This dude drives a pink Audi A7, Garths favorite…24 inch wheels , fuzzy dice on the rear view, take out dim sum container on the passenger seat…also happens to be an engineer part time, too funny….

http://www.kijiji.ca/v-real-estate-service/city-of-toronto/advertise-your-property-across-gta-to-china-in-both-english-and/1220925676?enableSearchNavigationFlag=true

Heres another one…not so fancy as the above

http://www.kijiji.ca/v-real-estate-service/city-of-toronto/chinese-buyers-love-to-buy-homes-in-toronto/1197296582?enableSearchNavigationFlag=true

Part 2… the stats

Huge spike in searches for Toronto homes , from China…hmmm…kinda correlates with the November TREB sales stats through the roof doesn’t it??

https://pbs.twimg.com/media/Cy33rlMUcAAUcqi.jpg:large

Part 3 ….the news

Foreign investors buying commercial properties at record pace….

http://business.financialpost.com/personal-finance/mortgages-real-estate/foreign-investors-continue-to-gobble-up-canadian-commercial-real-estate-report

Some big sales in my hood lately…..wonder who bought these? sure wonder if its foreign money…I mean how many Torontoians you know can afford over $3 million….by the way, these were listed by chinese and persian agents, how ironic…..

http://www.gtasoldview.com/Form/public/SoldResult.aspx?tfList=1&HouseSoldId=285258346

http://www.gtasoldview.com/Form/public/SoldResult.aspx?tfm=1&HouseSoldId=305572003

http://www.gtasoldview.com/Form/public/SoldResult.aspx?tfm=1&HouseSoldId=256706914

and if you drive by this street, theres about 5 more going up now, soon to be on MLS….

#47 common sense on 12.05.16 at 9:45 pm

#2 Flopper

Well said..

#48 Context on 12.05.16 at 9:50 pm

Upon the cost of money rising we will see the housing assets fall in price. Now if sellers panic we will see a rush of listings with no buyers. Now if there are no buyers then down she goes. This is all simple logic based on the past.

#49 Terry on 12.05.16 at 10:15 pm

“Lower American taxes, leading to higher corporate earnings. Lots more protectionism, less globalization, more populism, more alt-right leaders”

Ka-Ching!!!!! GO TRUMP!!!!!

God, guns and pass the ammunition please!

Thank God for the USA!

#50 Paul on 12.05.16 at 10:15 pm

“Too many namby-pamby people in the foreign policy shop are saying ‘Oh my gosh we can’t do this, we might insult the Chinese.’ I don’t care if we insult the Chinese.

“Taiwan is our ally. That is a country that we have backed because they believe in freedom. We ought to back our ally, and if China doesn’t like it, screw ’em.”

How can you not love the president?

#51 mark on 12.05.16 at 10:23 pm

turnernation.
Is that all you got.

#52 RIL on 12.05.16 at 10:37 pm

Lots of taxable CO2 emissions in YMM tonight as folks heat houses to ward off the -27 C. I’m breaking out the heavy artillery. Parka. I’m far to old to have fallen for Canada Goose. Going with the 30 year old North Country from Eatons.

Just submitted this inane comment to refresh the comments. But, to return to topic, don’t buy a house in Fort Mac. $700K gets you something perfectly ordinary.

#53 Barb on 12.05.16 at 10:39 pm

Donna’s in the exact position all of us (some, secretly) want to be in. Financially sound…rent or buy a small abode (I presume the kiddies are grown and gone), you don’t have to work so why not move to a great little (cheap) place near the urban mess.
But you’ll have peace and quiet.

And invest the sizeable balance with Garth.

Truly why this phrase was invented:
No Worries!

Attagirl, Donna!

#54 TCContrarian on 12.05.16 at 10:40 pm

“Will financial markets crash? Unlikely. The worst hit in a generation came in 2008-9…” -GT

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

I’m preparing for a nice, leisurely decline, until most will be shocked – again!

The VIX is showing similar pattern as in 2007-8 – for anyone who’s paying attention.
But it may be different this time. :-)

Conditions could hardly be more different. 2008 is not coming back. — Garth

#55 Paul on 12.05.16 at 10:49 pm

So Justin Trudeau on C.B.C. Talking to refugees starts crying. Great what a ? Add your own !

#56 Technical analysis WTF and "throwing up" on 12.05.16 at 10:52 pm

“Pseudoscience” vs “science”

It’s game of ideologies, no different than liberal vs conservatives.

Lear it from an 18year old

https://youtu.be/h9S3ikiL3Ow

#57 Smoking Man on 12.05.16 at 11:02 pm

UFO deniers make me ill. Repugnant, and imaginationless.

Secret lefties.

#58 Half Full on 12.05.16 at 11:10 pm

Why aren’t the y axis boxes equal in size? Why are they bigger at the bottom?

Ryan has a fetish. — Garth

#59 Geoff on 12.05.16 at 11:20 pm

Garth, do you still see the loonie trending lower over next several months or has your view changed now that the oil price is on the road to recovery?

Under pressure as US$ maintains strength and rate differential grows. — Garth

#60 Smoking Man on 12.05.16 at 11:21 pm

When Hunter S Thompson said “you don’t know where the edge is till you go over it”

Free falling. And I know there is a hard rock waiting for me at the bottom of the mountain. Good thing I packed a parachute. Just praying to god it wasn’t me who packed it.

#61 BillyBob on 12.05.16 at 11:40 pm

#6 John on 12.05.16 at 7:07 pm
My understanding from this blog is that most of the authors are money managers as well. It comes as little surprise that most of the advice that ensues is to remain ‘invested in something’, as this is a bias all money managers are prone to given that a client with only cash holdings would provide little for a manager to do.

