The importance of balance

Investor/Client “What has been the best performing asset class over the long run?”

Me “Equities with the S&P 500 returning 9.5% annually versus bonds at 5%.”

Investor/Client “Great, I’ll go with 100% in equities since I have a long time horizon and they provide the highest rate of return.”

Me “Yes, but you’re only looking at the returns with little consideration to risk, and the commensurate pain that can come from an all equity portfolio.”

This week we go back to the basics, examining the benefits of a balanced portfolio. A balanced portfolio includes a mix of stocks (60%) and bonds (40%). We prefer this asset mix as it provides a solid long-term return but with far less volatility than an all equity portfolio.

In the table below we show every bear market for the S&P 500 since WW2. Bear markets are defined as 20%+ declines, but we find this 20% level to be arbitrary and therefore have included other major market sell offs over this period. On average, the S&P 500 declines 34% in bear markets and last 15 months. Bear markets during recessions tend to last longer at an average 19 months and with an average decline of 36%. The more recent bear markets, including the 2008/09 financial crisis and the 2000 tech bubble collapse, saw the S&P 500 decline 57% and 49%, respectively.

It is during these inevitable bear markets that investors’ resolve is tested with many throwing in the towel during these major corrections, often at the worst possible time. I’ve been in this business 20+ years and I have found this to be the most common and repeatable investor mistake. This is what we try to protect against by using a balanced portfolio.

Major US Bear Markets since WW2

Source: Bloomberg, Turner Investments

Now let’s look at some real life examples of how balanced portfolios performed during major equity bear markets.

During the last two bear markets of 2000 and 2007, balanced portfolios really showed their mettle. A 60/40 balanced portfolio of US Treasuries and the S&P 500 declined during both of these bear markets, but much less than the S&P 500. For example, during the 2000 technology meltdown a 60/40 balanced portfolio declined 15%, far outperforming the S&P 500, which fell 49%. During the 2007 financial crisis a balanced portfolio declined 27%, roughly half the decline in the S&P 500.

The key reasons why a balanced portfolio holds up better are: 1) you only have 60% of your assets invested in equities (hopefully your advisor or Portfolio Manager will be proactive and reduce this during bear markets helping to further limit the damage); and 2) bonds typically rally during bear markets as investors flood into safer assets like bonds and the Federal Reserve responds by slashing interest rates in an effort to stabilize the economy and stock market.

Balanced Portfolio During Previous Bear Markets

Source: Bloomberg, Turner Investment

To further hit home the point I’ve run some numbers to show empirically that a balanced portfolio gives you the best bang for your buck. Below I show the long-term rates of return of stocks and bonds. As mentioned the S&P 500 has returned 9.5% annually since 1926, with bonds at 4.9%. Therefore a 60/40 balanced portfolio would have returned 7.7% before fees. This is why we try to target 6-7% returns net of fees.

Now let’s bring volatility into the equation. Stocks have a standard deviation of 18.8%; meaning stocks should return 18.8% above or below the average of 9.5% in any given year. Looking at long-term US Treasuries as our proxy for bonds, they have a standard deviation of 7.8%. By combining these two assets we can significantly lower the volatility (versus the S&P 500) with a 60/40 balanced portfolio having a standard deviation of 12.3%. The key reason behind this is the low and at times negative correlation between stocks and bonds.

Finally we can take it one step further by calculating risk-adjusted returns, otherwise known as the Sharpe Ratio. This fancy financial term is actually quite simple to calculate and understand. It subtracts the return of a portfolio from the risk-free rate (US T-bills) and divides this by the standard deviation (volatility) of the portfolio. Essentially it measures portfolio return versus risk and the higher the number the better. Based on this statistical measure a 60/40 balanced portfolio has a higher risk adjusted return or Sharpe Ratio of 0.34 than the S&P 500 at 0.32 This is why we love this asset mix. We still get solid returns (6-7%) but with far less risk. It’s not too often that you can have your cake and eat it to, especially when it comes to investing. But we believe you can with a balanced portfolio.

Balanced Portfolios Provide Better Risk Adjusted Returns

Source: Aswath Damodaran, Turner Investments
Note: Stocks is the S&P 500, bonds are US Treasuries, and risk adjusted return is portfolio return less the risk-free rate divided by standard deviation

___________________________________________________

Flag day in Belfountain!

Mike and Ian from the community citizens’ group let their coffees and bistros grow cold this morning as they helped me nail an important piece of cloth on the side of the old pile of bricks that is the Belfountain General Store. It was like Curly, Larry and Mo doing patriotism, but we got the sucker up. This flag flew atop the Peace Tower high above the Centre Block of Parliament while I sat in the House of Commons below. It lives again, in a simple hamlet within the dominion. Thanks Canada. — Garth. Belfountain Store blog.

106 comments ↓

#1 Ron on 06.24.17 at 2:25 pm

Investor/Client “Great, I’ll go with 100% in equities since I have a long time horizon and they provide the highest rate of return.”

————————————————–

Your argument against this seems to be that people are bad at managing their emotions in a downturn.

Shouldn’t this be the real problem to solve rather than persuading your clients to dilute their portfolios?

#2 For those about to flop... on 06.24.17 at 2:33 pm

CONFIRMED PINK SNOW.

Here’s one that has been a long time coming that has finally been updated.

The details…

Paid 650k June2016

Sold 620k April 2017

So after expenses a loss of around 10% on a condo…

M43BC

1401-6659 SOUTHOAKS CRES BURNABY .

Oct 15:$680,000
Jan 20: $555,000
Change: – 125000.00 -18%

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAzV0NQVA==

#3 Figmund Sreud on 06.24.17 at 2:40 pm

The importance of balance
_____________________

Balance shmalance, … good read for a day like today, … snip:

Finance is overwhelmingly a game of psychology, and it’s absolutely imperative that people understand their own temperament, flaws, goals, and skills. Whether or not you can tear apart a balance sheet or learn how to price derivatives doesn’t really matter, especially in the beginning. Realizing that you don’t have much tolerance for loss, or truly aspire for early retirement, does.

How do you know yourself? That’s the hard part. …

https://chrisreining.com/morgan-housel/

Best,

F.S. – Comox, BC.

#4 Sharpe ratio on 06.24.17 at 2:45 pm

Is a critical metric in assessing the worth of a portfolio manager

It’s available freely to asses mutual fund managers and active ETF’s . Unfortunately good luck finding a financial advisor that is willingly to share his/her number . You can ask and they’re likely to look at you oddly .

#5 Owe Canada. on 06.24.17 at 3:02 pm

Good to see Garth up in the flag.

#6 Ryan Lewenza on 06.24.17 at 3:19 pm

Ron “Your argument against this seems to be that people are bad at managing their emotions in a downturn.”

Yes that’s exactly right! Half of our job is spent managing client emotions and the other half is spent managing their assets. A balanced portfolio helps us do this as it smooths out the ride for investors. 6-7% returns with less volatility is a win-win in our view. Ryan L

#7 Arto on 06.24.17 at 3:25 pm

Wait…you climb ladders wearing cowboy boots? Wow…that is living on the edge.

#8 Rental property math on 06.24.17 at 3:30 pm

A few weeks ago I was enjoying a free ice cream from the ice cream trucked parked outside an Etobicoke house courtesy of the local realtor.

I asked her what’s that house worth? She said in April 1.5-2.6mill. Now.. lucky to get 1.25

Many bungalows in the area were trading for about a mil in April and she said now I tell them they’ll have to list for 900 and be prepared to accept 780.

Since I don’t know how to do math, only rental property math, I’ll leave the calculations up to the experts.
Basically prices are back at spring 2016 levels over there and I don’t think they’ll get any lower and that is the new floor. Quite a big drop for someone who’s purchased in April but other than that, not too many casualties from what I think is a pretty siginificant correction

#9 Rental property math on 06.24.17 at 3:31 pm

Correction: I meant to say 1.5-1.6 mill in my post above

#10 rainclouds on 06.24.17 at 3:39 pm

#110 06/24 ponzius

“Buffett Like Jim Pattison, he’s sucking the working man dry, so he can make another Billion.”

