The blind

Brenda and Khira, her partner, tried to buy four little houses last year. Failed every time. “Yeah, okay, I know we were kind of emotional,” says B, “but after losing out on the first one – it was perfect – we started to panic and just kept offering more, even though it was stupid, because how else are you supposed to get a place? It was insane.”

You wait, kid. Prices don’t go up forever. It’s a lesson which seems obviously now – but nobody believed it last year.

However at the heart of the B/K angst was the fact they kept being outbid by other, anonymous buyers who were making offers for unknown amounts, with undisclosed conditions, deposits or closing dates. This blind auction process, common in most major markets, is designed to give 100% transparency to the seller and 0% to the buyers. Couples like this are expected to make their “best offer” with no knowledge if they’re coughing up too little to be competitive, or too much and will overpay.

Blind auctions encourage buyers to do rash things. Like make the offer unconditional – no time to arrange financing or do a rudimentary home inspection. As such the process can easily result in someone “winning” a blind auction by paying too much and massively increasing their risk. Given the price of residential real estate these days, it’s a giant stain on the entire industry.

Worse, some agents and brokers purposefully engineer these hideous sales events. They list for a price strikingly below market value (as determined by comparables on the street or in the hood) in the full knowledge this will ignite hope and attract multiple bidders. Then when the blind auction begins each party is pushed higher by the spectre of competition and the place usually sells for a premium over street values.

In fact, it’s not uncommon during a frenzied time or in a demand area for bidders to sit in their cars at the curb outside, waiting for the listing agent to emerge with the top offers, then ask for more. Sadly, they always get it. So people like Brenda and Khira, on a fixed budget but with a bad case of house lust, are incredibly bitter.

“Realtors are scum,” Khira told me, spitting out those three words like an undigested bug. “How is anyone supposed to be able to buy a home without knowing what you need to pay for it, then have to make a decision in five minutes? They should all burn.”

Not everywhere are buyers so victimized. In Australia, for example (where people have also been house horny for years) it’s also common for properties to be auctioned – but it all happens in broad daylight. Most states there have legislated fair conduct – for example, it’s illegal to advertise an artificially low price just to goose buyers. False offers are not allowed. In some areas buyers need to register their interest in advance (so you know who the competition is), and the sellers can set a reserve or minimum price. The auction is open, often on the front step of the place being sold, and is final when the hammer comes down. The standard down payment then is 10% with closing in a month or two.

The big drawback to the Aussie method: no conditional sales. Sold means sold. (And for this reason, now that the Down-Under market is cooling, auctions are growing less commonplace.)

Well, time for a change. What our heroines went through – which turned them completely off home ownership – should not be repeated. Kudos to the real estate industry for making exactly this suggestion to the Ford government in Ontario.

On Thursday the province’s realtors said legislation governing their business should be revamped after a 16-year pause. One suggestion would mean the end of blind auctions – allowing realtors to disclose details of competing offers to prospective buyers. The catch is that all parties would have to agree to this change (which only makes sense). If adopted by the Big Kahuna, it would help end wild price speculation in boom markets by providing transparency. After all, why would you pay more than you have to or eliminate conditions once you know the competition has flamed out? Just like in a real, Aussie-style auction.

This also comes as the realtor cartel’s iron grip on sales data is being shattered, thanks to the courts and the federal competition bureau. Soon it will be common – in all major markets – for buyers to see the past sales history of a property, previous listings and relistings plus price changes and days-on-market. It’s valuable and powerful information in the hands of buyers so they research their own comparables, determining if an asking price is fantasy or realistic.

Of course, these are steps on the path to a real estate revolution in which agents, brokers and marketing giants like Re/Max and Royal LePage go the way of Sears and Future Shop. When Millennials no longer visit banks or stores – empowered by their phones instead – being held hostage in a house deal by some sleazy rock star realtor running a high-stress blind auction is repulsive.

The asteroid is coming.

About the picture...

“I took this dog pic while working down in Argentina,” says Chris, “where inflation is running wild. On my last trip, I took out some cash at 22 pesos/CAD, 1 week later they were worth about 30% less, at 30 pesos/CAD. Figured you could maybe is on on one of your posts about inflation.”

155 comments ↓

#1 dakkie on 10.11.18 at 4:51 pm

How Will 6% Mortgage Rates Deal with Housing Bubble 2?

http://www.investmentwatchblog.com/how-will-6-mortgage-rates-deal-with-housing-bubble-2/

#2 jermike on 10.11.18 at 4:52 pm

first

#3 millenial-Falcon on 10.11.18 at 5:01 pm

should we load up on some stocks garth? BTFD right?

#4 slam on 10.11.18 at 5:03 pm

With all the sales data published, did the value of a realtor just drop? Does that mean their commission should drop too?

#5 Nick B on 10.11.18 at 5:04 pm

A lot of the information you mentioned is available thru your realtor but transparency is a great idea non the less. Interesting week in the markets. Maybe a healthy correction is coming.

#6 John Torres on 10.11.18 at 5:09 pm

First(?)

#7 Doug t on 10.11.18 at 5:14 pm

Realators “business” pictures of themselves for signage and ads pretty much tell you all you need to know about the industry lol – every time I see their fake smile, groomed hair and blank eyes it makes me cringe – they look like vapid souls

RATM

#8 jess on 10.11.18 at 5:24 pm

and the latest argentine with the “notebook” is definitely not a romantic movie

inflation created by corruption
someone has to pay for the bribes

https://www.newyorker.com/news/news-desk/argentinas-culture-of-corruption

and with the new guy’s party:

Macri’s Cambiemos party is under investigation for allegedly stealing the identities of 2,000 people to launder illegal campaign contributions.

In three separate cases, the courts are investigating some 500 fake contributors to Macri’s 2015 presidential campaign and 1,500 fake contributions to the 2017 midterm elections in Buenos Aires province.

“They stole the names and ID numbers of social welfare recipients, people living below the poverty line, made them fake members of Cambiemos and passed them off as campaign contributors,” says Juan Amorín, a journalist for El Destape website, which discovered the illegal maneouvre.

======

IMF gives Argentina $57bn emergency loan

The loan comes with stringent conditions, including a commitment to a zero deficit for 2019.

https://www.theguardian.com/world/2018/sep/27/argentina-corruption-book-cristina-fernandez

#9 uh oh on 10.11.18 at 5:25 pm

dow only down 500 points today? … only 5000 more before it bottoms. it’s what you get when stocks are massively overvalued and the fed takes the punch bowl away.

Corrections are normal and healthy. And too fare inbetween, lately. People like you forget. – Garth

#10 Smoking Man on 10.11.18 at 5:30 pm

More bad news for home ownership.

OSFI is going to cock bloc helocks without income verification.

This huge…

#11 Jungle on 10.11.18 at 5:34 pm

These changes won’t do anything to cool the Gta market.
Just wait until listings go on amazon and rich international Chinese buyers can “point, click and buy”

#12 SoggyShorts on 10.11.18 at 5:34 pm

#103 Stan Brooks on 10.10.18 at 11:42 pm
#37 SoggyShorts on 10.10.18 at 6:54 pm
Exactly. Inflation is individual experience.
*****************************
So now you are saying your 10% inflation is just for certain things purchased by certain people? That isn’t inflation that is a simple price increase and is virtually meaningless.
It certainly doesn’t support your statements that everyone’s buying power is reduced by 10% every year.

You either have to look at everything or not even bother. The CPI isn’t perfect, but it is an order of magnitude more accurate than “The price of this one thing I saw in a store went up”

If your personal living expenses have increased by 10% and mine have increased by 0%, then it is far more honest to say that inflation is 5%. Then you’ll notice it still isn’t very accurate since there are only 2 data points, so let’s add in 10 more people, then 1,000 more, then the whole country and pretty soon do you know what you get? Canada’s Inflation. Spoiler alert: It’s not 10%

#13 Dolce Vita on 10.11.18 at 5:36 pm

I can put more 0’s on a cheque than you can.

Ego. Save face.

I just said no to my Realtor when I realized he was about to enroll me in an auction.

Knew that it would come to no good end. Your story today says so.

Transparency always a good thing.

PS:

Khira should start a writers klatch with HHCE.

#14 fancy_pants on 10.11.18 at 5:40 pm

yep, biggest threat on the Canadian frontier right now is inflation and the only tool to combat it is higher rates. buckle up

#15 arfmoocat on 10.11.18 at 5:42 pm

#3 millenial-Falcon

I bought a gold and a bio today

#16 Sierts on 10.11.18 at 5:43 pm

@ jess

corruption is not the big problem in Argentina. it is only a sideshow.

the real problem is, Municipalities, Provinzes and Goverment are employing more than 50% of all the workforce.
(plus a bunch of private companies working exclusivly for the goverment)
they are simply producing much less, than they are spending.

#17 KW on 10.11.18 at 5:45 pm

Garth, with current market conditions I’m doing 1 ETF trade / month at $2500. Switching between US / Maple / Int & Emerging / Rate reset preferred

.. Continue as planned?

#18 yvrguy on 10.11.18 at 5:50 pm

being held hostage in a house deal by some sleazy rock star realtor running a high-stress blind auction is repulsive.

The asteroid is coming.

———–

great lines. love your writing.

#19 The Real Mark on 10.11.18 at 5:51 pm

What $550k buys in rural Saskatchewan:

https://www.cbc.ca/news/canada/saskatchewan/kinistino-mansion-auction-sold-1.4859360

“The home features geothermal heating, a 2,700-foot four-car garage, an elevator, a solarium, a fitness centre and a swimming pool with two adjacent saunas.”

#20 Larry B on 10.11.18 at 5:54 pm

So if the stock market is falling because investors can receive a rate of return (without the risk) good enough in Bonds they are divesting their stock holdings (so said GT), WHY are bond yields still increasing? A flood of investment in bonds (nothing more than a financial commodity) should cause the price to increase (demand) and the yield to decrease. Please explain as my basic economic understanding (supply vs demand) doesn’t hold.

#21 infrared on 10.11.18 at 6:04 pm

what auctions?
market is slowing down, months for a single offer…

#22 crowdedelevatorfartz on 10.11.18 at 6:05 pm

@# 186 Rattl
“A middle class old guy that already did very well on RE cheer leading a crash is pathetic. Karma is a bitch – he will most likely be a casualty of any dramatic crash. His savings will get hit or if he is still working he may lose his job. ”

*********

Gee, NOW who’s cheering for a crash? :)
And…
I own the company I work at :)
100k salary + divvies :)

“Just be happy you lived in a home for 20 years in YVR and sold it, tax free, for 3.5 times. Anything else is bitterness and envy.”

