A value play

RYAN  By Guest Blogger Ryan Lewenza

In my last blog post I laid out my investment approach, which combines macro, fundamentals and technical analysis. Apparently this was a bit of a snooze fest for readers as it only garnered a paltry 59 blog comments. Garth’s blogs often generate over 200 comments and Doug and I are resigned to the fact that we cannot match Garth in his wit, biting prose and chiseled abs. Having come to grips with this harsh reality, I must persevere and stick with what I know best – providing boring (yet insightful??) financial analysis, in the hopes that a handful of readers will find the analysis and commentary helpful. Having got that off my chest, today I further flesh out my investment approach by examining the macro, fundamental and technical factors for value stocks, which we believe are starting to look tasty.

Growth stocks, which include the likes of Amazon, Netflix, Facebook, etc. have been the place to be over the last decade. Since 2009, the S&P 500 Growth Index has returned 344% on a price basis versus the S&P 500 Value Index up 259%. Value stocks pay higher dividends so when including dividends the outperformance narrows but still growth stocks have been the clear winner over this period. Looking at the last 10 years, growth stocks outperformed value stocks in 8 of those 10 years, which is very rare.

Over the long-run this should not be happening. In a seminal research report from economic professors Eugene Fama and Kenneth French, it was determined that large-cap value stocks returned 11.8% annually going back to 1927 versus large-cap growth stocks at 9.2% annually, an outperformance of 2.6% annually. They concluded that value stocks are the place to be over the long-run. It seems like someone forgot to tell the Elon Musks, Jeff Bezos, and Mark Zuckerbergs of the world.

So given this massive underperformance and our contrarian nature, we’re starting to kick the tires on value stocks to see if this trend may reverse, providing a good buying opportunity. Let’s see what the factors say.

Growth Has Crushed It

Source: Bloomberg, Turner Investments

First, from a macro perspective now should be time for value stocks to be outperforming. Value stocks tend to be concentrated in the more cyclical sectors of the economy including financials, energy, and industrials. With the global economy growing at the fastest rate since 2011 this should bode well for these sectors. Also, we believe we’re late cycle which historically is when these sectors shine.

Another macro support for value stocks are interest rates. Value stocks tend to outperform in a rising rate environment. This is captured in the chart below which shows the relationship between interest rates and the relative performance of value to growth stocks. Note the 2003 to 2007 period when interest rates were steadily climbing and how value outperformed growth over this period (rising green line captures value outperforming growth). Well, with the US 10-year bond yield now above 3%, the highest level since 2011, this should be supportive of value stocks. In fact there has been a notable divergence (second dotted box) between interest rates and value stock performance, which we believe could be creating a buying opportunity in the form of a “catch up” trade.

Value Tends to Outperform When Rates Rise

Source: Bloomberg, Turner Investments

Next we move on to the fundamentals. With growth stocks knocking the lights out over the last decade they are now quite expensive based on a number of fundamental metrics. Currently, the S&P 500 Growth Index trades at a P/E ratio of 25.5x, a 7x P/E premium to the Value Index at 18.5x. Typically, values stocks trade at a discount to growth stocks given their lower earnings growth, but the current discount looks extreme.

When you consider their earnings growth, value stocks look even more attractive. For 2018 both the value and growth indices are projected to grow their earnings by roughly 30%, so you would be getting cheaper valuations through value stocks with similar earnings growth potential.
Finally, with the current bull market now in its 9th year, we believe playing the equity markets a bit more defensively makes sense so higher dividend yields is one way to do this. Currently value stocks are yielding 2.6% versus the growth index at 1.3%.

Things look like they are starting to stock up in favour of value.

Value is Trading at a Sizable Discount

Source: Bloomberg, Turner Investments

The final piece of the puzzle is technical analysis, and currently they continue to favour growth stocks as seen below, with growth stocks still in a long-term uptrend versus value stocks. As I like to say “fundamentals tell us what to buy and technicals tell us when to buy.”

So we patiently wait for now for the technicals to turn in our favour, thus providing the final trigger for us to implement this in client portfolios and increase the odds in our favour for a successful trade.

Value Still In a Downtrend – Waiting for the Breakout!

Source: Stockcharts, Turner Investments

Of course we can’t just give away this advice for free, so if you want to know when and which ETF to purchase for this investment theme, you’ll have to give us a call. And it will only cost you 1%. Speaking of a value play!

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

115 comments ↓

#1 For those about to flop... on 05.26.18 at 3:16 pm

Weekend Rewind.

This week in howmuch articles.

Bing,bang,bong…

M43BC

See How Your Take Home Pay Compares to Workers Around the World.

https://howmuch.net/articles/money-people-take-home-after-taxes

See Which Companies Make Billions from Selling Weapons Around the World.

https://howmuch.net/articles/20-companies-with-the-highest-revenue-from-arms-sales

These Countries Have the Largest Stashes of Foreign Currency in the World.

https://howmuch.net/articles/countries-with-the-biggest-forex-reserves

#2 For those about to flop... on 05.26.18 at 3:17 pm

Pink Pollen falling in Vancouver.

These guys picked this house up at the peak in April 2016 and their latest reduction puts them back at their buy price of 1.99

It was built this century,so it is not ancient but the assessment only comes in at 1.76

They are in tough ,mainly because Vancouver detached has hit the Wall…

M43BC

2808 Wall Street, Vancouver

Apr 25:$2,250,000
May 25: $1,998,000
Change: – 252000.00 -11%

https://www.zolo.ca/vancouver-real-estate/2808-wall-street

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#3 akashic record on 05.26.18 at 3:24 pm

DELETED

#4 For those about to flop... on 05.26.18 at 3:36 pm

“In my last blog post I laid out my investment approach, which combines macro, fundamentals and technical analysis. Apparently this was a bit of a snooze fest for readers as it only garnered a paltry 59 blog comments.”Ryan Lewenza.

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

Don’t beat yourself up about it InfLewenza.

It’s always been a bit quieter on the weekends when the semi-professional lobbyists take the weekend off.

You and Robax do good work and for what it’s worth I tried to pump your tires with 3 of the 59 posts.

As I have learnt with my Pink Snow Project,there are tonnes of lurkers on here and people will complain and moan but they would miss you if you stopped giving up part of your Saturday.

I spent and hour and half last weekend doing a CONFIRMED PINK SNOW session,where I showed the final result of 7 cases and my reward was to be told to sit down and shut up at the kiddies table.

The boss of this blog,Thor Turner has given you a great platform to show off your skills and experience.

Focus on the positive,block out the negative.

Don’t stop doing a public service…

M43BC

#5 Blacksheep on 05.26.18 at 3:47 pm

Shawn # 16,

“Just so I am clear, is the shortfall (you also call it a subsidy) the entire cost of government employees or just the part related to deficits or what?”
▪▪▪▪▪▪▪▪▪▪▪▪
Shortfall / subsidy, what ever you wish to call it includes all costs associated in any way with the operational running, of all tiers of government to have a functioning society.

#6 Stan Brooks on 05.26.18 at 3:49 pm

Should we consider online porn sites and their value propositions?

Not that they can beat the entertainment provided by T2, lil greedy more-tax-now and their gang, BoC, CHMC or the dysfunctional provincial political parties.

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

Ryan, I thought the 1 % is for active portfolio management tailored to individual risk tolerance and investment goals, including tax advice.

I can give you the list of value ETFs/stocks for free.

