Why saving sucks

Poor, sodden, misguided savers. Your nation had bad news for you Friday.

The current inflation rate has bloated to 2.1%, thanks to higher energy costs – mostly gas. For many working people, as well as risk-averse savers, this is a disaster. In fact Stats Can has told us wages in many low-end occupations are now declining. Average weekly earnings for retail workers are lower year/year by more than 2% – which sucks, since almost two million people toil in this business (the most of any sector in the entire economy). Down, too, in hotels, tourism and restaurants, by 1.9%.

Overall, wages in Canada have risen in the past year by only 1.2%. Adjusted for the swelling cost of living, it means these millions are earning less now than they were a year ago. This is another reminder of what a fake economy we live in, how fantasy real estate values have become detached from economic reality, and why a growing hunk of our $2 trillion in household debt is absolutely, totally, and forever unrepayable.

Worse, this is creaming seniors with GICs, wuss investors with whimsical “high-yield” savings accounts and anyone misguided enough to keep big bucks in their chequing or regular savings account. In fact, to earn just 2% on a guaranteed investment at one of the big banks, you have to buy a non-cashable five-year GIC. That’s locking up your money for half a decade, and you’re still losing ground. What a dilemma for people too emotional or financially illiterate to properly deploy their capital.

In fairness, the main reason some folks don’t invest is fear. These days they’re afraid of “the markets” which, in popular parlance, means the Dow. Here it is:

Three important thoughts to keep in mind.

First, the Dow Jones Industrial Index (and the S&P 500, and the TSX) are in record territory in terms of their numeric indices. But that’s not the measure to look at – rather the P/E ratios. The P stands for the price of stocks and the E represents the earnings of the underlying companies composing the index. The ratio traditionally (for US markets) is in the 17 range, and lately has floated by to around 21. So, yeah, stocks are not cheap.

But neither are they dangerous. The P/E went to 44 during the dot-com era, or more than twice today’s level. And what were retail investors doing then? You bet – feasting on technology stocks and stuffing their RRSPs with Nortel. Kinda like buying a house in the GTA these days.

Second, a balanced and diversified portfolio with 60% of growth assets divided between Canada, the US and international markets will have maybe 6% exposure to big US companies, and another 7% or 8% invested in medium and smaller enterprises. So when you invest this way you’re hardly “playing the market”, especially when also owning preferred shares, bonds, real estate investment trusts and having exposure across the globe.

Third, there’s a strong case to be made that as robust as markets are now, we ain’t seen nothing yet – with this bull as tawny and pumped as, say, my own glistening abs. The reason is simple. If Trump makes good on his promise to slice corporate tax rates from the current 35% level to 15% (or even 20%, or 25%) then the E in the P/E ratio could  erupt. A tax reduction of that size would drop huge amounts to corporate bottom lines, suddenly making stocks look cheap.

Will he do it?

We might know next week, when the Trumpster makes a key and widely-anticipated speech to Washington lawmakers. Said an economist at Barclays on Friday: “We think that the presentation to Congress will be a good opportunity for the president to more clearly flesh out his policy priorities and goals, especially on trade, taxes, and public investment.” So far this guy has a track record of doing (or trying to do) what he promised on the campaign trail, and slashing both corporate and middle-class taxes was a key plank in getting elected. (The contrast with Canadian politicians is becoming comical.)

By the way, while GICs were collecting between 1% and 2% last year, a highly-balanced and diversified balanced portfolio delivered well north of 8%. Sure, an all-equity account did better, but it came with a ton of volatility. And, after all, what most people want is simple – no losses, and predictable growth.

There are no guarantees financial assets will continue to perform as they have in the past. But neither are there many reasons to think they won’t. The deflationary years that doomers so love have passed. We’re now on the other side. Savers will pay dearly.

131 comments ↓

#1 old gringo on 02.24.17 at 6:25 pm

Cant believe that Trump has selected only tv stations that
approve of him to the white house.
This is madness!!!!!!!

#2 Derek R on 02.24.17 at 6:28 pm

Yup, very pleased with the performance of my BLD portfolio over the last year.

#3 Ummmmm on 02.24.17 at 6:32 pm

Inflation is the most fake number and always will be. They throw whatever they want to in “inflation basket of goods” to obtain the number the want. Gas was omitted for years and they justified it as “core inflation”.

But seriously anybody knows that inflation is much much higher than what they claim.

Real Inflation = 6% average. That doesn’t include inflation in which items are reduced in quality (planned obsolescence) meaning you spend twice the amount over an equal amount of time.

We are getting poorer!

#4 Buddy O' Pal on 02.24.17 at 6:37 pm

“The deflationary years that doomers so love have passed”

Yeah, right. What exactly has changed? Oh yeah, a 70 year old wrinklie with loose lips got elected.

Hardly, check out the Obama jobs record. — Garth

#5 powder_hound86 on 02.24.17 at 6:38 pm

Garth your comparison of today’s PE ratios during previous (PE) peaks is flawed. You should compare to the PE ratio when the market set its peak price, which would be very similar to today’s PE ratio.

S&P500 PE ratio is at 25 – 26.

Peak price for S&P in Oct of 2007 was 1550.

Guess what the PE ratio was that month? 20.68.

Thats right, stocks are more expensive compared to earnings now than at the peak price point leading up to the credit crisis. Let that sink in people.

Later on after the credit crisis had set in and stocks had already begun their price decline it peaked at 123 due to declining earnings.

The same phenomena played out during the dotcom boom/bust. Peak price for S&P in march of 2000: 1500. PE Ratio of that month? 28.3

PE ratio spiked later on well after the crash had already commenced.

Its disingenuous to compare today’s PE ratios to previous peak PE ratios because those peak P/E ratios occurred during a different market stage, which was well after the price decline had already set in.

During those time periods people were making these exact same (logically flawed) arguments. I’m not saying a crash is coming, but at least compare apples to apples.

#6 Doug t on 02.24.17 at 6:42 pm

What I don’t get is that the world is in a stagnant “zero growth” period – so how do the markets ignore this fact? We have exited the growth cycle of the last 50 years and the likely hood of more unemployment and more pain is growing. As a society our ability to grossly consume in order to drive the Cargo Cult of Keynesianism has stalled. The idea that expanding debt exponentially to drive diminishing returns of growth is dead. The markets are rigged ant the casino is full of fools with one eye one the dealer and the other on the exit.

RATM

The world is not stagnant. Myth. Global growth is in the 3% range, and US GDP may exceed that next year. — Garth

#7 None on 02.24.17 at 6:47 pm

The big green is forcing me to invest my kids $1200 B.C. Training and Education Savings Grant (BCTESG) in a GIC of some kind.

What do I do? Market based GIC? Is that all I can do?

Unless the kiddies are going to college next year, that is an abysmal choice. — Garth

#8 Wrk.dover on 02.24.17 at 6:48 pm

S&P has not dropped as much as 1% in one day since October 11 !! Naturally?

Dow up 11 days in a row because Forrest Trump speaks to Congress in four more days. Of course!

#9 mark on 02.24.17 at 6:48 pm

Shiller CAPE which some say is far better barometer than p/e is indicating a 4 percent projected 10 year performance for the USA market.
Subpar at best.

#10 joeshmo on 02.24.17 at 6:51 pm

now even TD is calling TO real estate unsustainable..

http://business.financialpost.com/news/fp-street/rbc-boost-dividend-after-24-profit-growth-to-3-billion-beats-expectations

Tax change is coming in March to cool the TO market.

#11 crowdedelevatorfartz on 02.24.17 at 6:53 pm

“glistening abs” , “pumping stocks”

Freud would have a field day with this blog

#12 Olive on 02.24.17 at 6:56 pm

Very confusing Garth,

“Savers” have been suffering since 2008…when interest rates took a nose dive and remains in a holding pattern.

BTW savers have been following your blog for years believing a housing crash would be the end result of this limbo nightmare.

Now you say…inflation is the future and wages are in downward dog position.

Rather be a saver then have debt beyond this life time.

#13 joe on 02.24.17 at 7:02 pm

“Savers will pay dearly” = fear mongering

Garth is like RE agent of rigged stock market, this is the best time to buy, buy now or u will miss out.