++++++
Gee sounds like YOU’RE bitter and envious. :)

The tax free capital gains was awesome
BUT
I was just smart enough to dump a 55 year old house and all its problems on some other “greaterfool” who pumped another 500k into it and will probably have to wait at least 20 years to break even.

Greaterfools and their money……….. soon parted.

#23 Dolce Vita on 10.11.18 at 6:05 pm

#10 Smoking Man

That’s what I thought too, but it’s not about HELOCs.

OSFTI wants to tighten income verification on uninsured mortgages since they know people are falsifying the income that they earn on their mortgage applications (liar loans).

They do not say how they will do this.

OSFI also says that (i.e., B20 working but more tightening needed):

“…the amount of uninsured mortgage originations with loan amounts greater than 4.5 times the borrower’s income has dropped from 20 per cent from April to July of 2017 to 14 per cent for the same period of 2018.”

That’s still a lot of high risk mortgages the banks are taking on, more so if they are liar loans.

OSFI is correct.

Article:

“OSFI to take new measures to address equity-based mortgage loans” -Financial Post

https://business.financialpost.com/personal-finance/mortgages-real-estate/osfi-to-take-new-measures-to-address-equity-based-mortgage-loans

#24 Jungle on 10.11.18 at 6:18 pm

#12 soggy shorts at least the CPI compares
The same basket of goods yoy

Like you said, Personal inflation can be complex based on lifestyle, spending or stage in life.

For example, the recent urbanation report is saying average 416 condo rent is up 30% In 4 years.

#25 Brian Ripley on 10.11.18 at 6:18 pm

The asteroid is coming… Garth

In my recent post “credit purge”…
http://www.chpc.biz/history-readings/credit-purge

…there is a chart from Robin Brooks, Institute of International Finance, that shows, since the early 1990’s, the change in automation in the retail sector has resulted with: While it still takes 8 workers in a brick and mortar retail store to generate $1,000,000/yr in sales… in e-commerce sales channels (Amazon, Walmart etal) it takes less than 1 person to do the same.

And this metric is widening. The asteroid of software landed sometime ago.

#26 Jungle on 10.11.18 at 6:25 pm

I wonder if poloz really needs to jack up rates, in light of surging bond yields , and the stock market now pricing in a slow down in the economy.

Is this the end of our “economic boom” ?

#27 Fish on 10.11.18 at 6:28 pm

Canada: Outlook for Principal Field Crops, 2018-07-19

http://www.agr.gc.ca/eng/industry-markets-and-trade/canadian-agri-food-sector-intelligence/crops/reports-and-statistics-data-for-canadian-principal-field-crops/canada-outlook-for-principal-field-crops-2018-07-19/?id=1532102190686

#28 PeterfromCalgary on 10.11.18 at 6:34 pm

I am generally against more regulation. However, I make an exception here. They should ban these blind auctions because:
-they make bubbles more likely
-they cause unnecessary stress
-they lead to bad financial decisions which could hurt not just the bidders but also banks and the economy in general.

Having said that we still have too many regulations. We need to cut them out especially environmental regulations. Also why I am in a bad complaining mood I might as well tell you I am against recycling to.

#29 eaglebay on 10.11.18 at 6:35 pm

#14 fancy_pants on 10.11.18 at 5:40 pm
yep, biggest threat on the Canadian frontier right now is inflation and the only tool to combat it is higher rates. buckle up
——————————–

Higher taxes bring higher inflation.

#30 Danny on 10.11.18 at 6:39 pm

Any idea how then in a more transparent bidding process to make sure that the competition is not a plant by the selling team to drive the price up?

I am all for transparency especially when the value of real estate seems to be based mainly on how much the buyer is willing to pay…….not many other rational facts.

Hoping over time more transparency in history knowledge and process will provide more fairness…..at minimum…a better educated guess than we have now where real estate agents hold all the cards.

Even in poker we use the same one deck of cards !

Let’s wait and see what “Tricky Dougie” ….the phantom Mayor of Toronto……..will do from Queens Park ” for his friends ” in the real estate world. I am sure Doug has had many private lunches over this with Ford’s big developer friends and financial backers. The same one’s who hope to have a strong hold over Toronto’s City Council soon.

This all means that the real estate cartel….knows they are in trouble especially in Toronto where the overly priced housing prices is the 2nd most important issue in the municipal election after public transit.

When prices go too high…….buyers stay away.

I say buyers need to go on strike for at least 3 more months when the Christmas season bills come in and real estate agents begin too worry about making their credit card and mortgage payments like most people in Toronto do.

Happy New Year Toronto.

#31 Chaddywack on 10.11.18 at 6:49 pm

I hate price manipulation.

Think of it this way. If you went into a store to buy a coffee and the price was $2 and then once you order it suddenly the barista tells you that the seller is not accepting the offer and the REAL price is actually $3.50……..most people would walk out disgusted.

Funny how when it comes to houses people get sucked in time and time again. I just walk away…..it’s just a house. But maybe that’s why I’m a renter in Vancouver :)

#32 Xpat on 10.11.18 at 6:50 pm

Rocky waters ahead and at times like these it pays to be a contrarian.

It’s lift off for gold at Kirkland Lake today. DOL is looking tasty. The big insurance stocks like SLF took a hit, a bit surprising in a rising rate enviro and worth investigation (maybe the Asia connection?). What else you got blog dogs?

#33 jess on 10.11.18 at 6:52 pm

corruption is not the big problem in Argentina. it is only a sideshow.
====================

why would one invest in a country with so much “structional “corruption

=======

https://www.icij.org/investigations/panama-papers/panama-papers-reveal-offshore-payments-by-madagascars-seafood-king/

chaneled dividends

https://www.mirror.co.uk/news/uk-news/cadburys-owners-paid-no-corporation-13396542

https://www.independent.co.uk/news/business/news/cadbury-chocolate-mondelez-no-corporation-tax-paid-uk-profit-a8578951.html

#34 Sold Out on 10.11.18 at 6:56 pm

I felt vaguely dirty after selling our GVA sfd in ’17. 1 open house, 6 offers, and a begging letter followed. “Winning” bid was 1.08k clear of the second highest bid(w/begging letter), and 2.58k over ask with no subjects and a free month of rent thrown in. We couldn’t accept the top offer fast enough! Terrified that they’d come to their senses before we made a clean getaway. We moved to Van Isl, refused to play Blind Mans Bluff, paid more than we would’ve liked (full ask) but we figured, “WTH, we’re playing with Monopoly money”. 7-digit portfolio, balanced, liquid, diversified – no worries. The fear of not getting out of that house before the SHTF still makes me throw up in my mouth a little when I think back on it. I can’t imagine what the buyer would barf up if they knew how much they over-paid. Maybe a sellable organ, cause they could use a little cash right now.

#35 Mattl on 10.11.18 at 6:58 pm

#19 The Real Mark on 10.11.18 at 5:51 pm
What $550k buys in rural Saskatchewan:

https://www.cbc.ca/news/canada/saskatchewan/kinistino-mansion-auction-sold-1.4859360

“The home features geothermal heating, a 2,700-foot four-car garage, an elevator, a solarium, a fitness centre and a swimming pool with two adjacent saunas.”

—————————————————-

Except it doesn’t – the pool isn’t in and most of the house needs to be finished. Probably 500K+ to finish that house. Which still makes it a bargain but most of the house is only at lock up.

#36 Stone on 10.11.18 at 6:59 pm

#20 Larry B on 10.11.18 at 5:54 pm
So if the stock market is falling because investors can receive a rate of return (without the risk) good enough in Bonds they are divesting their stock holdings (so said GT), WHY are bond yields still increasing? A flood of investment in bonds (nothing more than a financial commodity) should cause the price to increase (demand) and the yield to decrease. Please explain as my basic economic understanding (supply vs demand) doesn’t hold.

———

It’s called short-sighted desperation. Nothing more. You have a better understanding than you think.

#37 Smartalox on 10.11.18 at 7:00 pm

The classic real estate transaction posted price vs. offer is an example of how a once, perfectly reasonable way of doing things, has become unsuitable, because the elements that ensured fair play (the ethics of the participants) were abandoned as people learned it was more profitable to game the system.

Agents normalized all these silly games, in order to goose their commissions a few dollars higher, while simultaneously losing sales and closing fewer deals.

Sure, the agents reasoned, they were doing this to net higher prices for their clients, the sellers, but those same sellers got burned in turn by the same practice, when they went to try to buy.

Then, there were the assignment flippers… another case of never having needed a rule against it before, but now we do!

The question is: What will have the greater impact on speculation-driven house prices?

– B20 stress testing?
– Rising interest rates?
– Government taxes and meddling?
– Making Real Estate transactions and sales data more transparent?

There are getting to be a lot of nails in that coffin!

#38 OttawaMike on 10.11.18 at 7:01 pm

Said it on here before. Will say it again. Why is the largest purchase an average working person is onvolved in full of such chicanery?

A nasty industry that attracts slimey people who are regulated by a cartel that slaps the bad ones on the wrist and charges laughable fines that are just a cost of doing business.

#39 pete on 10.11.18 at 7:07 pm

Re Aussie auctions:

Garth, left out one important detail – in oz, the vendor can put in a bid. seriously, you can bid on your own house if you dont like the bidding direction. so, effectively, a reserve doesnt mean diddly. not a true auction. you can put in a vendor bid once reserve is met if it turns out you set it too low (this would be really rare)

#40 Penny Henny on 10.11.18 at 7:07 pm

#17 KW on 10.11.18 at 5:45 pm
Garth, with current market conditions I’m doing 1 ETF trade / month at $2500. Switching between US / Maple / Int & Emerging / Rate reset preferred

.. Continue as planned?

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

Sounds like a great plan. Distribute new funds to keep the assets classes balanced.

#41 stage1dave on 10.11.18 at 7:09 pm

#19 the real Mark:

A Mansion? In Kinistino? Wow…the only time I ever went there was to chase a 70 hemi RR that had been sold new at local Plymouth dealer…turned out to be rusted past repair, (IMO) I passed and it went to cowtown later on. I think at that time the car was still worth more than the house the owner was living in…guess things have changed.

