By Guest Blogger Doug Rowat
Building a portfolio is a bit like putting together a puzzle: each small piece plays a role in creating an overall coherent picture.
Performance, of course, is only a part of the final picture. If all our clients had cast-iron stomachs we’d throw 100% of their assets into US small-cap stocks, which have pretty much had the market’s best long-term returns, and be done with it. But, naturally, it’s also about controlling risk. There’s no point in building an aggressive portfolio if every time there’s volatility the strategy is abandoned. Therefore a smooth journey becomes equally as important as a high-returning one.
Which brings me back to puzzle pieces.
Portfolio managers are wrong—a lot. So, while it’s important to build a forecast and position portfolios in a way that supports this outlook, it’s also important to guard against the fact that often the forecast will be incorrect. With this in mind, let’s consider a ‘Japan equity’ puzzle piece.
2015: TSX Composite returns Vs Nikkei 225: When oil is weak, Japan serves a Purpose
Source: Bloomberg, Turner Investments
On the surface, the Japanese market seems dismal: the average Japanese citizen is comparatively ancient, the Japanese economy has spent much of the past eight years mired in recession and, long term, the country’s equity market has been the virtual definition of underperformer.
However, we hold a small amount of Japan in our client portfolios. Why? First, we never underestimate central bank power and the asset-purchase programs enacted by the Bank of Japan have, more recently, strongly supported Japanese equity markets (the Nikkei 225 is up 16% annually over the past five years, for example). But secondly, and more importantly, we are aware of how the Japanese market has behaved historically. For a variety of reasons, including Japan’s dependency on oil imports, the Japanese equity market tends to have a negative correlation to the oil price (-0.38 over the past 10 years) and therefore acts as a useful hedge against weakness in our own Canadian equity market. This is one reason why the Nikkei 225 appreciated 9% in 2015 while the S&P/TSX Composite dropped 11%. So, when it comes to smoothing equity returns, Japan did its job. In other words, it was a small but stabilizing piece of our global equity puzzle.
However, global equity markets are still generally positively correlated, so to even more effectively control risk, it becomes necessary to own offsetting asset classes. Briefly, there are two major forms of equity risk: systematic and non-systematic. Systematic risk refers to market risk. For example, the 2008–2009 financial crisis more or less indiscriminately dragged down all stocks. Unsystematic risk refers only to company-specific risk. For example, Enron went bankrupt because management was fraudulent. Unsystematic risk can be eliminated through diversification, but systematic risk cannot be. Therefore, when the overall equity ‘system’ is failing, you can’t look to other equities to meaningfully control portfolio volatility. You need an entirely different asset class—usually bonds—to stabilize returns.
We all know the basic rationale for holding bonds—they provide safety and tend to be negatively correlated to equities. However, the beauty of bonds is that they also have a certain amount of ‘flex’. That is, when equity markets are under stress, the negative correlation increases. If bonds constantly maintained a high negative correlation to equities then they would likely only act as a permanent and unproductive drag on performance. We don’t want this. We want bonds to transition only occasionally to higher levels of negative correlation. And indeed this is often how they work, as the chart below showing the ROLLING correlation between the broad US bond market (Barclays US Aggregate Bond Index) and the broad US equity market (the S&P 500) indicates. Notice how the negative correlation between bonds and equities increases during times of equity market stress.
Rolling Correlation: Barclays US Aggregate Bond Index
vs S&P 500
Source: Bloomberg. Red=Negative Correlation
So when we consider a specific bond ETF for our clients’ portfolios we often examine rolling correlations to assess how effectively it might control risk. And sometimes it’s useful to include bonds that more frequently have positive correlations to equities. To parallel bonds with hockey: it doesn’t help your team win if your defensemen never leave their own zone. We want defensemen who occasionally try to score. So, more puzzle pieces get added and matched together. Perhaps we add a bond ETF that acts more like Bobby Orr to offset one that acts like Doug Harvey (if you’re of that particular generation). And so it goes, one puzzle piece at a time.
Building a portfolio is really just a careful process of hedging risk to get the best return possible.
The objective being to create the most efficient portfolio: one that controls volatility while sacrificing only the minimum of expected performance.
It can be painstaking work, but one strategic puzzle piece at a time and suddenly the bigger picture reveals itself.
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.
96 comments ↓
Doug, great post. Thank you.
At the risk of being accused of brown nosing, I sometimes wonder why Garth doesn’t charge the blog dogs at least a token amount for all the pearls of investment wisdom that have been shared freely here over the years. Anyway, it’s certainly appreciated!
The rush back into bonds has begun. Already starting to see some good deals in US equities (particularly multinational beer manufacturers for some reason right now are mispriced due to recent mergers and acquisitions).
Looks like it will be a good summer……
Worst decision ever? – about 7 years ago, was drinking way too much red wine up at the family cottage. Had a smart phone with internet. Was trolling around on the old MLS site (now realtor.ca) and looking at Toronto properties.
Ended up purchasing a semi detached three unit dump, in a rotten Toronto neighbourhood, inhabited by crackheads, cockroaches, rats and mice, for what at the time seemed a lot of money. Wow that was quite the hangover. Offer was firm, no backing out, so got the cash together, set up financing and took possession. Thought I’d made the worst mistake of my life.
Enter the great Toronto real estate bubble. My crackhead infested dump is being sold for slightly under 2 mil.
Oh well. Literally, that was the best investment decision of my entire life. Made drunk on red wine at the cottage. I have never come close to achieving anything like it and it made me independently wealthy.
Nice article, Doug.
Got any more asset classes under consideration?
So here we have it, put all your money in stocks cause in long run it’s better…im surprised Garth let you say that Ryan…
Hey smoking man, what a nite playin poker at bellagio, pocket aces on the button, I can see people running towards the bathroom which was out of place, I’m waiting for the turn card and it’s an ace both guys to my right go all in I snap call, then someone yells in poker room active shooter… all hell broke loose guys diving under tables etc…never seen the river card…I bolted out exit door, what a vegas story for the archives…
Comment to yesterday’s posts on Vancouver sun article:
http://vancouversun.com/news/local-news/house-buyer-beware-landmark-b-c-court-ruling-will-shake-real-estate-industry
Now if they coupled the criminal practices of Canadian firms that have supported the undermining of Canadian real estate by foreign capital, and add additional laws to go after the original offending party (the original lying party, the seller) with substantial penalties, they may actually get somewhere in modulating this crazy Vancouver and Toronto real estate market. If cra and the courts did so, it would force an overdue return of integrity to the real estate industry.
All proof that CPP, with it’s very low costs and consistent returns, should have been increased substantially thirty+ years ago when the company pension plan went the way of the dodo bird. Average retirement savings in this country are a joke, and with real estate out of sight young working people have suffered a seven figure loss of net worth compared to their parents and grandparents. Going to be a lot more broke seniors in the decades to come, with the bankruptcy rate already rising faster than any other demographic.