While investments in a mixed bond/equity portfolio over the long run WILL undoubtedly provide a positive return, the situation described in this post is a perfect example of the bias described above. The woman has $2million and some form of pension income and ~30 years left for that to cover her. Without any pension income she has roughly $70,000 annually of after tax income to support herself (closer to $100,000 pre-tax). Why anyone would suggest to this person to do anything aside from maintain her liquidity is contrary to her interests. Her goals are already met, as they have been described above.

A debate about historically low interest rates, which have increased correlations between bond and equity prices to small changes in those rates through discounted cash flow sensitivities is not needed in this example, although for other potentially younger people in the same position as the woman above, you MAY end up with a substantially larger long term return if you WAIT one or two years on the gamble that rates will rise and asset prices will fall. Or you can take the advice of the blog authors and invest now in a mixed portfolio which will still produce positive gains in the long run, but possibly much less than could have been generated by waiting.

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

Good lord, so you consider her eating her principal for 30 years as a viable scenario? Do you even remotely understand the concept or power of inflation?

Math is hard.

Someone once said, the greatest risk to one’s retirement isn’t losing your money, it’s running out of it.

Now who WAS that….hmmm…

#62 Bram on 12.05.16 at 11:47 pm

Ha ha ha ha….
And we think we have it bad in Canada.

In Sidney you can auction off a tin shed on postage size laneway lot, put a reserve price on it of $1.6M (!), and then SELL IT.

Read it and weep:

http://www.domain.com.au/news/tin-shed-in-glebe-laneway-sells-at-auction-for-169-million-20161114-gsnymh/

#63 For those about to flop... on 12.05.16 at 11:57 pm

#33 diharv on 12.05.16 at 8:36 pm
#2 What the hell has Zuckerberg done this year except continue to propagate to developing narcissism of our society with Facebook ? What has Beyonce done except create more crap that is passed off as music and yet another forgettable Super Bowl appearance ? May as well round out the list with that imbecile Kanye . Trump WILL be Time magazine’s person of the year , you can take that to the bank. It won’t be Hillary , remember , she lost.

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

Dude ,I’m 42 I remember who won the election last month.

Even though I wish I could forget some of the images.

I lost interest when Ben Carson found his luggage,but lost his marbles…

M42BC

#64 Bram on 12.05.16 at 11:57 pm

#36 time machine on 12.05.16 at 8:45 pm
Have you, personally studied extensively enough the specific subject…

Nope.

Just as I have studied neither homeopathy, nor astrology.
But I stay away from it, all the same.

But by all means: please use it yourself.
Rational long term investors love having an irrational counterparty at the trade.

Maybe this will help you for your next investment strategy (or at least study it extensively):
https://upload.wikimedia.org/wikipedia/commons/f/fd/Agriculture_in_Britain-_Life_on_George_Casely%27s_Farm%2C_Devon%2C_England%2C_1942_D9817.jpg

#65 Henry Morgan on 12.06.16 at 12:11 am

M42BC – “Remember the good ol’ days, when cars were made in Flint and you couldn’t drink the water in Mexico. Now the cars are made in Mexico and you cant drink the water in Flint.” D. J. Trump

#66 Ponzius Pilatus on 12.06.16 at 12:19 am

Donna,
Obviously you are a figment of imagination created by Garth.
In any case, here’s my advise (if you are real):
Blow your first mill on male hookers and booze and if you are still alive after that, donate the rest to your favorite charity.
It’s the only decent thing to do.
I’m sure smokie will approve.

#67 jfish on 12.06.16 at 3:38 am

2 million you say. Such hard times for this woman. Put in under your mattress for frig sakes. Your set for life.

#68 ...flow of labour and capital is restricted on 12.06.16 at 3:44 am

Impressive few words.

To Canadian blue collar workers in Manufacturing, over the past 30 years, “flow of labour” has meant a 40% decimation of their jobs [30% in the US].

And for what? Some cheaper tee shirts, sneakers and Christmas toys at Walmart?

Capital, as of yet, is not restricted as long as we continue to have an electronic banking and clearing house system [and are not laundering money].

You are correct, it is in our nature.

It would appear the affluent West is putting the brakes on this far too rapid Globalization that has lined the pockets of the very few and left the many with little or no gains [which has encouraged gambling money in asset bubbles to make up that cash].

I think it as a good thing to put the brakes on for a few years and re-examine Globalization.

Recall, Globalization is an Economist theory and ask yourself how often do they get it right?

Why they have they also have the “Law of Unintended Consequences” to explain all the theories they screw up.

I believe that Law is about to bite them and their free flowing labour and capital mavens right in the hindquarters.

bsant

#69 DoomandGloomer on 12.06.16 at 6:43 am

#6 John

“.. you MAY end up with a substantially larger long term return if you WAIT one or two years on the gamble that rates will rise and asset prices will fall. ”
——————————————————————–
Hey Johnny…have you just arisen from a self – induced coma? NEVER try to time the markets!

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

#70 jess on 12.06.16 at 7:14 am

Is making American great and “Buy American”?

Audits and the Dod
Jan 03, 2012
NYT Misses Elephant in the Room: Defense Service Contractors

http://pogoblog.typepad.com/pogo/2012/01/nyt-misses-elephant-in-the-room-defense-service-contractors-.html
=============================
The Berry Amendment, which has been in effect since 1941, requires the military to buy equipment, including clothing and food, that is manufactured in the United States. However, the military has used foreign-made footwear in the past because there weren’t any domestically made shoes available on the market.”