Anyway, tonites post jogged a memory about the runup to the USA housing meltdown in 07…I was spending a ton of time in the midwest, and I distinctly remember a lot of houses in Des Moines being sold “on contract”. post 2000…

My understanding of it was it functioned like a “regular” mortgage, but with a higher interest rate and tighter rules for missed payments, etc; there was lots of horror stories about the same house being sold over and over again, kind of like a used car because someone missed a payment, or “broke” the contract in some way.

Any chance of that coming to Canada as the banks tighten up? Or does some regulation forbid it? Or, is the odd “lease to own” ad I see just a variation of this practice?

#42 John Kenneth Galbraith on 10.11.18 at 7:11 pm

#180 n1tro on 10.11.18 at 3:04 pm

#170 John Kenneth Galbraith on 10.11.18 at 2:06 pm

“Seems you picked up some tidbits on economics 101 and like to quote economists. Great.
From my soapbox…to say it again…”majority of politicians do things to help themselves despite saying otherwise.”
You bringing up what (insert politician) does to make (insert group) richer is moot because in the end, it is just pandering for votes or bribes. I’ve moved beyond picking political sides and understand human behaviour.”

You sound like a puerile teenager. I have more than just read a few books on economics. You are the one who probably has no more than a 101 knowledge of the subject. Politicians implemented the Keynesian system which has prevented another Great Depression. Society as a whole was the beneficiary not just politicians. You have a long way to go in your understanding of human behaviour.

#43 Rexx Rock on 10.11.18 at 7:16 pm

I’m seeing many sold signs here in Langford for houses but it takes 5 to 7 days to sell.Unbelievable,its quite shocking when this is not normal.Houses usually sell the first day with multiple offers for the last few years.Times are a changing!

#44 Sydneysider on 10.11.18 at 7:19 pm

The Australian auction is not a place for the faint-hearted either. Normally there is a good crowd of neighbours standing around just for the entertainment. The reserve price is not disclosed. If the bids dry up, the auctioneer can make one bid of his own (this is allowed) to move them on. Once the highest bid is called, he disappears indoors to ask the owners if they are satisfied. Then he comes back to tell the bidder and audience how much more (perhaps 10K) he will have to pay (i.e. he has to make a bid made against himself, or be seen as wimp by the crowd). If he agrees, he gets a kiss from the wife and a debt to last him a lifetime. All this, just to buy a typical Sydney dump that is completely unrenovated for the last 20 years.

#45 Pete from St. Cesaire on 10.11.18 at 7:24 pm

The blind auctions are a nasty piece of work but no one is forced to partake in one. I’m still LMAO over the people who 6 months ago agreed to pay $950 for a place that won’t even be built for 2 years and now could buy the same place for $750.
As for Australia, what right do they have to ‘not allow’ low opening prices; as long as the seller is willing to let it go for that amount should there only be the one offer.

#46 young & foolish on 10.11.18 at 7:28 pm

“The asteroid of software landed sometime ago.” — Ripley

This is a common enough meme brought up again and again across most industries/services ….. the obvious flaw is human nature. Sure, software can and does increase productivity in many respects, but face to face is what social creatures eventually require.

#47 John Kenneth Galbraith on 10.11.18 at 7:30 pm

#181 n1tro on 10.11.18 at 3:22 pm

“Nice strawman argument implying that anyone who doesn’t support a minimum wage isn’t compassionate.

As a society, the best we can do for the people with the greatest needs is to give them the opportunity to not be dependent on others. I think Canada does a wonderful job at that where an immigrant that comes to the country with nothing can make something more of themselves. Their secret? A lot of hard work and tenacity whether it be their jobs pays them $5/hr or $15/hr.

Are you for real? $5 an hour? In Toronto? $15 an hour barely buys groceries. $5 an hour? Give your teenage head a shake cowboy. No person should have to work for $5 an hour. I guess you have no problems with people working for $5 an hour. I do.

“I am light years away from the poor folks who have to eke out an existence on minimum wage but I fully support their right to it.It’s this kind of bullshit that annoys me. You are “light years” away from the poor folks….implying you are rich or at least well off…but you “fully support their right to it”….”

That’s right. What don’t you understand about my statement. I can’t be well off and support minimum wage? Are you for real? How one dimensional are you?

“Like what the F*ck do you know about what poor people go through day to day to make a grandiose statement about supporting their rights to anything?? ”

You are a clown. A real full blown clown. Are you psychic you moron? You don’t have a clue who I am. I am a child of immigrants who grew up in austere circumstances. My childhood was one of austerity in an immigrant household.

“Having come from poor immigrant parents, not one day did my folks bitch and moan about not getting paid more per hour or how a few more dollars was going to make anything better. Instead, they instilled the mentality in us kids that nothing comes to you without hard work.”

My parents came to Canada after WW2 and worked hard their whole lives and instilled in me a work ethic and a thirst for education. You are learning about human behaviour? Start by stopping making assumptions about others and reaching unfounded conclusions.

#48 The Real Mark on 10.11.18 at 7:33 pm

“The big insurance stocks like SLF took a hit, a bit surprising in a rising rate enviro and worth investigation (maybe the Asia connection?)”

Higher rates imply losses in long-term bond portfolios. Insurers hold large portfolios of long-term bonds. Banks hold mortgages which are backed by assets that are proxies for long-term debt (housing). The entire FIRE sector suffers with rising long-term rates. Only amateurs think that higher rates are good for banks/insurers/pension funds.

The time to invest in FIRE is when long-term rates are very high and are heading lower. Not the other way around. Anyone who tells you otherwise is just lying or misleading you. Or otherwise trying to distort the truth.

#49 MF on 10.11.18 at 7:38 pm

#20 Larry B on 10.11.18 at 5:54 pm

I’ll take a stab at it.

The US Federal Reserve, the biggest player in the market, is unwinding its balance sheet and dumping bonds back on to the market.

We have been reading about the “Great Unwinding” for a few years now and this must be it. As the bond market gets flooded with billions of dollars of bonds, watch yields rise. It’s the opposite of what occurred during the Obama era where the Fed purchased bonds in the trillions and drove yields to zero.

MF

#50 The Real Mark on 10.11.18 at 7:39 pm

“#26 Jungle on 10.11.18 at 6:25 pm “

Of course Poloz doesn’t need to “do” anything. If anything, rate cuts are indicated. The data, especially the recent auto sales and PMI, were literally that weak. One month of a little bit of inflation after running a decade 40-50bp on average under the 2% target was nothing for Poloz to get too concerned over. The “rates need to be hyped” narrative was almost entirely concocted in response to a Bank of Canada press release which was clearly, if anyone had bothered to read it with a historical perspective, jawboning.

I won’t go as far as to predict a rate cut at the next meeting (24th???), but its pretty clear that Poloz will likely be “on hold”.

#51 akashic record on 10.11.18 at 7:39 pm

#19 The Real Mark on 10.11.18 at 5:51 pm

What $550k buys in rural Saskatchewan:

https://www.cbc.ca/news/canada/saskatchewan/kinistino-mansion-auction-sold-1.4859360

“The home features geothermal heating, a 2,700-foot four-car garage, an elevator, a solarium, a fitness centre and a swimming pool with two adjacent saunas.”

—-

location, location, location

#52 Freedom First on 10.11.18 at 7:42 pm

Ok so I’m not the real Freedom First.
But my mentioning him I’ll get your attention.

What is the best place / way to sell physical gold bullion?

And now a plug for Smoking Man and his periscope videos and great book.

#53 Mad Realtor - lol on 10.11.18 at 7:51 pm

Real Estate is a game of numbers.

If you do not know how to compute for fair value, do not go in the game. If you lose in the game, don’t go crying. You were better off staying in your parent’s basement.

Fools and their money always part ways. Especially those with low EQ.

Deal with it.

If there was an auction for a low price and no one came, who’d be crying?

#54 Fish on 10.11.18 at 7:55 pm

Canada introduces new surtaxes to curb flood of steel imports

Imports on seven steel products will be subject to a 25 per cent surtax
CBC News · Posted: Oct 11, 2018 3:51 PM ET | Last Updated: 14 minutes ago

https://www.cbc.ca/news/politics/steel-surtax-canada-imports-1.4859138

#55 KLNR on 10.11.18 at 8:02 pm

@#22 crowdedelevatorfartz on 10.11.18 at 6:05 pm
@# 186 Rattl
“A middle class old guy that already did very well on RE cheer leading a crash is pathetic. Karma is a bitch – he will most likely be a casualty of any dramatic crash. His savings will get hit or if he is still working he may lose his job. ”

*********

Gee, NOW who’s cheering for a crash? :)
And…
I own the company I work at :)
100k salary + divvies :)

“Just be happy you lived in a home for 20 years in YVR and sold it, tax free, for 3.5 times. Anything else is bitterness and envy.”

++++++
Gee sounds like YOU’RE bitter and envious. :)

The tax free capital gains was awesome
BUT
I was just smart enough to dump a 55 year old house and all its problems on some other “greaterfool” who pumped another 500k into it and will probably have to wait at least 20 years to break even.

Greaterfools and their money……….. soon parted.
______________________

now, now, children.

#56 For those about to flop... on 10.11.18 at 8:04 pm

Race to 900k

Here’s the latest entrant in the Race to 900k.

Perhaps the most liveable one I have seen sub one million.

The listing mentions double glazed windows and new furnace and with the pictures presented, this ain’t no knockdown.

It is most likely the owner is discounting this place by 50k because as a concession to the dodgiest street name in Vancouver.

Turner Street, just doesn’t sound right,can’t put my finger on it but it oozes dodgieness.

O.k enough ribbing,seriously this street has come up time after time in my study.

This one is a Race to 900k post, but nearby you have people that got carried away and paid over 2 million for new builds.

I think I’ve had a few losses and a few more are yet to take their Buckley’s.

Did I mention the area is dodgy…

M44BC

2357 Turner st,Vancouver.

Asking 949k

Assessment 1.06

https://www.zolo.ca/vancouver-real-estate/2357-turner-street

#57 Karl on 10.11.18 at 8:09 pm

I hope the the way we buy RE changes. This blind auction/sit in the car while your agent negotiates is ridiculous. I hope the industry is disrupted, ala an Uber did to taxis.

More importantly, where is Happy Housing Crash Everyone?! This post was made for his commentary.