It seems you think things are slowing down, Eh?
1 – 1.5 years still to go that late in the cycle?

#7 Reality is stark on 05.26.18 at 3:53 pm

You forgot to mention debt.
According to the Liberals and the NDP only by taking on absurd amounts of debt can you reach your goals. It would stand to reason that you should only look for companies that have outrageous amounts of debt with much more to follow as your value plays. Debt will set you free and more debt will take you to the promised land. As Kathleen Wynne so proudly remarks that she can single handedly drive the loonie to 50 cents and create lots of jobs, Andrea wants the dollar at 40 cents to grab even more jobs. With this logic why stop there if you can drive the dollar down to 10 cents and keep our population employed for life.
As a side note it appears that public servants have decided that they need a pay raise of 50%. This is needed due to injustice. Economic realities have no credence in their analysis.
Has everyone in this country lost their minds?
If you discourage people from starting businesses because you want to eventually tax them to death the entrepreneurial types will leave. More overpaid public servants will not bring prosperity. A larger sunshine list is nothing to boast about.

#8 For those about to flop... on 05.26.18 at 3:56 pm

This is probably the closest offering I have to dovetail with today’s effort…

M43BC

“What $1,000 Invested in These Companies 10 Years Ago would be Worth Today.

Here’s a fun thought experiment. Suppose you had $15,000 to invest evenly in fifteen different companies back before the Great Recession. Then you let it ride through the market’s downturn, holding your investment instead of selling anything. How much would you have today?

We let MSN crunch the numbers, and we did two things. First, we made a blue circle equivalent to the $1,000 initial investment, which is the same size for each company. Second, the pink circle represents the total value of the investment today. The larger the pink circle, the more your investment is worth. Obviously, if the pink fits inside the blue, then you lost money.

The viz makes one crucial assumption you have to keep in mind. We assume that you took any dividend paid out in cash and did not reinvest it back into the company by buying more stock. This means that you have to pay a capital gains tax on any dividends as you hold the stock, unless it is part of a tax-sheltered account like an IRA. Understanding the difference between dividends and annualized growth in a stock is important as you compare relatively new companies like Netflix to old ones like GE.

That being said, our graph provides a quick snapshot of the U.S. economy over the past several years. First and foremost, you can easily see which companies have been winners and losers, and as a result you can infer significant changes in the economy. Netflix is the obvious standout. $1,000 invested ten years ago would be worth a whopping $51,966 today, which is by far and away the best performance in our graph. Netflix made a big bet that it could profitably create its own content. It wasn’t clear this would pay off back in 2007, and it remains to be seen how Netflix will compete with the proliferation of other streaming services.

We hasten to add that a stock’s past performance is certainly no guarantee of future returns. Take a look at GE, the company in last place. $1,000 invested ten years ago would have dropped by more than half to a measly $490 today. GE has been around for a long time and is currently undergoing significant structural changes. The new CEO just announced the deepest cut to the dividend since 2009. If your philosophy is to buy low and sell high, dropping Netflix in favor or GE might be a smart move.

Looking at stock prices is a good barometer for judging the overall economy. All things being equal, prices seem pretty high right now. In fact, most of the companies on our chart have seen significant gains in recent years. Think about it. Investing in the lowest performers like Microsoft, FedEx, and Walmart would still have doubled your money. Investors focused on long-term capital appreciation would take those results every time.”

https://howmuch.net/articles/1000-dollars-investment-in-stocks

#9 crowdedelevatorfartz on 05.26.18 at 3:58 pm

More sound advice.
And its free!

Any concerns about the Canadian economy moving forward in the next 12-24 months?

#10 [email protected] on 05.26.18 at 4:01 pm

“.. will only cost you 1%” –
Ryan, I’ve always been curious what is the minimum investment for Turner Investments? Personally with time being a premium and my tendency to second guess my investing acumen/advice over and over again I’ve been putting my TFSA in Vanguard’s VGRO. Any opinion welcome.

#11 X on 05.26.18 at 4:02 pm

Some dividend yields are great, as some appear to be undervalued.

#12 Mark on 05.26.18 at 4:13 pm

18.5X earnings seems awfully rich for US “Value” stocks as a multiple. And a lot of US “Value” stocks are heavily financed with short-term debt, as we saw in the 2008/2009 debacle where an inability to roll short-term debt saw many quintessential “value” plays, such as GE, basically collapse and require large bailouts loans.

You can buy the TSX60 at 16X trailing earnings, 13X current earnings, 11X forward earnings. I don’t see how/why the US stock market would be even remotely interesting to a Canadian investor at this point. And most Canadian “value” firms have not been enslaved to short-term debt to anywhere near the same extent as large numbers of US firms have been. Lower levels of per capita government debt also make the TSX far more attractive, as we all know that government debt is merely deferred taxation on individuals and corporations. Or deferred inflation, inflation being particularly toxic to the US stock market historically.

#13 conan on 05.26.18 at 4:14 pm

Garth’s blogs often generate over 200 comments and we only get 59 : ( – The cheese and whine club

That is because Garth is a Rain Maker.

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

#14 Hana on 05.26.18 at 4:17 pm

Hey Ryan, great post.
Come on man, just tell us what ETF :).

#15 Lyndsey on 05.26.18 at 4:19 pm

Hi Ryan,

Just wanted to comment since you sounded a little down in the dumps. Although I usually have to reread your posts to absorb the information you are sharing, I do appreciate your knowledge and affinity to charts (I am a visual learner). Keep the information rolling my friend :)

Looking forward to the discounted value stocks!

#16 conan on 05.26.18 at 4:28 pm

For the love of God ,and all that is holy, post something everyone.

https://www.youtube.com/watch?v=98lNKjwYtaU

#17 jess on 05.26.18 at 4:36 pm

https://www.npr.org/sections/parallels/2018/03/26/596129462/how-the-pentagon-plans-to-spend-that-extra-61-billion

..”Harrison, the budget analyst, says new weapons and health care costs keep rising rapidly. To maintain current levels, he says, the Pentagon needs to spend about 3 percent above inflation every year.

“We’re going to have to make a decision as a nation about our overall defense strategy and the role of our military,” he said. “If you want to maintain the same level of involvement in the world, then you’re going to need to fund a larger military.”

This debate looms as forecasters warn of a federal budget that could start churning out annual deficits of $1 trillion in the near future.
====

“Suppose a missile happens to kill some Nigerien civilians by mistake (not exactly uncommon for U.S. drone strikes elsewhere)? Not to worry: AFRICOM is covered. A U.S.-Niger Status of Forces Agreement guarantees that there won’t be any repercussions. In fact, according to the agreement, “The Parties waive any and all claims… against each other for damage to, loss, or destruction of the other’s property or injury or death to personnel of either Party’s armed forces or their civilian personnel.” In other words, the United States will not be held responsible for any “collateral damage” from Niger drone strikes. Another clause in the agreement shields U.S. soldiers and civilian contractors from any charges under Nigerien law.”

http://www.tomdispatch.com/post/176427/tomgram%3A_rebecca_gordon%2C_recognizing_the_camel%27s_nose/#more

#18 Arto on 05.26.18 at 4:37 pm

Garth may have the sharp wit and the chiseled abs but you got the hot car and the trophy wife. I call that even.

#19 ANON on 05.26.18 at 4:59 pm

The cure for high oil prices was high oil prices, and it works miraculously. Expect value to be “lost” rather quickly at this point, as promises which cannot be kept are starting to be seen as such. To cope, I propose to blame someone, the government seems the most popular choice, but other choices abound.