Average wage earners have been ill served by the investment industry, with high fees and a ridiculous array of “products.” A decent pension, with private investments available for those who want more in retirement would once and for all solve senior poverty, and we have the means. Too bad contributions weren’t increased a long time ago to provide properly for workers.
Good insight into a professional help, Doug. Much thanks, …
A suggestion, though, to the groupies of this enduring forum:
It’s perfectly fine to utilize a professional help to manage one’s investments, but – there always is a but!, one should – at least theoretically – fully comprehend every single suggestion the professional help proposes!
Without knowledge, … one is at the mercy of …
… just sayin’
F.S. – Comox, BC ( … off for a spin in his Aperta SA – top down, this a.m. – glorious spring day in Comox Valley! )
Thanks Doug, for another good read. I’m thinking I may stick with equities only for myself because my wife has a DB pension….
#8 Figmund sez:
“It’s perfectly fine to utilize a professional help to manage one’s investments, but – there always is a but!, one should – at least theoretically – fully comprehend every single suggestion the professional help proposes!”
Yes indeed.
Same principle as going to the doctor with new symptoms. You should do some research to know the language they use and have an idea of relative probabilities.
Remember the interviews with people that Madoff fleeced? Common quote: “I didn’t know how he got 15% a year and I didn’t care”.
It has to be explainable to a reasonably informed investor which after all this time should describe the blog dawgs here.
From the How the World Works Kids department:
Loblaws used to carry bottled organic lemonade from an independent outfit in USA. At almost $5/bottle kinda pricey I thought, but when it came on sale 2 for $5 – large bottles – I always jumped.
Now, the hippy juice is gone, replaced with the supermarket’s own PC Organics brand.
Priced at – you guessed it – 2 for $5.
(The sweet spot.)
Replication. Private labels.
Score: Hippies 0. Big Corps.1
#2 Ace Goodheart on 03.25.17 at 1:51 pm
While I agree with the mentality (buy low sell high) and applaud you on the paper gain, the only reason why housing has increased to such an extent everywhere (and here in the GTA especially) is central bank manipulation and foreign money laundering. No offence but most of the GTA’s billion dollar houses should be about 500k realistically.
MF
Here’s the rest of the chart:
https://en.wikipedia.org/wiki/Nikkei_225#/media/File:Nikkei_225.png
Note 1990 and afterwards.
Japan has been known to falsify virtually everything but only recently the government in Japan has done what America has done for the last 7 years that is buying up the entire market thus rigging it and setting it up for the biggest crash of all time. Ironically America has resorted to what Japan has done but under the guise of rewriting accounting rules and rewriting or changing the definition of so many important things to try to snowjob the feeble American public into believing there’s a recovery or better times ahead. Nothing could be further from the truth.
Well my rent has increased again significantly. About 50% of my income is now going towards my GTA condo’s rent. Great.
Started investing whatever savings I have in 2015 and I am about 5% up on 100k (after being down for about 80% of that time). This is after working 7 days a week for about 4 years with 2 jobs and saving as much as possible.
Still looking to purchase somewhere. Reasons being the obvious:
-Renting is garbage when most of your money goes towards renting
-Rental stock available is also garbage
-Having a landlord is garbage
-I don’t trust stocks (sorry I don’t anymore. I tried)
Taking a peak in this GTA market is a hilarious joke though. Everything in this city where people make 50k/year is 1.2 million for a townhouse. Worthless 1 bedrooms are 500k. Speculation rampant. Mortgage lenders everywhere. Our central banker is incompetent, CMHC totally worthless and should be eliminated.
Complete runaway freight train. But what can I do? My life is here.
MF
Daring to Compare Canada to Japan…
I wonder what the 120 mil Japanese could do with our landmass and resources. Pretty much rule the world.
—————————-
Gold also had negative correlation to stocks.
Until the beginning of 2016.
Bonds had correlation to stocks within certain phase of the biggest bull market of bonds in history.
Now that is over. I will hold corporate bonds and preferreds but never government bonds. Period.
Following on #2 Ace Goodheart
My worst decision ever? Nothing like yours, by a long shot (in any direction!) but it was deciding to change my Uni. Major because I liked computers.
It was most certainly *not* a decision made for $$ reasons, but solely for enjoyment. It took me into many interesting places in the world, and (almost) every day is filled with delightful challenges. The pay is not bad, either!
One decision I took when I was younger was that “if the phone ringed, and someone offered an interesting job, seriously consider it”. I say younger, because a well known VC contacted me in 2016, but I was not interested; if I was in my 20’s, I’d have been “outa here” and down to SF or NYC in a second.
I don’t think there is such a thing as a “wrong decision”, just decisions that take you down different paths in life.
Back to reading my (actual paper-based) book….
#125 tabloid vocabulary on 03.25.17 at 12:29 pm
Crazy Brits
Millions of deplorables
reality TV star misogynist billionaire
populist
lame duck
his Muslim travel ban
ridiculed and killed
unpredictable tangle of ego, bravado and well-aged testosterone
calls into question the man’s status as a grand deal-maker
Financial analysis mixed with tabloid vocabulary does not add up to any credibility.
Now, which one of those awful words hurt you? — Garth
===
If I didn’t personally recommend you to your client I would be less worried about your ability to maintain a valid financial analysis.
Seems like even you are becoming the victim of polarization of the society – your previous critical, balanced views recently turned borderline open propaganda of a specific political spectrum.
You get plenty of feedback from visitors here noticing this change.
The question is, if you can no longer maintain objective analysis in one field, what are the chances that you can you do it in an other?
Will this hurt your business as a Raymond James financial advisor- regardless of your disclaimer about the views expressed as the author, Garth Turner?
That’s really the question for you to ask.
Love Big Brother. The tax serfs are getting rowdy. Tax ’em some more:
http://www.cbc.ca/news/canada/saskatchewan/wall-faces-boos-cfl-1.4039919
#12 Tony on 03.25.17 at 3:06 pm
Japan has been known to falsify virtually everything but only recently the government in Japan has done what America has done for the last 7 years that is buying up the entire market thus rigging it and setting it up for the biggest crash of all time.
—
The US discontinued its asset purchases years ago and its market has continued to rally. Sure sounds like for 7 years you sat on the sidelines and watched the US and Japanese markets skyrocket. Seven years. That would be…what’s the term? A market cycle. Sounds like a brilliant strategy.
–Doug
‘Performance, of course, is only a part of the final picture. If all our clients had cast-iron stomachs we’d throw 100% of their assets into US small-cap stocks, which have pretty much had the market’s best long-term returns, and be done with it’
……..
past performances does not guarantee future results
the only free lunch in investing is diversification.
As you say, return is not the only criteria to look at in assessing a portfolio manager. How much risk is he/she taking to achieve said returns?
look ar sharp ratio and beta for a clearer picture
ex.,
5 yrs , fund manager returns 7.5% annually
beta- .74
sharpe ratio- 1.61
that’s a guy you want on your team….:)
agree with #16 tabloid vocabulary. Your neoliberal propaganda tarnishes this otherwise great blog.