#58 old gringo on 10.11.18 at 8:13 pm

Great photo Garth.
Its nice to catch Trump supporters off to a rally!!!!!
Too funny!

#59 crowdedelevatorfartz on 10.11.18 at 8:14 pm

@#55 KLNR
“now, now, children.”
+++++

Dad?

#60 Remembrancer on 10.11.18 at 8:14 pm

#31 Chaddywack on 10.11.18 at 6:49 pm
Think of it this way. If you went into a store to buy a coffee and the price was $2 and then once you order it suddenly the barista tells you that the seller is not accepting the offer and the REAL price is actually $3.50……..most people would walk out disgusted.
————————————————————–
But its worse than that, even though there is a country full of of 25 cent, 50 cent, $1, $2 and $5 cups of coffee you want that particular cup at that particular location so FOMO and other instincts kick in and you *offer* to pay $3.50 just so it gets to be your cup and not some one else’s who is maybe offering $2.75. Either way, the barista is not going to say no to your $3.50 offer for a $2 cup of coffee…

#61 NJGeezer on 10.11.18 at 8:18 pm

MF on 10.11.18 at 7:38 pm

#20 Larry B on 10.11.18 at 5:54 pm

I’ll take a stab at it.

The US Federal Reserve, the biggest player in the market, is unwinding its balance sheet and dumping bonds back on to the market.

We have been reading about the “Great Unwinding” for a few years now and this must be it. As the bond market gets flooded with billions of dollars of bonds, watch yields rise. It’s the opposite of what occurred during the Obama era where the Fed purchased bonds in the trillions and drove yields to zero.

MF
—————————————————-
Afraid that’s an inaccurate description of the process known as QuantitativeTightening (QT), the opposite of Quantitative Easing (QE).

Wolf Richter at WolfStreet.com publishes details monthly of how the process actually works. The Fed is not putting any of the “tightening” bonds on the market. Rather they are allowing them to mature, and roll off the balance sheet. Check out Wolf’s site for details.

Thank you Garth for your awesome blog, and especially the fabulous pooch fotos.

#62 crowdedelevatorfartz on 10.11.18 at 8:20 pm

@ # 56 Flopster

2357 Turner St.
++++++
Yep , Location location location.
Turner St is definitely a bad part of east van.
The street name is just the icing on the cake……..

But think of how excited the realtor is with all the Blog dog “hits”……..

#63 Remembrancer on 10.11.18 at 8:22 pm

#54 Fish on 10.11.18 at 7:55 pm
Canada introduces new surtaxes to curb flood of steel imports
—————————————————————–
Hmm, doesn’t mention whether this maybe previously dumped steel was all consumed in Canada and not, say, maybe imported into the pre-tariff US market?

We better have our house in order while calling US on their behavior…

#64 paul on 10.11.18 at 8:27 pm

So much for brick and mortar stores.
Eleven out of 500 open.

https://www.cbc.ca/news/canada/calgary/new-horizon-mall-balzac-calgary-1.4850804

#65 John in Mtl on 10.11.18 at 8:38 pm

Holy Toledo, Batman; that photo…
is that Smoking Mans’ pickup?

#66 For those about to flop... on 10.11.18 at 8:39 pm

Crowdie 8:20 pm
@ # 56 Flopster

2357 Turner St.
++++++
Yep , Location location location.
Turner St is definitely a bad part of east van.

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

I haven’t been down that way recently but a while back at 7am I was waiting in a car for a co-worker to pick up something at a notoriously slow local hardware store.

After 20 minutes I decided to get out and get some fresh air.

10 minutes later I decided to start snacking on some grapes and out of the corner of my eye I saw a lady of the night approaching.

She propositioned me and I politely said “No thanks.”

I was still waiting by the car a few minutes later and she had circled around again and asked me the same question.

I didn’t know what to say this time as she was acting like we had never spoken and was probably strung out on drugs so I tried my best to lighten the moment.

“Can I at least finish my grapes first?”…

M44BC

#67 april on 10.11.18 at 8:39 pm

#43 – realtor spin if ever!

#68 I am Unknown on 10.11.18 at 8:45 pm

Young expecting couple, that I’m closely related to, have been trying to buy in Brampton, Tottenham, Bolton, etc. They have been looking in the 600 to 700 range. Evey house they see has been selling for above list. And selling quickly.

I don’t think there has been any recent price depreciation or slowdown, in these areas, or that there ever will be.

#69 Fish on 10.11.18 at 8:47 pm

Calgary home sales on track for slowest pace in more than a decade

Fewer than 13,000 homes sold in the city from January to September
Robson Fletcher · CBC News · Posted: Oct 09, 2018 6:30 AM MT | Last Updated: October 9

https://www.cbc.ca/news/canada/calgary/calgary-september-2018-real-estate-forecast-1.4852120

#70 skeptism needed on 10.11.18 at 8:51 pm

Think about Garth and blogdogs…why the hell would the real estate industry suggest open auctions? Anyone here ever been to an actual auction? anyone? anyone? I have.
If you want to see buyers regret, go to an auction for regular folk. Emotions run high and only the true pros have the ability to keep it in check over the 2 minutes of bidding madness.
If you think open auctions are the answer to a bloated market, you have little experience with the real thing.
Australian real estate is just as over-price (maybe more so) than Canadian and their over-hyped open auction solution didn’t save them.
Good luck with that.

#71 Raging Ranter on 10.11.18 at 8:52 pm

@ #49 MF, balance sheet normalization does not involve dumping bonds back onto the market. The Fed is allowing bonds to mature and not replacing them, whereas prior to balance sheet normalization, they were actively buying bonds and mortgage backed securities to replace the maturing issues, which kept their balance sheet stable. (And prior to that of course, in the QE phase, they were buying in excess of what was maturing.) Allowing notes to mature without replacement is the least disruptive way of shrinking the balance sheet.

Wolf Richter does a great job explaining the process on Wolfstreet.com.

#72 reynolds531 on 10.11.18 at 8:54 pm

You should do an entry on home inspections. What a joke. Talk about “don’t bite the hand”

#73 Ian on 10.11.18 at 8:57 pm

When do we get the transparent data? Does anyone know?

#74 For those about to flop... on 10.11.18 at 8:59 pm

Pink Pumpkins being carved in North Vancouver.

These guys just cannot find any traction in the market.

Featured them not long ago after they reduced it down to 1.99 after starting off at 2.37

They’ve been at it since May after picking it up roughly a year ago so the have put away the beachball and pulled out the pumpkin instead.

So they are asking 200k less than they paid a year ago, but people pretend, still even to this day that nothing is happening.

This all caught a lot of people off guard, and all some people had time to grab to try and cover up was some chaps.

Their bum is hanging out…

M44BC

351 Beachview Dr,.North Vancouver paid 2.08 October 2017 ass2.14

Was asking 1.99

New ask…1.88

May 4:$2,375,000
Sep 5: $2,050,000
Change: – 325000.00 -14%

https://www.zolo.ca/north-vancouver-real-estate/351-beachview-driver

#75 FOUR FINGERS WATSON on 10.11.18 at 9:00 pm

Meanwhile in other parts of the world where it is a little warmer after being chased out of Kelowna by smoke:
31 degrees in Cebu city today, night time lows down to 25 so air con not necessary…….Airfare via EVA air, Kelowna, Vancouver, Taipei, Cebu and return in Feb.2019 was $1200….since mid August, nice little hotel here with small pool and gym, air con, wifi, cable, hot showers, and daily housekeeping, rooftop restaurant with panoramic view, quite comfortable is a negotiated $875 per month….breakfast yesterday at Denny’s was pancake, egg, bacon, and sausage breakfast with Maple Syrup! for $4.50 …….Lunch at BK was a Whopper Junior, fries , and a coke for 2 bucks. Dinner at Casa Verde restaurant was a green salad, a decent steak, mashed potatoes, gravy, mushrooms and bacon, and a bottomless ice tea for $6.50…..I think i am gaining weight here….Marlboros are about $2.50 a pack, Heinies and Coronas are 3 bucks but the local San Mig Lights are a buck. And taste like the Coronas. Taxi from hotel to just about anywhere in the city is about 2 to 4 bucks…Sat on an outdoor coffee shop terrace watching the girls go by after dinner, wiggled my eyebrows at a few but no takers hehehehe….yet…Still early tho…..and i have nothing to do and lots of time to do it in….might blaze over to Mindanao next week to visit a friend…it is a one hour flight in a Bombardier prop plane and the cost is about the same as a Kelowna taxi from my condo to the airport. The locals are friendly and most speak passable English here. Garth, if u don’t hear from me in a week : send lawyers guns and money. Tks. FFW.

#76 NoName on 10.11.18 at 9:01 pm

#68 I am Unknown on 10.11.18 at 8:45 pm
Young expecting couple, that I’m closely related to, have been trying to buy in Brampton, Tottenham, Bolton, etc. They have been looking in the 600 to 700 range. Evey house they see has been selling for above list. And selling quickly.

I don’t think there has been any recent price depreciation or slowdown, in these areas, or that there ever will be.

they should look my way, 500k gives you big lot and many houses for sale will have swimming pool, and i not gonna mention me for nebour. Siriously, does it get any better than that?

Ok i’ll answer that, it doesn’t!

#77 MF on 10.11.18 at 9:02 pm

#61 NJGeezer on 10.11.18 at 8:18 pm

-Thanks for the website. I checked it out and the author(s) do a great job of keeping track of the tapering.

For another explanation I found this Bloomberg article:

https://www.bloomberg.com/news/articles/2018-07-09/after-years-of-easing-meet-quantitative-tightening-quicktake

“The Fed is now letting up to $40 billion of its bond holdings mature every month without replacing them, a cap it will raise to $50 billion later in the year. That takes money out of the financial system, as the Treasury Department then finds new buyers for its debt.”

-I guess that explains it. The bonds on the Fed balance sheet are maturing and not being replaced, and now yields have to become more attractive for anyone to want to buy them.

Bond funds must be down because the new debt is being issued at higher yields, meaning older bonds with lower yields are less attractive. I guess bonds will be attractive again if a pullback has other additional factors beyond yields.