Now, where did I say that? Exposure to stocks (as I wrote) should be contained and controlled. Maybe you should leave this blog for the adults. — Garth

#14 Vancouver Review on 02.24.17 at 7:07 pm

Feb 24th Daily Review video of Vancouver Real Estate Housing Bubble news and items from Twitter: https://youtu.be/7TR05NoY8Gw

#15 jess on 02.24.17 at 7:12 pm

sinking infrastructure check out the image

“This is a consequence of the overuse of groundwater.”
https://www.revealnews.org/article/california-is-sinking-and-its-getting-worse/
Joseph Poland of the U.S. Geological Survey used a utility pole to document where a farmer would have been standing in 1925, 1955 and where Poland was then standing in 1977 after land in the San Joaquin Valley had sunk nearly 30 feet. Credit: U.S. Geological Survey
U.S. Geological Survey scientist Michelle Sneed shows where a farmer would have been standing in 1988, before a six-year drought triggered sinking in California’s San Joaquin Valley. It also shows how sinking accelerated in 2008. Credit: U.S. Geological Survey
https://www.revealnews.org/article/california-is-sinking-and-its-getting-worse/

2015
Some areas of the Golden State are sinking more than 2 inches (5.1 centimeters) per month, the imagery reveals. Though the sinking, called subsidence, has long been a problem in California, the rate is accelerating because the state’s extreme drought is fueling voracious groundwater pumping.
http://www.livescience.com/51943-california-sinking-faster-than-thought.html

==========

The God Loophole
How religious freedom for day cares can come at a high price for children
https://www.revealnews.org/topic/the-god-loophole/
Religious advocates suggest parents need not worry about the lack of oversight because day cares are guided by a moral authority that eclipses any regulatory agency.”
https://www.revealnews.org/article/she-runs-disastrous-day-cares-but-her-church-makes-her-untouchable/
——————————–

#16 BG on 02.24.17 at 7:13 pm

Anybody knows this about RRSP contribution deadline:
What if you initiate the transfer from your bank on Feb 28th and the money actually arrives in the RRSP on Mach 2nd.
Does it count as 2016 or 2017 contribution?

Yes. — Garth

#17 Cheap Houses on 02.24.17 at 7:19 pm

I am playing the teeniest tiniest violin today in tribute to CNN being banned from the White House.

#18 Brian Ripley on 02.24.17 at 7:20 pm

The deflationary years that doomers so love have passed. We’re now on the other side. Savers will pay dearly. Garth

I would argue that we are seeing deflation in wages as you point out for retail workers. Recently I saw an IT report that suggested highly paid IT workers are also at risk of unemployment because machine learning is faster, cheaper, more dependable and better at just in time skill acquisition.

I would also say that on a Canadian National level we have had almost 20 years of consistent negative Federal Direct Investment; see my chart on Household Debt http://www.chpc.biz/household-debt.html – thus Canadian investors may be at work but most of the capital is happening outside of Canada and with Trump-O-Nomics I don’t believe that there will be a change in that trend very soon – in 2015 this data set spiked to a new “wide”.

But all of this is of no concern to individual Canadians who are trying to make investment decisions, and the advice for a balanced portfolio makes a lot of sense.

But we the mouse are sitting next to the new GOP elephant who appears to be adding another economic layer of fresh snow onto a precipitous incline. I have put together a few youtube videos on Trump’s economy and the stock market here: http://www.chpc.biz/history-readings/need-for-speed

I would add to the disclosure…

There are no guarantees financial assets will continue to perform as they have in the past. Garth

..that risk levels are as high (some say higher) as in 2000

#19 Ponzius Pilatus on 02.24.17 at 7:20 pm

Just as expected.
The gap between the 1% and the 99% continues to widen.
In related news:
Pitchfork and torch manufacturers are hiring.

#20 Chaddywack on 02.24.17 at 7:31 pm

Meanwhile on Global News Vancouver

“Homes under $1 Million are virtually extinct in Vancouver”

http://globalnews.ca/news/3270040/vancouver-homes-under-1-million-2017-extinct/

#21 jess on 02.24.17 at 7:39 pm

Justice Department to Reverse Obama’s Hands-Off Policy on Marijuana

medical vs recreational
GOP Lawmakers Push Bills to Limit Protesting in 17 States
Press Secretary Sean Spicer: “But I think the Department of Justice has the lead on that. It is something that you should follow up with them. But I believe that they are—they are going to continue to enforce the laws on the books with respect to recreational marijuana.”
The Trump administration said Thursday it will enforce federal laws barring the use of marijuana, reversing an Obama administration policy that gave wide latitude to states to determine their own pot laws. White House Press Secretary Sean Spicer said the Trump administration would prioritize enforcement in states that have passed laws allowing for the recreational—rather than medical—use of the drug.

“good people do not smoke marijuana”
https://www.washingtonpost.com/news/wonk/wp/2016/11/18/trumps-pick-for-attorney-general-good-people-dont-smoke-marijuana/?utm_term=.da2c2263eacd

#22 Smoking Man on 02.24.17 at 7:44 pm

#1 old gringo on 02.24.17 at 6:25 pm
Cant believe that Trump has selected only tv stations that
approve of him to the white house.
This is madness!!!!!!!
……

Called being a man… screw decorum.
CNN relentlessly bitch slaps him. What’s even better the devil himself with the inishals GS is finally under investigation.

#23 For those about to flop... on 02.24.17 at 7:48 pm

Colin,on second thoughts if you don’t want to put the Pink Snow information on the board,just send it to Garth and he will email it to me.

He occasionally emails me to vent when he burns his toast and can’t get the lid off the marmalade on Saturday mornings…

M42BC

#24 Travis Bickle on 02.24.17 at 7:50 pm

“The ratio traditionally (for US markets) is in the 17 range, and lately has floated by to around 21. So, yeah, stocks are not cheap. But neither are they dangerous. The P/E went to 44 during the dot-com era, or more than twice today’s level.”

This is a classic example of ‘alternative facts’ pushed by Mr. Turner! The P/E ratio before the dotcom crash in 2000 was well below 30. Only after the crash when earnings (“E” in the P/E ratio) took a nosedive, the ratio went to 44 as Mr. Turner indicates.

The reality is that the current P/E ratio is very similar to the one just before the dotcom market crash, and consequently stocks are dangerous. Note that I am not saying that means an imminent crash (especially since the P/E ratio is not the ultimate predictor of market valuation) but to state that stocks are not very dangerous at this time is very wrong, unless you have a personal benefit if folks buy stocks…

We disagree. BTW, I do not sell stocks. Or anything else. Equities are a proxy for the economy. Everyone who is not already wealthy would be well-served to have some long-term, continuous exposure. — Garth

#25 crowdedelevatorfartz on 02.24.17 at 7:51 pm

The photo of the racoon hitching a ride on a US garbage truck reminded me of THIS

http://www.google.ca/url?url=http://news.nationalpost.com/news/canada/black-bear-captured-in-downtown-vancouver-after-hitching-a-ride-in-a-garbage-truck&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwiLg5WwgqrSAhVN2mMKHYirAvwQwW4INjAH&usg=AFQjCNEWK9Lx8P5mH_nca2FGpOBdtObylw

Perhaps the Vancouver “bear market” is now upon us.

#26 I'm NOT Poloz on 02.24.17 at 7:52 pm

Bollocks! We need to cut interest rates down to 0.25% to increase spending, encourage home buying in Toronto, and to make our Dollar competitive.

We need to support Poloz to lower our Dollar to $0.60 US or even less. I personally told Poloz that we need a 25 cent Loonie to boost our exports and be competitive in a global economy.

The peak of the Euro was $1.60 in 2008, but now it is $1.05. That’s a 55 cent decline.

Our dollar was way overvalued in 2007 when it was at $1.10, so using the Euro equation, our Loonie should be 55 cents lower or at 55 cents today. Our Loonie is overvalued.

We need a 25 cent Loonie today to boost exports. Poloz will talk down the Loonie next week. It’s our only way to be Canadian. I know Poloz and he agrees with me that our dollar is way too overvalued, even at 70 cents.

#60cent loonie boost exports in Canada.

#27 Dan.t on 02.24.17 at 7:59 pm

Loved the post today. You know what the crappy thing is… even if you invested wisely the last 10 years you are so far behind because real estate was sponsored and pimped by our government to the point now that it is the holy grail of Canadians desires and only goal in life… basically savers and investors lose because as an investor, I needed the money to earn 8-9-10% per year…

The masses just needed a fraudulent mortgage broker, a gift from bank of mom or small saving to leverage 98% investment in real estate because tax payers through The Canadian housing and mortgage corp and banks were willing to lend with zero risk… awesome business the banking business- guess that is why the big banks just posted insane profits (RBC something like 3billion) .