-Buffet’s giving his fortune to the Gates foundation . Berkshire conglomerate employs thousands.
-Pattison employs thousands, has given over 100million to the local hospitals,Ran EXPO 86 for $1 . His corporations AND employees pay significant taxes.

What have you done for the “working man”?

#11 Red Deer Rob (Now in Toronto) on 06.24.17 at 3:42 pm

Talking about balance and risk, next time have someone support the ladder. Unless of course you’re hoping for titanium in your other leg!

#12 Mark on 06.24.17 at 3:45 pm

2 points:

1) Over the past 30-35 years, bonds have matched, if not slightly outperformed the TSE/TSX indices. So in hindsight, the addition of a bond allocation to a portfolio wasn’t a significant drag on returns.

The big problem that arises is that what if bonds, rather than spending the last 30-35 years keeping up quite nicely with stocks, not only lag stocks by the traditional long-term equity risk premium (3-6%, depending upon what data and which economy you model off of), but overshoot to the downside (ie: a 6-12% annual underperformance) to make up for the past 30-35 years of outperformance versus historical averages?

Does the “math” of a 40/60 split work out so well then?

2) Why just bonds and stocks? How about a 60/20/20 portfolio split between equities, bonds, and precious metals? Since 1970, assuming a 20% bonds, 20% gold, 20% EAFE, 20% TSE/TSX, and 20% S&P500 portfolio, the annual return has been 10.25%, 10.45% SD.

If we do 40% bonds, and 60% stocks with the same mix, the annual return is 9.71%, SD = 10.91%.

So the 20% gold allocation since 1970, with gold’s severe underperformance in the 1980-2016 timeframe included, still managed to add 54bp of incremental return for a hold period of 46 years including rebalancing.

Yet mention gold bullion as a portfolio allocation around here (or to most financial advisors), let alone a 20% allocation, and chances are, you’ll be laughed at as some sort of kook or crazy person.

I should add that an extra 55bp of return over 47 years is quite a chuck of coin. 77.9X one’s initial invested capital, versus 98.1X, or the guy who bought shiny rocks ended up with roughly 26% more after 47 years

(figures calculated with http://www.ndir.com/cgi-bin/downside_adv.cgi )

#13 Kim on 06.24.17 at 3:45 pm

Ahh, the joys of leveraging. I once met a lawyer friend who was into investing and told me he loves buying condos and real estate cuz you get to leverage and magnify your gains. Somebody forgot to tell him that you can magnify your losses as well. That raw 30K drop (4.6%) from 650K to 620K is a loss of 23% with 20% down, more with less down. And this is not including fees and taxes. I love real estate.

#14 Triplenet on 06.24.17 at 4:01 pm

Dear Curly, Larry and Moe

I must say – after viewing photo’s of the store renovation program and now a ladder show….you wouldn’t last an hour on my site. You’re lucky the regional Worker Compensation ( or equivalent) officer hasn’t sent you a compliance order.
Garth, if your ‘molson muscle’ buddy falls off the ladder or scaffolding – well don’t do that anymore.
Harness your enthusiasm. Safety first.
That’s why a one scoop cone is $4.00. Go figure.
……gives you a brain cramp eh?

#15 mike23 on 06.24.17 at 4:05 pm

For people that do not know what there doing. A 60/40 split may be ok. But, if your a young buck (23 yrs old), then 100% stocks that are paying DIVIDENDS (growth ones), is much better and the returns (Gains & including the DIVs) are over 12% – ave yearly. (9% + 4%). No need to hold bonds (or bond etfs) as any money in these are taking away your $$ that could be making better gains and DIVs. Mr Market goes down, you do not sell. (if you can and have some cash – buy more growth paying Dividends). Collecting the 4% DIVs help while you wait for the market to bounce back. Bonds are for old guys like Garth who no longer have 30-40 years to invest.

#16 crowdedelevatorfartz on 06.24.17 at 4:31 pm

@#14 Triplenet
“Garth, if your ‘molson muscle’ buddy falls off the ladder or scaffolding – well don’t do that anymore….”
******

Ah yes the “Safety Nazis” abound.
Driving the final nail in the country’s working productivity coffin.
How DID we survive before Work Safe and their endless mindnumbing rules that put the onus entirely on everyone else’s back …. all while charging ever more exorbitant rates.

I once remember about 10 years ago when there was a huge interior renovation project at WCB headquarters in Richmond. The poor general contractor couldnt lift a piece of paper without being endlessly harrassed by the WCB govt employed drecks that didnt care if he went bankrupt or not.
The deadline for occupancy was the 1st of the month on a Monday.
Friday night at midnight the sewer system backed up.
12 inches of raw sewage covered the carpet, workstation walls, furniture, everything…..and it was the WCB maintenance workers fault.
The head guy for WCB arrived at 5am Saturday morning and said, “I dont care what it takes! Get this cleaned up before the Monday morning WCB staff arrive or they will want all new furniture…..”

Safety went out the window . Inspectors were told to “F**k Off” until Monday. The work got done. Not one WCB office worker was ever the wiser.
WCB …..another govt cash grab.

#17 Paul on 06.24.17 at 4:41 pm

Garth, stay the latter!
We don’t need you laid up again. Lol

#18 Mark on 06.24.17 at 4:51 pm

“Bonds are for old guys like Garth who no longer have 30-40 years to invest.”

I think you’re missing the whole point of rebalancing. Rebalancing improves returns, not because you’re stuffing the portfolio full of higher returning asset classes (ie: your proposed no-bond allocation, for instance), but rather, because it forces the sale of assets that have outperformed, and the purchase of assets that have underperformed in the rebalancing process.

Even though the TSE/TSX and the Canadian bond market, over the past 30-35 years, have performed similarily (I think bonds actually performed, ie: a negative realized equity risk premium), a rebalanced combination of the two outperformed.

I posted a link earlier to a calculator which allows you to see this in action for yourself with the use of various asset classes which are readily available to Canadian investors.

http://www.ndir.com/cgi-bin/downside_adv.cgi

I’d certainly encourage you to visit the site, and run through a few different asset allocations. For example, try your 100% equities, no bonds, versus a 60/40 split. Try adding a little bit of gold. A T-Bill (cash) allocation. Etc. You’ll see that there is definitely a realizable “rebalancing bonus” available.

#19 SheCallsMeDaddy on 06.24.17 at 4:52 pm

#110 06/24 ponzius
“Buffett Like Jim Pattison, he’s sucking the working man dry, so he can make another Billion.”
-Buffet’s giving his fortune to the Gates foundation . Berkshire conglomerate employs thousands.
-Pattison employs thousands, has given over 100million to the local hospitals,Ran EXPO 86 for $1 . His corporations AND employees pay significant taxes.
What have you done for the “working man”?


Before you start scolding people amd hold others to such high esteem. Remember, take into account the amount of their donations compared to their net worth.
If i donate 10mill to a school but have 500 mill in the bank, itll barely make a dent to my way of life.

Not really that impressive.

#20 Tim on 06.24.17 at 5:01 pm

“The key reasons why a balanced portfolio holds up better are: 1) you only have 60% of your assets invested in equities (hopefully your advisor or Portfolio Manager will be proactive and reduce this during bear markets helping to further limit the damage)”

What does that mean? It sounds like the advisor/portfolio manager would be selling equities when they go down. Isn’t that exactly the mistake people need to avoid? (In a bear market your allocation would go down anyway, temporarily, without anyone doing anything.)