MF

#78 Fish on 10.11.18 at 9:07 pm

More Canadians living alone and without children, census figures show

Childless couples and empty-nesters growing at faster rate than couples living with kids, 2016 census shows

Éric Grenier · CBC News · Posted: Aug 02, 2017 9:50 AM ET | Last Updated: August 2, 2017

https://www.cbc.ca/news/politics/census-2016-marriage-children-families-1.4231872

#79 Steven Spellberg on 10.11.18 at 9:08 pm

#166 James on 10.11.18 at 12:59 pm
________________________________________
Xi is a astute communist…… He has several degrees form University’s and is quite intelligent.”

Hopefully he didn’t go to the same uni as you! That’s primary school grammar bro’

#80 Fish on 10.11.18 at 9:37 pm

Upcoming Events Bank of Canada

https://www.bankofcanada.ca/press/upcoming-events/

#81 For those about to flop... on 10.11.18 at 9:40 pm

Recent sale report.

This house in West Vancouver sold 7 days ago.

The details…

2432 Ottawa ave,West Vancouver

Paid 3.78 September 2017

Sold 3.15 October 2018

So close to 22% after expenses and if you tagged them for opportunities lost and work done to the house they would most likely join the infamous Club 25.

Let’s just call it a 850k kick to the kookaburra…

M44BC

https://www.zolo.ca/west-vancouver-real-estate/2432-ottawa-avenue

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

Feel free to make a donation.

Flop For Fox Fund…

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

#82 fancy_pants on 10.11.18 at 9:43 pm

#29 eaglebay on 10.11.18 at 6:35 pm
Higher taxes bring higher inflation.

valid point, with the tax and spend liberals at the wheel, you better put a helmet on too

#83 crowdedelevatorfartz on 10.11.18 at 9:44 pm

@#66 Flopster
“Can I at least finish my grapes first?”…
+++++

ahahahahaha good one.

I worked with a fella from that area of East van for almost 10 years.
All his neighbours, his kids, everyone was involved in some sort of scam.
I was at a bbq at his place one time with dozens of locals and I jokingly asked, ” Does anyone in East Van NOT break the law daily?”
They all laughed.

#84 South Africa on 10.11.18 at 9:52 pm

If you need a thanksgiving reminder, google ‘south africa farmers’ and count your blessings

#85 X on 10.11.18 at 10:00 pm

Dear Realtors,

How about a rule that if a house is advertised for $X and an offer with no conditions comes in for $X it is improper to not accept it.

Yes, we all know the argument will be made that the closing date could not be agreed on…but really, if you price low and it backfires, you should honour your offer price.

In any other walk of life, if someone walked into a store, and offered the asking price for a product and the cashier told them that it would take another 20% to be able to purchase it, that type of business model would not earn you the greatest amount of respect within your community….then why do Realtors do this?

Most of your members are very knowledgeable and professional, give the members reasonable rules to follow.

#86 Dave Ahem on 10.11.18 at 10:08 pm

Patience, frugality, sacrifice.

#87 Steve French on 10.11.18 at 10:15 pm

I’m down $6,800 this week in my Garth (TM) approved ETF portfolio. My worst decline in 2 years.

Time to hug your kids… hold your dog…. look sorrowfully at your wife, and stare off grimly into the distance… the dust being kicked up as the whirlwind approaches….

Smoking Man … need advice. What should a Long Branch Apprentice do?

I’m thinking the most strategic option is to put some Johnny Cash on the buds and start hitting the bottle, hard.

#88 AB Boxster on 10.11.18 at 10:41 pm

60/40 equity to fixed portfolio getting killed in 2018.

Despite fixed income fall, at least it is making some money due to higher dividend and income yields.

Equity side is negative for pretty much all asset classes and in all locations.

My theoretical basket of ‘quality’ dividend stocks in Canada is now down over 13% YTD.

On a 500k portfolio, that’s down over 65k YTD.

The dividend investors are getting royally killed this year.

I think that 40/60 equity / fixed is a far safer mix in today’s investing world.

And for your fixed portion just buy actual bonds and ladder. Forget the ETF bond funds. They have paid nothing to you for the past 3 years and likely for years to come.

Sure, real bonds may lose market value but you will always get your face value back when the bond matures plus all the interest in between.
You don’t buy bonds for price appreciation. You buy them for income and safety and capital preservation.

Watching ETF funds of preferred shares continue to drop despite rates rising and wisdom suggesting that rate resets should rise makes one wonder how these fund managers are messing up.

Especially since a portfolio of ‘actual’ preferred shares, has not fallen in value anywhere near as much as the ETF.

Same with bond ETF funds.
Yes the bond funds should fall due to bond values falling in a rising rate environmnet. But their return should rise accordingly. Yet this does not happen with the ETF funds I have owned.

The value of the fund continues to fall and the distribution remains the same. So a 5 year bond ETF that pays 2% per year, but has fallen 6% over the past 5 years, is a massive waste of investing dollars.

Better to have bought a 5 year provincial bond at 2% 3 years ago for 10k. At then end of 5 years you have $1000 in interest and 10k principal.

If you bought a 5 year ETF you get 1000 interest and your bond fund ETF is now worth 9k.

Sure they don’t fluctuate like equities, but to achieve nothing at all for your 5 years of investments is kind of absurd.

Not sure why this is happening but it makes sure does not give confidence that ETF investing is the best way to go, especially for fixed asset investments.

#89 Al on 10.11.18 at 10:41 pm

Why would any buyer want to allow their bid to be disclosed just so they can be subsequently outbid? It only works if it’s mandatory for everyone. The final price might not be any different in any case, just that offers will be closer. It may make people feel better which is a plus.

#90 DON on 10.11.18 at 10:50 pm

#43 Rexx Rock on 10.11.18 at 7:16 pm

I’m seeing many sold signs here in Langford for houses but it takes 5 to 7 days to sell.Unbelievable,its quite shocking when this is not normal.Houses usually sell the first day with multiple offers for the last few years.Times are a changing!
************

Times are a changing for sure. When I drive around Langford it seems only the cheap stuff is selling that quickly. Two houses near me been on the market all summer (too expensive). Have you venture off behind the Quality Foods Ltd, past the ruby field in the new development area – real estate signs giving local election signs a run for their money. And their are tons of election signs. Anything cheap or moldy seems to be moving – but new builds and bigger houses sit waiting for their greater fool.

#91 WUL on 10.11.18 at 10:50 pm

Garth,

A few days ago I commented with a couple of “holy kadoodles”. Today’s commodity (bitumen) report is “extremis”.

Yesterday’s spot price of Alberta’s heavy oil blend (WCS) was $34.16. A year ago, on the same date, it was $49.55. The differential to WTI yesterday was $61.35 and last year on this date was $13.89.

This is serious stuff. As a Canadian taxpayer, with Trudeau’s $4.5 billion purchase of the TransMountain Expansion pipeline, I own approximately .03 metres of the pipeline. I’m installing taps at either end of my segment to become a “swing producer”.

Once it is built, the Asian market will save me.

Not really. I’m smart enough to know that the Asian market is mythical when it comes to bitumen. I can dream, can’t I?

Respectfully,

Pipeline Baron WUL

#92 Smoking Man on 10.11.18 at 11:04 pm

John in Mtl on 10.11.18 at 8:38 pm
Holy Toledo, Batman; that photo…
is that Smoking Mans’ pickup?
……

That was yesterday when I was competing with TFW as a code Smith for monapolistic global commie corps that take orders from Soros

This blog has reach.

Now I’m Dr Herdonomics. In a high density town of lear jets, lambos and a spirit of free enterprise, kill or be killed. I love it.

If you call heads or tails accurately the way I do, its in the archives . They come looking for you.
Thanks Gartho and this pathetic blog.

Living the dream, blue skies and green palm trees everyday.. 30% tax is a hell of a lot better than 54%. Especially on what I’m nailing now

0x0x0x love you all.

#93 M on 10.11.18 at 11:08 pm

Stats for Greater Vancouver from realtor Paul Boenisch

Oct 11 New 221 Sold 97 TI:13,605
Oct 10 New 261 Sold 62 TI:13,566
Oct 9 New 376 Sold 128 TI:13,472

Oct 5 New 193 Sold 88 TI:13,425
Oct 3-4 New 421 Sold 197 TI:13,400
Oct 2 New 251 Sold 115 TI:13,360
Oct 1 New 278 Sold 109 TI:13,361

Sept 28 New 153 Sold 77 TI:13,766
Sept 27 New 184 Sold 81 TI:13,755
Sept 26 New 236 Sold 78 TI:13,724
Sept 25 New 270 Sold 127 TI:13,649
Sept 24 New 288 Sold 142 TI:13,586

Sept 21 New 171 Sold 63 TI:13,574
Sept 20 New 218 Sold 81 TI:13,538
Sept 19 New 227 Sold 99 TI:13,472
Sept 18 New 266 Sold 99 TI:13,418
Sept 17 New 360 Sold 93 TI:13,339

Sept 14 New 143 Sold 85 TI:13,239
Sept 13 New 225 Sold 58 TI:13,240
Sept 12 New 268 Sold 90 TI:13,147
Sept 11 New 325 Sold 77 TI:13,057
Sept 10 New 487 Sold 87 TI:12,916

Sept 7 New 197 Sold 87 TI:12,681
Sept 5-6 New 609 Sold 195 TI: 12,653
Sept 4 New 498 Sold 53 TI:12,439

Inventory at the end of August was 12,510

#94 crowdedelevatorfartz on 10.11.18 at 11:14 pm

@#81 Flop
“Let’s just call it a 850k kick to the kookaburra…”
++++

Oooooo the Kookaburra.
That bird that laughs like no other.
I was in the Calgary Zoo YEARS ago and saw this tiny bird with a huge head sitting on a branch in a cage.
I walked over , stopped in front and just stared at it…..
The bird ruffled its feathers and let out the LOUDEST call for such a small bird I’ve ever heard in my life……

An impressive racket for such a small bird.

Kinda like whats happening to the realtors in a declining sales market……..

#95 Tedfiftyfour on 10.11.18 at 11:19 pm

Behind every sleazy agent who under values a property to encourage over paying buyers are smiling over paid greedy home sellers happy to hire an agent who will fill their bank account with tax free gains

#96 Tedfiftyfour on 10.11.18 at 11:24 pm

#34 exactly what I am talking about. No sellers turning down large tax free gains.

#97 DON on 10.11.18 at 11:26 pm

@ 67 April

Those sold signs Mr. Rexx Rocks speaks about have been sold for a months. The cheap mouldy town house around the corner sold in two weeks. Old townhouse. In my home town retirement mecca prices in the 300k are reappearing. On the outskirts of town but slowly creeping inwards towards the town centre. Still waiting for all the rich Asians I guess. SHTF coming to a theatre near you.