“Some policy makers believe that policies like the Berry Amendment contradict free trade policies, and that the presence and degree of such competition is the most effective tool for promoting efficiencies and improving quality. On the other hand, some other policy makers believe that key domestic sectors (like manufacturing) need the protections afforded by the Berry Amendment. The debate over the Berry Amendment raises several questions, among them (1) If the United States does not produce a solely domestic item, or if U.S. manufacturers are at maximum production capability, should DOD restrict procurement from foreign sources; and (2) to what extent do U.S. national security interests and industrial base concerns justify waiver of the Berry Amendment?

https://fas.org/sgp/crs/natsec/RL31236.pdf
http://www.pogo.org/blog/2013/10/20131025-dod-oig-expands-into-buy-american-compliance.html

#71 Mishuko on 12.06.16 at 7:28 am

Did you get a podcast of Ryan giggling? I swore portfolio managers had no emotion!

#72 Bottoms_Up on 12.06.16 at 7:42 am

About 4% yearly EPS growth from 2012-2015. I sure hope wages have been appropriately adjusted.

#73 crowdedelevatorfartz on 12.06.16 at 8:14 am

@#14 Sue Gurgle-y

Apparently you failed “Reading and comprehension” in school.

Hopefully you paid attention during Sex-Ed?

#74 pBrasseur on 12.06.16 at 8:25 am

#68 …flow of labour and capital is restricted

«To Canadian blue collar workers in Manufacturing, over the past 30 years, “flow of labour” has meant a 40% decimation of their jobs [30% in the US].

And for what? Some cheaper tee shirts, sneakers and Christmas toys at Walmart?»

Yeah and sophisticated electronics the world had never see before.

You are full of c-r-a-p!

#75 maxx on 12.06.16 at 8:28 am

#6 John on 12.05.16 at 7:07 pm

Best post I’ve read on this blog. Bar none.

There are, without doubt, optimal investment approaches for everyone as well as varying degrees of sensible, solid ones, based upon risk tolerance, age, investment horizon, health and net worth.

I subscribe to a low-stress, age-oriented one and your post reflects it precisely.

The older I become, the less interested I am in “managing my emotions” vis-a-vis risking my wealth. It’s just one more thing to do in a long list of things I’d prefer not to have to do.

Brilliant post. It describes a significant cohort of people on this blog who should consider NOT engaging in risk assets based upon their age.

Ever since rates descended into the crapper to promote the housing agenda, I’ve been searching for a decent way to invest with low risk. No offerings at all. Either risk on, or near-zero return- take your choice.

Even annuities, as a small portion of a portfolio, are not worth considering.

So no, I won’t be “playing” or “riding” the markets.

#76 maxx on 12.06.16 at 8:38 am

#12 InvestorsFriend on 12.05.16 at 7:15 pm

Yes, and try using the word “value” in a sentence with a salesperson, especially a realtard- their eyes glaze over within seconds…….

#77 thebarold on 12.06.16 at 8:46 am

Isn’t that a sign of a bubble? A market that continues to rise, despite growing risk?

#78 Cottingham a bargain on 12.06.16 at 8:48 am

If you’ve been a renter in the GTA you have been a sucker. Not sure how anyone can interpret it any other way.

By the way, the Cottingham property mentioned in a long ago previous post ,near yorkville, that went above asking with multiple offers, has indeed turned out to be a bargain for the buyer.

#79 Vs on 12.06.16 at 9:03 am

Under pressure as US$ maintains strength and rate differential grows. — Garth
———
And today’ good balance of trade did not help loonie; is it because of potential risk to Nafta?

#80 Mark M. on 12.06.16 at 9:19 am

Conditions could hardly be more different. 2008 is not coming back. — Garth

Everyone remember this when the next “once in a 100 year crisis” hits in 2017.

Amazing, Trump’s solving a debt problem with MORE debt and bridges. Lots of magical thinking on this blog.

#81 Thom on 12.06.16 at 10:08 am

Sorry Garth but according to a friend of mine I had coffee with yesterday you are part of the alt-right.

No I’m not joking, she actually said that.

Seriously? Half the people on this blog think I’m a commie. — Garth

#82 Stephane Bergeron on 12.06.16 at 10:24 am

I see that you are suffering from the same thing that is underlying the market sentiment now!

Denial.

Things are turning to shit. Brexit, Italy….and the biggest threat: a basket of deplorables dream team running the US. If you think the housing crash was bad, you ain’t seen nothing yet.

The stock market has turned into a big orgy, run under the impression that ‘it is too big to fail’ people buying under the impression that a ‘a balance of ETFs cannot fail’. Look at that, no loss a year after housing crash. The reality is that a housing crash is nothing against world disorder. Nothing against shifting powers of Russia. Nothing against a unhealthy relationship with China.

I have agreed with most of what you wrote in the last 4 years. But now, the hormones to growth is ill-placed on the balanced portfolio. Can you not see the chaos coming, have you not a twitter account? Are you not suffering from a bad case of denial.

Get out while you can, January 20th it will be too late.

#83 Doghouse Dweller on 12.06.16 at 11:10 am

• Mark Carney: World Is Facing The “First Lost Decade Since The 1860s

But he and his cohorts had saved the world with the QE printing press.
He said officials will tolerate a period of above-target inflation, though there are limits to this. ( narf )
Globalization is good but there should be more moldy bread crumbs for the peasants.
Low rates are not the caprice of central bankers, but rather the consequence of powerful global forces,
And a official reminder, Trump is bad !
—————————-
When things arn`t going as planned double down on the hubris.

#84 rainclouds on 12.06.16 at 11:12 am

Interesting data re investor participation rate. Low…..

http://www.visualcapitalist.com/maps-stock-ownership-surging-markets/

#85 Context on 12.06.16 at 11:16 am

There is always hope for Ontario to make things once again to sell into the world marketplace. There is a small city in Ontario that is the #2 manufacturer in the world and rated highly for the product. Name the product that is produced in this multi-billion dollar area of growing need?