#21 Andrew Woburn on 06.24.17 at 5:05 pm

Them flocking Vancouver developers are at it again –

http://www.timescolonist.com/business/vancouver-developers-flock-to-build-in-victoria-s-core-1.20675264

#22 Waiverless on 06.24.17 at 5:08 pm

#16 crowdedelevatorfartz

Asbestos is still the leading cause of work-related death. the ‘Safety Nazi’s’ are there to help people understand the risks to their health and safety (2 different things) that they can’t see. But profits right.. gotta have profits… :S

#23 Andrew Woburn on 06.24.17 at 5:11 pm

If you’re deeply into the “Canada is doomed” thingy, you won’t like this much. Buy hey, take heart. It could be fake news.

http://business.financialpost.com/investing/david-rosenberg-why-you-shouldnt-worry-about-the-loonie-even-as-oil-slides-towards-40/wcm/aac9c428-d30a-4980-a0ab-674a9ded3115

#24 Asterix1 on 06.24.17 at 5:18 pm

#8 Rental property math
“I don’t think they’ll get any lower and that is the new floor….other than that, not too many casualties from what I think is a pretty siginificant correction”

You could be right. Who knows. I personally think that this is the tip of the iceberg. We have not seen a new floor or a real correction yet. Speaking of “crash” will probably be more realistic than using the word “correction”.

The financial fundamentals are just not there. Charts are just begging to be placed back in order. It truly is a house of cards waiting to fall.

Keep up the great work Garth, always a pleasure to read the posts.

#25 InvestorsFriend on 06.24.17 at 5:23 pm

Risk Adjusted Returns?

Finally we can take it one step further by calculating risk-adjusted returns, otherwise known as the Sharpe Ratio.

Balanced Portfolios Provide Better Risk Adjusted Returns

****************************************
Well, not much to disagree with but I will do my best.

Should say Balanced provided (past tense) since that was from past data.

Risk is a forward looking concept.

Those who actually got the higher equity return with 100% equities in your past data actually got that money. After the fact where is the risk? are you going to convince a rich equities investor that the 9.53% he actually achieved was really smaller after taking into account risk that never happened?

If equities return minus 5% over some period. I have never heard any expert say, well don’t worry that was actually (say) 2% if we account for risk. If equities are adjusted down in good times to account for the risk times could have been bad, why not adjust upwards when times were bad to account for the risk that they could have been good?

I’d be careful with risk adjusted returns since risk in the future can only be estimated it can’t be measured precisely.

The return on a 30 year government bond bought today and held to maturity is known with certainty and it’s about 2%. I don’t want ANY of that.

Bonds (even when held to maturity) did abnormally well in last four or so decades because they had abnormally high initial interest rates.

All capital gains on bonds were and are 100% temporary. They mature at par. If one investor sells above par another MUST lose that money as it matures at par.

(Capital gains on stocks in contrast tend to be or can be permanent.)

For fixed income I agree with your strategy of replacing half the bonds with pref shares. I’d probably replace it all.

Yeah some kind of balance is good but don’t load up on 2% bonds or anything like that.

#26 mark on 06.24.17 at 5:43 pm

your giving away too much return with a 60/40 i am all in stocks………

#27 rainclouds on 06.24.17 at 5:48 pm

#19 SCMD
“Remember, take into account the amount of their donations compared to their net worth.”

————————————————————–

ALL of Buffets Net Worth is being donated……

Jim Pattison

http://vancouver.ca/your-government/jim-pattison.aspx

She probably doesn’t call you smart………

#28 mouldyinYVR on 06.24.17 at 5:49 pm

http://www.westerninvestor.com/news/british-columbia/b-c-largest-land-agent-really-deals-in-water-1.2266234
It’s all about water…..this article is from 2016, but worth a read…..
“After years of record-breaking drought across China, groundwater levels hit historic lows this year in northeast and central parts of China where hundreds of millions of people live. More than half the country’s 50,000 significant rivers have dried up and left hundreds of cities facing a severe water crisis. Widespread chemical runoff and other pollution have contaminated 60 per cent of the country’s groundwater. “…………
B.C, however, has rain and huge tracts of fertile farmland, some of which can produce two and even three cuts of prime hay a year, ……….. China-based buyers were the first foreign climate-driven investors to begin buying B.C. farmland, primarily for hay crops. “We are now seeing ranchers and farmers looking to expand their operations to ensure climate diversity. This includes not just China-based buyers but [those from] the U.S. and United Kingdom, as well as Alberta and Saskatchewan,”

#29 Old Dog on 06.24.17 at 5:53 pm

Have to agree with Garth, a balanced portfolio is the best way to go for most people. Having been investing for over 40 years these market pull backs can be gut wrenching. I’ve seen many times people sell at the worst time. A lot of newer investors feel they can just jump in at the right time and make a fortune. Problem is they jump in and then watch the market continue to fall for several more months. Whether it’s $10000 dollars you watch evaporate of several million it still hurts. Having said that I keep almost 100% equities myself of dividend producing companies. I’ve built up a tolerance over the years to not get caught in that trap, but I wouldn’t recommend it for people with a weak stomach. Better to be safe than sorry.

#19 SheCallsMeDaddy
without the taxes, job creation and charitable donations of these wealthy people, the average working joe would be screwed. It has nothing to do with making a dent in your way of life. I hope we all can do the same for our communities on a relative basis.
“We make a living by what we get, but we make a life by what we give.” WC

#30 mike23 on 06.24.17 at 5:59 pm

Mark… You are talking about RE-BALANCING… I do that. Example: RY gave a nice gain last year and so I sold some. ENB was down 10% – so I used the $$$ from RY and bought ENB. So I balanced.. What you are missing here is that a young buck (23 yrs old), does not need BONDS to balance my portfolio. I get better gains with ALL STOCKS plus another 4.7% DIV (enb current Div). Why would you put 40% of your $$$ in Bonds that pay less than 4% and is treated as income? Why not invest your bond $$$ in stocks that give you a better / higher gain and Dividends that are not treated as income? Bonds are for scared investors that worry of stock markets crashes and old guys that want what they think is safer income. I would take 4% Dividends over 4% Bond income any day. Plus get the capital gains when the stocks go up. (stocks go up more than they go down). Last time i checked our big banks never have ever cut their dividends and have beat the market over the past 30 years. Heck, our banks returns are better than even Warren Buffetts returns.

#31 Ryan Lewenza on 06.24.17 at 6:04 pm

Tim “What does that mean? It sounds like the advisor/portfolio manager would be selling equities when they go down. Isn’t that exactly the mistake people need to avoid?”

Our long-term or “strategic” asset allocation is 60/40. If we believe a bear market is coming and we reduce equities ahead of this, say to 50/50 or 40/60, then the portfolio will hold up better with a more muted drawdown. Then as markets start to turn around we reduce bonds (likely at higher prices) and re-allocate funds back into equities (likely at lower prices). This is know as “tactical” asset allocation. We’re not making big bets by selling all equities and going to cash, but we’re adjusting the asset mix and geographic weights around the long-term/strategic asset mix in efforts to improve portfolio performance. Alternatively you can just always stick with the 60/40 asset mix and rebalance the portfolio during the bear market. This has you trimming bonds (which may have risen to say 43% of the overall portfolio) and adding to equities (which in this case would have declined to 57%). Both methods have you tweaking the portfolio weight during bear markets, but one is just more tactical. – Ryan L

#32 crowdedelevatorfartz on 06.24.17 at 6:07 pm

@#22 waiverless

So we’ve Segway’d into asbestos?
When I was referring to Safety Nazi ninny’s that demand a written safe work procedure for the most mundane of tasks
Gotta wash a floor with water and detergent. Safe work procedure required.
Gotta change a lightbulb. Safe work procedure please.
Fill a tire with air. No no no. Fill out that safe work procedure first.
Simple tasks that a moron with an IQ lower than Forest Gump could perform( did I just break a PC rule?)
Beaurocratic Nazi’s that Lord their authority over all and sundry.