#98 For those about to flop... on 10.12.18 at 12:18 am

Recent sale report.

Man, did these guys burn some paper in a short amount of time.

The details…

4498 w 7th ave Vancouver.

Paid 7.28 November 2017

Sold 6.45 October 2018

So if my realtor buddy Adam is lurking can you confirm this one?

If not, I will do a CONFIRMED PINK SNOW post in a few months when the dust has settled and the ink has dried.

Tentatively a 1.25 million buck rip to the retina…

M44BC

https://www.zolo.ca/vancouver-real-estate/4498-w-7th-avenue

#99 Stan Brooks on 10.12.18 at 12:25 am

#12 SoggyShorts on 10.11.18 at 5:34 pm

Inflation (aka cost of living) is statistical, you are intelligent enough to know that. If you consume/eat cheap Chinese TVs or are a plant/live off vegetation, you are just fine.

A statement that everything for everyone will increase by exactly certain and fixed amount at the same time is strange.

I am really not sure how you can argue about lack of inflation, just look around, it is already here. Why do you believe GT has it mentioned in this article?

I am just stating the obvious with no intent of deceiving, the rest – the comprehension and acknowledgement part is your choice.

#100 Stan Brooks on 10.12.18 at 12:40 am

#78 Fish on 10.11.18 at 9:07 pm
More Canadians living alone and without children, census figures show

Childless couples and empty-nesters growing at faster rate than couples living with kids, 2016 census shows

Éric Grenier · CBC News · Posted: Aug 02, 2017 9:50 AM ET | Last Updated: August 2, 2017

https://www.cbc.ca/news/politics/census-2016-marriage-children-families-1.4231872

The elite simply decided at some point that it is too expensive to grow its own sheeple, they think that they can get it for free with promise for greener pastures while working out the old stock sheeple to death, thorough the mortgage.

Who needs kids when you can get the house and live happily ever after/paying the mortgage? At least this is what the MSM propaganda is telling us on daily basis.

We are not even talking about lifestyle here like travel etc (although it is implied that you can use HELOC for that…), just plain house worth 15 times your annual before taxes income.

Of course nobody in their right mind will exchange green pastures for frozen tundra, but hey, it seems the elite thinks it is a viable option.

People do not really understand to what extent their lifestyle depends on the intelligence of the owners of this place. If they are stupid or greedy as they really are, look at what happens.

#101 Smoking Man on 10.12.18 at 1:35 am

When get to that place where you are not scared anymore.
https://youtu.be/QohUdrgbD2k

#102 Smoking Man on 10.12.18 at 1:53 am

When I look in the mirror.
https://youtu.be/MjUqfRrWwcM

#103 Howard on 10.12.18 at 4:30 am

$17million asking price for Vancouver penthouse

https://www.zolo.ca/vancouver-real-estate/1835-morton-avenue/2001

Says in the ad : This property is a co-op property, so the purchaser is exempt from the FOREIGN BUYER TAX and the PROPERTY PURCHASE TAX.

Not sure why that would be the case?

#104 mark on 10.12.18 at 6:26 am

Oh Garth, you don’t even know the half of auctions in Australia. They actually show them live on the equivalent of BNN (admittedly a low rent BNN) on a Saturday morning, if you really have no life.

#105 ts on 10.12.18 at 7:50 am

Garth, what’s your opinion on Harry Dent’s prediction of a 70 to 90% correction in the stock market within next couple of years which will trigger a major recession?

Harry’s a has-been. Nobody cares about him anymore, which explains his extremism. – Garth

#106 John Kenneth Galbraith on 10.12.18 at 8:01 am

#20 Larry B on 10.11.18 at 5:54 pm

“So if the stock market is falling because investors can receive a rate of return (without the risk) good enough in Bonds they are divesting their stock holdings (so said GT), WHY are bond yields still increasing? A flood of investment in bonds (nothing more than a financial commodity) should cause the price to increase (demand) and the yield to decrease. Please explain as my basic economic understanding (supply vs demand) doesn’t hold.”

The Fed has the means and the motive to raise yields and they have expressly said they would use interest rates. They have a large inventory to sell, and rather than move the short end, moved the long end, maintained stimulus with the positive curve, but raised yields and thus put a bit of a damper on the works as we saw yesterday in the equities. The bond market is much bigger than equities so such a tectonic shift was bound to have repercussions. I was surprised how little comment resulted.
The other player who has the means and motivation is China. By raising yields, they strengthen the dollar by enough to offset any tariff, and encourage trade with China.

#107 crowdedelevatorfartz on 10.12.18 at 8:13 am

@#85 X
“Most of your members are very knowledgeable and professional, give the members reasonable rules to follow.”

++++

Ahahahahahahaha.
Good one!

#108 Shawn on 10.12.18 at 8:14 am

Watching Ryan L on BNN. I agree 100% with his view on cannabis companies. But timing the top is so difficult…

#109 Raging Ranter on 10.12.18 at 8:23 am

@ #106 John Kenneth Galbraith, the Fed is not, nor does it intend to, sell off its inventory. It is merely allowing maturing treasuries and mortgage backed securities to roll off its books as they mature, without replacement. It has been very transparent about this and the information is easy enough to look up.

#110 Cultured on 10.12.18 at 8:42 am

“John Kenneth Galbraith”

You trot out your dated socialists beliefs and theories…perhaps we should all chip in and buy you a one way ticket to Venezuela?

There you can join your brethren and soak up the greatness of socialism and what it has done for its Venezuelan constituents.

Its people like you who are ruining our great country of Canada.

Capitalists are forced into a position of cleaning up the mess left by socialists.

Look at the great Doug Ford and what he has to do now to make things right in Ontario.

Jason Kenney will be forced into cleaning up the mess left by the Alberta NDP and their misguided adventures.

Consider the mess left by Glen Clark years ago in BC.

Yes, you need to spend some time in Venezuela.

Perhaps it will convert you.

#111 Tater on 10.12.18 at 8:57 am

#109 Raging Ranter on 10.12.18 at 8:23 am
@ #106 John Kenneth Galbraith, the Fed is not, nor does it intend to, sell off its inventory. It is merely allowing maturing treasuries and mortgage backed securities to roll off its books as they mature, without replacement. It has been very transparent about this and the information is easy enough to look up.
—————————————————————–
Whether they let them mature or sell them the effect is the same. The borrower likely needs to refinance and the support bid has been removed. And thus, rates up.

#112 Shawn Allen on 10.12.18 at 8:59 am

The Real Mark’s self destructive behavior

At 48 the Real Mark lectures on the (negative)impact of higher interest rates on banks, insurance companies and pension funds and says:

“Only amateurs think that higher rates are good for banks/insurers/pension funds.”

Presumably he thinks he has done a service by educating the readers and also has impressed them.

I think it more likely that readers think, Mark may be right or wrong but for sure he thinks he is smarter than others and eager to show it and would be a negative person to have around.

I will admit to sometimes acting that way myself. But I learned to tone that way down years ago and look for ways to compliment others or find points of agreement before getting into trying to impose my own view of how things work or should work.

Insulting people is no way to get ahead or even get along in business unless you are already the boss / owner in which case you might get away with it for a while.

It’s sad because Mark, who is clearly intelligent, has displayed his personality in this way on this blog for I think five years or more and all the while often complained about lack of job opportunities in his field. Totally fails to listen to sincere concern about his approach.

#113 TurnerNation on 10.12.18 at 9:28 am

The next time someone complains about Weed smoke remind them this is what you voted for with T2.
The Champange Socialists gotta learn there is consequences in real life to permissiveness (Unlike in school and unions life.)

The anti capitalist/left are a danger to civilization and Our Way of Life and are seeking to destroy us from within. Et tu, George Sorrows??
Homes, hospitals, schools could be left in the lurch and without heating. Dangerous. If only we had more piplelines:

“The Vancouver Sun reports in its Friday edition that FortisBC is scrounging far and wide to keep natural gas flowing to its customers after a massive fire at an Enbridge pipeline near Prince George on Tuesday cut off about 60 per cent of its normal gas supply. The Sun’s Randy Shore writes that with one large pipeline still shut down by the incident, the province’s gas distributor is pulling new supply from an existing east-west pipeline, revaporizing liquid natural gas (LNG) stored on Vancouver Island and is drawing gas back that would otherwise be headed to the United States. The company was able to pull additional gas from Alberta through the Southern Crossing pipeline, which runs close to the U.S. border. Northwest Natural, Puget Sound Energy and Northwest Pipe — which normally receive gas from the Enbridge pipeline — were able to reverse the flow back north. Fortis also pushed gas from its own Mt. Hayes LNG plant on southern Vancouver Island by revaporizing the gas stored there for export and backfeeding it to from the Island to the Lower Mainland. At the Fortis LNG plant, natural gas is cooled until it condenses into a liquid at about 1/600th of its usual volume.”
source: stockwatch .com

#114 Capt. Serious on 10.12.18 at 9:30 am

@ #88 AB Boxster on 10.11.18 at 10:41 pm
The value of the fund continues to fall and the distribution remains the same. So a 5 year bond ETF that pays 2% per year, but has fallen 6% over the past 5 years, is a massive waste of investing dollars.

Better to have bought a 5 year provincial bond at 2% 3 years ago for 10k. At then end of 5 years you have $1000 in interest and 10k principal.

You clearly do not understand what a bond ETF is. The price of the ETF may fall, but the distributions from the ETF will rise as the interest rate on the bonds in the portfolio rises. All other things being equal, if you hold the ETF for longer than the duration, the return you get is insensitive to the changes in interest rates.
In the case of holding an individual bond you get your principal back but you are holding at a fixed interest rate the entire time. Essentially you are looking at two sides of the same coin. There is no free lunch.

#115 Tim on 10.12.18 at 9:39 am

Did you guys see this one? Assessed for $2.6 million and sold for $550k….and people wonder if there is a slow down in real estate in SK.

https://www.cbc.ca/news/canada/saskatchewan/kinistino-mansion-auction-sold-1.4859360

#116 oncebittwiceshy on 10.12.18 at 9:42 am

The Real Mark: “Only amateurs think that higher rates are good for banks/insurers/pension funds.”

<<<<<<<<<<<<<<<<<

Actually Mark, higher interest rates are very good for Pension Plans because it reduces the liabilities for said plans.