#86 gattaca on 12.06.16 at 11:26 am

With Garthesque style writing:

The rise of the wealthy renters – In San Francisco more households making over $150K/yr choose to rent than own.

One of the typical lines lobbied by cane wielding house humpers is that renters are low income households that simply have no choice but to rent. The implication is subtle on some fronts but others choose to use a 4×4 of clarity by saying renters are simply poor people. Clearly these Taco Tuesday Jimmy Buffet loving fans have failed to take a look at rental rates in San Francisco. They also use an outdated model of the world where Don Draper was the model of success puffing away long and hard on that cigarette.

http://www.doctorhousingbubble.com/wealthy-renter-households-in-san-francisco-outnumber-owners/

#87 Alt-right on 12.06.16 at 11:46 am

#81 clearly you do not understand communism, please don’t insult genuine commies. Commies do not start investment/wealth management firms, according to a commie anyone who chooses out of free will to make a living in a financial profession is the lowest scum on the earth. I am not a commie either, but you, sir Garth, are an entirely different beast in the opposite direction.

– Tom

#88 Context on 12.06.16 at 11:55 am

I see that all is not lost in the rental market as a greater fool must have left to buy a home for a premium. It is a bit out of the way in paradise, but the Go Train will get you to Union Station in 25 minutes. A beautiful 2 bedroom with a view to die for, goods and services everywhere in a village town setting is on the market. Lets analyze the rent structure for 925 sq. ft. as $1,725 covers everything; no nonsense with from with hydro and parking extra. Essentially you are paying $1,650 for all utilities plus $75.00 per month with underground parking and you dog is welcome as the property is surrounded by parks along the lake.

#89 Alt-right on 12.06.16 at 12:02 pm

PS according to http://www.newyorker.com/magazine/2016/10/31/trolls-for-trump, Alt-right is often exemplified by the very people who deny being one. How right on the mark in this case. “Half the people on this blog think I am a commie”, how laughable. In your next online poll, add a question on what label your readers think fit you.

#90 InvestorsFriend on 12.06.16 at 12:09 pm

How to Spend Money

#66 Ponzius Pilatus on 12.06.16 at 12:19 am advised:

Donna… here’s my advise (if you are real):
Blow your first mill on male hookers and booze…

*****************************************
Years ago, Jay Leno spoke of a millionaire who had spent away his entire fortune.

He said fully HALF of it he had spent on women, booze and partying…

And the other half?

He had just WASTED

#91 TurnerNation on 12.06.16 at 12:21 pm

Price deflation?

Saw a video linked from RetroOntario website.
A Zellers TV ad from 1983 or 84.
A pack of four AA batteries… $1

Guess what at Dollarama the same still is $1. Or maybe 1.25 now. Almost 35 years ago!!

#92 Millenial-falcon on 12.06.16 at 12:24 pm

How will the US service 19 trillion in debt , ( 9 trillion which was added at next to zero rates) with a interest rate tht would be headwind for housing ? So 5 yr money will go from nothing to next to nothing , big deal.

#93 Doghouse Dweller on 12.06.16 at 12:34 pm

#75 maxx
#6 John

I subscribe to a low-stress, age-oriented one and your post reflects it precisely.
———————————————
Absolutely ! Not going to risk a cardiac arrest or a seniors chronic depression, for a lousy 2% dividend on the Dow, S&P 500, Long bonds or the financial alchemy of Pref shares. Growth ? Blog dog Carney just said “forget about it”.
The accumulation phase is over, holding on to what you have and enjoying the time you have left is the prerogative.

#94 HOHOHO on 12.06.16 at 12:37 pm

https://www.bloomberg.com/news/articles/2016-12-06/canada-s-key-rate-set-to-lag-fed-s-for-first-time-since-2007

BoC’s Poloz focused on U.S. divergence since oil crash


Poloz says only fresh shock would prompt cutting 0.5% rate

Canada and the U.S., among the world’s biggest trade partners, are diverging when it comes to how their central banks view the recovery.

#95 soost on 12.06.16 at 12:47 pm

Serious question. What about us young adults who still want to OWN a home in the GTA one day for its consumption value and to grow a family? We walk a tight rope between now and a few years from now. What’s the outlook/advice?

#96 TurnerNation on 12.06.16 at 12:48 pm

Paging Aggregator. Sub prime mortgage losses?

On today’s wire:


PrimeWest Mortgage Investment Corp. has reached an accord with the dissident shareholder group, and the special shareholder meeting scheduled to occur on Dec. 15, 2016, has been cancelled.

The court proceedings for a court-appointed inspector have also been resolved, with the corporations and the dissident shareholder group agreeing to work collaboratively to mitigate the mortgage portfolio losses. Since the inception of the legal proceedings, considerable additional information has surfaced, which has alleviated the pressing need to have a court-appointed inspector involved.

At a meeting held on Dec. 1, 2016, as between the corporation, the dissident shareholder group and registered sales brokers, the board’s action plan to mitigate mortgage portfolio losses and to pursue further capital wherein new mortgage loans can proceed was accepted.”

#97 Thom on 12.06.16 at 1:05 pm

#81 Thom on 12.06.16 at 10:08 am

Yes unfortunately. As a university aged, very left wing woman she lives and dies by her ‘isms’ and saying mean things about women and talking about fake news like the housing bubble is what alt-righters do!

#98 jess on 12.06.16 at 1:06 pm

what’s in a name ?