It isn’t about safety……Its about job security
As long as WCB can deny a claim of foist the responsibility on some other company, person, whatever….They will do it in a heartbeat.
All while raising your rates.
WCB
Another govt cash grab

#33 Fish on 06.24.17 at 6:14 pm

Fantastic, you have our flag up!!!!
But what is to do when you go to invest, and
You don’t like, or something tells you the the Investor manger, no go, I keep looking, because it will get alot harder,

Thankyou Garth

#34 TurnerNation on 06.24.17 at 6:16 pm

Good to see, the ‘Store is making progress toward Gender Parity in staffing. ;-)

(Lib govts tell us there is no larger issue today.)

#35 Tony on 06.24.17 at 6:33 pm

A balanced portfolio worked swell in the ’29 crash. Both stocks and bonds got pulverized. What if the bankers get cold feet this time around? We could see a bear market worse than the ’29 bear market.

#36 Sir James on 06.24.17 at 6:33 pm

Saw CTire Welland today flying the rainbow 150 Canadian Flag. Anyone else have mixed feelings about it?
https://www.costco.ca/Flags-Unlimited%C2%AE-Canada-150-Logo-Flag-.product.100336487.html

#37 TurnerNation on 06.24.17 at 6:33 pm

#14 C’mon. Anyone older than today’s crop –
androidinal leftoid Millennials – grew up clambering up trees, cliffs and so on with bare hands and feet.

Laddering is a cakewalk.
Pejoratively so, oftentimes.

#38 leebow on 06.24.17 at 6:34 pm

Now, that’s a cavalier approach to the portfolio theory and ex-ante vs ex-post differences.

#39 Waiverless on 06.24.17 at 6:35 pm

#32 crowdedelevatorfartz

Ok..but you said renovation.. renovation work is done to often without consideration for asbestos exposure…

You’re right not every job task needs a safe work procedure… common sense isn’t always common as they say… *shrug*

#40 Rebalance on 06.24.17 at 7:05 pm

#14 Mark
Rebalancing improves returns,

If I had the dataset, I would love to hack up a python script to test that by running a lot of simulations on historical data.

What is better? Selling winners, buying losers or: buy and hold forever.

I don’t know but would love to find out in an objective way.

Even with zero cost trades, I am not so sure active investing beats passive one.

#41 Pepito on 06.24.17 at 7:22 pm

Two observations on your first chart. First, the frequency seems to indicate that the next bear market is overdue. Second, the increasing size of more recent downturns suggests it might be a doozy.

#42 Cloudy on 06.24.17 at 7:26 pm

I have two questions:

How many ETFs do you recommend at different investment levels? (Let’s say $20,000, $50,000, $100,000 etc. I assume the only downside to having lots of ETFs would be transaction fees when rebalancing?

Which leads me to question two: if I remember correctly you guys recommend rebalancing once a year. Is there a certain time of year that works best or should it just be the same quarter every year? Do you rebalance differently (frequency, weightings, etc) in bull/bear markets or recessions?

Thanks!

#43 just a dude on 06.24.17 at 7:42 pm

Garth,

Thanks for continuing to hammer home the benefits of a balanced portfolio.

I’m trying to encourage the young ones I’m fortunate enough to know along this path vs buying a house for “investment purposes”. I’m seeing ever so subtle cracks in the house lust phenomenon amongst these dudes & dudettes . . . maybe there’s hope but maybe I’m just deluded. Time will tell.

Posts like this latest one provide hard data in support of balance that is hard to refute and that I hope will eventually ring true to them too. I’ve certainly benefitted from a ~60/~40 split over the past 9 years.

Awesome flag on the old Belfountain by the way. I’ll have to pass by sometime soon with the missus.

#44 crowdedelevatorfartz on 06.24.17 at 7:58 pm

@#39 waiverless
“Ok..but you said renovation.. renovation work is done to often without consideration for asbestos exposure… ”
*****
Yep it was a major reno for WCB.
Because they have a budget to spend, whether its needed or not.
In a building less than 5 years old. Built in the early 2000’s. No worries about asbestos.

Speaking of Asbestos.
You should travel to Thetford mines in Quebec. About an hour and a half south east of Quebec City. I’ve visited friends there several times over the years.
The Open Pit mine at Black Lake next to Thetford was worked for almost 100 years. There are slag heaps in the countryside all around Thetford that are 100’s of feet high full of asbestos.
Man made mountains that tower over the surrounding forests.
Its quite a sight! You should check it out. And the asbestos museum! You get to go underground and look at an old mine face! Its AWESOME.

#45 crowdedelevatorfartz on 06.24.17 at 8:06 pm

Speaking of WCB.
I worked as a highrise window cleaner in Vancouver for almost 10 years. Swingstage, Bosuns Chair, Rope decks, ….You name it …..I did it. 40 story buildings, houses built on cliffs in West Van, Jails, etc. everything has windows and they all need cleaning at some point.
Never saw WCB once.
Until 2 seperate window cleaners went “splat” in less than 6 months. Neither one of the guys had more than a few weeks experience…..Thus one would assume. If your a careless window cleaner…..you dont last very long.
Next week WCB is all over us. ” Ya gotta do it this way! Ya gotta do it that way !”
Not a f**king clue what they were talking about. But the just repeated what they read in a “rigging manual”.Probably written by another desk jockey.
Anyway. After about a week we never saw them again.
They dont give a shit.
Unless, you’re late on your WCB payments.

#46 kam on 06.24.17 at 8:31 pm

http://business.financialpost.com/personal-finance/stop-using-your-tfsa-to-frequently-trade-stocks-the-cra-may-see-it-as-business-income/wcm/81e56526-d089-4321-833c-8730b06ccd5c?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3Bc9eQEHwtS3CUUn5Qh9RvHQ%3D%3D

#47 rosholt on 06.24.17 at 8:31 pm

I didn’t know Garth was growing out an afro.

#48 thin on 06.24.17 at 8:33 pm

Garth,
I may be mistaken, but it seems like you lost weight big time. Is it just funny optics?

#49 AB Boxster on 06.24.17 at 8:58 pm

Couch Potato had an article on risk and portfolio balance in 2010.

http://canadiancouchpotato.com/2010/03/09/how-much-risk-do-you-need-to-take/

It referenced a study that looked at historical returns and indicated that a pretty good return could be had (8%) with only small percentages of equities. (eg 20%) . Not sure of the accuracy of the data and the analysis, and it did not include the crappy yields on bonds over the past few years.

But perhaps 60% equities is not required to get a reasonable return especially given the volatility of equity markets over the past few years.

7-8% would be a nice return without worrying about the market volatility and the possibility of a market dive for whatever flavour of the month reason.

#50 conan on 06.24.17 at 9:00 pm

Looks like someone needs to brush up on their ladder safety skills.

I would give that ladder a nick name. Widow maker works.

#51 Cici on 06.24.17 at 9:14 pm

Lookin sleek Garth…does Dorothy help you in the wardrobe department?

Smokey loaned me the pink shirt. — Garth

#52 Jeff Kowlsky on 06.24.17 at 9:37 pm

Very cool, thanks for sharing with the community and the country Garth.
Is there a story behind how you were able to acquire such an important piece of history?

The flag is 25 years old and was presented to me after I financed a new rock-star version of the national anthem for the country’s 125th birthday when I was an MP. I guess it’s too sexist to play now. — Garth

#53 Ace Goodheart on 06.24.17 at 9:59 pm

Been saying this for years. Keep your bonds. No one agrees. Everyone is like “buy equity sell your bonds”. In a bull market bonds are cheap. That is when you buy them

#54 Smoking Man on 06.24.17 at 10:08 pm

I need help, what’s Doug’s last name. I need to connect on linked in. Got a pending out to Ryan. I think I got the right Garth but not sure. I mean who names there kid Garth.