Most plans have shorter term duration bonds which would be minimally impacted by the higher rate and the offset of lower liabilities would be a godsend.

In effect you would end up with possibly lower assets but lower liabilities.

#117 Rob on 10.12.18 at 9:58 am

Linda – #196

There is no doubt as to which party will win the next election in Alberta.

The NDP had an excellent opportunity to show what they could do to help Albertans.

Instead they have made quite a mess of things.

UCP – 80% of the popular vote in the next election.

Albertans are hard working gregarious people.

The social experiment is over…and hopefully for the rest of Canada as well.

We should be a great and prosperous country. Instead we allow socialists and radical environmentalists to have their way.

The time of reckoning for these two entities is here.

I believe Canadians have had enough.

Right wing populism steamrolls across Canada!

#118 The Real Mark on 10.12.18 at 10:01 am

“#112 Shawn Allen on 10.12.18 at 8:59 am
The Real Mark’s self destructive behavior”

*sigh*. Don’t you get tired of making uncalled for personal attacks which have little to no basis in reality?

Do you have anything to say in response to my argument that the market conditions that enabled systemic FIRE sector outperformance in the economy (falling long-term interest rates), will be the FIRE sector’s undoing as long-term interest rates rise? And other sectors of the economy take leadership?

It really speaks to your character, unfortunately, that you’d pollute your posts with your private thoughts on me, rather than address what you may perceive to be inaccuracies in my argument. I’d almost have to say, you’re unfortunately coming off as being slightly obsessed with me, and certainly not in a good way.

#119 dharma bum on 10.12.18 at 10:01 am

Don’t sweat it dogs.

2 or 3 good market rally days, and we’re all back in business!

Stay the course.

In the meantime, buy.

Works every time.

#120 Karl on 10.12.18 at 10:02 am

Why is everyone so obsessed about timing everything? Investing should be long term, be it stock markets or real estate.

You only lose when you sell. Stay put in down markets and in fact get more aggressive. History has shown this to be the consistent winning strategy.

#121 Gravy Train on 10.12.18 at 10:08 am

#88 AB Boxster on 10.11.18 at 10:41 pm
“[…] I think that 40/60 equity/fixed is a far safer mix in today’s investing world.[…]” Why?

“[…] Sure, real bonds may lose market value but you will always get your face value back when the bond matures plus all the interest in between.[…]” (Unless the company issuing the bonds goes bankrupt or otherwise fails to pay.) Further, coupon rates of newer bonds these days are higher than those of older bonds. Why hold the older bonds—esp. those with longer maturities? :)

“You don’t buy bonds for price appreciation. You buy them for income and safety and capital preservation.[…]” You can expect price appreciation when buying bonds with high coupon rates while the market interest rate is falling; conversely, you can expect capital destruction when buying bonds—esp. those with long maturities and durations—with low coupon rates while the market interest rate is rising. Finance 101. :)

“[…] Yes the bond funds should fall due to bond values falling in a rising rate environm[en]t. But their return should rise accordingly.” The bond yield does rise because—while the average coupon rate stays the same—the price of the bond fund falls. :)

“Yet this does not happen with the ETF funds I have owned.” AOTBE, the bond yield of the fund equilibrates to the market interest rate via changes in the price of the bond fund.
https://www.sec.gov/files/ib_interestraterisk.pdf

“The value of the fund continues to fall and the distribution remains the same. So a 5 year bond ETF that pays 2% per year, but has fallen 6% over the past 5 years, is a massive waste of investing dollars.” In a low-interest-rate environment, you should look at the bond fund’s duration.

“[…] [A] bond fund with 10-year duration will decrease in value by 10 percent if interest rates rise one percent. On the other hand, the bond fund will increase in value by 10 percent if interest rates fall one percent.[…]

“Variables such as how much interest a bond pays during its lifespan as well as the bond’s call features and yield, which may be affected by changes in credit quality, play a role in the duration computation. Maturity—the length of time before the bond’s principal is repaid—also plays a role.

“To find your bond fund’s duration, look for it in the fund’s Fact Sheet, often in the Bond Holding Statistics section. Finding the duration of an individual bond can be a bit trickier. Start by asking your investment professional or the bond’s issuer. There are also online calculators available that compute an individual bond’s duration.”
http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio

“Better to have bought a 5-year provincial bond at 2% 3 years ago for 10k. At then end of 5 years you have $1000 in interest and 10k principal.” You could have done better with a low-cost equity index fund.

“Sure they don’t fluctuate like equities, but to achieve nothing at all for your 5 years of investments is kind of absurd.[…]” Agreed. :)

#122 John Kenneth Galbraith on 10.12.18 at 10:48 am

#110 Cultured

Another right wing whacko trying to convert me. You are ignorant of the economic system you inhabit. Canada is a mixed market economy cowboy, not a socialist state. When the 2008 financial crisis hit, the capitalists of Wall Street became Keynesians and asked for massive government bailouts. We have not had another Great Depression because of the economic system Canada set up immediately after Keynes delivered his speech at the Bretton Woods conference in 1944. Canadian officials couldn’t get back to Ottawa fast enough to implement their new system. For the record, I am not a socialist and have done very, very well in the private sector. Classical economics was given a decade to solve the problems of the Great Depression and FAILED conclusively. It was Keynes that had to show a new approach. Do some reading before you spew out your nonsense.

#123 John Kenneth Galbraith on 10.12.18 at 10:53 am

#110 Cultured

“Look at the great Doug Ford and what he has to do now to make things right in Ontario.”

Guess your form of capitalism has no problem with Mr. Ford’s support of dairy welfare in the form of a supply management system with fixed prices for wealthy dairy farmers…

#124 Doug in London on 10.12.18 at 10:58 am

Yup, when you see such panic in buying it’s a signal you’re at or near the top. Say, could I interest anyone in some premium priced tulip bulbs or Nortel shares? How about Bitcoin?

As for the picture, I’m reminded of the classic Neil Young song with the words: King went runnin’ after deer, wasn’t scared of jumpin’ off the truck in high gear!

#125 Fred on 10.12.18 at 11:06 am

John Kenneth Galbraith

Get out of your parents basement and get a job.

You postulate outdated theory.

Socialists like you need to take your ilth and drain another countries economy.

#126 Right Way not the Wrong (Socialist) Way on 10.12.18 at 11:29 am

John Kenneth Galbraith

I think if we keep after him guys he is going to recite his entire economics manual.

#127 Shawn Allen on 10.12.18 at 11:30 am

A last ever? response to Mark, scroll if not interested

118 The Real Mark on 10.12.18 at 10:01 am
“#112 Shawn Allen on 10.12.18 at 8:59 am
The Real Mark’s self destructive behavior”

*sigh*. Don’t you get tired of making uncalled for personal attacks which have little to no basis in reality?

Do you have anything to say in response to my argument that the market conditions that enabled systemic FIRE sector outperformance in the economy (falling long-term interest rates), will be the FIRE sector’s undoing as long-term interest rates rise? And other sectors of the economy take leadership?

*******************************
Mark, I don’t have a very strong opinion on the impact on banks, insurance and pensions. Mixed impacts. Pensions get a big boost from lower present value of liabilities but take a hit on bonds and probably other investments as rates rise. But then higher yields ahead help going forward. Same for life insurance I think.

Banks will do okay unless it gets really ugly as defaults will not likely get out of hand. They don’t mark to market the value of future loan payments so no hit there on the books. Interest spread will increase because a good chunk of deposits (chequing accounts) will stay near zero paid and interest on loans will increase. Bank share prices should fall as interest rates rise all else equal but not sure their profits will take much hit. Insurance shares also fall as do the prices of ALL investments, all else equal as rates rise. But all else is not equal.

I am not trying to attack you. Have tried to suggest sometimes gently sometimes roughly that you come a cross as a real know-it-all Ahole and I seriously think it has impacted your career. I have long suspected that there may be no such thing as constructive criticism as the recipient usually reacts defensively as you do. It’s just hard to stand by and see self-destructive behavior from you all these years.

Shall we both agree to never again post a response to each other? I am in if you are.

Best wishes.

#128 Tina Annapolis on 10.12.18 at 11:31 am

Gravy Train

You can get 3.75% to 3.8% 5 year GIC rates, 4.1% if you compound them. Why bother with 2% 3 or 5 year bond rates.

#129 whiplash on 10.12.18 at 11:44 am

#91 WUL
This is serious stuff. As a Canadian taxpayer, with Trudeau’s $4.5 billion purchase of TransMountain Expansion pipeline……..

Taxpayers own a 65 year old pipeline. The estimated cost of twinning is $7.4 billion and climbing add on the $2.1 billion in financial assurance that has to be put up for land based spills, then add on the $1.5 billion for so-called ocean protection plan every five years and in addition to the existing $1 billion in financial assurance that has to be increase by another $1.1 billion as a condition of the pipeline expansion.

#130 Greg Franklin on 10.12.18 at 11:51 am

Central Banks are part of the communist manifesto, Karl Marx. Need to say more!

#131 IHCTD9 on 10.12.18 at 12:00 pm

Hey Garth, we’re considering ditching [email protected] – we have a few questions – what email should we contact you at?

Thanks!

You might be too scary to work with. In any case, I am at [email protected]. – Garth

#132 Gravy Train on 10.12.18 at 12:08 pm

#128 Tina Annapolis on 10.12.18 at 11:31 am
“Gravy Train, you can get 3.75% to 3.8% 5 year GIC rates, 4.1% if you compound them. Why bother with 2% 3 or 5 year bond rates.”

Tina, it was AB Boxster’s idea to hold or buy bonds—not mine; in fact, I don’t own any bonds or bond funds. I agree with Garth that interest rates have nowhere to go but up! I was merely pointing out to AB Boxster how dangerous it is to hold or buy bonds or bond funds these days—esp. those with high durations.
http://www.finra.org/investors/understanding-bond-risk
http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio

BTW, do you come here often? :)

#133 AB Boxster on 10.12.18 at 12:19 pm

#121 Gravy Train on 10.12.18 at 10:08 am

Do we continually need you to show your superior intellect on the blog? Maybe, instead of spewing details from your finance textbooks, you can actually address the commentary being made.

Unless the company issuing the bonds goes bankrupt or otherwise fails to pay

Really.?
How many federal or provincial bonds have failed over the past 100 years?
There are corporate and government bonds right?
Finance 101


You can expect price appreciation when buying bonds with high coupon rates while the market interest rate is falling

Um, no kidding.