Doug one of your best posts to date. Informative and easy to understand but to your hockey analogies:-)
@#16 Politically correct weenie
“if you can no longer maintain objective analysis in one field, what are the chances that you can you do it in an other?”
*******************************************
All this whining due to Garth’s use of adjectives that you disapprove of?
Wow!
Words like “Crazy”, “Deplorable”, ” misogynist billionaire”….send you into a lather.
Perhaps YOUR bias FOR Trump is the issue?
Newsflash! A lot of people think Trump is a dangerously unstable idiot who shouldn’t be within a thousand miles of the nuclear codes
But that’s neither here nor there.
This is Garth’s blog, not yours, and the last time I checked ….its free to read.
Don’t like his political opinions?
Tough.
You always have the option to leave the blog and never come back.
Deal with it
Due to your hockey analogies… should say
#16 tabloid vocabulary on 03.25.17 at 4:07 pm
“Seems like even you are becoming the victim of polarization of the society – your previous critical, balanced views recently turned borderline open propaganda of a specific political spectrum.”
You are willfully ignorant of all the criticism directed at T2, Moreau and Rachel Notley in his posts; look up as recently at his posts earlier this week about the Federal budget for proof.
We can safely assume Trump does not care at all about Canada and Canadians and yet, here you are with a need to protect him against any negative statements about him.
Canadian Trump supporters fascinate me. Why do they need to defence him so much on a Canada financial blog? What do they get out of it?
Sorry about your situation .
Unfortunately a LOT of people called the peak on housing
way way too early . Some as early as 2006!!
And yup rent is going higher and higher . As you say, for folks are throwing 50% of their payment into rent! You are not alone
Is negatively correlated to equities especially when markets r severely stressed
Gold , tho, provides no yield
defend him so much on a Canadian financial blog?
Damn typos
Healthcare seminar on Friday . They had the customary token financial advisor booth seeking new business . A norm. What was abnormal was a real estate booth !!a real estate agent looking for new high net worth customers to ‘invest ‘ . He stated the ‘housing market is hot now , over 20% gains within months ‘
No word of a lie
#21 Dan.t on 03.25.17 at 5:14 pm
Doug one of your best posts to date. Informative and easy to understand but to your hockey analogies:-)
—
Thank you. I was lucky enough to watch Orr at the very end of his career. Doug Harvey, alas, was a bit before my time.
–Doug
MF what area in the city?
(I’m on King St. West party strip.)
Rents here were 1400 for 1 bedroom but in past two years edged up close to 1800 -for new rental entrants.
If i had a $ million plus and was retired ….
why not ditch bonds altogether ?
60% Equities
20% Preferreds
20% Reits
this portfolio has long term growth and superb dividends inching/reaching towards that magic 4 % monthly yield .
(in the above i have ditched bonds and increased the Reits weighting )
bonds are historically priced high now and not the best in a rising rate world anyway
one can sleep at night in a crisis in the markets because you know that all the bills will be paid from the monthly dividends and one knows that you will get long term growth .
its the best of both worlds ; income and growth
Poor dog. Great Pyranees do not do well in warm weather. Much happier rolling in the snow.
Some people on here do not understand Trump lovers? I really don’t understand all the Canadian Trump haters.. Iy must be that good old traditional Canadian Liberal upbringing that we all love so much (tongue in cheek). But seriously why do Canadian’s get so wound up about it? Who cares, it is none of our business and we have more than enough problems in front of our noses. Sounds like a bunch of old busy bodies with nothing better to do.. why don’t we come up with a solution for the following: why would we bring more refugee’s into this country when we have thousands of people living in third world conditions and the bureaucracy is simply too massive to change these conditions?
#19 ugh on 03.25.17 at 5:09 pm
the only free lunch in investing is diversification.
As you say, return is not the only criteria to look at in assessing a portfolio manager. How much risk is he/she taking to achieve said returns?
look ar sharp ratio and beta for a clearer picture
—
These are critical metrics often overshadowed by returns, which are what mutual fund companies misleadingly focus on.
–Doug
@22 crowdedelevatorfartz
Dreaming up insults for Donald Trump is the latest party game for the same people whose view on the world induced millions to vote for him last November. That does not invalidate the insults. But it does reinforce the view of his more ardent fans that he is a brave outsider, seeking to smash the so-called liberal elite that does not argue but merely derides.
https://www.theguardian.com/commentisfree/2017/feb/15/yes-donald-trump-is-a-monster-but-his-agenda-isnt-all-bad?CMP=share_btn_fb
Interesting article here about why people believe what they believe, although it’s way too long (some skimming will be required):
https://www.theatlantic.com/science/archive/2017/03/this-article-wont-change-your-mind/519093/
I’m posting it because it is sort of a side issue that comes up again and again on this blog, even Garth refers to the problem in his own way “recency bias, etc.”, but I think this goes more to the point.
The jist of the article is that people tend to gravitate towards information that confirms their pre-existing viewpoints, regardless of facts. And where do they get their pre-existing viewpoints? From their social circle. In other words we tend to believe what maximizes our social inclusion, not what’s true. Interestingly the author cannot see her own bias on things like climate change but perhaps that only enhances the point. She defacto assumes her viewpoint is true. (I am not commenting on whether it is true or not, only that she assumes it is and uses those who don’t believe as an example of her point.)
Why do I think this article is interesting to readers of this blog? Something that Garth has commented on ad nauseum is the mathematical impossibility of the current housing market and the importance of diversification, and his angst that the message is so slow to catch on. What this article points out, although it doesn’t refer to markets in particular, is that for most people social acceptance is more important than facts. That’s why mom’s opinion is worth more to most people than Garth’s. And it’s hard wired in. We are social creatures first, and logicians way down the line.
I think it goes a long way to explaining why most people don’t have a financial adviser (their friends don’t, unless they run in a pretty well healed crowed), why the US is so divided over Trump (facts don’t matter to either side), and why people are still buying houses in Toronto and Vancouver. As that recent pep-rally in Toronto just proved, you can sell 15,000 tickets by promising people easy wealth. How many tickets can Garth sell with his slow wealth method? He can’t even get his readers to all agree on it, even though I think, he’s more than amply proved his case, and even folks like the great Nassim Taleb probably agree with him point for point. (PS if you haven’t read “Fooled by Randomness”, do so now before you read anything else.)
Incidentally, side note. I have argued a couple of times that Trump is either an idiot or a genius. I still lean towards the later. His campaign was and style is completely fact free. Why? He knows facts don’t matter, only the narrative. His appeals are all based on emotion and identity. And I think he does it quite intentionally. He knows to whom he is speaking. Is he fact free? Probably not so much as he appears.