If I could have gone to the bank in 2009 and asked for 400k to invest in a balanced and conservative stock portfolio can you imagine what they would say? Just show the bank that i have say 20k for example and have then give me 400k to invest and my returns would have been just as impressive as the real estate gains.

Gains are insane on the way up when you leverage an investment 95%… guess how bad the loss is if the investment goes the other direction. That is why I think gov will do everything in its power to keep the party going- unfortunately I think even they overestimated Canadians aversion to debt ( there is none) and underestimated Canadians views on real estate at all costs as the only guarantee investment to be in. Just look at the debt that has been created !

But that was their plan anyhow, makes paying all the boomers pensions cheaper when you can devalue the crap out of the value of money. Inflate your way out of debt- how does that work for those with massive mortgages and personal debt…. can’t blame Canadians, they were just following our leaders ways…debt, debt and more debt, but they can’t print non stop money like gov can. Too bad, that would be the best deal ever!

#28 pete from St. Cesaire on 02.24.17 at 8:00 pm

DELETED

#29 US civil war? on 02.24.17 at 8:02 pm

Anyone investing in the US market should look at this “resistance calendar”, set up and operated by the way by Michael Moore, who demanded that Trump, the elected president, would “vacate the White House” by next day. Seriously.

https://www.resistancecalendar.org/

Americans will be lucky to somehow avoid the civil war, if you take a look at the number of events organized against Trump.

What Moore is missing, is that this will only force Trump to make his government more heavy handed to stabilize power – it is daydreaming that Trump will resign.

#30 Ronaldo on 02.24.17 at 8:05 pm

#1 old gringo on 02.24.17 at 6:25 pm

Cant believe that Trump has selected only tv stations that
approve of him to the white house.
This is madness!!!!!!!
—————————————————————-
Kinda like when Garth does the delete post thingy with the precious metal pumpers. Besides, why would Trump want to include the “Fake News” buttheads who are constantly going against his every move and twisting everything around to suit them. As he has stated, they are the opposition and the very ones who will scream against the loss of free speech when they are the ones who are contributing to the loss of it with their b.s. Don’t feel a bit sorry for them.

Idiot comment. Trump is trying to become the biggest media manipulator in U.S. history. Anyone who supports this attack on a free press deserves the outcome. — Garth

#31 crowdedelevatorfartz on 02.24.17 at 8:07 pm

@#24 Travis Bickle

Isnt the US Secret Service still watching you?

#32 palebird on 02.24.17 at 8:09 pm

#1 old gringo ..CNN is the biggest bag of crap in TV land, always has been.

You are right Garth..The contrast with Canadian politicians is becoming comical. i wonder when JT and company are going to wake up to the reality taking place right across the border?

#33 MF on 02.24.17 at 8:09 pm

#21 jess on 02.24.17 at 7:39 pm

Good.

From what I’ve seen, 99% of pot smokers are closet drug addicts deluding themselves into believing weed is “natural” and “medicinal”.

I get the idea that legalizing it will remove some drug dealers off the street and provide a source of tax revenue, but having people feel okay puffing that garbage in my face is just too much.

MF

#34 RIP Ontario on 02.24.17 at 8:10 pm

Bacardi in Brampton – CLOSING DOORS – Moving to Florida!!!…even after a $350K government welfare cheque. (Stated Reason: Energy Prices, Corporate Taxes, Carbon Taxes)

Nature Fresh Greenhouse Tomatoes- Expanded in OHIO instead of Leamington where it’s Corporate HQ . Stated Reason – Carbon Taxes and Energy Prices!

Leland Industries – Building Plant in Illinois then shutting down the ones in Ontario once production in Illinois starts. Stated Reason – High Energy Prices and Carbon Taxes.

Amazon- Expanded in Quebec- Stated reason: High Hydro Prices!!!

Trump will destroy Canada in the next few years!!!

Depression on the way!

#35 RWZ on 02.24.17 at 8:10 pm

“with this bull as tawny and pumped as, say, my own glistening abs” – Been missing this stuff.

#36 jay on 02.24.17 at 8:11 pm

These are the kind of boneheads that inhabit this country nowadays,was probably thinking about real estate and drove into streetcar tunnel . http://ca.motor1.com/news/136942/driver-suv-stuck-toronto-streetcar/

#37 Fake Comments on 02.24.17 at 8:13 pm

DELETED

#38 crowdedelevatorfartz on 02.24.17 at 8:14 pm

@#28 St Pete from Cesars

Personally I dont know why a person from the place they invented one of the best hangover cures on the planet should be DELETED!
Did you give away the secret “clamato” recipe?
Anyway.
I’ve always wanted to ask a person from the town of Cesars.
Celery or Asparagus?
Personally I like either one but asparagus kinda makes my urine smell weird……..

#39 Sebee on 02.24.17 at 8:17 pm

To pick up on yesterday’s point, what will the upcoming HUGE wave of automation do to wages and wage growth from here on?

“This is your pilot speaking. Buckle up. On my command, brace, brace, brace.”

It is already happening. But 2018-2020 will be the first big wave to automation replacing millions of jobs. Taxis. Buses. Truckers. Support call centers. Millions. Maybe even tens of millions.

#40 Ace Goodheart on 02.24.17 at 8:20 pm

RE: #10 joeshmo

From the financial post article: “Overall, we remain comfortable with our residential mortgage portfolio, given our clients ability to repay, and the underlying credit quality of this portfolio.”

This is the cute little mantra that the big banks always like to trot out whenever someone questions what they are doing. “Clients’ ability to repay”.

There is one, and only one, way, for 95% of the current residential mortgage holders in Canada, to repay their mortgages: Sell the house.

That is it. No one has the money sitting somewhere else. The 5% who could repay without selling are the lucky ones whose mortgages are almost paid down.

Modern banking relies on the debt holders NOT all trying to repay their loans at the same time. Doing so would crater the entire banking system, because it would require the sale of the underlying assets.

What the banks are really talking about is the ability of their debt holders to keep up with their payments. This is the cornerstone upon which the entire banking system is built. From ultra high interest “Payday” loans, right through to the modern residential mortgage, the underlying idea is the same: If you are going to run a successful bank, you have to make sure that 95% of your debt holders CANNOT REPAY YOU.

If the above situation is ever not true, then the banking system can’t function.

If you want to turn this whole nasty little lie on its head, here is what you do: Don’t borrow money. Instead, loan it. Be a venture capitalist.

Whenever you purchase stocks, or preferreds, or bonds, or ETFs, you are capitalizing businesses. They will gladly pay you to do this. The percentages are often pretty good. A person who wants to be truly comfortable and content in her/his life, need only to build an income stream by loaning, rather than borrowing, money.

It’s weird and to a lot of people it feels wrong and scary and risky to do this. We are taught not to act this way. But I am telling you from my own experience, it is just so much better to have people pay you money every month, for doing nothing, than to be the person who is paying someone else for the same thing (nothing).

#41 good job Trump on 02.24.17 at 8:21 pm

Looks like the cry baby corporate right wing media is not invited and for good reason. These criminal elite right wing misinformation “news” media outlets are finally getting called out for their fake news.

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

#42 Ronaldo on 02.24.17 at 8:28 pm

”Idiot comment. Trump is trying to become the biggest media manipulator in U.S. history. Anyone who supports this attack on a free press deserves the outcome. — Garth”
——————————————————————–
Thanks for allowing me to speak freely.

#43 Vanecdotal on 02.24.17 at 8:28 pm

Possibly the best analysis and visual representation to date of 2006-2016 Vancouver home prices and how unrestricted speculation (initially primarily in the luxury market then spreading outward) has created a market completely detached from local income fundamentals.

From urban planner Andy Yan: “…I think these assessment values are at the convergence of cheap money (low interest rates), fast money (speculation/flipping), and global money that has helped define Vancouver real estate, particularly in the City of Vancouver for the last couple of decades. The key factor is what happens when one or more of these factors change and what the reaction of the real estate values and housing finance market might be. This is not even factoring things like aging demographics and the overall economic environment in terms of the quantity and quality of local employment in the city and region.”

The animated map speaks volumes.
http://globalnews.ca/news/3270040/vancouver-homes-under-1-million-2017-extinct/

#44 Alex on 02.24.17 at 8:31 pm

Nobody can predict a market crash.
Waiting to invest is as bad if not worse than investing right before a crash.
Saving is useless.
If you have a long term investing horizon and plenty of cash to invest, you should do it now and continue to do it as soon as you have new cash available.
However, I keep at least 200K in cash at all times.
Most of my fixed revenue portion of my portfolio is also in cash at the moment.
But as soon as I have new cash available in my taxable account, I buy stocks, no matter where we are at.