Ur-Fascism
Umberto Eco
June 22, 1995 Issue

http://www.nybooks.com/articles/1995/06/22/ur-fascism/

#99 Ronaldo on 12.06.16 at 1:08 pm

#55 Paul on 12.05.16 at 10:49 pm

So Justin Trudeau on C.B.C. Talking to refugees starts crying. Great what a ? Add your own !
—————————————————————–
A sincere human being regardless of what I or others may think of him as a prime minister. Shows he has a heart.

#100 Victor V on 12.06.16 at 1:11 pm

http://torontolife.com/real-estate/houses/toronto-house-sold-549-briar-hill-avenue/

The sellers, who bought the place in 1986, lived there for 30 years without making major alterations. Now that they’re spending their winters in Florida and don’t need the space, they’re downsizing to a condo.

For the buyers, the fact that the house still had many of its original fittings—including its dark wainscotting—was a bonus. They’re still deciding whether they want to live in the house themselves or rent it out.

The agent decided to price the place slightly under market value to generate interest. There was an offer on the first day, but the sellers decided not to accept. After four days, there were six offers, which led to the hoped-for bidding war. The winning bid was for $450,000 over the asking price.

#101 Doug in London on 12.06.16 at 1:12 pm

Wow, selling the house for 2 million and wondering what to do with the money? What a wonderful problem to have! If Donna doesn’t mind leaving the GTA, there are much cheaper places to live. I suggested Sarnia and someone else here suggested Leamington in response to yesterdays post. If she wants to stay in the GTA, rent one of those abundant condos. The rest of the money should be invested, as Garth says, in a diverse portfolio. The bad news is equities have gone up a lot recently. The good news? Preferred share ETFs and bond ETFs are still relatively cheap.

#102 ChrisPitzel on 12.06.16 at 1:34 pm

#61 BillyBob on 12.05.16 at 11:40 pm
Someone once said, the greatest risk to one’s retirement isn’t losing your money, it’s running out of it.

Very true. Even in the US.

It’s a problem for all wealthy societies because people who get older get more afraid

http://www.usatoday.com/story/money/personalfinance/2016/11/26/invest-save-interest-rates-retire-stocks-risk/93798458/

The irony is that the fear of losing money is causing seniors to lose money

#103 Victor V on 12.06.16 at 1:49 pm

Odds of an interest rate hike? U.S. Federal Reserve (100%) versus Bank of Canada (Zero)

http://business.financialpost.com/news/economy/economies-at-very-different-cycles-canadas-key-rate-set-to-lag-feds-for-first-time-since-2007

#104 InvestorsFriend on 12.06.16 at 1:52 pm

Funds Flow is Farce?

I consider “funds flow” to a farce because it purports to measure cash going into equities and out of bonds.

Not quite.

It measures cash going into and out of various mutual funds. But if a mutual fund buys equities then some other investor must have sold. That changes the net cash that has been invested in equities and bonds by not a penny.

It is Impossible for mutual funds or any other investor to inject net cash into equities or out of bonds by trading in the market. Corporations only receive funds from investors when they issue shares and they only disperse cash by dividends and buybacks.

Trading in the markets injects not a penny and removes not a penny from corporate equity and debt capital.

Hence my view is that “funds flow” is a misrepresentation of what is happening and therefore in the way it is usually discussed, it is a farce.

It pretends to measure TRADING flows into and out of equities and bonds (an impossibility as a TRADE injects no new money) when in reality it only measures flows into and out of certain funds which are only a sub-set of the market.

This view of mine goes against the entire financial media and reporting system. Luckily, being right is not a popularity contest.

#105 jess on 12.06.16 at 1:53 pm

Football Leaks

The largest leak in the history of sports reveals murky financial transactions in the world of European professional football and exposes the tax tricks employed by some of the Continent’s biggest stars.

The data includes 18.6 million documents, including original contracts with secret subsidiary agreements, emails, Word documents, Excel spreadsheets and photos. The data set extends into the year 2016. EIC partners will publish their findings in the coming weeks, allowing for an unprecedented look into the gloomy depths of the modern football industry.

https://eic.network/projects/football-leaks

===========

Madrid (AFP) – A Spanish judge is seeking a gag order on 12 European media outlets that leaked documents alleging football stars like Cristiano Ronaldo could have been involved in a multimillion-euro tax evasion system.

The injunction, seen by AFP on Monday, claims that the so-called “Football Leaks” published last week could constitute an offence against the right to privacy as they were allegedly obtained through a cyber-attack on Senn Ferrero, a firm advising sports personalities on tax.

#106 Mark on 12.06.16 at 2:02 pm

http://www.cbc.ca/news/business/trade-imports-exports-october-1.3883294

“The country’s trade deficit narrowed to $1.1 billion in October,
..
The improvement came as imports fell 6.3 per cent to $44.7 billion ”

As predicted, with falling RE prices nationwide after roughly 3 years of stagnation, Canadians are becoming far more austere in their overseas spending and imports.

The CAD$ is still too weak for further policy rate cuts tomorrow, but with the RE sector decelerating so rapidly, and Canadian consumer spending falling rapidly, CPI is likely to be extremely weak and the BoC wil be in a position to further lower policy rates.

#107 InvestorsFriend on 12.06.16 at 2:02 pm

Price Deflation

#91 TurnerNation on 12.06.16 at 12:21 pm
Price deflation? said:

Saw a video linked from RetroOntario website.
A Zellers TV ad from 1983 or 84.
A pack of four AA batteries… $1
Guess what at Dollarama the same still is $1. Or maybe 1.25 now. Almost 35 years ago!!

************************************
And those no-name alkaline batteries are probably of higher quality than 35 years ago.