#20 Reynolds531 on 05.26.18 at 5:14 pm

And Garth got those abs in only six minutes a day.

#21 conan on 05.26.18 at 5:14 pm

Rob Ford’s buck a Beer policy will generate how many new votes?

I say zero.

https://www.youtube.com/watch?v=rzEfBYcRT1w

#22 Capt. Serious on 05.26.18 at 5:19 pm

I’ve been reading this blog for a long time, and I think this is the first Fama – French reference I’ve seen. About time. There is the world before their seminal paper and the world after. Value has had the crap kicked out of it lately, but this reminds me of late in the dot com bubble when a similar outperformance of growth stocks took place. Large cap growth was subsequently a terrible place to be.

#23 ALFRED E. NEUMAN on 05.26.18 at 5:20 pm

Ryan,

the reasons we don’t comment as much on your posts, are because:

a) most of your content is way, way over our heads

b) what we do understand we agree with, so say nada

c) if you take out the stupid/silly/snarly posts from Garth’s and Doug’s, your post numbers may be higher

There. Feel a little better now, bro’?

#24 Newcomer on 05.26.18 at 5:27 pm

I think investments in financial instruments are just less likely to garner comments because people have less visceral opinions. When I see a $2M bungalow I know in my gut that it’s overvalued. When I see Facebook at $200 I have to go look at the charts and look up the P/E to figure out what that means, and even if I decide it’s high, I can’t say what could happen next year. It’s a company. It could come out with virtual reality meeting rooms next year, or start streaming TV shows. But that bungalow is not going to turn into a 25 story hotel any time soon.

Basically, I’m too dumb to weigh in on Ryan’s posts.

#25 young & foolish on 05.26.18 at 5:46 pm

Useful post Ryan … thanks. Can I coax you to comment on John Bogle’s suggestion that we should not expect better than 4% return on equities over the next 10 years?

#26 Murphy on 05.26.18 at 5:53 pm

Ryan

Excellent analysis on Value stocks.

Gives me comfort in knowing you are taking care of rebalancing our portfolio as required

Keep up the good work

#27 Ryan Lewenza on 05.26.18 at 5:56 pm

crowdedelevatorfartz “Any concerns about the Canadian economy moving forward in the next 12-24 months?”

I see the Canadian economy slowing over the next 12 months on higher interest rates and NAFTA overhang but I don’t believe a major slowdown is in the cards. For that to happen we would need to see the US economy roll over, a large spike in oil prices or materially higher interest rates which I see as unlikely. 24 months out is harder to predict right now. – Ryan L

#28 bsallergy on 05.26.18 at 6:05 pm

Your abs are plenty chiseled and wish the two of you would both post on the weekends and let Garth strut the rest of the week.

#29 tccontrarian on 05.26.18 at 6:09 pm

As I like to say “fundamentals tell us what to buy and technicals tell us when to buy.”
————————————————————-

And what, may I ask, informs you of ‘what’/’when’ to sell?

I sold 80% of all my oil/gas stocks last week, for instance, because I have several indicators that strongly suggested I sold them. Studies have shown that buying is ‘easy; selling is much harder (psychologically).

TCC

#30 tccontrarian on 05.26.18 at 6:11 pm

Good info
TCC

#31 Blood in the Streets on 05.26.18 at 6:12 pm

Good info..
Thanks

#32 Ryan Lewenza on 05.26.18 at 6:12 pm

young & foolish “Useful post Ryan … thanks. Can I coax you to comment on John Bogle’s suggestion that we should not expect better than 4% return on equities over the next 10 years?”

The S&P 500 and TSX yield 2% and 2.7% respectively. So at 4% returns that would mean stocks only return 1-2% annually on price basis over the next decade. Way too low in my opinion. The long-term total return of equities is 9-9.5% depending on index. Given the higher current valuations I do see lower returns over the next 5-10 years than the 9%, say closer to 7%. That would consist of the 2% yield, 6-7% EPS growth and some PE contraction. Still not a bad rate of return but lower than what we’ve experienced since 2009. But longer term (ie greater than 10 years) I see equities continuing to deliver that 9-9.5% return since you’ll continue to clip the 2% dividend yield and earnings will continue to grow in-line with their long-term average of 7%. – Ryan L

#33 jess on 05.26.18 at 6:17 pm

ASTONISHING MARGIN

who decides : the vote goes to the women and their doctors

https://uk.reuters.com/article/uk-ireland-abortion/ireland-set-to-end-abortion-ban-as-exit-polls-signal-landslide-vote-idUKKCN1IR087

#34 Fake News Again on 05.26.18 at 6:19 pm

I find it interesting how very very few financial advisers want to touch the impending PENSION/BOND MARKET COLLAPSE which will soon envelope the entire world.

#35 Quality not Quantity on 05.26.18 at 6:29 pm

Garth may get more comments, but Ryan and Doug outdid him in the looks department.

There. How’s that for a suck-up comment?

#36 Ryan Lewenza on 05.26.18 at 6:30 pm

Mark “18.5X earnings seems awfully rich for US “Value” stocks as a multiple. You can buy the TSX60 at 16X trailing earnings, 13X current earnings, 11X forward earnings. I don’t see how/why the US stock market would be even remotely interesting to a Canadian investor at this point.”

I would agree the TSX is looking a lot cheaper relative to US which is why we’ve increased our exposure to Canada. But that doesn’t mean you load up on Canada at the expense of US. US adds the benefit of diversification, exposure to areas other than financials and resources, and it brings in exposure to the US dollar. So hold more TSX right now but don’t exit the US. – Ryan L

#37 Nonplused on 05.26.18 at 6:33 pm

The reason you and Doug don’t generate as many comments is probably that Garth takes on a broader range of subjects, such that he can manage to offend just about everyone. From moisters to Depends wearing boomers, right and left, Trump fans and haters, people spending too much on a single asset, debt, government shenanigans and even relationship advice he covers it all. Plus he has more pictures of dogs.

But I made a comment anyway to help cheer you up. Unfortunately there isn’t too much that’s controversial in your post so that’s about all I have to say.

#38 LP on 05.26.18 at 6:35 pm

Hi Ryan

I never comment on your posts. But in the interest of padding your numbers, and stroking your suffering ego, with this post I’ll admit to rarely (never?) understanding a word of your attempt to teach me.

That said, it’s why I pay you guys the 1%. You keep me out of trouble, look after my interests. For which, my heartiest thanks!

(If I think of anything else before tomorrow afternoon, I’ll contribute that too…gotta keep those numbers on the upswing.)

#39 Ryan Lewenza on 05.26.18 at 6:44 pm

tccontrarian “And what, may I ask, informs you of ‘what’/’when’ to sell? I sold 80% of all my oil/gas stocks last week, for instance, because I have several indicators that strongly suggested I sold them. Studies have shown that buying is ‘easy; selling is much harder (psychologically).

I strongly agree with this. Knowing when to sell is almost more important then knowing when to buy. To sell I use two key things. First the broad long-term technical trends on the S&P 500 and global equities. Meaning if the S&P 500 breaks down through important levels this would cause us to reduce our overall exposure and get more defensive. Second we use relative technical trends to determine when to buy/sell specific markets. For example, if I’m correct on value and value stocks breakout versus the S&P 500 this could trigger us to trim our S&P 500 exposure and add to value stocks as they could then outperform the broader market. We use relative strength a lot in determining our exposures. – Ryan L

#40 Long Branch Apprentice on 05.26.18 at 6:50 pm

My retirement plan is to short TSLA on borrowed money.