#45 45north on 02.24.17 at 8:32 pm

Average weekly earnings for retail workers are lower year/year by more than 2% – which sucks, since almost two million people toil in this business (the most of any sector in the entire economy). Down, too, in hotels, tourism and restaurants, by 1.9%.

which is hard if you’re supporting a family

This is another reminder of what a fake economy we live in, how fantasy real estate values have become detached from economic reality, and why a growing hunk of our $2 trillion in household debt is absolutely, totally, and forever unrepayable.

“absolutely, totally and forever unrepayable” sounds pretty definite

it looks like the GTA blow-off is coming just as we realize that we aren’t going to be rich. I get a glimpse of a violent socially disruptive cataclysm.

#46 Smoking Man on 02.24.17 at 8:38 pm

I’m going to start a group on linked in. “THE ANTI DECORUM LEAGUE OF DRUNKEN BASTARDS”

What an appropriate place to do it. I’m sure no bay street boys will post but will join. Just for Smokey Bet Accordinglys

I finally found out what happend to my glasses last Friday at Seneca.

Two hotties I told you about. Apperantly they were afraid of some creepy cross eyed man with BO. They wanted and escort to their room. Even hammered out of my mind there is still a gentle men in that head some were.

They told me tonight that I bargged into the room, disrobed and went to sleep in one of the double beds.

They say for an hour they tried to wake me up. Even water boarded me. I got up and left. Leaving the glasses behind….

Well their here, got my glasses back and I’m picking up there tab at the pulse night club.. The deal. Don’t say shit to my wife.. she will kill me.

I really enjoy life to fullist, that’s got to be a crime somewhere.

After Friday March 3rd disclosing my real name address and phone number.. I tried to fit into the world of diversity, inclusion, accountability. . They rejected me…

The dog collar will be off. My years of notes and observations that I’ve never shared…will be on full display in short birsts.

Join me next week on linked in….. it’s going to be amazing.

#47 TrumpForTheAges on 02.24.17 at 8:45 pm

Inflation is due to the erosion of purchasing power of a currency. The US has a $20 T debt, with 2% GDP growth and ageing demographics that suggests that without a robust immigration policy the economy will now grow by more than 2%.

While Trump’s new tax regime may improve earnings you are glossing over the fundamentals. A stock’s value is also based upon forward earnings….growth from both top and bottom line improvements. And…without significant growth with that kind of debt level the tax base will not support the social benefits government has to provide creating a further divide between the have’s and have nots.

You are a smart man Garth…are you seriously suggesting that Trump is going to make America great again?

I said his tax cuts will boost corporate revenues and be positive for equities. How is that hard to understand? — Garth

#48 acdel on 02.24.17 at 8:45 pm

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

————————————————

Hmm Garth, did you forget about our past P.M. Heir Harper and our current drama queen T2, seriously what the heck is the difference?? Same old same old, if you do not get that then, I have no words…

Huh? — Garth

#49 bigtowne on 02.24.17 at 8:48 pm

CBC and CTV and even my favorite French channel RDI all have the same “anti-Trump administration bias” and the news is filled with chatter and pundits dumping on the new administration…should these Canadian media ever take even 10% of their screen time and analysis to critic and examine Canadian and Trudeau policy with the same in-depth focus we would all be able to be more aware and informed about our own governing scions. Apparently, the news room producers have cottoned on to a theme that frees them up from any real journalism or real news reporting as opposed to watching CNN all day and then going from there. I guess most of these anchors only read the news after they fix their hair and make-up and then their politically correct persona can agree with Facebook and Twitter feeds.

#50 crowdedelevatorfartz on 02.24.17 at 8:53 pm

To all you nay sayers out there….
I had a portfolio managed by a lazy, shyster more focussed on mutual fund fees than my retirement.
Then I found this blog.
I was a skeptic and then a few years ago ………………….I drank the Kool Aid.

My balanced and diversified portfolio is doing very well.

Thanks Garth.

#51 ummmm on 02.24.17 at 8:56 pm

It’s not in the Banks BEST interest to inform people that the housing market is in a bubble. All banks are doing it.

SO WHY ARE THEY DOING IT? Could it be because they stand to gain real assets in lieu of digital loans (creating money out of thin air) through fractional reserve banking???

#52 crowdedelevatorfartz on 02.24.17 at 8:58 pm

@#46 Smoking Hole
“I’m going to start a group on linked in. “THE ANTI DECORUM LEAGUE OF DRUNKEN BASTARDS””
*******************************************

I think Stan Lee of Marvel Comics fame beat ya to it…
Although he called it THE ANTI HERO LEAGUE OF OLD DRUNKEN BASTARDS
Either way, its full of angry old Boomers…..no fun.

#53 TCContrarian on 02.24.17 at 8:58 pm

“…a balanced and diversified portfolio with 60% of growth assets divided between Canada, the US and international markets will have maybe 6% exposure to big US companies, and another 7% or 8% invested in medium and smaller enterprises…

…while GICs were collecting between 1% and 2% last year, a highly-balanced and diversified balanced portfolio delivered well north of 8%. …”

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

While a portfolio loaded with precious-metals, base-metals, uranium, oil, and MMJ equities, returned xxx%.
Like Stanley Drukenmiller has suggested, the only way to make outsized gains in the markets is to be … a PIG!

oink, oink…

TCC

#54 Good Job Trump on 02.24.17 at 8:59 pm

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

You are exactly right and I do agree but looking how google has now blacklisted small independent media outlets is a much greater attack on the free press. Many of these newly blacklisted small independent media outlets where big supporters of Trump. It’s funny to see these corporate interests get a taste of their own medicine and cry foul.

#55 45north on 02.24.17 at 8:59 pm

RIP Ontario:
Bacardi in Brampton

http://mcaf.ee/qnks2w

yep

Nature Fresh Greenhouse Tomatoes- Expanded in OHIO instead of Leamington

http://mcaf.ee/khevq1

yep

Leland Industries – Building Plant in Illinois

https://mcaf.ee/0fgdhj

yep

Amazon- Expanded in Quebec

http://mcaf.ee/8cd16i

yep

” violent socially disruptive cataclysm”

#56 Linda on 02.24.17 at 9:03 pm

Lots of people fear stocks, because most know someone who essentially gambled & lost by trying to ‘time the market’ or purchasing a stock that promised huge returns w/o realizing it also came with a huge risk factor. Balanced & diversified sounds so – tame. Unexciting. Plus the idea of waiting for the money to increase is even more difficult for those who want their goodie ‘now!’.

However, if you do follow the very sensible advice (& most especially use the TFSA as a vehicle for it) the rewards are eye opening. HISA equalled maybe $100 per annum in interest when I first opened a TFSA. Couple of years in, I moved TFSA contributions from a HISA to a balanced portfolio. Let us just say my investment TFSA has a substantial amount ‘more’ in it than I would have had I left the funds in a HISA.

#57 crowdedelevatorfartz on 02.24.17 at 9:03 pm

@#48 acdc
“our past P.M. Heir Harper ”
******************************************

“You have no words”……..apparently you have no spelling or history either.
“Hair Harper” ridicules his wooden hair style or
“Herr Harper” ridicules his germanic obsession with control or
“Heir Harper” is a jab at his heritage??????????
Which is it?
Inquiring minds still cant figure it out

#58 acdel on 02.24.17 at 9:08 pm

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

————————————————

Hmm Garth, did you forget about our past P.M. Heir Harper and our current drama queen T2, seriously what the heck is the difference?? Same old same old, if you do not get that then, I have no words…

Huh? — Garth

————————————-

Meaning, what is the differences between Trump, and all other news orgs out there that contradict each other as well as what is happening in this country, Harper’s current gang against T2’s; there is no truth out there..

Regarding your article, (your words, Chinese Dudes) do as the Chinese dudes do, stash it under the mattress or elsewhere, and pay for everything in cash; 20 to 50% discount on merchandise; only some can make that much on the exchange. Smart Dudes!

#59 Joe2.0 on 02.24.17 at 9:09 pm

The Global fruits of QE.
Can’t just print trillions of dollars without dire consequences.

#60 TRT on 02.24.17 at 9:09 pm

Vancouver is back!