Price deflation is all around us but seldom admitted. But inflation overall is positive.

There are thousands of products for which it takes fewer hours of labour to earn now than it did 35 years ago for the same quality level. Almost any mass-manufactured commodity product fits that bill. (batteries, toilets, cars, toasters, and more)

Dollarama is one of the very best managed companies in Canada. It is a highly efficient means of obtaining and distributing the goods its sells.

It’s success in no way illustrates a weak economy. It’s success illustrates its brilliant management. They rock. They have greatly benefited both their customers nd their share owners.

Sadly, I have never owned a share as they always looked too expensive. My mistake.

#108 Braj on 12.06.16 at 2:22 pm

#82 Stephane Bergeron on 12.06.16 at 10:24 am
I see that you are suffering from the same thing that is underlying the market sentiment now!

Denial.

Things are turning to shit. Brexit, Italy….and the biggest threat: a basket of deplorables dream team running the US. If you think the housing crash was bad, you ain’t seen nothing yet.

The stock market has turned into a big orgy, run under the impression that ‘it is too big to fail’ people buying under the impression that a ‘a balance of ETFs cannot fail’. Look at that, no loss a year after housing crash. The reality is that a housing crash is nothing against world disorder. Nothing against shifting powers of Russia. Nothing against a unhealthy relationship with China.

I have agreed with most of what you wrote in the last 4 years. But now, the hormones to growth is ill-placed on the balanced portfolio. Can you not see the chaos coming, have you not a twitter account? Are you not suffering from a bad case of denial.

Get out while you can, January 20th it will be too late.

I think the problem is that you have a twitter account.

#109 Braj on 12.06.16 at 2:25 pm

#85 Context on 12.06.16 at 11:16 am
There is always hope for Ontario to make things once again to sell into the world marketplace. There is a small city in Ontario that is the #2 manufacturer in the world and rated highly for the product. Name the product that is produced in this multi-billion dollar area of growing need?

Sudbury? Nickel? Batteries?

#110 time machine on 12.06.16 at 2:34 pm

#36 time machine on 12.05.16 at 8:45 pm
Have you, personally studied extensively enough the specific subject…

Nope.
Just as I have studied neither homeopathy, nor astrology.
But I stay away from it, all the same.
But by all means: please use it yourself.
Rational long term investors love having an irrational counterparty at the trade.

===

That’s too bad… Rejecting anything based on belief, instead of actual knowledge is just that, a belief.

I am very interested what you know, I could care much less what you believe, but you don’t actually know – especially when your belief is presented as an opinion.

You might as well stay away from ETFs in your investment, as substantial part of all markets are made of those irrational trading methods, therefore they are hardly safe spaces for “rational long term investment”, which is by the way, basically extrapolation of historical data, based on past performance.

A trend line? A specific instance of “technical analysis” that eliminates all other aspects of risk taking, except the “rational” that what happened in the past should happen in the future?

#111 Context on 12.06.16 at 2:48 pm

The violence in Toronto goes beyond the pale with crime escalating and now this. A planned fight was staged between two high schools and a parent became involved, so a group of students beat him up. Do you think things will improve when the bubble bursts? I say if you have the means and freedom move out of the city proper and just commute.

#112 InvestorsFriend on 12.06.16 at 3:16 pm

Cash on the Sidelines is a Farce

Yes, “cash on the sidelines” is a farce.

The reason being that if one person deploys their cash by buying shares in the market the same cash appears in the sellers account.

So, cash on the sidelines cannot be increased or decreased by investors trading with each other.

Cash in investors hands can be reduced when there are a lot of IPOs as cash then migrates to corporations.

But the usual implication of “cash on the sidelines” is that it will disappear as investors buy stocks or bonds in the market. It’s not possible.

In case you are afraid I will identify other things that are a farce, rest assured; Santa Claus is indeed real.

#113 Rapier Wit on 12.06.16 at 3:17 pm

Seems as though the information is out there – but, it doesn’t appear to be sinking in.

http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/August-2010/repeat-after-me-your-house-is-not-an-asset.aspx?utm_medium=email&utm_source=flipboard

#114 Renter's Revenge! on 12.06.16 at 3:19 pm

#104 InvestorsFriend on 12.06.16 at 1:52 pm
Funds Flow is Farce?

I consider “funds flow” to a farce because it purports to measure cash going into equities and out of bonds.

Not quite.

It measures cash going into and out of various mutual funds. But if a mutual fund buys equities then some other investor must have sold. That changes the net cash that has been invested in equities and bonds by not a penny…

…Hence my view is that “funds flow” is a misrepresentation of what is happening and therefore in the way it is usually discussed, it is a farce…

…This view of mine goes against the entire financial media and reporting system. Luckily, being right is not a popularity contest.

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

I thought measuring funds flow was a simple way for the industry to keep track what the “dumb money” is doing.

i.e. The logic is that since retail investors are the dumb money, and since it’s mostly retail investors that are investing through mutual funds, funds flow is reasonable estimate of what the dumb money is doing.

So if, for example, money is flowing into equity funds, the conclusion is that the smart money must be selling equities, and therefore equities are near their peak.

I feel like you’re misrepresenting the industry’s views just so you can be different than them and show that you’re smarter than them by being “right”.

#115 Smoking Man on 12.06.16 at 3:37 pm

Carney says robots could replace 1/2 the workers in britan.

http://www.dailymail.co.uk/news/article-4003756/Robots-steal-15m-jobs-says-bank-chief-Doom-laden-Carney-warns-middle-classes-hollowed-new-technology.html

Another air head Globalist. Robots don’t vote.