No guts, no glory, right Smokey?

#41 Shawn Allen on 05.26.18 at 6:55 pm

Does the Private Sector create all wealth?

It’s not unusual for someone to comment that it is the private sector that pays the full cost of government through taxes and that government workers don’t really pay any income tax since their wages derive from income tax.

It might be worth refuting this since it is fundamentally wrong and also divisive and is an ignorant claim in both senses of the word.

But it’s probably not worth the bother since people generally believe what they would like to believe and seldom change their minds.

But here are a few thoughts:

Goods and services created by both the private sector and government exist independently of money. Money is fundamentally a completely intangible construct that is the way we keep score and divide up the spoils of the economy. Money can be thought of as a claim check on real goods and services. Fundamentally paper money has value only because it can be redeemed for real goods and services.

Fundamentally government workers create valued and often critical indispensable real services and sometimes goods. Just as does the private sector.

Government workers contribute to the economy and earn their “money” (intangible claim checks on real goods and services) just as do private sector workers.

I will leave it at that because those that wish to believe that governments are just a cost and create nothing of value, enjoy believing that and none of them will want to change their minds on that so I may as well not waste anymore time on it.

#42 Vantage Points on 05.26.18 at 7:08 pm

#29 Newcomer quoting Ryan:

I think investments in financial instruments are just less likely to garner comments because people have less visceral opinions. When I see a $2M bungalow I know in my gut that it’s overvalued. When I see Facebook at $200 I have to go look at the charts and look up the P/E to figure out what that means, and even if I decide it’s high, I can’t say what could happen next year. It’s a company. It could come out with virtual reality meeting rooms next year, or start streaming TV shows. But that bungalow is not going to turn into a 25 story hotel any time soon.

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

Basically, I’m too dumb to weigh in on Ryan’s posts.

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

Newcomer, you’re probably not too dumb.

Ryan’s only looking at the data he understands or so it seems. FB @ $200 is overvalued. Straight answer.

The bung at $2,000,000 is overvalued but has the potential in a land assembly to be part of a foundation for that 25 storey hotel depending on location.

Invest 2 Mio into FB could net a loss of 75% if FB drops back to IPO level. The bung will never ever drop that low unless the seller has to liquidate. Land values will over a long time horizon.

FB may not be around in 5 to 10 years given the government’s scrutiny on data collection and FB’s business of collecting and selling data points. That is coming to an end and so is FB’s business model. Where else is their revenue going to come from? Ads?

FB’s exec looks and acts almost as pathetic as TSLA. Their companies are dependent on the execs cred which is coming into question.

The FANGs have peaked and that should be Ryan’s advise to all. Go into value stocks.

#43 MF on 05.26.18 at 7:16 pm

Reality is stark on 05.26.18 at 3:53 pm

-Just curious, which public servants saw their pay go up 50%?

A close family member who works for the federal service sure did not see her 55k/year increase.

?

MF

#44 Old gringo on 05.26.18 at 7:16 pm

Okay let’s think about this.
Tons of Canucks and Americans are moving to foreign countries to escape the “bullshit
The CD’S in Mexico pay the lowest in 10 years at 7.8% per annum
DA!!!!!!!!!!!!

#45 Keith on 05.26.18 at 7:23 pm

#7 Reality is stark.

Between them, Mulroney and Harper ran up 450 billion of the federal debt of 700 billion. I wouldn’t throw stones at the Liberals and the NDP. Reality is stark, the debt run up by Canadian federal Conservatives is starker.

#46 Keen Reader on 05.26.18 at 7:24 pm

More distractions on Saturday nights… To generate more discussion, try writing about how much smarter the Boomers really are, or why most government employees really deserve their DB pensions ;o)

#47 Tony on 05.26.18 at 7:27 pm

There’s the stock market and then there’s the stocks that make the rigmarole list. If you make the rigmarole list your share value doubles and triples for no reason at all. Trump got elected and Trump was also on one of the WWE pay per views. The astute investor would surmise since Trump is president the WWE stock would make the rigmarole list. It did if you look at when Trump was elected and how the WWE stock did. See? It really is that simple.

#48 Tony on 05.26.18 at 7:33 pm

Re: #32 Ryan Lewenza on 05.26.18 at 6:12 pm

America is too big to devalue their currency appreciably. The only possible way would be helicopter money. I don’t see either scenario.

#49 Fluorine on 05.26.18 at 7:44 pm

I appreciate your posts!
And like others, I suspect lower post counts stem from less nonsense generated, not any bearing on the content.

#50 Nonplused on 05.26.18 at 7:50 pm

#41 Shawn Allen on 05.26.18 at 6:55 pm

“Does the private sector create all wealth?”

I would agree that “some” government workers create “some” wealth, but it is not always clear whether the job being done by a government worker couldn’t be done more efficiently by the private sector.

For example this time of year every city across the land is employing an army of folks to mow the grass along the roads. They seem to be busy and the job needs to be done, but couldn’t it be contracted out? Teachers are another good example, they do valuable work, but the best schools across the land are private. Why is it that so many parents who can afford it chose to put their kids in a private school when there is a perfectly good public school available free of charge? Is it mere wealth signaling, like braces used to be?

Anyway, to properly answer the question one needs to revert to fundamentals, and for that we need to go back to the original, Mr. Adam Smith himself.

His theory can be roughly translated as follows: Wealth = resources (land and what’s on or under it) + labor + capital (which is roughly translated as investment of excess labor and resources into improving the land, say by building a barn or a factory or a road).

Since labor is a big part of the equation, I suppose we could assume that whenever someone is doing something productive wealth is being created, including a government worker. The problem is there is often no competition, so we cannot tell if the government is doing things efficiently.

As Milton Friedman once said, “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand.”

In order for an economic system to function, the feedback loop between effort and result has to be functional. A thing can only cost so much before it costs to much to be done. The old cost-benefit thing. The problem with government is that there is often no way to measure whether the things they are doing are worth the price they are paying. The F-35 is a classic example. Does Canada need a steal fighter that costs that much money per unit? To do what? Chase 40 year old Russian bombers across the arctic? They don’t have a long enough range to catch them. In flight refueling then? You can see the fueling plane from half way across the planet via satellite and it isn’t supersonic. The F-35 is a waste of money and thus destroys wealth.

Government seems to be a necessary evil, every country gets one either by choice (democracy) or force (everything else). But the best government is always the one that governs least.

#51 Kilt on 05.26.18 at 7:51 pm

Hey Ryan
How difficult would it be for You, Garth and Crew to make your own fund(s)?
At some point you must feel you can do better for your clients than picking index and bond etfs.
And for that 1%, is a 7% return all your clients are getting.

Kilt.

#52 Kilt on 05.26.18 at 7:55 pm

Oh. Any comments on the McQuarrie article? Suggesting Canada is headed for a recession possibly worth than 2008/9 in the next two years.

Kilt.

#53 Old Wrinkley on 05.26.18 at 7:57 pm

Ryan,
A large section of the ( Garth’s description) “sterage section” simply does not understand what you are discussing or the value of your insights/analysis. Mathematics is difficult so they don’t learn/understand it, the phone will do it for you !
They are stuck in or plan to be in the real estate quagmire that is presenting itself slowly but surely and may lash out when you provide information that may affect their view of the world, or their single investment “plan”. Alternative ideas degrade their self confidence and are not welcome to them, and they will/do not comment other than negatively. This is a product of our educational system at most levels, including university.