My best word smithing is saved for future linked in rants, I just want to make sure after my house close my new portfolio managers know what there dealing with.

#55 acdel on 06.24.17 at 10:09 pm

#7 Arto

Wait…you climb ladders wearing cowboy boots? Wow…that is living on the edge.

——————————————–

Hear is a thought, how about thanking the host and his partj

Seriously, what are you one of of those dicks that get off scrutinizing or bullying others due to what they express ( TO A POINT) man, seriously that is the most childless post I have read in a long time.

How about thanking the host and his partners for all the help, education, and of course self love but hey Garth and others allow freedom of speech.

Which I disagree with you, for the plain and simple fact your post is just plain stupid; but hey it is your right, and mine!

#56 acdel on 06.24.17 at 10:14 pm

To my response to to I think was number seven, the response was correct on my end for all I care; but that annoying spell check is a bugger!

#57 Smoking Man on 06.24.17 at 10:15 pm

51 Cici on 06.24.17 at 9:14 pm
Lookin sleek Garth…does Dorothy help you in the wardrobe department?

Smokey loaned me the pink shirt. — Garth
….
You lying prick. There is a diffetance between soft purple and pink.

#58 fancy_pants on 06.24.17 at 10:30 pm

Mr Turner, you’re rockin those shades. those former peckerettes on the hill have nothing on ya. But crazy to think such patriotism can get you in trouble in the states thsse days. Oh Canada!

#59 Wrk.dover on 06.24.17 at 10:58 pm

The guy in the middle…didn’t bobby Sands die?

beer doing the talking, but feed that poor guy!

#60 LP on 06.24.17 at 11:13 pm

#54 Smoking Man on 06.24.17 at 10:08 pm

Who names their kid Garth? Why, Mr & Mrs Brooks of course. ;>)

#61 Ponzius Pilatus on 06.24.17 at 11:15 pm

#19 SheCallsMeDaddy on 06.24.17 at 4:52 pm
#110 06/24 ponzius
“Buffett Like Jim Pattison, he’s sucking the working man dry, so he can make another Billion.”
-Buffet’s giving his fortune to the Gates foundation . Berkshire conglomerate employs thousands.
-Pattison employs thousands, has given over 100million to the local hospitals,Ran EXPO 86 for $1 . His corporations AND employees pay significant taxes.
What have you done for the “working man”?


Before you start scolding people amd hold others to such high esteem. Remember, take into account the amount of their donations compared to their net worth.
If i donate 10mill to a school but have 500 mill in the bank, itll barely make a dent to my way of life.

Not really that impressive.
————–
Also remember that Jimmy get’s to write of 50%.
The rest is being paid by the taxpayer.
And he get’s free advertising on the wall of the hospital.
Not a nice man.

#62 Ponzius Pilatus on 06.24.17 at 11:21 pm

#28 mouldyinYVR on 06.24.17 at 5:49 pm
http://www.westerninvestor.com/news/british-columbia/b-c-largest-land-agent-really-deals-in-water-1.2266234
It’s all about water…..this article is from 2016, but worth a read…..
“After years of record-breaking drought across China, groundwater levels hit historic lows this year in northeast and central parts of China where hundreds of millions of people live. More than half the country’s 50,000 significant rivers have dried up and left hundreds of cities facing a severe water crisis. Widespread chemical runoff and other pollution have contaminated 60 per cent of the country’s groundwater. “…………
B.C, however, has rain and huge tracts of fertile farmland, some of which can produce two and even three cuts of prime hay a year, ……….. China-based buyers were the first foreign climate-driven investors to begin buying B.C. farmland, primarily for hay crops. “We are now seeing ranchers and farmers looking to expand their operations to ensure climate diversity. This includes not just China-based buyers but [those from] the U.S. and United Kingdom, as well as Alberta and Saskatchewan,”
———-
Thank you for this informative post.
If we don’t preserve our farmland we are doomed.

#63 Felix on 06.24.17 at 11:42 pm

That pathetic mutt looks intimidated – he has found yet another inanimate object more intelligent than himself.

#64 BillyBob on 06.24.17 at 11:54 pm

#19 SheCallsMeDaddy on 06.24.17 at 4:52 pm


Before you start scolding people amd hold others to such high esteem. Remember, take into account the amount of their donations compared to their net worth.
If i donate 10mill to a school but have 500 mill in the bank, itll barely make a dent to my way of life.

Not really that impressive.

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

You completely ignore that “10 mill” donated will actually make a difference in people’s lives, unlike your sanctimonious, envious sneering.

To suggest that generosity is only measured by some mythical percentage of one’s wealth is arbitrary and the usual line of the socialist dreamers dominating in Canada today.

#65 Russ on 06.25.17 at 12:11 am

Interesting comments about ladder safety and ragging on the guy who derided us about working on our own car brakes.

Safety. Perspective. Bites. eh.

Anyhow, relax dudes he had a back-up on the other side of the ladder… planted in a flower bed. :)

#66 T-Rev on 06.25.17 at 12:33 am

Pretty sure Garth does damn near everything in cowboy boots, cause he’s bad as F***. Got a pair of dark brown snip-toes myself that I wear whenever sh** needs to get real and I need to send the world a message that it will never, ever change me. Only problem is I can’t even move in them, what with all the women swarming me.

Thanks Canada- You are the greatest.

#67 Stock Picker on 06.25.17 at 1:03 am

How dare you fly a Canadian flag publicly after our great leader Mr Peter Pan Fartcatcher himself called for the end of Canada as a nation? Not very Liberal of you. You should have flown either the UN flag, an ISIS black banner or a rainbow ……Mr Pans favoured causes. Otherwise, if you insist on this misplaced nationalism you could fly the Maple upside down signalling distress.

#68 AB Boxster on 06.25.17 at 1:44 am


The flag is 25 years old and was presented to me after I financed a new rock-star version of the national anthem for the country’s 125th birthday when I was an MP. I guess it’s too sexist to play now. — Garth

—————————
A Blast from the past.

http://www.greaterfool.ca/2011/06/30/best/

http://www.youtube.com/watch?v=xXaIAQjbD6I&feature=youtube_gdata_player

The pc leftist knobs, who are fully full of shite, can legislate the words to the anthem all they want.
And Canadians can sing whatever we want.
‘In all thy son’s command.’
Loud and Proud, forever.

Ain’t freedom great.

#69 crowdedelevatorfartz on 06.25.17 at 2:58 am

@#62 Ponzi Pee
“If we don’t preserve our farmland we are doomed”
******
Total agreement
Could you please inform our BC premier( for a few days more) Christy Clark that her obstinate insistance that building an unneeded and unwanted and fiscally unsustainable Site C Dam in the most fertile land BC still has left ( Peace River valley) for $9 Billion ( and counting) is the equivalent of Flooding Paradise to put up a Parking Lot?

#70 Renter's Revenge! on 06.25.17 at 8:06 am

#64 BillyBob on 06.24.17 at 11:54 pm

To suggest that generosity is only measured by some mythical percentage of one’s wealth is arbitrary and the usual line of the socialist dreamers dominating in Canada today.

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

Tru dat. It’s part of the uniquely Canadian additude that, unless you’re hurting yourself in the process, you’re doing it wrong lol

#71 Jeff Kowalsky on 06.25.17 at 8:25 am

Garth,

and

#68 AB Boxster on 06.25.17 at 1:44 am

Thanks for sharing, I knew there had to be a great back story. I didn’t anticipate to that degree. That’s as good as it gets. I agree with some of the YouTube comments a 150th version should be done.