Even the health care debacle will turn in his favor. As Scott Adams has pointed out, he has a built in scape-goat in Paul Ryan and congress, and he’s already been converted from “Trump is Hitler” to “Trump is incompetent” in the media. While “incompetent” might not be great, it’s a big upgrade from “Hitler”. He’s already moving the needle in the right direction. For most people, “incompetent” is a given in a politician and is about the best you can hope for. Far better than “corrupt”, “tyrannical”, or “Hitler”. So within 100 days he’s already moved his public perception to inline with all politicians. If this doesn’t indicate he has a much better idea of what is going on than most people give him credit for, then he is the luckiest idiot alive.
#13 MF
The definition of insanity is to do the same thing over and over and expect a different outcome.
Your living expenses are too high as % of your income you should change that. Don’t be confused between a need and want. To be successful you must do what is necessary to succeed. We all have choices and changes that we can make to improve our circumstances.
In your case you could move to an older building that’s less or rent a 2bed with a roommate or move outside the downtown core. Or you could just leave Toronto entirely. If you’re making 50k a year like it sounds like based on 2k per month rent on a one bed condo as 50% of income. What do you have to lose? You can make 50k a year anywhere. As for your life being here remember that if you’re starving maybe 1 or 2 of your friends might help you the rest will laugh. Take care of yourself first and the rest will take care of itself.
I recently gave similar advice to a friend. His situation
Married mid 30s with new born
Household income 250k 200k him 50k wife
700k (400k pension) 300k cash
My opinion move to Ottawa both him and wife can transfer and make the same. They can have their dream home with a mortgage that’s about as much as a car payment. His wife can stay at home if she wants and he can reduce his workload. Or stay here stay mortgaged and stressed for life. Every strip mall is exactly the same from Miami to Montreal so what’s the difference if your income is the same?
#8 Figmund Sreud on 03.25.17 at 2:24 pm
Good insight into a professional help, Doug. Much thanks, …
A suggestion, though, to the groupies of this enduring forum:
It’s perfectly fine to utilize a professional help to manage one’s investments, but – there always is a but!, one should – at least theoretically – fully comprehend every single suggestion the professional help proposes!
Without knowledge, … one is at the mercy of …
… just sayin’
F.S. – Comox, BC ( … off for a spin in his Aperta SA – top down, this a.m. – glorious spring day in Comox Valley! )
====================================
*cough* bullsh!t *cough*
Are you really trying to slip in a reference to one of only 80 Ferrari Aperta SA’s ever made, each worth about 1.6 million, and get us to believe that someone living in COMOX, BC, Canada owns one? lol You DO realize this is the same forum frequented by Smoking Man, right?
Post some credible proof or a more believable lie.
:-)
#1 just a dude
I think Garth has explained why he doesn’t charge, or even have advertisements on the site, is because he believes he’s doing a public service. Also it doesn’t sound like he’s strapped for cash.
But there is probably a second reason at this point. If you are looking for a financial adviser, we all know Garth well and are getting to know Ryan and Doug better. Where would you go with your business? And no I don’t think that is underhanded. Most advisers give a preview of what you will be getting for free. The only reason I didn’t go with Turner Investments is because I am very far from Toronto and prefer some face time. But I definitely looked for similar attributes.
@#21 & 34 Anton
“Your neoliberal propaganda…..”
********************************************
My reply to that pseudo intellectual drivel spewed forth…… Ugh.
” the view of his more ardent fans that he is a brave outsider, seeking to smash the so-called liberal elite…”
********************************************
Brave? Seriously?
Outsider. Definitely.
Seeking to smash the liberal elite.
And replace it with plutocrats .
Careful what you wish for.
While I agree that most current democratic elections are a financial funding farce of fornication ….. and that the entire process needs an enema.
Trump isnt the one to do it.
Greedy opportunist comes to mind when Trump’s name is mentioned. Nothing more.
Its a shame most “deplorables” cant see that.
#22 crowdedelevatorfartz on 03.25.17 at 5:14 pm
Dude, lots of people spend plenty of times to fill public space with various political views, some – unlike you – for making money.
Not many of them are managing other people’s money, though – there is a reason for that.
I don’t expect you to get this. Feel free to spare your time with more useful things than explaining the world who owns this blog.
#24 Joseph R. on 03.25.17 at 5:27 pm
You are willfully ignorant of all the criticism directed at T2, Moreau and Rachel Notley in his posts; look up as recently at his posts earlier this week about the Federal budget for proof.
What his post the day before the budget was proving is that unbalanced political bias results in a tabloid grade financial analyst prediction. Look it up. Exactly my point.
Ace Goodheart on 03.25.17 at 1:51 pm
Worst decision ever? – about 7 years ago, was drinking way too much red wine up at the family cottage. Had a smart phone with internet. …
the best investment decision of my entire life. Made drunk on red wine at the cottage. I have never come close to achieving anything like it and it made me independently wealthy.
=================
Hi Ace,
Do you remember the vintner, variety & year of the wine?
I would like try that strategy, but at the boat instead of a cottage.
Cheers, Russ
“Perhaps we add a bond ETF that acts more like Bobby Orr to offset one that acts like Doug Harvey (if you’re of that particular generation).”
——————————————————————–
Indeed. When Hockey was played without helmets.
Is it really painstaking work to build a portfolio, or simply a matter of buying several stock etfs and bond etfs and holding them. Buffet said that the average investor is best off just buying the S&P 500 index fund and holding it. I know advisors wouldn’t make much money if people understood how simple this was, but do the math and you will see over the long term this beats most portfolios and one reason is there are almost no fees.
Not such a great strategy in 2008-9. — Garth
A pleasure to read and information is relevant and thought-provoking. Thanks Doug!
Thanks for the lucid post Doug. I know you and Garth wouldn’t approve but I went 25% cash a couple weeks ago. I don’t think Trump will be able to implement the infrastructure program he promised. That will require money from congress and all the Republican congress wants to do is cut taxes for their wealthy supporters. Garth said as much in his Friday post. I will wait and try to take advantage of a correction.
Re: #13 MF on 03.25.17 at 3:19 pm:
“Still looking to purchase somewhere. Reasons being the obvious:
-Renting is garbage when most of your money goes towards renting”
I’m actually in the unique position of being able to comment on this, from a perspective that probably not a lot of other people in my situation have:
I am 43, own my Toronto home outright (no mortgage or debt attached to it, it is mine) and also own two other houses (one we use as a summer cottage, the other is a three unit rental) also with no debt attached to them.
So I can let everyone know, from the perspective of a relatively young person (43 is young I guess) what it actually is like to own a house in Toronto without a mortgage (since this seems to be the dream of everyone).
I can tell you that it is not really all that wonderful.
Houses need repairs. Pretty much all of the time. Right now we have a leaky chimney, a basement stairwell that is falling apart and has a major water leak, a partially broken gas stove in the kitchen (entire kitchen really needs replacing, but that is like 30K) and several other small issues.