#54 young & foolish on 05.26.18 at 8:03 pm

“The S&P 500 and TSX yield 2% and 2.7% respectively. So at 4% returns that would mean stocks only return 1-2% annually on price basis over the next decade. Way too low in my opinion. …”

Thanks for answering …

#55 Ryan Lewenza on 05.26.18 at 8:13 pm

Kilt “Any comments on the McQuarrie article? Suggesting Canada is headed for a recession possibly worth than 2008/9 in the next two years.”

Absolutely there will be a recession in Canada in the coming years. The business cycle and interest rates makes it so. The question then is when and how deep. I would say we’re a few years away at least since the central banks will be slower than normal to aggressively hike rates. Regarding how deep it is, I don’t see it being on par or worse than the financial crisis. I suspect McQuarrie’s doomsday call is predicated on the higher household and government debt and our elevated home prices. I think this is overly simplistic and unlikely to occur. Instead I believe a more probable outcome is slower growth over the next decade as we see a somewhat orderly deleveraging cycle similar to that seen in US following the financial crisis. – Ryan L

#56 Shelly Schuster on 05.26.18 at 8:14 pm

Hi Ryan:

Facts are difficult to debate, some do, but it’s hard because you have to back up the contrary with your own facts.

But Opinions?!

That is an all out call to war with sides taken, battle flags raised and bodies galore riddled in the comments section…

And on that happy note…what is your opinion of effect on the TSX and Canadian Economy with an NDP and PC election win in Ontario?

#57 will on 05.26.18 at 8:19 pm

“fundamentals tell us what to buy and technicals tell us when to buy.”

I like that. Lots of people scorn technical analysis but you don’t want to make a decision that is obviously technically wrong.

#58 crowdedelevatorfartz on 05.26.18 at 8:22 pm

@#23 Alfred E
“if you take out the stupid/silly/snarly posts….”
+++++
I resemble that remark

#59 FOUR FINGERS WATSON on 05.26.18 at 8:26 pm

It is not all your fault. I posted early to cheer you up and pad your numbers but Garth shitcanned me.

#60 crowdedelevatorfartz on 05.26.18 at 8:31 pm

@#46 Keen Reader
“try writing about how much smarter the Boomers really are….”
+++++

We already know we’re smarter, we dont need to be told again.

#61 greyhound on 05.26.18 at 8:38 pm

Here’s a value play — with the VIX at 13, 10% out of the money December puts on the big 5 banks look cheap, and all five banks’ stock prices are in a downtrend since February.

#62 Long-Time Lurker on 05.26.18 at 8:38 pm

>I was wondering about technical analysis so here’s an opinion:

https://www.advisorperspectives.com/articles/2018/05/23/gundlach-defends-technical-analysis?utm_campaign=20180523&utm_medium=manual&utm_source=Boomtrain

Gundlach Defends Technical Analysis
by Robert Huebscher, 5/23/18

Criticism of technical analysis ranges from bemused skepticism to claims of harebrained alchemy. Few investors as well-respected as Jeffrey Gundlach admit to using it. But yesterday, he explained why he relies on technical analysis under certain conditions.

Gundlach is the founder and chief investment officer of Los Angeles-based DoubleLine Capital.

He spoke to investors via a conference call at 4:15pm on May 22. The focus of his talk was DoubleLine’s fixed- income closed-end funds, DBL and DSL. There were no slides accompanying his presentation.

Technical analysis will work some of the time and fail some of the time, according to Gundlach.

It works when the market’s resistance and support levels are “in sync” with sentiment signals, he said.

“When those things marry together,” Gundlach said, “technical analysis works 70% of the time.”

Gundlach said that he’s been investing professionally for 35 years, and has outperformed the market 75% to 80% of the time. Half of that has been due to technical analysis, and half due to fundamentals and understanding investor psychology and human nature.

>Maybe grow a beard, Ryan. That might be the secret to Garth’s charisma. Tell Doug.

#63 Westcdn on 05.26.18 at 8:39 pm

#41 Shawn Allen on 05.26.18 at 6:55 pm

It sounds to me you haven’t made the connection between the cost of Government and their budgetary deficits which create Government debt.

If Governments ran budgetary surpluses without raising taxes then I would say the public economy was making a contribution toward Government debt.

What are the chances of that? More likely they will find a way to default usually by currency devaluation. I do agree the public economy does provide needed services.

#64 Balmuto on 05.26.18 at 8:40 pm


Rob Ford’s buck a Beer policy will generate how many new votes?

I say zero.

I say he loses undecided voters with that stunt. It’s insulting.

#65 Yuus bin Haad on 05.26.18 at 8:46 pm

Oh, hi Ryan – I was looking for Garth.

(just kidding)

#66 crowdedelevatorfartz on 05.26.18 at 8:53 pm

@#62 Long Time
“Maybe grow a beard, Ryan……tell Doug”
+++++

I dont think they’re old enough yet.

#67 tccontrarian on 05.26.18 at 8:57 pm

39 Ryan Lewenza on 05.26.18 at 6:44 pm

tccontrarian “And what, may I ask, informs you of ‘what’/’when’ to sell? I sold 80% of all my oil/gas stocks last week, for instance, because I have several indicators that strongly suggested I sold them. Studies have shown that buying is ‘easy; selling is much harder (psychologically).
—–
I strongly agree with this. Knowing when to sell is almost more important then knowing when to buy. To sell I use two key things. First the broad long-term technical trends on the S&P 500 and global equities. Meaning if the S&P 500 breaks down through important levels this would cause us to reduce our overall exposure and get more defensive. Second we use relative technical trends to determine when to buy/sell specific markets. For example, if I’m correct on value and value stocks breakout versus the S&P 500 this could trigger us to trim our S&P 500 exposure and add to value stocks as they could then outperform the broader market. We use relative strength a lot in determining our exposures. – Ryan L
*********************************

Thanks for replying…at least we agree on something!

A comment on this:
“…Meaning if the S&P 500 breaks down through important levels this would cause us to reduce our overall exposure and get more defensive.” RL

A reasonable plan…however, just about every other portfolio manager is likely using similar (value) strategies and ‘levels’ of support (technical) etc., which begs the question:

who’s gonna get out first?

Unless YOUR metrics/indicators are more precise and also give you an advantage that enables you to get out ahead of the majority of others, you’re not going to be able to avoid the next bear market – as well, you’re not going to be able to outperform.

TCC

#68 Interstellar Old Yeller on 05.26.18 at 9:02 pm

Interesting and educational analysis, Ryan. Thank you.

I suspect, after you build up a longer posting history and your views and tendencies are more well known, you’ll get more engagement in the comments section. Part of it is teaching us up to a level where we can meaningfully comment on what you’ve written, and part of it is us getting to know you well enough so we can pettily or pedantically call you out on perceived tiny inconsistencies or to simply needle you a little. So keep it up, it’ll come. :)

#69 Jungle on 05.26.18 at 9:05 pm

Always enjoy your posts Ryan, keep up the good work.

#70 Lead Paint on 05.26.18 at 9:14 pm

Hi Ryan,

Here is a comment to boost your numbers, and possibly your moral. Just write more about BitCoin being flaccid, gold being in-lickworthy, and fill your post with sexual innuendo. Really, with the right kind of lubrication it doesn’t have to be that hard!