13 sales of $3Million plus today in one neighbourhood. Yup, damn local money and debt /S

#61 Mr America on 02.24.17 at 9:12 pm

It’s amazing just how brain dead Canadian’s are!
They sit back and take in everything the mainstream media tells them without question. It’s why so many are against Trump!

There’s a true leader for once in our lifetime in our midst and people have been misled to believe he’s evil.

Doesn’t it remind you Jesus and all the dummies screaming CRUCIFY HIM!

Trump as Jesus. You are sick. — Garth

#62 Wrk.dover on 02.24.17 at 9:21 pm

I hope your driver-less cars work out better than the driver-less Federal Phoenix payroll system, futurist folks.
Automate this – (middle finger)

#63 Freedom First on 02.24.17 at 9:23 pm

#22 Smoking Man

Perfectly said Smoking Man.

#1
Freedom First
Master of Freedomonics

#64 WUL on 02.24.17 at 9:23 pm

I pity the MP candidates for Harper’s former seat that knock on my door in Calgary Heritage in the next few weeks. My wife is on the warpath. She is in Indio, California with my daughter this week for a sun filled break and is enraged about what we pay for cheese here. End the supply management dairy biz. Dairy farmers…., watch out. She’s gunnin’ for ya. Don’t worry, you can take the millions of tax monies for your milk quota and retire to Indio.

#65 Victor V on 02.24.17 at 9:26 pm

https://themash.ca/realestategossip/2017/2/price-drop-2-4411-escarpment-side-road-caledon

In August 2015, I posted this 6+1 bedroom, 14 bathroom house in 13,725 square foot house on an 86 acre lot at 4411 Escarpment Side Road in Caledon.

It was a house with a crazy view of Toronto…

The asking price was $15,900,000.

It didn’t sell and I think the price was dropped to the $14s at some point. By September 2016, it was listed again with an address of 17202 Horseshoe Hill Road. The new asking price was $12,500,000.

It still hasn’t sold and the price has been dropped again.

The new asking price for this house is…

$11,800,000.

#66 JSS on 02.24.17 at 9:38 pm

Rub tummy

RBC: 5% increase in common share dividend

Magna: 10% increase in common share dividend

#67 Nemesis on 02.24.17 at 9:46 pm

“Trump as Jesus. You are sick.” — TheBeatitudesOfGartholomew

#ArtToTheRescue,Or… #AComparativeAnalysisForDummies…

TrumpVs.Jesus

https://i.ytimg.com/vi/RuCG0qG_CmU/maxresdefault.jpg

TakeTheQuiz:

http://trumporjesus.com/

#68 Ret on 02.24.17 at 9:48 pm

The free press has become irrelevent. They have done it to themselves.

So what will be on Toronto’s news next week? The same as every night this week.

Twenty minutes of Trump bashing and wild speculation on his “next move.” He is reported to be, he is believed to be, there a concerns being raised, etc., etc. etc.

Ten minutes of demonstrations by one group or another, standing up shouting into megaphones against Trump’s policies. (It’s okay. I already saw your group last week on the news and four times this month. Do you know that you live in Canada?)

Three ten minute segments of weather reports, comprised of :
-fear for your life freezing rain and ice storms that might kill you on your morning commute,
-visits to the public works yard to watch trucks being loaded with salt in an all out effort to let you live through your morning commute and see the news again tomorrow night.
-airport visits to look at stranded travellers who can’t get connecting flights to some exotic destination that you could never afford to go to, all because of that Texas low crippling every US airport.

Ten minutes of sports updates for the Pro-Line addicts.

Throw in a two minute lost puppy returned to owner item and a three minute weather final and that’s a wrap.

Great tabloid news but not journalism.

So, don’t watch. — Garth

#69 Pay back $10 million on 02.24.17 at 9:48 pm

Let’s hope more illicit funds will take the wind out of the Vancouver RE

http://www.cbc.ca/news/canada/british-columbia/chinese-real-estate-investor-to-repay-millions-1.3998380

#70 Ej on 02.24.17 at 10:00 pm

(The contrast with Canadian politicians is becoming comical.)

Canadian politician’s are comical, a dark comedy for anyone who generates money (*anyone who owns a business and provides a service). I am at the point where I could expand and grow but will not because I am just paying tax, no benefit.

#71 Smoking Man on 02.24.17 at 10:03 pm

Alone in a booth at senica. .

The band playing a song. … “when I’m bad, so so bad, ”

Heaven to me no human interaction. … decending to the world of comfort. Not all beings need pats on the head. Some of the hybrid class love hate.

They thrive on eyes of contempt .

Getting really drunk. ..

#72 Smoking Man on 02.24.17 at 10:10 pm

Freedom, the day you give no shit..

I’m long over due..

#73 acdel on 02.24.17 at 10:11 pm

#64 WUL

Funny you should mention that; or not!
I just had visitors from Europe; the same brand cheese that they would buy for under 1 Euro, at Safeway they were charging over $7 dollars for it. Purchased Canadian cheese at the supermarket and they could not even stomach it. I will not repeat what they actually said about it but for any of us that have traveled it is a travesty on what we pay for crap.

Another story is that they could not believe on what we pay for butter or bread, they mentioned that there is so much farmland and livestock in this country that they were actually sad on how we are treated. Mind you, they loved us,(Canadians, friendly people) and loved our large parks and mountains but could not and will not ever understand why we pay as much as we do in a country that has so much. There is no reason for it!!

In my part of the country an average loaf of bread is between $3.50 and $5.00 at Safeway; I live in the Prairies surrounded by wheat fields. What do you others pay in different regions of Canada??

#74 VicPaul on 02.24.17 at 10:27 pm

#49 Bigtowne

I am pickin’ up what you’re putting down….I had an exchange of thoughts the other day with a coworker. He cruises into my room dropping “trash Trump” bombs, baiting me to join in. When I shared that I was (am) surprised and perturbed by the seemingly relentless negativity of msm coverage (mostly left-leaning) – by the intense vitriol that seems to exude from each piece and, that apparently, it’s completely acceptable.
I don’t support some of his policies and don’t cotton to his boorish, arrogant persona…but what happened to social decorum and democratic rule…or is that only if you agree with the screaming mob?

#75 TurnerNation on 02.24.17 at 10:39 pm

#34 RIP Ontario I just saw the backstory. Rewind…we wuz robbed. What a racket.

“Bacardi Canada Inc. is raising a glass to the federal and provincial governments after it was announced Monday the company would receive $350,000 to support operations at its Brampton pla”

http://www.bramptonguardian.com/news-story/6547826-bacardi-bottling-plant-in-brampton-toasts-350k-in-federal-and-provincial-support/

#76 Spectacle on 02.24.17 at 10:40 pm

11 crowdedelevatorfartz on 02.24.17 at 6:53 pm
“glistening abs” , “pumping stocks”

Freud would have a field day with this blog.

After that, I’m trying to keep my dinner down. Sheesh !

Thanks Garth for the blog. Just had dinner with the brother….he sold thanks to my constant bickering about blowing out the stupid real estate. It wasTime, sold 7months ago in YVR, and he Pocketed $800,000. Lotto time.
And that is mostly to your Greater Advice.

Stellar gent you are Mr Turner.

#77 Smoking Man on 02.24.17 at 10:46 pm

DELETED

#78 attack on a free press on 02.24.17 at 10:49 pm

Trump is trying to become the biggest media manipulator in U.S. history. Anyone who supports this attack on a free press deserves the outcome. — Garth”

—-

https://ca.yahoo.com/news/police-school-boards-social-agencies-223558069.html

Thursday’s report, called Addressing Anti-Black Racism in Ottawa.

The report includes dozens of recommendations aimed at city police, school boards, social service organizations and local media. A sample:

– Media outlets should acknowledge that failing to report on positive stories in the city’s black community or offer comments from experts on black matters is part of “institutional anti-black racism.”

#79 Smoking Man on 02.24.17 at 10:52 pm

https://www.youtube.com/shared?ci=YXhDVeFHcMY

Not sure where I found this bUT it sounds good

#80 Leo Trollstoy on 02.24.17 at 10:53 pm

Trump’s conflict with journalists is transparent. Obama’s conflict with journalists was opaque. Administrations tolerate the press. It’s nothing new.

http://archives.cjr.org/feature/covering_obamas_secret_war.php

http://www.cjr.org/criticism/barack_obamas_press_freedom_legacy.php

https://mobile.nytimes.com/2016/12/30/opinion/sunday/if-donald-trump-targets-journalists-thank-obama.html

#81 Flyin_Dutch on 02.24.17 at 10:56 pm

Speaking of market timing, would anyone consider borrowing to invest in a non-registered account (in a balanced portfolio of course) at this point in this market?