We don’t have a lot of freedom in things that you would want freedom with. For example, we don’t get to choose who we live on the street with. This is just a random thing, conducted by way of bidding wars, and whomever moves in, we then have to work to “impress” each other by renovations and what sort of car we park in the driveway. Spending most of your time impressing people you do not know and do not care about, is really pointless. That is what homeowners do.
We are not mobile. Again, right now, you can sell a house for whatever price you ask. But Toronto is in a bubble. We can’t just up and leave, go work somewhere else, have an adventure, live our lives. We are tied to three houses.
I honestly got into this situation by mistake. The house was originally purchased so that the wife could have somewhere to live while she went to school. At the time the neighbourhood was pretty crappy. It subsequently “gentrified”.
If it was just me here, honestly I would sell all three houses, take my millions and spend my life travelling. I don’t enjoy home ownership and I am frustrated that I have this large amount of money sitting in three houses, earning about 10K a year off the rental and nothing off the other two. But I’m married….
It is not that wonderful a thing, to own a house and live in it. I don’t know why everyone wants to try it out, except that maybe it is impossible to imagine what it might be like.
It is like living in a big pile of bricks and wood, that is falling down slowly around you and that you have to keep fixing.
Canadians have options
1. Rent and save more
2. Buy and save less
In either case you can invest what you save into
A. Stock Market bubble
B. Real Estate bubble
C. Safe investment and lose ground to inflation
Or, save nothing and party hard. Then, when to old and tired to work or have fun….end your life.
What is the best option Garth? We have been renting since selling our home in 2008. Saving all we can in safe investments with low returns. Thinking of starting the save nothing plan.
Live in Calgary where a $725000 listing went to a 4 way bidding war last week. This in a province that could go bankrupt. Driving me nuts!
Doug. Putting you on the spot.
Puzzle, Puzzrle me this.
1 No comment.
2 Is the VIX the seer of all things market related.
3 Or is it the drunken ability of a weirdo alien that can read the herd, the true visionary of markets.
1 No answer. = Means I don’t know.
2 The VIX rules. = Your a schooled idiot.
3 Smoking Man is a lucky bastard. = he’s right but we can hire this lunnatic. To unpredictable for Cap Markets. TJ would like a comment on linked in.
Probably 3, not seeing creativity skills for a number 4 explanation.
Bottom line, I’m nearly broke. If I don’t get a gig in the next week, I got to sell Shlong Branch.
I’ll be leaving 400k on the table for peek real esate in 2018.
Doug your thoughts?
Ps I met a blog dog a while ago. Big fan of this blog worked with you at CIBC. He sort of worshiped you. Me not so much. The mirror works for me.
Nothing but good things to say about you. First name George.
Where am I going with this. No idea.
I’m an alcoholic. And proud. Anything else is conforming for a pathetic pay check.
That’s not living.
Quartz has a good writeup comparing Canada’s peak housing to USA’s
https://qz.com/938570/canadas-mortgage-debt-has-reached-the-levels-in-the-us-before-the-financial-crisis/
‘ This in a province that could go bankrupt.’
where does this level of paranoia come from? Candidly, I don’t understand
Who is Bobby Orr? Sorry, this generation is into Soccer, Rugby and Lacrosse. Hockey is too expensive.
Trump freaks.
Stop trying to explain why Trump is such a swell guy and how he’s gonna rule the world.
The only reason why he ran for office was to sit in that fancy chair in the Oval Office, surrounded by 20 incompetent serfs, and spew nonsense.
He’s got no clue, it’s obvious.
Time to move on to more important news.
Even Don Cherry makes more sense.
Hey Smoking Man,
“Own your house, have a couple bucks in the bank, dont drink. That’s all i have to say to anybody at any social level.” – John Goodman, Gambler
https://www.youtube.com/watch?v=6RfF–Orc-A
Went to baseball spring training to Phoenix with my boy this week.
Glorious facitities.
Talked to 3 elderly looking after the fields.
All in their late seventies.
All on social security having to keep working to make ends meet. One, a bricklayer, even had a second job.
And they all voted for Trump.
Go figure. They seemed content.
Though I think dementia helps.
Recounting the past, is what old people do.
Very friendly people in the desert, unlike the cold, soulless people in the Best Place on Earth, Vancouver.
Doug, maybe money is not everything.
#47 Rich Young:
“Canadians have options
1. Rent and save more
2. Buy and save less
In either case you can invest what you save into
A. Stock Market bubble
B. Real Estate bubble
C. Safe investment and lose ground to inflation”
Contrarian investing. It is not a Canadian option. It is available to everyone.
Basically my entire life has been spent doing stuff that no one else wanted to do. It has made me quite wealthy.
When the herd runs one way, you run the other. Just do it as a habit and you’ll see where it gets you. I think that people refer to it as “badassity”. The art of disagreeing with the herd.
#37 Are you really trying to slip in a reference to one of only …
___________________
You mean this one?
http://www.evo.co.uk/ferrari/599/3340/new-ferrari-sa-aperta-supercar-pictures#0
YES. But the R/C version! I picked one up, as I recall, for about $499.99 – less 25%, from PMS Hobby & Craft in Calgary, … oh, about five or six years ago.
Anyway, … I don’t believe one would want to take the real mccoy onto the streets and roads of Comox Valley just yet. They still toss salt and de-icing brine profusely onto the roadways whenever forecast is for near zero C overnight and rain – which has been every day ’til last night.
Today, however, … we had a very first nice day with no rain, +11C high, … at least on the east side of Inland Highway 19 [… west side still sucked in with plenty of snow at over 150 metres ASL. ]
Cheers!
F.S. – Comox, BC.
#47 Rich Young on 03.25.17 at 10:59 pm
Are you brand new here? Or have you completely missed Garth’s countless references to a 60/40 balanced and diversified portfolio?
#25 Re. MF on 03.25.17 at 5:29 pm
Sorry about your situation .
Unfortunately a LOT of people called the peak on housing
way way too early . Some as early as 2006!!
And yup rent is going higher and higher . As you say, for folks are throwing 50% of their payment into rent! You are not alone
———————————
You are absolutely correct.
In 2006 the housing market was already in a bubble territory. People who saw it faced the dilemma of Michael Burry/from the ”big short”, he correctly predicted and did bet against the bubble but almost got creamed by corrupted rating agencies, banks who did not price properly his shorts.
No sane person on earth would believe or expect for what happened around 2008-2009 and after that with Canadian housing bubble:
1. Canadian lenders got bunch of bad mortgages which were purchased quietly under the table by Jim Flaherty/over 70 bil.
In addition the banks got bailout from the Fed, total help of over 125 bil, exceeding the banks market cap at the time.
2. the silent nature of the bailout established the foundations for what followed: instead of being happy of avoiding bankruptcy, and becoming prudent lenders (despite all the bragging to the world of how stable and conservatives our banks are , we Canadians like to brag) the banks incentives by idiotic BOC and CHMC policies continued to lend increasingly sup-prime and risky mortgages without adjusting the ”insurance’ premiums for them.