I’ll use this comment to shout out to oft-maligned Floppy. Flops, I’ve been to Tasmania, it’s a beautiful place. Why do they have signs on the roadside that read ‘Speedo Check’? Do they care what swimsuits people where?

#71 Loonie Doctor on 05.26.18 at 9:40 pm

Hi Ryan,

I actually look forward to the Saturday posts. The topics are important and differ from the real estate focus. I learn something, and I do understand what you talk about. The pictures help. Plus, the comments section contains some good questions and answers rather than people simply spouting predictions of the future or insulting each other. I am weird though.
-LD

#72 Good karma on 05.26.18 at 9:40 pm

Pity comment.

#73 Blacksheep on 05.26.18 at 9:48 pm

Shawn # 41,

“Does the Private Sector create all wealth?”

“It’s not unusual for someone to comment that it is the private sector that pays the full cost of government through taxes and that government workers don’t really pay any income tax since their wages derive from income tax.”

“I will leave it at that because those that wish to believe that governments are just a cost and create nothing of value, enjoy believing that and none of them will want to change their minds on that so I may as well not waste anymore time on it.”
———————————-
Shawn, Buddy, please do not, “leave it at that”(I capitalized the ‘B’ in uddy to you know, show respect)

Come on, edgumikait me… educate

Yesterday in post # 16 you asked me / the blog this:

“Does the Private Sector Subsidize the Government” Sector?”

I answered you in post # 5 today, so you understood exactly what I was stating (as you were confused and I needed to remove your excuses) and give you the opportunity to elinten me and my flawed thinking.

But now that I clarify my statement as you requested, you change the question / conversation, using statements I never said.

Like these:

1)”Does the Private Sector, create all wealth?”

2)”The private sector that, pays the full cost of government”

3)”just a cost and, create nothing of value”

Copy and paste when I made, any of these three (inaccurate) statements and will remove myself from the blog.

Permanently.

I’m looking for adult debate and if my thinking is wrong, to correct it. But your inability to actually address the discussion in play, while attempting to group me in with the closed minded, only confirms, you have absolutely nothing of substance to challenge my rational and instead chose ramble on about about topics, that are completely irrelevant to convo at hand.

If you cant back up your theories, why say anything at all?

#74 D on 05.26.18 at 9:52 pm

Adding to Ryan’s comment score :)

#75 espressobob on 05.26.18 at 9:58 pm

Value investing is just another form of market timing. Owning ETFs that track all the major indices by market cap are more diversified and generally realize upside.

Maybe this and maybe that for reasons hard to dispute based on technical and educated guesses don’t always make for good returns. Just saying.

It’s proven over time to just be the benchmark.

#76 GaRtHaTrOn on 05.26.18 at 9:59 pm

Look at this puny post count. You will never make 200 posts. Muhahahahaha.

#77 For those about to flop... on 05.26.18 at 10:07 pm

#70 Lead Paint on 05.26.18 at 9:14 pm

I’ll use this comment to shout out to oft-maligned Floppy. Flops, I’ve been to Tasmania, it’s a beautiful place. Why do they have signs on the roadside that read ‘Speedo Check’? Do they care what swimsuits people where?

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

Hey Leady,yes to do a speedometer check properly in Tasmania ,you drive to work dressed only in your speedos.

When you see the start line sign you are supposed to wind down the window and yell out in your loudest voice…

Check…1-2…

M43BC

#78 Puff daddy on 05.26.18 at 10:23 pm

You can do it dude…

#79 Lead Paint on 05.26.18 at 10:31 pm

From FP:

If you sell real estate, expect the taxman to take a close look in continued CRA crackdown

The CRA is particularly taking a close look at “pre-constructio assignment sales,” whereby a condo is purchased from a developer and sold to another buyer before the unit is completed. The CRA has issued what’s known as “unnamed persons requirements” to property developers and builders, requesting information about the buyers involved in such sales.

http://business.financialpost.com/personal-finance/taxes/if-you-sell-real-estate-expect-the-taxman-to-take-a-close-look-in-continued-cra-crackdown?utm_campaign=magnet&utm_source=article_page&utm_medium=recommended_articles

#80 DON on 05.26.18 at 10:33 pm

Hard to argue with your analysis. your info is educational and appreciated.

You need to chum the waters to get the comments. This one always works…”Peak house was 2013″ or “boomers ripped off the Millenials – that’s why they can’t afford to invest”.

#81 Cow Man on 05.26.18 at 10:48 pm

Thank you Ryan. Facts are of interest when factual not just opinion. You have provided just that.

#82 Baloney Sandwitch on 05.26.18 at 10:52 pm

Garth get more comments because he is always insulting the rednecks. Rednecks have feeling too. When insulted they comment.

Seriously good post of value stocks. Bezos is now richer than Buffett. Looks like Buffett is going to claw back his spot on the greasy pole.

#83 NoName on 05.26.18 at 10:54 pm

Must watch !!!

https://www.youtube.com/watch?v=ByvPp5xGL1I

#84 iogitra on 05.26.18 at 11:39 pm

@TCC #29
I have several indicators that strongly suggested I sold them. Studies have shown that buying is ‘easy; selling is much harder (psychologically).
====================================

That’s a very interesting and valid point.
Would you care to add some detail on the indicators you used?
Thanks.

#85 iogitra on 05.26.18 at 11:45 pm

@#29 TCC
I have several indicators that strongly suggested I sold them. Studies have shown that buying is ‘easy; selling is much harder (psychologically).
====================================

That’s a very interesting and valid point. Would you care to add some detail on the indicators?
Thanks.

#86 Purp on 05.27.18 at 12:38 am

Hey Ryan,

I enjoy your insights. Your posts are usually all I read on this site. Also it appears you do not read the comments as you never respond to anyone.

#87 Fortune500 on 05.27.18 at 2:04 am

Pity comment.

You’re welcome

#88 Gravy Train on 05.27.18 at 6:52 am

#50 Nonplused on 05.26.18 at 7:50 pm
“[I]t is not always clear whether the job being done by a government worker couldn’t be done more efficiently by the private sector.”

The private sector has no incentive to provide public goods because such goods are non-excludable and non-rivalrous.
https://en.m.wikipedia.org/wiki/Public_good
https://en.m.wikipedia.org/wiki/Excludability
https://en.m.wikipedia.org/wiki/Rivalry_(economics)

“Anyway, to properly answer the question one needs to revert to fundamentals, and for that we need to go back to the original, Mr. Adam Smith himself.”

Here’s a good discussion of Adam Smith’s view of the role of government:
http://economistsview.typepad.com/economistsview/2010/03/adam-smith-and-the-role-of-government.html

“… The problem is there is often no competition, so we cannot tell if the government is doing things efficiently.”

Yes, because only the government is prepared to produce public goods.

Further, you refer only to efficiency. Efficiency is only about doing things right. Effectiveness—which is far more important—is about doing the right things. Economy is about getting the right price.

“Government seems to be a necessary evil, every country gets one either by choice (democracy) or force (everything else).” A non sequitur.

“But the best government is always the one that governs least.” Thoreau and Emerson agreed with you.

#89 Catalyst on 05.27.18 at 8:11 am

I also enjoy your posts but rarely comment on them – sorry!

Do you think the rotation to value stocks can only happen when rates have stabilized? In a rising rate environment, the dividend stocks just don’t look as attractive when I can get similar yield in the bond market without the equity risk.