#82 Millmech on 02.24.17 at 11:09 pm

#19
If people only payed themselves first the gap would close instead of widen, but keep blaming the evil1% for their own self inflicted 99% lifestyle.

#83 RainForest on 02.24.17 at 11:22 pm

“Savers will pay dearly” = fear mongering

Garth is like RE agent of rigged stock market, this is the best time to buy, buy now or u will miss out.

Now, where did I say that? Exposure to stocks (as I wrote) should be contained and controlled. Maybe you should leave this blog for the adults. — Garth

Joe, it looks like you have stepped on Garth’s toe.

#84 Alex on 02.24.17 at 11:26 pm

Borrow to invest idea from many ‘novice’ investors (not talking about you in particular) = market crash after tomorrow

Reminds me of the 1929 crisis.. When everyone and anyone were borrowing to invest in stocks.

Worry about houses and mortgage debt, not the financial markets. — Garth

#85 aa3 on 02.24.17 at 11:27 pm

A hell of a lot of Canadians cushy jobs and businesses are from various anti-competitive rules, and government transfers of wealth. Either through directly paying those businesses, or various rules that make sure you have to pay a tithe to those businesses.

The part of Trump’s ideology of draining the swamp is a direct threat to this crony-capitalism/crony-socialism. And they are going to fight back with everything they’ve got, as everything for them is on the line(or they perceive it to be on the line).

On the other hand if Trump can stand tall and push through this resistance and it starts to become seen as futile to oppose the changes.. suddenly the power players will have a ‘come to Jesus’ moment, and they will be going after all the new opportunities that emerge in the new era.

Funny thing is many Canadians who are clinging to their protected jobs and industries, would enjoy much success if given the opportunity. Just change is scary and people are also lazy by nature.

I also agree with Garth that the stock market has a long ways to run up. We are still relatively early days of this bull market. One factor is that a lot of US corporations got lazy in the last 2-3 years and let their costs start bloating up and eating profits again. Their last downsizing was 7-8 years ago, so there is a lot of fat they have built up and can be trimmed down when needed.

#86 Ronaldo on 02.24.17 at 11:32 pm

#73 Acdel

”In my part of the country an average loaf of bread is between $3.50 and $5.00 at Safeway; I live in the Prairies surrounded by wheat fields. What do you others pay in different regions of Canada??”
————————————————————
In BC about the same depending on the quality. Good quality is around $5.00 but it’s all relative to wages isn’t it. 60 years ago I recall paying 20 cents a loaf but wages were anywhere from 65 cents per hour for a dishwasher to $1.00 for a carpenter. So, 1/5th of the carpenter’s wage. Today, same guy makes $25.00 or more so 1/5th is $5.00. Of course the dishwasher gets hit the hardest.

#87 Ronaldo on 02.24.17 at 11:36 pm

#74 VicPaul

My thoughts exactly.

#88 BG on 02.24.17 at 11:52 pm

Garth, in the answer below, did you mean “Yes it counts for 2016”?
Thanks.

**********************************************
#16 BG on 02.24.17 at 7:13 pm
Anybody knows this about RRSP contribution deadline:
What if you initiate the transfer from your bank on Feb 28th and the money actually arrives in the RRSP on Mach 2nd.
Does it count as 2016 or 2017 contribution?

Yes, 2016. — Garth

#89 april on 02.25.17 at 12:00 am

#4 – Why is it some people always have to insult old people?

#90 Deplorable Dude on 02.25.17 at 12:04 am

R.E. ‘Press ban’….over exaggeration.

Total hit job/fake news on Trump today by the NYT and CNN over the FBI/Prebius meeting.

Glad I don’t rely on CNN or the NYT to make my mind up.

#91 Ace Goodheart on 02.25.17 at 12:27 am

“Why, in a free democracy, would the President not trust people to make up their own minds? — Garth”

Far right governments do not like being criticized. It isn’t so much that the President doesn’t want people to make up their minds. I doubt he even considers such a thing possible. His main concern is that he is being questioned and to some extent made fun of, by the media. His goal appears to be to “crush” that problem.

#92 yorkville renter on 02.25.17 at 1:08 am

#10 – now RBC has joined TD in calling a bubble… this wont end well

#93 When Will They Raise Rates? on 02.25.17 at 3:04 am

Equities are a proxy for the economy. — Garth
——–

I cringe every time you tout this falsehood.

Your own chart, published on this very blog a few weeks ago, destroys the “Equities are a proxy for the economy” argument:

http://www.greaterfool.ca/wp-content/uploads/2017/02/RYAN-3-768×444.png

^ Your own chart shows that since 2009, stock prices are 98% correlated with the size of the FED’s balance sheet.

It’s not investing, it’s betting on the Fed.

#94 juno on 02.25.17 at 3:33 am

Its nice to know (from trumps point of view)

that China and Russia got it right along time ago

– Control the media
– Filter out the press
– Tyrants Rules
– Communist Rules

Gosh, I just can’t believe so many Americans believe this guy is going to give them all those promises without screwing them over

#95 Euro Observer on 02.25.17 at 3:48 am

Overall, wages in Canada have risen in the past year by only 1.2%. Adjusted for the swelling cost of living, it means these millions are earning less now than they were a year ago. This is another reminder of what a fake economy we live in, how fantasy real estate values have become detached from economic reality, and why a growing hunk of our $2 trillion in household debt is absolutely, totally, and forever unrepayable.

————————
Exactly,

That 1.2 % increase is 0.7 % after the taxes on it and the inflation (which has after tax impact), if they report it as 2 % is actially 4-6 %.

Losing 3-5 % (guaranteed) per year, stolen from you. Year after year.

This is what happens when you leave the governence of your nation’s ‘money’ to idiots.

this is what happens whet

#96 Sebee on 02.25.17 at 4:48 am

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

I’ll take a stab at it.

Because News, especially bad news that scares people is big business. There is entirely too many of these businesses.

#97 Sebee on 02.25.17 at 4:50 am

…it should be noted media was there and all major TV networks were present.

#98 maxx on 02.25.17 at 7:10 am

“This is another reminder of what a fake economy we live in, how fantasy real estate values have become detached from economic reality, and why a growing hunk of our $2 trillion in household debt is absolutely, totally, and forever unrepayable.”

Completely agree.
The robust, rude and equalizing nature of a genuine capitalist economy has been truncated, neutered and denatured.
We have been delivered a specially “tooled” one which no longer works, hijacked by an agenda that has forced far too much cash and cash flow into too few places and far too few hands.
Small wonder that the economic sludge that’s left has hardly moved for years and what does move, travels in circles. So many real economy businesses now look back with nostalgia on how people used to spend before central bank wizards led the 25-year charge with sledgehammer finesse and fawning financial communities bringing up the rear whilst licking their chops.
All of the parsing for a telling word or facial expression is just pathetic, misguided hero worship. Putzes.

True capitalism and its healing cull of stupid money and stupid investment no longer exists in an effective sense.

The “hope and wait, we’re watching the economy closely” methodology that seems to have underpinned central bank policy will never work.
Current modus operandum hasn’t worked, doesn’t work and never will work.

#99 Mark M. on 02.25.17 at 7:49 am

Global growth is in the 3% range, and US GDP may exceed that next year. — Garth

Every bit as prescient as your interest rate and real estate calls Garth.

Growth is a thing if the past, better come up with a portfolio for reality rather than the Fed pumped fantasy you’ve been riding since 2008.

OECD global growth projections: 2017 – 3.3%, 2018 – 3.6%. Here is the reference. Or should I rely on some angry Internet loser? — Garth

#100 Wrk.dover on 02.25.17 at 8:06 am

Yeah, so dairy marketing boards…..set up to protect a little Mom and Pop like Cooks Dairy in Yarmouth at the tip of NS, or Farmers, in the Valley, or Scotsburn more up-province and so on.

Well, now that Tony Soprano aka Saputo owns all of them, who is being protected anyhow…the mob?

I see Saputo took the last three whole years to double share value, all while they strong arm purchased this little fiefdom one by one.

The Royal Bank branch in Embro Ont. has by leaps and bounds the smallest number of customers of all RBC’s, but will not close and move customers into Woodstock, ten minutes away, because the Dairy Accounts (Capitalised Capital) have way too much on deposit to be rocking that boat.