3. It seems based on input from the ‘Real estate wealth forum’ in Toronto from few days ago lenders routinely ‘bend’ the rules to allow qualification of ultra-subprime loan recipients, few months ago one of the lenders fired bunch of mortgage brokers for over 2 billions in fraud mortgages, the degree of fraud in lending surely will be established in future investigations but it seems is widespread.
4. Complete silence from the watchdogs. CHMC is the market, any statement that the government should let the markets (read CHMC keep insuring ultra sub-prime mortgages) work itself, implying there is actually free markets are total fraud and deception.
Allowing CHMC to continue with it’s practices and allowing continuation of their insurance even for a day is a fraud and participation in a fraud.
As Steve Eisman pointed out, the bubble-heads will eventually prove correct. But at that point there will be no economy left.
Given the conditions and the choice of the elites to deliberately destroy the economy for the profit of the lenders and the consequences from that (yes, inflation higher rents) the best logical choice for any sane person is to simply move out with his/her investment and savings before it is tool late.
Who has the 4+ millions (at this point in time, this amount will increase in the future) to afford the purchase of a home in GTA and moderate retirement in a crappy weather and ever increasing taxes and increasing inflation and reduced services, including health?
What will be the perspective for our kids in such environment? Do you want to destroy their future.
Packing and leaving for better places seems the best option. Would you like your kids to pay for this mess with they wasted lifes?
#48 Smoking Man on 03.25.17 at 11:10 pm
I’m an alcoholic. And proud. Anything else is conforming for a pathetic pay check.
That’s not living.
———————————–
At least you have the decency to recognize your problems. This is so very un-Canadian (except the being proud part)
So there is some hope.
In this circumstances I believe your condition is actually much better then the brainwashed 98 % mental cases of the populace I see on daily bases on the street.
Any deliberate transfer of wealth from one societal group of the population to others in an severely unjust manner is doomed to a failure and will have limited time span.
Any talks about prudent behavior by people/authorities who in reality punish such behavior and incentivise and reward risky and irresponsible behavior is deception and should be avoided and not trusted. This will greatly diminish the authorities credibility to none and establish them as enemies of the victims of their reckless policies.
The ability to extract continuously wealth by doing nothing by large groups of the population (e.g. home owners) due to government handouts and largesse at the expense of the suckers (renters, savers who become minority by the day) is limited and can not run forever. Continuing with such practices will only make the outcome form the inevitable total crises of markets worse.
“Duration risk is the name economists give to the risk associated with the sensitivity of a bond’s price to a one percent change in interest rates….
“For example, a bond fund with 10-year duration will decrease in value by 10 percent if interest rates rise one percent … If a fund’s duration is two years, then a one percent rise in interest rates will result in a two percent decline in the bond fund’s value….”
— FINRA
http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio
“Simply put, bonds with longer durations are more sensitive to interest-rate changes than those with shorter durations. So investors who expect interest rates to decline might look for bonds or bond funds with longer durations or maturities to increase potential exposure to falling rates, whereas investors expecting rates to go up would prefer shorter durations or maturities to limit exposure to the higher rates….
“Investors can use duration to help estimate how a bond or bond fund’s value would be affected by a change in interest rates. For example, a bond with a duration of 5 years would be expected to rise 5% in value for every 1-percentage-point decline in interest rates (remember that interest rates and bond prices move in opposite directions). If interest rates go up by one percentage point, the bond’s value would be expected to drop 5%.
“This measure allows investors to easily make an apples-to-apples comparison of interest-rate sensitivity for bonds with different maturity dates and interest (coupon) rates. For example, a bond with a duration of 6 years would normally be twice as sensitive to interest-rate changes as one with a duration of 3 years regardless of when they mature or what they pay in interest….
“With interest rates at historic lows, now is a good time for bond investors to pay particular attention to the roles that both maturity and duration play with regard to interest-rate sensitivity….”
— Morningstar
http://www.morningstar.co.uk/uk/news/69773/the-difference-between-maturity-and-duration.aspx
You can find your bond fund’s duration by looking for it in the fund’s fact sheet. For example, the link below is the fact sheet for VAB.TO, showing (on p. 2) that its average maturity is 10.3 years, and that its average duration is 7.4 years.
All other things being equal, a 1% rise in the market interest rate can be expected to drop the value of VAB.TO by 7.4%.
https://www.vanguardcanada.ca/advisors/mvc/loadImage?country=CAN&docId=247
In my late teens and early 20s I enjoyed gambling. Cards mostly, sometimes sports, horses and casino. It was fun but I always lost. When I would lose I’d be upset, when I won I’d spend the night partying and end up going home broke. Then I discovered equities, I fell into the same cycle but with more money. I just shifted my gambling from one form to another. My point is that housing has become like gambling and alot of these paper gains are being used to support the broader economy. It’s a cycle that’s being reinforced with debt. I have no idea when the music is going to stop but I know it will eventually. Only then will we know who won and lost.
#35 Nonplused
“We are social creatures first, and logicians way down the line.”
——————————————————————–
Good post about a great topic. I’m glad you referenced Nassim’s book…I was thinking of it as I read the post.
One more point I wish to add: The belief system bias created in our feeble brains through socialization is also what makes us believe in complete fantasies and fictional concepts like religion.
People are really stupid.
#60 Euro Observer
“The ability to extract continuously wealth by doing nothing by large groups of the population (e.g. home owners) due to government handouts and largesse at the expense of the suckers (renters, savers who become minority by the day) is limited and can not run forever.”
I agree, the governments of today have been doing everything possible for us to spend our money on anything and the best ploy is the house because the house means a massive amount of contents and renos.
The punish the very prudent behavior that they recommend!
When this whole crazy government created and back Ponzi game crashes in a slow motion train wreck, this is just the same kind of government who will tax the hell out of our “prudent” investments to extract the money to stem the bleeding as they pay off the banks and provide support for those that have been reckless.
Yahhh!!! Canada, land of the good!
#55 Ace Goodheart
“When the herd runs one way, you run the other. Just do it as a habit and you’ll see where it gets you. I think that people refer to it as “badassity”. The art of disagreeing with the herd.”
——————————————————————–
You are CORRECT Ace. Right on the money!
http://www.mrmoneymustache.com/?s=badassity
Everybody oughtta read this.
#54 Ponzius Pilatus on 03.26.17 at 12:56 am
Doug, maybe money is not everything.
—
Now that they’ve gone plastic, it’s so tough to get these $100 bills lit for my morning cigar.
–Doug
#46 Ace Goodheart
“We are not mobile. Again, right now, you can sell a house for whatever price you ask. But Toronto is in a bubble. We can’t just up and leave, go work somewhere else, have an adventure, live our lives. We are tied to three houses.”