Also, I think you can’t underestimate how fast technology is changing the world and all industries. We are maybe in the 4th or 5th inning of this and typical big boring companies at cheap prices aren’t safe. Look at GE, IBM, Walmart, Enbridge, or Ford. Cheap valuations but for good reason. If you had to pick will Google or Ford be around in 10 years – I would probably say Google.

Lastly these tech companies have something that alot of businesses dont – great balance sheets. The top tech companies are flush with cash and are largely unaffected by increasing rates.

#90 Binky on 05.27.18 at 8:13 am

Just another pity comment
Come on guys lets push him over the 100 comments.
We can do eeet!

#91 Ryan to 100! on 05.27.18 at 8:28 am

Interesting post as always Ryan. Keep up the Saturday tech. Most of us just read without posting but always learn something. Cheers

#92 Smoking Man on 05.27.18 at 8:32 am

Whoa !!! I’m Back. Feels very weird. Feel like an alien here.
Smokes 17 bucks a pack. Gas twice as much as SoCal.

Something is very wrong with this place.

#93 Ryan Lewenza on 05.27.18 at 8:41 am

Shelly Schuster “And on that happy note…what is your opinion of effect on the TSX and Canadian Economy with an NDP and PC election win in Ontario?”

Personally an NDP win in Ontario would be bad for us given their platform and history (ie Bob Rae). And it would then have the NDP party controlling a good part of Canada with them in BC, AB and ON. Personally I would like to see a return to more pro-business, lower taxes and fiscal prudence in our governments but that’s just my opinion. That said, I don’t see it having a huge impact on the TSX since our stock market is driven by larger macro drivers like global growth, commodity prices, direction of US stocks etc. So if the NDP wins don’t go out and reduce your TSX holdings. Those other factors will dominate our stock market and look to be setting up nicely for better TSX returns in the years ahead. – Ryan L

#94 jess on 05.27.18 at 8:54 am

emerging :For example :
“Canada’s SNC-Lavalin, one of the world’s largest construction firms, benefited from a controversial treaty to avoid paying up to $8.9 million in taxes to Senegal.

POP’s
Remember the boastful remarks regarding first female (princess) billionaire?Isabel Dos Santos, Daughter Of Angola’s President, Is Africa’s First …

SNC-Lavalin used a Mauritius company with no employees and no office as a conduit for $44.7 million in payments from a Senegal company throughout 2012. The payments were for SNC-Lavalin work to build a mineral sands processing plant.

Usually, Senegal would have collected 20 percent in withholding taxes on the payments, according to tax experts. But a treaty between Senegal and Mauritius allows multinationals such as SNC-Lavalin to avoid taxation on payments made through a company registered in Mauritius.

West Africa Leaks today.

West Africa Leaks explores the impact of offshore secrecy in the 15 countries that make up Africa’s westernmost region, where reporters work in English, French and Portuguese and dozens of local languages.

Why focus on this collection of nations? For one, its 367 million people are some of the most disadvantaged in the world, and its position as the tax-avoidance center of Africa means those people are being hit harder still. Experts tell me Africa loses more money to offshore secrecy than it receives in development aid.

collaboration of 13 journalists from 11 countries, the International Consortium of Investigative Journalists and Cenozo.

https://www.icij.org/blog/2018/05/introducing-west-africa-leaks/

#95 great read on 05.27.18 at 9:01 am

thanks ryan

#96 Penny Henny on 05.27.18 at 9:18 am

Another example of “The book according to Mark 2013” being wrong :(

Bought in 2013 for $575,000 sold in 2018 for $976,000 with only minor updates completed. Would have went for more last March!

#97 jess on 05.27.18 at 9:49 am

It’s about “fairness ”

See how offshore companies and accounts have been used to strip cash out of West Africa.

and then wonders why we sent troops to mali who are canadian soldiers protecting?

https://www.icij.org/investigations/west-africa-leaks/

Looking for a job as an honorary consul?

“IMMUNITY. TAX SAVINGS. POLITICAL ACCESS. PRIVILEGES,” reads the pitch on the website diplomaticconsulting.com. “YOU TOO CAN BECOME AN HONORARY CONSUL.”

While many are honorable, some honoraries push deals with top officials and their wives. Some feel that they have no constraints at all and that, as unpaid volunteers, the concept of conflict of interest does not apply.

https://www.icij.org/investigations/west-africa-leaks/wanted-honorary-consuls-cash-strapped-african-nations/

#98 Dragonslayer on 05.27.18 at 9:57 am

Blog dogs- anyone have thoughts on Extendicare? Pretty good yield. But makes you wonder why.

#99 Gravy Train on 05.27.18 at 10:05 am

#92 Smoking Man on 05.27.18 at 8:32 am
“Feel like an alien here.” I thought you said you are an alien! :)

“Smokes 17 bucks a pack.” Yes, the government is trying to get you to stop smoking! Smoking cigarettes causes lung cancer, genius! Just be grateful cigarettes aren’t banned! :)

#100 crowdedelevatorfartz on 05.27.18 at 10:15 am

@#94 jess
“Canada’s SNC-Lavalin”
+++++
I would prefer to think of them as Quebec’s SNC Lavalin since they seem to do business the old fashion way ……….

SNC Lavalin. Banned for 10 years from bidding on any contracts involving the World Bank due to bribery convictions……….

http://www.google.ca/url?url=http://www.cbc.ca/news/canada/snc-lavalin-supreme-court-bribery-case-1.3558811&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjkuNa6iKbbAhU0NH0KHQUCDpMQFggbMAE&usg=AOvVaw04wG3eXjTcwSYMOxRdfeN5

SNC Lavalin building prisons in Libya for the Dictator Quaddafi before he was shot.

http://www.google.ca/url?url=http://montrealgazette.com/news/local-news/former-snc-lavalin-vp-accused-of-bribing-libyan-officials-will-go-to-trial&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwi1vvSIiabbAhWuHTQIHRokBeIQFggnMAM&usg=AOvVaw0RymlrHSvcaqp3Dh3hb8gr

SNC Lavalin mentioned in the Charbonneau Commission on corruption in Quebec.

https://www.google.ca/url?url=https://www.ctvnews.ca/canada/montreal-superhospital-bidder-knew-it-had-lost-to-snc-lavalin-before-final-call-1.1832321&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwibqbaziabbAhUlKX0KHaB8CYAQFggqMAM&usg=AOvVaw15Gcdll23Mcpp66knbJ31N

On and on and on.

Why are they still in business?

Over 100 comments yet?
If Conn Smythe was here we’d be posting over 200

#101 Baloney sandwitch on 05.27.18 at 10:21 am

Came here looking for another Garth dropping but … Ryan is still up. Well since the dude was trolling for comments I will comment.
jess – having immigrated from a 3rd world country I can tell you the importance of rule of law, paying your dues (taxes) and honest (even if misguided) politicians and bureaucrats. Otherwise we’d be no different from senegal or angola or venezuela or other shit hole. (Trump is digging the biggest shit hole in the world as we speak). Remember, we can always throw the rascals out if we collectively so decide. Its an incredible privilege.

Value stocks are an incredible value right now. Enbridge is one of my favorites. 6.3% yield (more like 8.9% after dividend tax credit). Its not a pipeline – its a machine to convert debt to tax advantaged dividends. People don’t understand that a couple can earn $100K in div. income without paying any income tax. (if you are early retired like me).