#116 Bram on 12.06.16 at 3:55 pm

This is going to sting:
YVR market has already crashed, but BC Assessments will be lagging and use the july 2016 (or in other words: the absolute top of the market) as the data point.

There will be some scary numbers showing up in the assessment notices this yr.

http://www.cbc.ca/news/canada/british-columbia/property-assessment-preview-1.3883751

If they are going to hit me with +50%, I will be appealing with the board.

#117 Context on 12.06.16 at 4:00 pm

#101 Doug in London:- You missed that house in Acton because she could keep busy fixing up that backyard into a garden park setting. Of course invest the difference, and that area has fine Real Estate support to survive any downturn from Toronto as she will be fine. The home in Acton at that price is a bargain and has intrinsic value.

#118 cd on 12.06.16 at 4:04 pm

some recent sales from the world of detroit…

http://detroit.curbed.com/2016/12/5/13846680/sold-homes-detroit-indian-village-lafayette-park

#119 IHCTD9 on 12.06.16 at 4:06 pm

#97 Thom on 12.06.16 at 1:05 pm

Yes unfortunately. As a university aged, very left wing woman she lives and dies by her ‘isms’ and saying mean things about women and talking about fake news like the housing bubble is what alt-righters do!
_________________________________________

Wow, best keep your distance.

You’ve been warned.

#120 jess on 12.06.16 at 4:07 pm

#2
Ontario corridor surpassed all other cities and regions and became the world’s second largest innovation corridor.

although, look at reason 2
http://www.ontariotechcorridor.ca/

#121 IHCTD9 on 12.06.16 at 4:11 pm

#116 Bram on 12.06.16 at 3:55 pm

If they are going to hit me with +50%, I will be appealing with the board.
_______________________________________

You should have listed that heap months ago.

You are going to regret not cashing in. In, fact; it will be one of the greatest regrets of your entire life. Another 10 years or so and you’ll have your face in your hands asking yourself why… WHY?!?

#122 IHCTD9 on 12.06.16 at 4:17 pm

#120 jess on 12.06.16 at 4:07 pm
Ontario corridor surpassed all other cities and regions and became the world’s second largest innovation corridor.
_____________________________________

Yes, come to Ontario where our brokeass cement headed government needs your tax revenue. We need more corporations to buttress our carbon tax scheme, and to put our newly fast-tracked TFW’s to work.

#123 IHCTD9 on 12.06.16 at 4:20 pm

#113 Rapier Wit on 12.06.16 at 3:17 pm
Seems as though the information is out there – but, it doesn’t appear to be sinking in.

http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/August-2010/repeat-after-me-your-house-is-not-an-asset.aspx?utm_medium=email&utm_source=flipboard
_________________________________

Been out there since no real specuvestor problem even existed in Canada. Kiyosaki was right, and especially right if you borrow to flip…

#124 The Technical Analyst on 12.06.16 at 4:24 pm

#10 Bram “It looks suspiciously like ‘technical analysis’ which is straight up witch doctor stuff..pseudo scientific technical analysis out of it, please.”

So I’m guessing you don’t like to look at supermarket flyers and see what’s on sale next week either?

If you DO buy things on sale in the flyer, then that’s technical analysis.

#125 Mark on 12.06.16 at 4:56 pm

“So if, for example, money is flowing into equity funds, the conclusion is that the smart money must be selling equities, and therefore equities are near their peak.”

Institutions are big buyers of funds these days, particularly ETFs. A few years back I read an article claiming that upwards of 60% of the XIU fund, Canada’s largest fund available to the public, was institutionally owned. “Retail” participation was only ~$4B of an approximately $12B fund. So if you’re going to lump “smart money” versus “dumb money”, you really have to be careful when it comes to funds particularly. Make sure the data, at the very least, provides for a separation between the ETFs, and the more traditional open-ended mutual funds.

I feel like you’re misrepresenting the industry’s views just so you can be different than them and show that you’re smarter than them by being “right”.

The logic that “Investorfriend” used was also repeated by Mish (Mike Shedlock) in his comments on the subject over the years. Almost verbatim. “Mish” has a pretty good track record (as does Investorsfriend), so I’d be reluctant to believe that he’s misrepresenting. On the continuum of truth, I’d rank Investorsfriend fairly high.

#126 jess on 12.06.16 at 5:13 pm

fifa and beyond

In this story

Four of the 16 FIFA officials indicted in the United States used offshore companies created by Mossack Fonseca

Files show offshore companies used by some soccer players to hold money from image rights deals
Offshore revelations extend beyond soccer to other sports including hockey and golf

https://panamapapers.icij.org/20160403-ethics-fifa-scandal.html

#127 InvestorsFriend on 12.06.16 at 5:22 pm

Funds Flow

Renters revenge responded to me as follows:

I thought measuring funds flow was a simple way for the industry to keep track what the “dumb money” is doing.

i.e. The logic is that since retail investors are the dumb money, and since it’s mostly retail investors that are investing through mutual funds, funds flow is reasonable estimate of what the dumb money is doing.

So if, for example, money is flowing into equity funds, the conclusion is that the smart money must be selling equities, and therefore equities are near their peak.

I feel like you’re misrepresenting the industry’s views just so you can be different than them and show that you’re smarter than them by being “right”.

****************************************
I agree with of much of that.

Funds flow does measure what retail investors are doing.

But I think the financial press does report it as if net new money is flowing into equities. I hear it every day. I don’t think they go on to point out that the institutions must be selling if retail is a net buyer.

The point is to be a bit careful in interpreting news.

#128 Context on 12.06.16 at 5:27 pm

#95 soots:- I will tell you the outlook with a story. One day called a taxi to go to my dentist’s office because might not be able to drive home in safety. It was a fine day and on the road said what is that ahead as the sky turned black. The moment I hit the office door a storm from hell rained down and could see nothing outside, and inside all were in fear.