——————————————————————–
Ahhhhh….but now is EXACTLY the right time to do it. You have the ability to experience the best of both worlds. You were lucky and/or astute enough to acquire real estate and reap the benefits of shelter AND capital appreciation. You are now debt free. The appreciated assets are now starting to cost you money just to stay even (i.e., not renovating to impress your unknown neighbours, but doing so to maintain the integrity of the structures themselves).
This is the time to “go against the herd” and seek adventure.
I did it.
I was in exactly your situation.
Now I am a Dharma Bum. Travelling and enjoying life. Being “badass”.
Isn’t that ultimately why everyone wants their house to “go up in value”? If you’re just going to stay in it, while it sucks cash off you for repairs, what was the point?
Now’s the time, the time is now!
You should have the adventure now, while the millions of dollars are actual. You can always return to the mundane life of a immobile trapped homeowner later, if you still want to.
GO FOR IT!
You will regret it if you don’t.
@#44 Terrible Vocabulary
“Dude, lots of people spend plenty of times to fill public space with various political views, some – unlike you – for making money.
Not many of them are managing other people’s money, though – there is a reason for that.
I don’t expect you to get this. Feel free to spare your time with more useful things than explaining the world who owns this blog.”
*******************************************
Wow!
I see that your “nom de plume” is an attempt at sarcasm.
Unlike you, this reply will take me about 30 seconds of my time and not require spellcheck. I would however, recommend you use grammarcheck.
I’ve surmised that explaining the simplicities of the world to simpletons is an exercise in futility so I’ll go drink my coffee.
Enjoy your intellectual prerusings of all things “tabloid” since I feel that anything a tad more “wordy” might overload that thick skulled gourd you call a brain…..simply deplorable.
Oops. I was wrong . It took 35 seconds to type this.
#51 Fortune500 on 03.26.17 at 12:24 am
Who is Bobby Orr? Sorry, this generation is into Soccer, Rugby and Lacrosse. Hockey is too expensive.
——————-
When you move up the totem pole, soccer get’s quite expensive, too. lot’s of travel.
But, overall you are right.
But this is Kanata. You gotta play hockey and finish your checks.
And every one follows Don Cherry.
Garth, maybe you should wear funny suits.
Can’t believe how many blog dogs are still falling for Drinking Man’s schtick.
Homer Simpson is not real. Peapel!
The Bigger Picture, like in:
1. The interest (and by extent profit) does not exist?
2. Money is fundamentally a promise of more non-existing tokens?
3. Compound interest formula shows only the principal PV exists, and FV is a mental fabrication?
4. Even if this should be painstakingly obvious, nobody cares, as long as there a Greater Fool?
5. All of the above?
Puzzles, puzzles… :)
One of the biggest mistakes investors, the online communities and newspapers made over the last 9 years is to dismiss bonds from your portfolio.
Some even suggest now (only after 9 year bull market) to not have any bonds, because interest rates are supposed to go up. They have been making this call for many years now and having no bonds is really going to hurt your returns should the stock market crash.
In 2008, a balanced portfolio of 40% bonds only took 1.5 years to recover. (thanks to bonds)
We are getting mature in this bull market and I would not dismiss bonds in a portfolio because they do smooth out your returns and keep you invested when things get scary.
@46 Ace Goodheart-
How refreshing, another “man” who supposedly can’t do what he wants “because wife”.
Are there any men under 50 left with any testosterone?
#59 Euro Observer,
you’re new around here. If you weren’t, you’d know that Smoking Man has been going on about being an alcoholic etc. for six years.
No reason for concern or congratulations. It’s simply his shtick.
#54 Ponzius Pilatus,
you’re missing the point: they voted for Trump because they are septuagenarians on SS having to work for a living.
“Suddenly, the Billions were gone”
Der Spiegel headlines Bill Ackman.
#54 Ponzius Pilatus on 03.26.17 at 12:56 am
Went to baseball spring training to Phoenix with my boy this week.
Glorious facitities.
Talked to 3 elderly looking after the fields.
All in their late seventies.
All on social security having to keep working to make ends meet. One, a bricklayer, even had a second job.
And they all voted for Trump.
Go figure. They seemed content.
Though I think dementia helps.
Recounting the past, is what old people do.
Very friendly people in the desert, unlike the cold, soulless people in the Best Place on Earth, Vancouver.
Doug, maybe money is not everything.
—-
You could start your own soul searching by respecting the choices of the 3 people in their late seventies, instead of promptly “diagnosing” them with mental illness, following a short conversation.
Canadian Trump supporters fascinate me. Why do they need to defence him so much on a Canada financial blog? What do they get out of it?
They get the same things that Canadian Trump critics get
from posting on a Canada financial blog
So what bond funds are everyone using?
#49 OttawaMike on 03.25.17 at 11:52 pm
Tired article by tired journalist. People have been writing about how our debt has reached higher levels as before the US housing crash for years. Its a rinse and repeat article that’s published once a month.
In a low-interest-rate environment, Treasury bills are safer than Treasury notes, which, in turn, are safer than Treasury bonds.
#55 AceGoodheart
And doesn’t it feel good!!! Im a technical investor but it’s the same thing as being “badassity” because I let the available information drive my decisions. Most of the time is away from the herd. I’ve removed all emotional attachment to investing once I stopped treating it like gambling.
Advice to The blogdogs:
Everyone should have an investment advisor. The small fee is worth every penny. Not only do you get great advice but you learn about investing if you don’t know how to.
Set goals and stick to them! Your goal should influence your risk tolerance. For example if you’re young and want 200k a year for life inflation adjusted you can figure out what you need to do.
Time/rate of return/ contribution amounts/inflation/ draw down rate= amount you’ll need
Without a goal you’re just running around like a chicken with no head!
#56 Figmund Sreud on 03.26.17 at 1:53 am
#37 Are you really trying to slip in a reference to one of only …
___________________
You mean this one?
http://www.evo.co.uk/ferrari/599/3340/new-ferrari-sa-aperta-supercar-pictures#0
YES. But the R/C version! I picked one up, as I recall, for about $499.99 – less 25%, from PMS Hobby & Craft in Calgary, … oh, about five or six years ago.
Anyway, … I don’t believe one would want to take the real mccoy onto the streets and roads of Comox Valley just yet. They still toss salt and de-icing brine profusely onto the roadways whenever forecast is for near zero C overnight and rain – which has been every day ’til last night.
Today, however, … we had a very first nice day with no rain, +11C high, … at least on the east side of Inland Highway 19 [… west side still sucked in with plenty of snow at over 150 metres ASL. ]
Cheers!
F.S. – Comox, BC.
====================================
hahah! Very cool! Yeah I was thinking there had to be a catch. I’ve been in Victoria myself this past week, so was enjoying the slightly warmer weather yesterday to sneak in a run. Heading back home to Asia tonight and then work takes me to Los Angeles on Wednesday, so warmer climes ahead.
Have fun with the car, it’s a beauty!
58 Euro Observer
You make very good points. You should write to the PM , finance minister and wynne . Let them know. I have many times. I personally fell better doing so and who knows maybe the message will get through one day.