I sure have trivia….

#101 The Buffett Indicator on 02.25.17 at 8:06 am

Click the link below for a discussion back in 2001 by Warren Buffett on the stock market, in which he (for the first time) discusses the market-cap-to-GDP ratio, now referred to as the Buffett Indicator. Buffett told Fortune magazine, “The ratio has certain limitations in telling you what you need to know. Still, it is probably the best single measure of where valuations stand at any given moment . . . If the percentage relationship falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%—as it did in 1999 and a part of 2000—you are playing with fire.” (Source: “Warren Buffett On The Stock Market,” Fortune, December 10, 2001.)

http://archive.fortune.com/magazines/fortune/fortune_archive/2001/12/10/314691/index.htm

Buffett Indicator for the U.S. (Q2 2016) = USD 22.152 trillion*/ USD 18.450 trillion* = 120%

Buffett Indicator for Canada (Q3 2016) = CAD 2.755 trillion**/ CAD 2.034 trillion** = 135%

*FRED **CANSIM

#102 TSX on 02.25.17 at 8:11 am

Taken to the woodshed yesterday .

A housing crash ? Would CRUSH it . Yesterday would be a good day

#103 millmech on 02.25.17 at 8:54 am

#92
have the banks pulled back on their lending? They will do no such thing as Canadians religious icon of the house will be the last thing to lose.
Most Canadians ideals/beliefs of success is home ownership and the banks love this and will have a steady stream of income for the next thirty plus years.
Keep loading up on Canadian bank stocks.

#104 Funny or not? on 02.25.17 at 9:29 am

You’ve Gotta Love Millennials

https://www.youtube.com/watch?v=hLpE1Pa8vvI

#105 TrumpForTheAges on 02.25.17 at 9:42 am

There is a new paradigm emerging and some of the Western worlds assumptions around the resiliency of the US could be questioned. Short article that provides context, and no question that Trump’s protectionist policies, if implemented, could accelerate the recalibration of economic power more globally.

“Although the dollar’s reserve status won’t end overnight, the global payments system is now moving inexorably towards that outcome. The US currency accounted for just 33pc of all foreign exchange holdings in 2013, on IMF numbers, down from 55pc in 2001.”

Since 2013 more financial clearing houses have opened (Shanghai Exchange) and trade agreements (China now can buy oil from Russia without going though petrodollar so that number continues to decline. Do we really believe that the BRIC’s will stand for any bully tactics by Trump?

Short article well worth the read.

http://www.telegraph.co.uk/finance/comment/liamhalligan/10978178/The-dollars-70-year-dominance-is-coming-to-an-end.html

#106 Andrew t on 02.25.17 at 9:45 am

#49 bigtowne on 02.24.17 at 8:48 pm
CBC and CTV and even my favorite French channel RDI all have the same “anti-Trump administration bias” and the news is filled with chatter and pundits dumping on the new administration…should these Canadian media ever take even 10% of their screen time and analysis to critic and examine Canadian and Trudeau policy with the same in-depth focus we would all be able to be more aware and informed about our own governing scions. Apparently, the news room producers have cottoned on to a theme that frees them up from any real journalism or real news reporting as opposed to watching CNN all day and then going from there. I guess most of these anchors only read the news after they fix their hair and make-up and then their politically correct persona can agree with Facebook and Twitter feeds.

Reality is always biased against delusion. It’s the natural order of things. One more thing, using “politically correct” as a putdown is so over now. It’s also hypocritical considering the dogmatic nature of Trump supporters.

#107 free democracy on 02.25.17 at 10:08 am

Why, in a free democracy, would the President not trust people to make up their own minds? — Garth

—-

For the same reason why we see on this blog:

DELETED

It is more complicated than a rhetoric, loaded question.

Comments posted here which are racist, xenophobic, misogynist or vulgar are removed. This, in contrast, is the stuff that defines Trump. — Garth

#108 RBC CEO drops a bomb on 02.25.17 at 10:58 am

“You’re seeing 20 per cent house price growth in a market where you shouldn’t see that much,” McKay said in an interview. “That’s concerning. That’s not sustainable. Therefore, I do believe we are now at a point where we need to consider similar types of measures that we saw in Vancouver.”

http://www.theglobeandmail.com/real-estate/the-market/torontos-housing-market-may-need-a-vancouver-style-cooldown-rbc/article34133220/

http://business.financialpost.com/news/fp-street/rbc-boost-dividend-after-24-profit-growth-to-3-billion-beats-expectations

#109 Renter's Revenge! on 02.25.17 at 11:24 am

#102 TSX on 02.25.17 at 8:11 am
Taken to the woodshed yesterday .

A housing crash ? Would CRUSH it . Yesterday would be a good day

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

1.6%? Puh-leeeease

Commodities and interest rates were down yesterday. A crash in one of those would crush the TSX. A housing crash? Not so much.

By any chance, do you teach drama classes?

#110 traderJim on 02.25.17 at 11:24 am

#80 Leo

Ari Fleischer also pointing out the hypocrisy of the anti-Trumpers when Obama did the same thing.

https://twitter.com/AriFleischer/status/835215195580542976

I’m looking forward to the end of the anti-Trump hysteria so that instead of defending the guy against all the fake news and hysterical claims, I might actually get to criticize the guy’s actual faults and policies, once I get to see what they are.

My lame analogy is: Guy is accused of stealing a bicycle, but he has some enemies who want him charged with being a potential serial killer, so even though you think he might have stolen the bike, you spend all your time defending him against all the false charges of being a monster.

On the other hand, if you’re a Trump supporter, all the focus on imagined events instead of reality might not be bad for a few years.

#111 OECD growth projections and crisis on 02.25.17 at 11:24 am

#99 Mark M. on 02.25.17 at 7:49 am
Global growth is in the 3% range, and US GDP may exceed that next year. — Garth

Every bit as prescient as your interest rate and real estate calls Garth.

Growth is a thing if the past, better come up with a portfolio for reality rather than the Fed pumped fantasy you’ve been riding since 2008.

OECD global growth projections: 2017 – 3.3%, 2018 – 3.6%. Here is the reference. Or should I rely on some angry Internet loser? — Garth

http://oecdobserver.org/news/fullstory.php/aid/4344/Getting_the_forecast_wrong.html

This working paper assesses the OECD’s projections for GDP growth and inflation since the start of the global financial crisis, and asks what went wrong and what lessons can be learned. The authors find that OECD projections repeatedly over-estimated growth, failing to anticipate the extent of the slowdown and later the weak pace of the recovery–errors, the authors point out, which were made by many other forecasters. At the same time, inflation was generally stronger than expected. Analysis of the growth errors shows that the OECD projections in the crisis years were larger in countries with more international trade openness and greater presence of foreign banks. The repeated assumption that the euro area crisis would stabilise or ease played an important role in overly optimistic recovery projections, with growth weaker than projected in European countries where bond spreads were higher than had been assumed. Similar-sized errors were made in the first oil price shock of the 1970s, the authors say.

Pain, N. et al. (2014), “OECD Forecasts During and After the Financial Crisis: A Post Mortem”, OECD Economics Department Working Papers, No. 1107, OECD Publishing.

#112 The Technical Analyst, CSTA, CPD on 02.25.17 at 11:44 am

Buy the rumor (Trump will cut corporate tax rates in a week), sell the news next week (as I’ve heard rumors it won’t be till August now).

The market has rose based on guesswork fundamentals of HOPES of inflation, $1 Trillion in stimulus spending and cutting corporate tax rates.

HOPE IS NOT A STRATEGY. Trade wisely.

#113 Mark M. on 02.25.17 at 11:49 am

OECD global growth projections: 2017 – 3.3%, 2018 – 3.6%. Here is the reference. Or should I rely on some angry Internet loser? — Garth

So classy Garth, as always. I’ll just remind the folks here of your complete faith in the “really smart people” at the Fed to engineer a scenario where the US finally returns to over 3% GDP growth.

All the while steadily raising interest rates, four times last year right? Three this year?

The future is not growth, the world is actually figuring this out, even on this blog, you are among the few holdouts.

So you’re smarter than the OECD, angry anonymous guy? Funny. — Garth

#114 traderJim on 02.25.17 at 11:49 am

“Mistakenly, I thought you were wiser. — Garth”

I used to be, then I got intellectually lazy. Now I sometimes get it right and sometimes not.