#102 ALFRED E. NEUMAN on 05.27.18 at 10:33 am

Ryan, I’m not one to worry much and nor should you,

BUT might it be

that Garth and Doug conspire to restrict your postings count to always be less than theirs?

I mean, doesn’t Gartho decide what actually gets posted here?

Jus’ sayin’ brother ..

So real congrats on breaking thru the century mark ..!!

(tho’ was likely well over 300 if your “pals” had permitted)

#103 ALFRED E. NEUMAN on 05.27.18 at 10:59 am

Three men and a parachute ~

Boss-man-Garth, shining-star-Doug and low-post-Ryan are on a private flight.

Suddenly, the pilot turns on the speaker and says: “The plane is malfunctioning and is going to crash.

There’s three parachutes, and I’m going to take one. You’re going to have to figure out who doesn’t get one”. He then proceeds to jump out of the plane.

The three men panic, but Garth tells the others to calm down and then says to Ryan: “Here. You take one, we’ll figure out who gets the last one.” And Ryan jumps.

Garth then turns to Doug and says: “Let’s grab the chutes and get out of this thing.”

But Doug says, very confused:” But you just gave the second to last parachute to Ryan. There’s only one left now.”

To which Garth replies: “Relax Dougie boy, I gave whinin-Ryan my backpack. He never breaks 100 posts, so gone he goes.”

#104 conan on 05.27.18 at 11:32 am

Congratulations on your first 100 post plus article !!!
There are free Cheetos in the lunch room, enjoy!

https://www.youtube.com/watch?v=7fbGFO1EaAE

#105 Shawn Allen on 05.27.18 at 11:35 am

Blacksheep graves a direct response from me.

I will address his quotes but also give some additional thoughts.

He said: (the square brackets are mine but identify Blacks sheep’s group A and B form his post number 232 of May 25)

“So group B) [private sector] generates the gross revenue to provide for their own needs / wants and then is forced by law, to cover any and all funding shortfalls that occur when group A) [government sector] provides the necessary services of a modern
society.

and clarified at 5 above:

“Shortfall / subsidy, what ever you wish to call it includes all costs associated in any way with the operational running, of all tiers of government to have a functioning society.”

***********************************
Well I don’t see the subsidy. The private sector worker pays some of the value of his efforts to the government to cover his deemed share of collective societal expenses (education, universal healthcare, defense, public roads, the courts, police and many others).

The government worker contributes to providing the needed collective services and is paid on behalf of society.

Both contribute to society.

Both chose careers and competed for jobs in a market that gave them some choices.

If government jobs (with benefits) tend to be overpaid, that is a different debate. How much government spending is wasted is also a different debate.

The government worker and the private worker both contribute and both competed for careers and jobs and both made life choices.

To suggest that the government worker is automatically being subsidized not only as to part of his wages but to the FULL extent of his wages strikes me as just plain silly.

And I think there is a strong implication in the first part of the quotes above that the private sector generated revenue without ANY benefit or assistance from governmental services, and that strikes me as patently false.

Whether private sector or government, we are all produce value as part of an enormous value chain of inputs and outputs. No one today produces any finished product without inputs and services and benefits coming from both government and other private sector workers/firms. (Not the least of which is public safety and relative freedom from having your valuables taken away by force at any time)

We are all part of a massive and enormously efficient system. A specialization of labour on a scale that Adam Smith could only dream about. Yes, some of us legitimately earn more due to our own efforts. But ALL of us benefit enormously from an inter-connected and global system of production, economy and government. This includes benefiting from physical and intellectual capital (some proprietary but much of it in the free public domain) that has been built up over the history of man but that enormously accelerated in the last few hundred years.

I am enormously grateful to be living in a country and in a time in history that allows me, and almost every Canadian, enormous comfort and ease compared to our ancestors of only a a century or two back.

We all benefit greatly from a giant system and would produce very little if we had to do everything ourselves.

#106 Smoking Man on 05.27.18 at 12:46 pm

Gravy Train on 05.27.18 at 10:05 am
#92 Smoking Man on 05.27.18 at 8:32 am
“Feel like an alien here.” I thought you said you are an alien! :)

“Smokes 17 bucks a pack.” Yes, the government is trying to get you to stop smoking! Smoking cigarettes causes lung cancer, genius! Just be grateful cigarettes aren’t banned! :)
……

Govt should stop playing mommy and balance the budget…no worries two cartons of Malborough 40 bucks each should last me a week. Can’t wait to go back to SoCal.

#107 Doug Ford Campaign Worker on 05.27.18 at 1:04 pm

Ryan, we understand you need your numbers, er….”enhanced”. We have some expertise in this area.

So, consider it done!

(we’ll contact you later about reimbursement for the new GF memberships, fyi)

#108 Boots on the Ground in Ptown on 05.27.18 at 1:30 pm

Ryan: Always appreciate your Saturday posts, even if my understanding is only very general and diffused. Theres usually always something you bring up that I go dig around online about, to learn more.
————————————————————–
Rarely address any of the rabblish comments but today I cant refrain from saying:

Gravy Train, your constant and almost instantaneous passive aggressive responses to Smoking Man comments/observations are tiresome.
We aren’t in 2nd grade anymore.

Do you have more of a right to comment here because you eshew cigarettes? And no I’m not a smoker. But this kind of holier than thou stuff ((head shake, eye roll))

#109 Gravy Train on 05.27.18 at 2:11 pm

#108 Boots on the Ground in Ptown on 05.27.18 at 1:30 pm

“But this kind of holier-than-thou stuff (head shake, eye roll).”

You’re right, Boots. I shouldn’t try to discourage him from smoking, but I do resent having to pay for his future healthcare costs (which will be substantial). Or has he now permanently left Canada?

From now on, I will leave him alone! He’s a lost cause!

#110 Sierts on 05.27.18 at 6:28 pm

Ryan,
Garth is witty enough for the three of you.
But i must say, your posts are getting more and more interesting.
thank you.

#111 Oft deleted much maligned stock.picker on 05.28.18 at 3:44 am

Guys… just keep an eye out for exceptional stocks and forget about shotgunning the ETF market. Not long ago I bought car at $14 and it just touched $27…..it wasn’t luck or rocket science….you read a companies public pronouncements….and proceed when the positive far outweighs the negative. I hold CP from $48 and see it at $230 today….due diligence. Agrium was another sub $20 stock….so was Maple Leaf and Saputo….Tim Hortons I bought at $13 and sold at $92. I could add another few dozen I hold….same drill…..research good companies …..buy the best…. That’s where the money is made.

#112 Buttercup on 05.28.18 at 5:39 am

Ryan, I also appreciate your research based, chart-enhanced investing articles. Food for thought. Well presented, timely topics.

Keep it up, you are getting through, as you can see. Feel the love

#113 Concerned Reader on 05.28.18 at 9:22 am

Would it be possible to do a post on your analysis of a single stock or sector? I realize there are disclosure issues and that you guys might want to steer clear of this, but I would be interested (not sure anyone else would be) in your analysis of a company like Tesla vs Ford or Tata Motors.

#114 Shawn on 05.28.18 at 10:15 am

The general consensus in the financial media is that we’re late cycle. A contrarian view would be to position ones self early cycle similar to 2013.

#115 RL on 05.28.18 at 12:38 pm

“Doug and I are resigned to the fact that we cannot match Garth in his wit, biting prose and chiseled abs.”

Wow Ryan, if that doesn’t get you a raise, I don’t know what will!