This petition against tax on a tax needs a lot more signatures in a hurry.
Please email the link to your friends:
https://petitions.parl.gc.ca/en/Petition/Details?Petition=e-713
1355 Signatures to date:
Province / Territory Signatures
Alberta 73
British Columbia 1205
Manitoba 12
New Brunswick 6
Newfoundland & Labrador 4
Nova Scotia 3
Nunavut 1
Ontario 38
Quebec 3
Saskatchewan 7
Other Countries 2 (citizens of Canada)
“The federal government has responsibilities to provide financial support to the citizens, provinces and territories of Canada. Federal government funds are raised through federal taxes, including the goods and services tax, or GST. When I was approached by Vernon Coun. Bob Spiers to sponsor his petition that seeks to end the federal government’s charging of GST on carbon tax, I felt I had to say yes especially when I began to see how many people are unaware that there is a tax on tax.” Mel Arnold
Having to pay GST on carbon taxes is highway robbery!
Thank you, GT, for allowing your blog to get the message across.
LOL WUT that Ferrari resembles the Pontiac Solstice
http://www.evo.co.uk/ferrari/599/3340/new-ferrari-sa-aperta-supercar-pictures#0
vs.
http://www.autotrader.ca/a/Pontiac/Solstice/Milton/Ontario/5_30372969_ON20071203105134834/?
(And oldsters might remember the 1980s kit car to turn a Pontiac Fiero (Unsafe at any speed) into a Ferarri body.)
#72 Jungle on 03.26.17 at 10:56 am
One of the biggest mistakes investors, the online communities and newspapers made over the last 9 years is to dismiss bonds from your portfolio.
We are getting mature in this bull market and I would not dismiss bonds in a portfolio because they do smooth out your returns and keep you invested when things get scary.
—
Watching investors dismiss bonds is like watching teenagers in a slasher movie laugh at the old local who warns them not to go into the woods. Well, off they go, cocky with their 100% equity portfolios.
–Doug
49 OttawaMike on 03.25.17 at 11:52 pm
re quartz article
seems the talk is always about debt or interest rates up or down….what is the cost of fraud?
=============
lessons learned ?
after the 2007 recrash………>fraud prosecutions continue
see e.g. Freedom Mortgage Corporation, M&T Bank, Primary Residential Mortgage (PRMI), SecurityNational Mortgage, Company, allied home mortgage, United Shores Financial Services
2019 case goes to trial
http://www.detroitnews.com/story/business/2017/03/09/quicken-lawsuit/98967000/
Total dollar losses attributed to mortgage fraud are unknown; however, law enforcement and mortgage industry participants have attempted to quantify them in recent years. According to CoreLogic (see Appendix A for source description) more than $10 billion in loans originated with fraudulent application data in 2010 (see Figure 1).4
https://www.fbi.gov/stats-services/publications/mortgage-fraud-2010
The FBI warned publicly in September 2004 that mortgage fraud had become “epidemic” and predicted that it would cause a financial “crisis” if it were not stopped. By 2007, however, the FBI had assigned only 120 FBI agents nationwide to investigate the epidemic of mortgage fraud that had grown massively since the FBI warnings.
https://www.justice.go/news?keys=mortgage+fraud&items_per_page=50
http://www.huffingtonpost.com/william-k-black/the-incredible-con-the-ba_b_3768208.html
#86 … resembles the Pontiac Solstice
______________________
You think? But, … it’s a pedigree that is lacking, my excellent fellow:
http://video.ferrari.com/view/EN/paolo-pinifarina-president-of-pininfarina-spa-presents-the-sa-aperta
To boot, … the most valuable Pontiac Solstice in existence is the one the Kidney Foundation will still take and issue to you a charitable deduction tax receipt. But I digress, …
F.S. – Comox, BC.
trump said biggest tax cuts since Regan?
here what the opposition says:
Rep. John Delaney (D-MD-6) introduced two infrastructure funding bills (H.R. 1669 and H.R. 1670)
http://www.commondreams.org/newswire/2017/03/23/wolf-sheeps-clothing-house-bills-fund-infrastructure-incentivize-tax-dodging
“The first bill, the Partnership to Build America (H.R. 1669), would establish an infrastructure bank funded by profits repatriated from offshore tax havens. This proposal, however, offers the worst tax avoiders a costly and unwarranted tax holiday, essentially rewarding and further incentivizing tax haven abuse.
Under this proposal, multinational corporations would be allowed to bring back up to $6 at a zero percent tax rate for every $1 in bonds purchased, with the exact ratio to be determined by an auction. The proposed bidding process would open the door to gaming and collusion. The bonds would further reward tax-dodging multinationals by paying them interest. Contrary to proponents’ claims, the bonds would not offer a cost-free way to capitalize an infrastructure bank. The bill instead offers multinationals a tax cut worth up to $105 billion to capitalize a $50 billion bank.”
======================
The Infrastructure 2.0 Act (H.R. 1670) would allow multinational companies to repatriate their existing offshore profits at a tax rate of 8.75 percent — lower than even the 10 percent rate proposed by President Trump. That means profitable U.S. corporations subject to the statutory tax rate of 35 percent would get a 75 percent reduction in the tax rate applicable to their foreign earnings — a massive tax break unavailable to any domestic U.S. company or individual U.S. taxpayer. Further, this bill would also set a deadline for Congress to act on corporate tax reform, and if that deadline is not met, a set of a new rules would be enacted that would, in effect, simply modify and extend the worst tax loopholes
“With over $2.5 trillion in corporate profits booked offshore, we could most certainly fund badly needed infrastructure with the taxes owed on money stashed in tax havens,” said Surka. “But doing so should not further incentivize or reward tax gaming. Rep. Delaney’s bills do just that, and they take us in the wrong direction.”
For more information, read the FACT Coalition’s letters opposing H.R. 1669 and H.R. 1670.
This very house:
https://www.realtor.ca/Residential/Single-Family/17936087/57-ANNDALE-Drive-Toronto-Ontario-M2N2X2-Willowdale-East
was worth 260 k in 1999, 800 k 6 years ago/in 2011 and now is ‘worth’ 1.6 mil.
Hyperinflation?
This is not funny any more. Outright scary:
https://www.realtor.ca/Residential/Single-Family/17933427/173-BYNG-Avenue-Toronto-Ontario-M2N4K8-Willowdale-East
2.8 mil for a tear down
What you don’t seem to realize is that we’ve had a 9-year bull bond market (not just a bull stock market).
When interest rates start to rise, fixed-rate bond prices will fall. (See my earlier comment today about duration risk.)
No place to hide in S Ontario , either . Houses in Woodstock are going for over $500,000.
Govt has this under control …im sure
I seen a comment last week about how much garths company invests, can’t find the comment, how much does Garth invest of peoples money? Not graham James as a entire company just what garths branch does? I was told make sure who you invest with one that has over 1 billion in the game….
Thanks
Champ