#129 bill on 12.06.16 at 5:28 pm

#55 Paul on 12.05.16 at 10:49 pm
“I weep for you,” the Walrus said:
“I deeply sympathize.”
With sobs and tears he sorted out
Those of the largest size,
Holding his pocket-handkerchief
Before his streaming eyes.

I am a bit of a cynic with politicians in general…

#130 Trader Dave on 12.06.16 at 5:48 pm

Anyone who doesn’t think mortgages was a setup needs to realize that as soon as the Harper government folded, the finance minister went to work at private mortgage lender with predatory rate.

http://www.newswire.ca/news-releases/firm-capital-mortgage-investment-corporation-announces-appointment-of-the-hon-joe-oliver-as-new-independent-director-574198911.html

#131 TCContrarian on 12.06.16 at 5:58 pm

I’m preparing for a nice, leisurely decline, until most will be shocked – again!

The VIX is showing similar pattern as in 2007-8 – for anyone who’s paying attention.
But it may be different this time. :-)
TCC
———————————————————–

Conditions could hardly be more different. 2008 is not coming back. — Garth

———————————————————–

Making claims is easy; supporting them with relevant facts a bit more challenging.

We now have:
– wayyy more debt in the system (credit card, student, corporate, government);
– real incomes stagnant or in decline,
– a growing anti-globalization movement just about everywhere,
– RE bubbles beginning to unravel in the USA, Canada, Australia and many other places;

and you think 2008 isn’t coming back? Well, you may be right in that the next one may very well be WORSE than in 2008/9!

Any counterargument ought to be accompanied with facts/reasons – not just ‘opinions’ (everyone’s got one).

Just saying…

TCC

#132 Ace Goodheart on 12.06.16 at 6:04 pm

So here’s the antithesis to Garth’s thesis, in the form of some cool little houses, in Toronto, south of highway 401, that just happen to be walking distance to the largest transit project currently under construction in North America.

Back in 2012 you could buy this house for around 260K. We purchased a three bedroom two storey house in the same area for 329K in 2012:

http://www.gtasoldview.com/Form/public/SoldResult.aspx?tfm=1&HouseSoldId=293593582

This gives you the actual price (it sold in a bidding war, as per usual for our neighbourhood now, the cars line up down the street on open house day).

The appreciation in this particular house, over the four year period from 2012 to 2016 is roughly $360,000.00.

Anyone smart enough to understand real estate speculation (find a house with good bones, outwardly crappy condition, in a crappy neighbourhood that is about to undergo a major transition that will make it more desirable) would have cleaned up on this.

So yeah, don’t go buying million dollar semis in Roncesvalles.

They are not going to appreciate.

But there are some pockets were prices are still going up….

#133 Context on 12.06.16 at 6:06 pm

#109 Braj:- Nope.

#134 "Innovation" corridor on 12.06.16 at 6:10 pm

#120 jess on 12.06.16 at 4:07 pm
#2
Ontario corridor surpassed all other cities and regions and became the world’s second largest innovation corridor.

although, look at reason 2
http://www.ontariotechcorridor.ca/

—-

Most of these programs are completely backwards: they are based on subsidizing human labor – instead of subsidizing development of technology that most successfully eliminate human labor.

Eliminating human labor IS technology, wasting tax dollars to artificially slow down the transition is not only pissing against the wind, but also delaying efficiency.

The true innovation would be the moonshot project of eliminating human labor at the fastest, most extensive way – while building up fully automated, super efficient manufacturing and other industries, also becoming leaders in developing, deploying and selling these automated technologies.

We do the opposite for pendering old fashioned way for votes.

#135 $2,000,000? on 12.06.16 at 6:32 pm

as others have noted she doesn’t need to take much risk. A good portion in laddered GIC’s. The problem is if she lands in the arms of a financial advisor working on percentage of assets under management then likely she’s toast. GIC’s will be out of the equation

#136 westcdn on 12.06.16 at 6:36 pm

Women bring me anguish and pleasure. I don’t understand them. They like me or hate me. When I quit the office, a few women apologised to me – it was surprising who there were.

My friend’s daughter sat beside me when I leaving the party. She asked if she could call me her uncle. She is 4 years old – yup.

#137 InvestorsFriend on 12.06.16 at 7:24 pm

Technical? Analysis?

#124 The Technical Analyst on 12.06.16 at 4:24 pm said:

#10 Bram “It looks suspiciously like ‘technical analysis’ which is straight up witch doctor stuff..pseudo scientific technical analysis out of it, please.”

So I’m guessing you don’t like to look at supermarket flyers and see what’s on sale next week either?

If you DO buy things on sale in the flyer, then that’s technical analysis.

***********************************
I don’t think so, since when a Technical Analyst sees a price drop he tends to sell, not buy. Stop loss. He tends to buy on only on “break-outs”

He (and women are too smart for this) tends to buy high and sell low, no?

A pure technical analyst is buying strictly on what he thinks others are doing and does not look at fundamentals like earnings.

A Technical Analyst speculates bases on “squiggles on a screen” whereas a value investor invests in profitable companies selling at reasonable prices.

One looks at markets the other looks at companies. Never the twain shall meet.

Technical analysis is neither immoral nor financially fattening.

Buffett quips that he gave it up around age 20 when he found out that he got the same answer when he turned the chart upside down.

#138 Dogman01 on 12.07.16 at 1:35 pm

For Smoking Man

You clued me into the dangers of “Gerald Butts” some time ago.

http://www.cbc.ca/news/opinion/ontario-disaster-architects-1.3884108