#72 Smoking Man on 06.25.17 at 8:29 am

Alien Disclosure around the corner.

https://www.youtube.com/watch?v=HGh8n1XxDrg&sns=em

#73 Lahdeedah on 06.25.17 at 9:13 am

You have to understand, Garth is eternally bearish on real estate. He was 2 years ago, and he probably will be
for the next 10. He does stocks because he knows stocks and he knows how to price in risk into his stock picks and balances. He is fiscally conservative. He doesn’t like the idea of putting so many eggs into the basket of a house. Because he can’t re-balance for that. You can’t re-balance your financing on a house :) So he avoids it as an investment vehicle. And he does well in what he knows and can control – stocks, bonds, etc. And that’s just looking at a house as an asset and an investment. For people who want to own a home because that is their dream, for themselves and for their family, because they want a piece of land, to hear birds chirping at their window, relive memories of their childhood, etc. that comes with an element of risk, and that’s not what Garth is about. He’s anti-risk. He advises against risk. Its his job! :) So of course he is anti-homeownership. So asking Garth, should I buy a house, the answer will be “don’t buy”. If you ask a mortgage broker, likely they will answer “better buy now”. You have to consider all the advice you get with the internal biases of the person you are asking. If you want to buy a house, then you need to consider the timing of your purchase, how liquid is your purchase, how will you finance the purchase, is the market at a peak and will I have trouble selling 5 years down the road (if the answer is yes, then you better be happy to be in that house for the next 5 years), what is the direction of interest rates, all common sense questions that are specific to the individual considering buying a house, and many times, its not all just about money. Its also about having a home, putting down roots, and usually raising a family there and having space for your life…

Wrong. Buying a home for hundreds of thousands (or a million-plus) with funds you do not have using extreme leverage, based on emotional fuzzies like “putting down roots”, is the primary reason people fail financially, are unhappy, suffer relationship breakdowns and end up bitter. You do not need to shoulder a mortgage and property tax bills to have a home. Insecure people think that way – those who need a physical manifestation of the security and confidence they lack internally. If you can afford a property, then buy it. If you can’t, don’t. But never use emotion as an excuse to indebt and imperil those you care about. — Garth

#74 Generation Screwed - Lahdeedah on 06.25.17 at 9:46 am

Also, this is still relevant now, as much as it was in 2013. #GenerationScrewed

https://www.youtube.com/watch?v=8nLZC7Mwgeg

Good discussion re Millennials vs Economy and delayed life goals. As a Millennial who finished a dual arts degree AND a B.Ed. at 26 in 2006, then moved out when I was 29 (finally!) to a very basic rental basement apartment with no dishwasher, no stove, just a hot plate and a microwave, then, with financial assistance from parents (very generous parents who immigrated with nothing from eastern Europe), bought a bachelor condo from a not-for-profit developer, was earning a lame $35,000 salary in 2006 doing administrative office work and over ten years of the same line of work, hustled to earn $60,000 before taxes before I quit that line of work because I was being sexually objectified at my job, went back to college for a year to learn a more technical line of work in an office setting, now doing an internship for minimum wage (that’s $11.40 an hour, not taxed, because I made no salary this year), and I’m surprised I only have $6,000 on my credit card. Actually, $5,000 now since I got my first paycheque(s). Woo! I met my husband at 30 (on the internet, naturally), and got married at 35, and currently 37 years old, living in my second, larger loft condo (bought in 2012 for a reasonable price). I never felt entitled, and I work hard. I was always an A and A+ student. What’s my plan? I have a plan, and it involves leaving the corporate world after bootstrapping a venture. I probably don’t fit the corporate mold I am trying to fit into. I can’t see myself working in an office till I am 65 years old, wondering if I am contributing enough to my retirement plan (what retirement plan, haha?!?)

Anyways, this doesn’t represent all Millennials, but just wanted to share.

In the video interview, btw, one of the more smug (gen-x) contributors insists that Millennials won’t have it as good as “our generation” and they “have to accept that” and should look to have a lifestyle more akin to that of “their grandparents”…so, growing up during a world war, with rations, and post-1930s economy? Lol, thanks for the inspiration! Challenge accepted? :P

#75 Generation Screwed - Lahdeedah on 06.25.17 at 9:52 am

“How do you keep Millennials from leaving a job they are not engaged by? Give them a mortgage and babies”.

And that’s why Millennials are so different from “adults” from other generations, and the economy, jobs, and debt are to blame. Can’t afford that mortgage so well, (or don’t even have one), and not having babies, so why “settle down” into early adulthood like the Boomers.

Insightful and humorous commentary by Haydn Shaw in a TED talk.

https://www.youtube.com/watch?v=BPMrcY9z0nM

#76 Yuus bin Haad on 06.25.17 at 9:56 am

old guys on ladders!

#77 };-) aka Devil's Advocate on 06.25.17 at 10:01 am

The Importance of Balance

Balance in everything:
– balanced markets (Supply/Demand)
– balance portfolios
– balanced ledgers
– balanced work/life

Balance (equilibrium) is alway sought.

I’ve known the many seasons
that life has cast for man
I’ve had my share of winning
and I’ve been the also ran
I’ve long since passed the middle
of a life that’s given me
a gift I’ll always treasure
the ability to see
when the good Lord calls my number
and for my sins I must atone
raise a salted margarita
and scratch
“gone sketchin’”
on my stone

The purpose is to enjoy the single asset you cannot earn, borrow or steal. Thus time is the measure. Money can make it pass with more pleasure, but not more meaning. For that you likely need family, success or love. And a dog.
– Garth Turner

#78 Freely on 06.25.17 at 10:25 am

Thanks for the heads up Ryan – I’m 43 years old and have a seven figure portfolio entirely in equities. I have had the ‘balanced portfolio’ discussion with my advisor several times, but we always come back to the fact that equities outperform bonds over the long term. Also, I am told, the equities in my portfolio are mostly ‘low beta’, so largely defensive equities that will outperform the index during a bear market. I was around for the dot com crash, and the 2008-2009 financial crisis, and I remained 100% in equities during these times. Fortunately, I didn’t need to draw down any capital during these bear markets.

Your charts are helpful, as I am in a tenuous employment situation right now and I am considering moving the equivalent of a few years salary into bonds or cash. My reasoning is that I now hate working (this is a new thing for me) and I might need to retrain or take a long hiatus from the cubicle farm. Or maybe open an ice cream store in a bucolic town with heavy motorcycle traffic. I hear it can be quite cathartic.

In any case, I’m not sure I would move all the way to a 60/40 portfolio, but upon reflection I might add some cash and fixed income to the mix.

#79 conan on 06.25.17 at 10:41 am

WCB …..another govt cash grab.

Yep, rotten to the core, and a nightmare to deal with.

I think it is run by the Mob myself. No excuse for them not to be a money making machine, instead of the multi billion dollar boondoggle that they are.

Private industry can offer a first day accident, with coverage to age 65, for about one third of the cost. Lets bump it to half the cost, and use those extra funds to kill WSIB ‘s stupid debt.

#80 Dharma Bum on 06.25.17 at 10:46 am

#72 Smoking Man

“Alien Disclosure around the corner.”
—————————————————————–

Too late. They’re already here.

Smoking Man is their leader.

#81 Doug in London on 06.25.17 at 10:55 am

It is during these inevitable bear markets that investors’ resolve is tested with many throwing in the towel during these major corrections, often at the worst possible time.
———————————————————–
I don’t understand that, never did and never will. I’ll again tell a story I’ve told before. Recently, I was travelling around New Zealand and Australia, and have a story to tell about my travels. I was on the ferry from the South Island of NZ to Wellington, on the North Island. When the ferry was about 30 minutes from its destination of Wellington an announcement was made on the PA system. It said: all prepared foods (sandwiches, fries, dessert foods) are selling for $2 (about the same in CDN dollars). That’s a significant discount to regular prices. I was outside, enjoying the view, and ran fast inside to take advantage of this deal. By the time I got the cafeteria, there was a long lineup and everything was cleaned out! Wow, it seemed like a lot of passengers on that ferry like a good bargain. Maybe it’s just a New Zealand thing, but I thought everyone likes a bargain. Did I get that wrong? What I wonder is, why isn’t there the same amount of enthusiasm when stocks, equity ETFs, or REITs are on sale?