As a classical liberal, I should despise Trump and his anti-free market ideas. But I just am tired of waiting for someone decent, let alone perfect, to come along. 40 years is long enough, and I don’t see the prospects getting any better for the next 40. Much worse in fact, by the look of things.

Curious as to what part you disagree with? That ‘the establishment’ is not mounting a coordinated effort with all their media friends to discredit Ellison?

I am most definitely not a conspiracy theorist, I’m an adherent to Occam’s razor in all these cases, but sure looks to be an effort to discredit Ellison and his cozying up to Farrakhan.

Could be just coincidence, but I don’t think so. I’m open to counter arguments.

There are definitely anti-semites (conspiracy theorists usually, who think Jews rule the world or some such nonsense) who like Trump for his anti-establishment talk. (And Trump clearly has some conspiracy theory beliefs)

But you can’t fault Trump for the lunatics that might follow him. And they will abandon him soon when he doesn’t live up to their hopes of draining the swamp.

A good number of anti-semitic events have turned out to be faked by anti-Trumpers, which makes it hard to know what the real truth is in that regard.

But trying to link a guy with such incredibly close ties to Israel and Jewish faith is a losing proposition, imo.

If you see a wave of anti-Islamic violence (like the Quebec City terrorist), then at least you could make an argument that Trump has amped up anti-Islamic emotions, just as I argue Obama amped up anti-police emotions, which indirectly resulted in assassinations of several police officers.

And I do agree, GICs suck.

#115 Shawn on 02.25.17 at 11:53 am

The S&P500 will close 2017 above 2700. Much higher than any analyst forcast.

#116 Lesson of the day on 02.25.17 at 12:22 pm

The real 1% ers are the wealthy earning lower taxed non work income.

The rest are the 99% (this includes all work related income earners like doctors).

Detractors will divide the 1% and the 99% via work income. Don’t fall for it.

#117 Deep Thoughts on 02.25.17 at 12:24 pm

“There are no guarantees financial assets will continue to perform as they have in the past. But neither are there many reasons to think they won’t. The deflationary years that doomers so love have passed. We’re now on the other side. Savers will pay dearly.”

Granted, let’s ponder:

“What surprises me most is “Man”, because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he doesn’t enjoy the present; The result being he doesn’t live in the present or the future; He lives as if he’s never going to die, and then he dies having never really lived.” – Dalai Lama

#118 Astronaft911 on 02.25.17 at 12:42 pm

None on 02.24.17 at 6:47 pm
The big green is forcing me to invest my kids $1200 B.C. Training and Education Savings Grant (BCTESG) in a GIC of some kind.

What do I do? Market based GIC? Is that all I can do?
__________________
Open resp in another brokerage. TD is too restrictive. But Scotia iTrade will hold it. So will most discount brokerages.

#119 Ronaldo on 02.25.17 at 1:09 pm

#117 Deep Thoughts

I love that quote. So true. I had the unexpected pleasure of hearing the Dalai Lama speak in person in Maui in April of 07. An awesome guy.

#120 Brian Ripley on 02.25.17 at 1:20 pm

#6

The world is not stagnant. Myth. Global growth is in the 3% range, and US GDP may exceed that next year. Garth

Yes World Bank data (2015) shows growth at 2.629% (or 2.6)
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

But the short term trend is down and the long term trend (since the 1970’s) is very down.

This does not appear to be your father’s Oldsmobile.

Canadians and Americans now have to compete with a hungry global labour and R&D force. Since the 1970’s we have been able to be consumer societies via debt which continues to grow while the economic class divisions continue to widen.

Now that we have bona fide gangster corporatists running the U.S. I am willing to bet that debt growth especially in the public sector is going to ratchet up bigly despite “conservative values” if there are any left in the GOP.

You either kiss Trump’s ring as Paul Ryan has done on bended knee or out you go.

#121 #109 on 02.25.17 at 1:25 pm

You are certainly entitled to your opinion ;

Commodities were all down , really ?

Gold was up

Get the facts straight. It would make your point more valid . Not sure what your point was , btw

#122 45north on 02.25.17 at 2:09 pm

Wrk.dover: I hope your driver-less cars work out better than the driver-less Federal Phoenix payroll system

my post on Phoenix:

The payroll system is a product of the need of the senior civil service to centralize . Administrative darwinism. True believers.

The article says the old payroll system wasn’t perfect but it was accepted. I received a promotion and moved from Statistics Canada to Agriculture Canada. For one year I was paid from the Statistics Canada pay office.

http://www.greaterfool.ca/2017/02/23/parabolic/#comment-502312

#123 45north on 02.25.17 at 2:16 pm

Victor V: In August 2015, I posted this 6+1 bedroom, 14 bathroom house in 13,725 square foot house on an 86 acre lot at 4411 Escarpment Side Road in Caledon.

just 17 kms from the Belfountain General Store!

but I don’t have $12 million

#124 45north on 02.25.17 at 2:25 pm

RBC CEO: from your link: “Given accelerated house price appreciation in both of these markets, we continue to closely monitor this portfolio with extra due diligence for higher value mortgages,” said Mark Hughes, RBC’s chief risk officer

“we continue to closely monitor this portfolio with extra due diligence for higher value mortgages”

thank God he’s on the job

#125 jon on 02.25.17 at 2:53 pm

“Worse, this is creaming seniors with GICs, wuss investors with whimsical “high-yield” savings accounts and anyone misguided enough to keep big bucks in their chequing or regular savings account. In fact, to earn just 2% on a guaranteed investment at one ”

Garth, there are savings accounts that pay nearly 2% without locking in, CDIC insured

1. https://www.alternabank.ca/Personal/EverydayBanking/Accounts/eSavings/

2. https://www.eqbank.ca/

So yah, there even with these they may not be getting a return after inflation, but the stock and bond markets are over-valued and will drop dramatically as soon as qe and low interest rates stop working to increase debt and create inflation. (this is, unless they do something really stupid and implement negative interest rates on banks – which may work for a while until people are sick of getting ripped off, try to take their money out and and there’s a bank run. everything will collapse at that point.

Totally wrong. But good luck with your no-branches, no-people, online, virtual 2% bank accounts. No risk there! — Garth

#126 Update to #101 Buffett Indicator on 02.25.17 at 7:15 pm

Buffett Indicator for the U.S. (Q3 2016) = USD 22.641 trillion*/ USD 18.675 trillion* = 121%

*FRED

#127 Jane on 02.25.17 at 7:57 pm

In today’s market, if we sell our house and have a large amount of money to invest, would you advise to put it all in the market in a balanced portfolio immediately?

Really struggling with this..when I look at the SP500 charts, if someone invested in 2007 before the crash when it was at 1550, it didn’t get back to those levels until 2013. Almost 6 years later! It just makes me very hesitant to put in a lump sum amount in today’s market…please tell me why my thinking is wrong. Thanks!

First, there is no 2008 looming and conditions today are nothing like they were then. But even if you’d invested in 2008 in a balanced and diversified portfolio all losses would have been erased in one year, not seven. In fact between 2007 and 2010 a 60/40 portfolio averaged a positive gain of 5% annually. The best time to invest is when you have the money. We have shown here previously how missing good days by sitting in cash hurts people far more than being invested during the bad ones. If you cannot stop being emotional, get an advisor. — Garth

#128 Where's The Money Guido? on 02.25.17 at 8:13 pm

BC’s “alternative facts” budget:
http://rafeonline.com/2017/02/bcs-alternative-facts-budget/#more-3762
Here it says: The so-called balanced budget has only been achieved by delay, spending suppression or hiding contractual liabilities. This is a form of Enron off-balance sheet accounting, that for the first time ever, caused the independent auditor to title their opinion with a new term. BC Hydro did not deliver an annual “audited” report.
Also: If the NDP wins the election this year Moody’s will have the opportunity to hit the BC credit rating down-grade button, thereby making the NDP the goat.

#129 Jane on 02.25.17 at 9:51 pm

Thanks,Garth. Truly appreciate you taking the time to respond. Big fan of your blog – educational and entertaining!

#130 Rexx Rock on 02.25.17 at 10:57 pm

Looking to buy a rental investment property in Nanaimo.The realtor said it was a no brainer.He sent me the info and I did the math I would be $120 a month in the hole.He said I don’t think I can find you a cash flow place,the property will be cash flow in a few years and appreciation.Thats how its done on the west coast.

#131 Pisces1717 on 02.26.17 at 10:27 am

So what is a Canadian well balanced ETF?