However, Garth is right about this balanced portfolio. If, when stocks or equity funds are expensive you cash some some in and buy bonds (or better yet bond ETFs), when stocks and equity ETFs do go on sale you can cash in some of those bonds and buy more stocks or equity funds/ETFs at Boxing Day prices. That worked well for me when equity funds went on sale in late 2008 and early 2009. As I’ve also said here many, many, many, many many, many, times here before, that’s investing like a governor that gives the engine more fuel/air mixture when the speed is low and less when the speed is high. It’s all so ridiculously simple.

Last, but certainly not least, that extra large Canadian flag is awesome! What a great way to celebrate Canada 150 Day!

#82 Smartalox on 06.25.17 at 11:07 am

Garth:

With the dark, skinny jeans, pink shirt, and beard, it’s like you’re Belfountain’s version of a hipster!

A regular Metro (Toronto) Sexual!

Kidding aside, both you and the flag look great, cheers!

#83 InvestorsFriend on 06.25.17 at 11:45 am

Home Capital

Home Capital’s run on deposits ended on Thursday with the Buffett announcement that morning. Deposits increased on Thursday. Watch for a bigger increase when they announce Friday’s numbers.

http://www.homecapital.com/press_releases/2017/HCG%20Update%20Liquidity%20June%2023%202017.pdf

The 9.5% Buffett line of credit is already in place but is expected to be paid off soon when the recent sale of mortgages closes. The interest rate will drop to 9% on Friday if the first part of his equity investment is approved.

The standby fee on the unused part of the line of credit is 1.75% but drops to 1% on Friday if the first part of his equity investment is approved by the TSX.

The Board will recommend approval of his second investment at $10.30 as they have already contractually agreed to do. But that may not be approved. Arguably it should be out of love and gratitude for the great man’s actions.

Even if none of the equity investment is approved, the line of credit remains in place and most of the improvement in confidence would remain.

It would be terribly wrong for the TSX to not approve the first part of the Buffett / Berkshire equity investment.

Watch for the “run to the bank” to continue for juicy 2.75% one year GICs and the juicy high interest savings account.

#84 A Reply to #79 Doug in London on 06.25.17 at 11:56 am

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”
— Warren Buffett

https://www.forbes.com/sites/agoodman/2013/09/25/the-top-40-buffettisms-inspiration-to-become-a-better-investor/#4df056567ccb

#85 Damifino on 06.25.17 at 11:58 am

#19 SheCallsMeDaddy

If i donate 10mill to a school but have 500 mill in the bank, itll barely make a dent to my way of life.
Not really that impressive.

—————————————

Odd comment. Why is it necessary for a sizable dent to be made? Is the purpose of the donation to ease guilt? Should the beneficiary refuse to accept it because it didn’t cause significant financial pain?

#86 George Will on Donald Trump on 06.25.17 at 12:15 pm

“What is most alarming (and mortifying to the University of Pennsylvania, from which he graduated) is not that Trump has entered his eighth decade unscathed by even elementary knowledge about the nation’s history. As this column has said before, the problem isn’t that he does not know this or that, or that he does not know that he does not know this or that. Rather, the dangerous thing is that he does not know what it is to know something.”

https://www.washingtonpost.com/opinions/trump-has-a-dangerous-disability/2017/05/03/56ca6118-2f6b-11e7-9534-00e4656c22aa_story.html?utm_term=.88b2a913ab5f

#87 SW on 06.25.17 at 12:19 pm

#154 crowdedelevatorfartz on 06.24.17 at 12:11 pm

“…Quebec will seperate….. only to be marginalized, divided and eventually happily swallowed up by the USA. Hence the US military “upgrades” at New York’s Artillery and Tank training ground, Ft. Drum, right on the Quebec border and only a half day M1 Abram tank ride from any strategic occupational military position in a new ‘foreign” country……..”

Fort Drum is closer to Kingston, Ontario and Ottawa than to Montreal. Is any of your comment factual? No.

In reality*, there is a perpetual fear in the North Country (what locals call upstate New York) that Fort Drum will be closed causing massive economic hardship to the Watertown, NY area.

I live on the north side of the St. Lawrence in Eastern Ontario. People in Quebec and New York are our neighbours, friends and family. So I’ll ask you to behave better, please.

*That’s real reality; as opposed to paranoid poison unreality.

Ref: https://www.northcountrypublicradio.org/news/story/33540/20170309/fort-drum-s-spending-down-but-still-a-giant-north-country-economic-driver

#88 rainclouds on 06.25.17 at 12:27 pm

Flag looks Great! Even The Raising looks safe to me, although consider the source………..

Was painting a residential home in Ocean Beach 2 yrs ago. Needed 2 ladders set up on the declining driveway with a rigid, springy aluminum/wood platform setup at the top to do the high end gable. Scary as hell. Yet effective. The painting PHD’S get to work brainstorming…uh oh

WCB would have loved the two pickup trucks wedged against the bottom of said ladders to keep the bottoms from kicking out. Ropes/vehicles/ bubble gum all integral…

LEARNED A FEW THINGS:
-Most important, I’m really stupid !
-Buddy told me in the event of me falling. I was fired the second I left the top rung and before I hit the pavement.(I. was. a. CONTRACTOR !)
-Making a comfortable living on pension/investments (sitting at home) so WTF was I doing risking my literary career ?
-White Rock is one congested tunnel and at least an hour away from civilization
-you only paint when its blistering hot out
-$20 an hour doesn’t go far when the tank needs $100 to fill it.

#61 Regarding Pattison and whether he is “a nice man”
Not sure about his personality but he has always come across as dignified and personable. He did wave to me on my pathetic scow as the Hotei glided past some years back. (didn’t throw any money though:-)

I expect his 35,000 employees are grateful he is in charge. I have met people who happily worked for him their whole careers, advancing on merit. I even did a stint for 6 weeks last year at Urban Fare and was offered full time employment at the end. Had to decline (Golf Season)

Somehow, in certain mindsets, giving $125 million to charity and setting up a foundation for MANY other causes is “not nice”. To each their own.

BTW, about the 50% tax break (no idea if that is correct) regardless, he didn’t make the tax laws.

#89 NoName on 06.25.17 at 12:30 pm

#84 A Reply to #79 Doug in London on 06.25.17 at 11:56 am

some time ago i was watching charlie munger so took notes for my older one, i taped it to her room dor on both side…

01. Always Keep Learning
02. Deserve What You Want
03. Know The Edge of Your Competency
04. Be Survivor
05. Practice Right Approach
06. Understand What You Are Doing (integrity, talent and price)
07. Invest In Trust (between people)
08. Know All Big Ideas
09. Do You Best (Regardless Of Payout) Adopt Better Ways Of doing Stuf
10. Don’t Self Pity
———————-

#90 I'm stupid on 06.25.17 at 12:57 pm

#83 InvestorsFriend

I agree with your statement. I have a thought stuck in my brain about all Alt lenders, what happens in the event of a housing correction when borrowers can’t simply sell to pay off debt? We’ve seen record low default rates because of high liquidity in the housing market. That seems to have changed in the GTA, Canada’s largest housing market. I bet default rates will creep higher in the next year or two and I think a lot of Alt lenders don’t have enough liquidity to stay in business.

#91 TurnerNation on 06.25.17 at 1:08 pm

Saw this in Leslieville today: Pig meet lipstick.

This hoary slanter sits unsold – how long now , any price changes? Real value is $475, 000

https://www.realtor.ca/Residential/Single-Family/18302636/40-CARLAW-Avenue-Toronto-Ontario-M4M2R7-South-Riverdale

#92 TurnerNation on 06.25.17 at 1:11 pm

^ Ahah it’s price was RAISED!

Now at $899,000 .

Google cache has it $100,00k lower.
SMART strategy guys LMAO.

40 CARLAW AVENUE IN TORONTO FOR SALE – $ 799,000

https://webcache.googleusercontent.com/search?q=cache:k-wchfVxcj8J:https://byjesseandjoe.com/listings/E3842846/40-Carlaw-Avenue-Toronto.html+&cd=9&hl=en&ct=clnk&gl=ca

#93 I'm stupid on 06.25.17 at 1:24 pm

#15 Mike23

I think you’re too young to know any better. Your strategy works in theory but just like many theories fails in reality. Anything can happen in life so preserving capital should always be a top priority when investing. Bonds help reduce volatility.

Your strategy isn’t bad with a 10k portfolio, where a 40% loss is 4K. Try explaining to your wife a 400k loss on a million portfolio. You might have the guts to stay invested but you’d be doing it as a divorced, castrated man.

#94 TurnerNation on 06.25.17 at 1:34 pm

#74 said ‘I was always an A and A+ student.’
Oh dear.

I saw a resume this week. 4-year Bachelor of Arts – Philo I think. Spent last 4 jobs working front line retail.
Fine.

But return on that investment so far, is Negative $30,000 – plus opportunity cost.

Better for to work full time while studying part time. At least the taste of the real cash money will show on how futile school can be. At least can claim school cost on tax return, increasing employment take home income.

#95 TurnerNation on 06.25.17 at 1:36 pm

The kids need a taste of Heart band. Before my time but…

https://www.youtube.com/watch?v=c0aAhmOjtCw

“‘Kick it out – kick it out!’ she said
‘Kick out your motor and drive
While you’re still alive – kick it out!”

M41ON

#96 Freedumb on 06.25.17 at 2:18 pm

The importance of balance

Clearly, one of my strengths.

#97 Russ on 06.25.17 at 2:25 pm

Thanks for the Heart memories.
Too bad Nancy kept smoking, she used to have a really “pure” voice and could sing as high as Robert Plant back in the ol’ days.

Anyhow, serious question here:
I inquired about commuting a pension that I haven’t contributed to for over 20 years and was told I’m not eligible since I’m over 55 years old.

Is that even legal these days?

Jurisdiction is B.C., left coast.

Legal, yes. Pension plans which allow commuting always have a cut-off date, after which you must remain a member. — Garth

#98 dani0724 on 06.25.17 at 2:34 pm

In looking at the prices of real estate in Toronto, they are still at a record high. Can’t find any townhouse or semi under 1.3M. Some of these dwellings need major renos. As far as I’m concerned, Toronto is still not affordable. Crazy prices! This is an artificial market fuelled by low interest rates. Unless interest rates rise, nothing will stop these crazy prices from rising. Behaviour runs these markets high too. Many are taking advantage of the low interest rates in purchasing multiple properties to flip and make $$$ (vs purchasing property to live) What’s taking the government of Ontario so long to implement the tax on flippers. Its the only way to help cool down the market until interest rates return to “normal” healthy levels.

#99 saskatoon on 06.25.17 at 2:41 pm

garth,

why show allegiance to that which chooses to initiate force against you, your wife, and all those you care about?

taxation is the initiation of force by government.

how is initiating force against any other person…ethical?

#100 waiting on the westcoast on 06.25.17 at 3:01 pm

I’m Stupid @93 says… “Your strategy isn’t bad with a 10k portfolio, where a 40% loss is 4K. Try explaining to your wife a 400k loss on a million portfolio. You might have the guts to stay invested but you’d be doing it as a divorced, castrated man.”

Ironically, it’s the caving in and staying married that proves to cause castration… moo ;-)

#101 SheCallsMeDaddy on 06.25.17 at 3:14 pm

#27 rainclouds on 06.24.17 at 5:48 pm

ALL of Buffets Net Worth is being donated……
=====================================
Yes, correct. 99% of his wealth will be donated in his lifetime or when his estate is is settled after he dies. Will you being doing the same?
=====================================

#64 BillyBob on 06.24.17 at 11:54 pm
You completely ignore that “10 mill” donated will actually make a difference in people’s lives, unlike your sanctimonious, envious sneering.

To suggest that generosity is only measured by some mythical percentage of one’s wealth is arbitrary and the usual line of the socialist dreamers dominating in Canada today.
=======================================
No one is questioning the value of help 10 million will make to society. You missed the context of my post. Of course generosity is measured by a percentage of ones wealth. Will you be donating 5% a year of your net worth like Buffet has? Post your receipts, dont worry, i’ll wait.

#102 crowdedelevatorfartz on 06.25.17 at 4:19 pm

@#87 SW

Ft. Drum….just a half days Tank ride from Montreal….
Vivre le Quebec Libre!

#103 };-) aka Devil's Advocate on 06.25.17 at 5:33 pm

Cascadia Now

#104 Russ on 06.25.17 at 6:44 pm

I inquired about commuting a pension that I haven’t contributed to for over 20 years and was told I’m not eligible since I’m over 55 years old.

Is that even legal these days?

Jurisdiction is B.C., left coast.

Legal, yes. Pension plans which allow commuting always have a cut-off date, after which you must remain a member. — Garth
====================

Thanks Garth.

Please excuse me this afternoon while I take time to flog my F.A., for not expressing the option four years ago.

Kids eh.

#105 Lahdeedah on 06.26.17 at 9:17 am

@ Garth, re reply to – #73 Lahdeedah on 06.25.17 at 9:13 am

You are correct, buying a house should not be done due to “warm fuzzies”, and yes, emotions are why most investors fail to make the right decisions. And yes, lots of people buy houses due to insecurity.

I think that’s why I am so bothered by a now ex-friend who bought a $1.2 mil house for $1.45 mil last summer, one with radiators, original flooring, original doors and knobs, likely asbestos and lead in the walls, a cover-up stucco exterior, but hey, its north of Bloor on the —! She and he are yuppie posers. And I am not. I was sick and tired of being told “Just buy something north of Bloor, its better!”. And I’m like, dude, anything north of bloor with 3 bedrooms starts at $1 mil in Bloor West area. Are you kidding me? But no, they had to have their status symbol. Her reply, “well, we’ll just, you know, have to travel less, and be ‘house poor’…”. Right. And then (he) goes out and buys her an anniversary present; a brand new BMW, no doubt used with some KMs on it, to match his Audi. On FB, “Hey friends, check out our new car, now we fit into our neighborhood!”. *eyeroll* Gag me with a spoon. So yes, they bought on insecurity and a desperate need to “fit in” and conform to their idea of “success” so they can feel like they are “alpha”. Meanwile, I bought my second condo because I wanted to co-habitate with my common law boyfriend at the time, and not pay rent, and own an asset. And I’m fairly sure I bought before the entire market become over inflated. Necessity vs desperate aspirational assimilation.

As usual, you give me much to ruminate about. Maybe owning a house in the next 5 years is not a great idea. Maybe the next size up for us will be a rental, who knows. But we’ll definitely have to become better savers for that to happen sensibly. And that in itself is a huge challenge when husband is not disciplined. Would require a lot of ‘nagging’.

I don’t think I am wanting to buy a house due to insecurity, but rather due to warm fuzzies and the hope that its a financially secure asset, a notion that is obviously not true in this current climate, and you’d have to be high to think otherwise. Also, not wanting to start a family in a 900 sq ft loft condo with no walls except in the washroom is also a motivator. It is a pickle. A rental might be more ‘freeing’. Who knows.

Cheers!

#106 Vancouver Brit on 06.26.17 at 11:42 am

So the takeaway from this is if you can’t handle your emotions, go 60/40. If you can handle your emotions, 100% equities provides a better return in the long run. I know what I’ll stick with.