The bond yield does rise because
while the average coupon rate stays the same
the price of the bond fund falls.

In theory, that’s how its supposed to work.
But, of course that the world does not allows align with your theoretical views, right?

My point, if you actually read the post, is to point out that overall yield of the ETF (not individual bonds) falls in a higher interest rate environment.


Better to have bought a 5-year provincial bond at 2% 3 years ago for 10k. At then end of 5 years you have $1000 in interest and 10k principal.

You could have done better with a low-cost equity index fund.

Scuse me?
Why would anyone buy a low cost equity index fund as part of their fixed portion of a balanced portfolio?

Do you need to read your textbook again to understand definitions of equity investments vs fixed income investments?

I’ll simplify the post for you.

For the past 3 years the value of bond fund XSB has declined by 5.22%.

The total yield on this Fund according to Morningstar was:

2.33% – 2015
.76% – 2016
-.07% – 2017
.44% (ytd) – 2018.

So total returns are falling massively in a rising rate environment.
Are individual federal or provincial bonds paying 0% or negative interest like the ETF fund is returning?

The point is that it seems that owning individual bonds in a rising rate environment seems better than holding the ETF.

#134 John Kenneth Galbraith on 10.12.18 at 12:30 pm

#125 Fred on 10.12.18 at 11:06 am
John Kenneth Galbraith

“Get out of your parents basement and get a job.You postulate outdated theory.Socialists like you need to take your ilth and drain another countries economy.”

You are a moron Freddie. My basement has more value than you will ever see in your sad life. I won’t waste any more time responding to a loser who doesn’t even understand the difference between a mixed market economy and socialism. What should I expect from the likes of you. Now go back to your job flipping burgers at McDonalds you economic moron.

#135 Stan Brooks on 10.12.18 at 12:34 pm

#122 John Kenneth Galbraith on 10.12.18 at 10:48 am

You are insane.

Keynes has nothing to do with the end of the Great Depression in the 1930-es.

https://www.thisismoney.co.uk/money/news/article-1646504/Keynes-Did-he-really-help-end-the-Depression.html

The association of excessive government spending in order to boost demand as an idea with Keynes is a fallacy. In ancient Rome emperors like Caligula and Claudius were already doing it with public projects with money borrowed from the banks in the conditions of gold/silver standard, loans guaranteed with public land. Read history.

Mixed market economy? All modern economies are mixed market economies.

Canada is classical oligopoly system. All the sectors are dominated by a few key players who practically control the markets, the rest like farming is strongly regulated.

Foreigners are given no access to local markets, except stuff that we do not produce, the main export is resources and cheap labour.

You are owned by the major players with very limited options to enter any market due to either heavy regulations or high entry cost.

And you have seen no crises as we have not started deleveraging yet.

Solving all problems by deficit spending and money printing is wrong, if not for the ‘solutions’ we wouldn’t have the problems in 1st place.

The great depression was not a failure of the gold standard but of the excessive credit, the same problem we have today. The idea that the Business/Credit cycle can be suppressed by extra borrowing and government spending is stupid.

All ultra-excessive borrowing at the end of the long credit cycle (read Ray Dalio) is resolved by a depression, just this time it is inflationary.
So we pretend there isn’t any.

Excessive debt has to be cleared somehow and the idea that it can be done with more credit is insane. It can be cleared with debt defaults or inflation. The idea that you can consistently ‘grow’ economy with more and more debt is wrong. You just add more and more pressure to the system and it eventually explodes.

We won’t escape our inflationary depression.

#136 AB Boxster on 10.12.18 at 12:34 pm

#132 Gravy Train on 10.12.18 at 12:08 pm

Tina, it was AB Boxster’s idea to hold or buy bonds—not mine; in fact, I don’t own any bonds or bond funds.

————————————————-
So, you have a balanced and diversified portfolio but you have no bonds at all.

Uh, huh.

So your fixed income, if you have it at all is made up of preferreds and dividend equities?

Or you have a magical safe investment other than bonds or bond funds that make up your fixed portion?

Self directed Mortgage perhaps?

Or maybe your not really balanced or diversified.

Not saying holding all equities is not a strategy.

But it sure is not balanced and diversified.

#137 JD on 10.12.18 at 12:47 pm

#92 Smoking Man on 10.11.18 at 11:04 pm

John in Mtl on 10.11.18 at 8:38 pm
Holy Toledo, Batman; that photo…
is that Smoking Mans’ pickup?
……

That was yesterday when I was competing with TFW as a code Smith for monapolistic global commie corps that take orders from Soros

This blog has reach.

Now I’m Dr Herdonomics. In a high density town of lear jets, lambos and a spirit of free enterprise, kill or be killed. I love it.

If you call heads or tails accurately the way I do, its in the archives . They come looking for you.
Thanks Gartho and this pathetic blog.

Living the dream, blue skies and green palm trees everyday.. 30% tax is a hell of a lot better than 54%. Especially on what I’m nailing now

0x0x0x love you all.
____________________________________________

Oh please explain yourself and show us the supporting data to prove it. There are tons of factors involved in tax comparisons.

The average top marginal tax rate on wage income in Canada is 45.7 percent. In America, it’s a bit higher: 47.9 percent. The rate is highest in California (51.9 percent) and Quebec (50 percent), and it’s lowest in Alberta (39 percent) and Texas, Washington and Wyoming (42.8 percent), according to a Policy Alternatives report from 2015.

https://www.huffingtonpost.ca/2018/05/03/income-taxes-canada-lower-us-oecd_a_23426460/

#138 Cultured on 10.12.18 at 1:10 pm

John Kenneth Galbraith

Where did I say that I am a Capitalist?

You are a Socialist, an Ageist and apparently presumptuous.

Don’t deny being a socialist….you reek of it!

#139 The Republic of Alberistan on 10.12.18 at 1:12 pm

“The price of Western Canadian Select (WCS) crude fell to a record US$52.50 per barrel below the price of Northern American benchmark West Texas Intermediate in trading Thursday”..

We luv ya T2 ..oh glorious leader… billions and billions of a discount.

#140 IHCTD9 on 10.12.18 at 1:30 pm

#131 IHCTD9 on 10.12.18 at 12:00 pm
Hey Garth, we’re considering ditching [email protected] – we have a few questions – what email should we contact you at?

Thanks!

You might be too scary to work with. In any case, I am at [email protected]. – Garth
_______

I’m better in real life than I am on the WWW. :)

Thanks, we’ll be in touch.

#141 Blacksheep on 10.12.18 at 1:33 pm

Shawn # 127,

“Shall we both agree to never again post a response to each other?”
———————————————
Shawn, you and Mark can of course agree to what ever you like…

But this thinking has been suggested to me before and runs tangent (my opinion) to what this comment section is about.

I came here to glean knowledge from Garth AND the Dogs. I post comments based on my beliefs. If my rational is flawed, I whole heartedly invite anyone to show me the errors in my thinking so I (and others) can form a more accurate picture of how things actually function.

If a party is bold enough to share his / her personal opinion or sourced information with 10’s of 1000’s of strangers, said party should also be willing to respond like an adult and defend their stance. If one is too emotionally tender to comfortably accept criticism, stay the frig off a public forum.

#142 AB Boxster on 10.12.18 at 2:17 pm

128 Tina Annapolis on 10.12.18 at 11:31 am

You can get 3.75% to 3.8% 5 year GIC rates, 4.1% if you compound them. Why bother with 2% 3 or 5 year bond rates.
——————–
Sure you can get these from obscure financial institutions.
Or you can get 2% GICs from the major banks.

You can get 2.5% 5 year provincial bonds, or get a 10% rate in corporate junk bonds.

its all about risk and return.

The higher the risk in the fixed investment, the greater the return.

It’s pretty simple.

#143 n1tro on 10.12.18 at 2:26 pm

yesterday….
“I am light years away from the poor folks who have to eke out an existence on minimum wage but I fully support their right to it.”

today…
“My basement has more value than you will ever see in your sad life…Now go back to your job flipping burgers at McDonalds you economic moron.”

Add in calling people with differing opinions a “clown”, “Gramps”, “moron”…

^^^ Prime example of Virtue Signaling Liberal Douchebag. IMHO.

#144 Fred on 10.12.18 at 2:48 pm

#125 Fred on 10.12.18 at 11:06 am
John Kenneth Galbraith

“Get out of your parents basement and get a job.You postulate outdated theory.Socialists like you need to take your ilth and drain another countries economy.”

You are a moron Freddie. My basement has more value than you will ever see in your sad life. I won’t waste any more time responding to a loser who doesn’t even understand the difference between a mixed market economy and socialism. What should I expect from the likes of you. Now go back to your job flipping burgers at McDonalds you economic moron.

Well LOL you are somewhat close there JKG the socialist. I use to own 5 McDonalds in leftist BC.

I actually don’t have a basement. I own a 5.3 acre high end condo development in Calgary.

I have to agree with the other people that are posting here. You are definitely a socialist!

Maybe you don’t live in your parents basement but I bet you want to!

LOL

#145 mike from mtl on 10.12.18 at 2:48 pm

#133 AB Boxster on 10.12.18 at 12:19 pm
….
Are individual federal or provincial bonds paying 0% or negative interest like the ETF fund is returning?

The point is that it seems that owning individual bonds in a rising rate environment seems better than holding the ETF.
////////////////////////////////////////////////////////////////

Have to agree with you there, when rates were falling bond funds (ETF or Mut) were an okay cheap way of diversifying bonds. On the way up however, I agree, you get nailed with capital losses. Without doing specific calculations on my holdings, I’d guess -1%/yr. Whereas if I simply bought the real short ones to maturity be +1.x%/yr

Bond funds act like a stash of various issues constantly measured by current market value, never to maturity. Plus when they mature you still have cap gains (not so much these days) and income taxation.

Preferreds are even worse IMHO, even with raising yields they’re not moving much and as this week’s witness aren’t safe at all. Probably a case of too much diversification.

Probably going to just buy RBC and ENB prefs as funds of which are SUPER dangerous to own.

#146 Alistair McLaughlin on 10.12.18 at 2:49 pm

#137 JD, do not quote the Huffington Post as a source of reliable tax information. Here are the top marginal rates in 2018 for the 4 most populous provinces:

Ontario – 53.53%
Quebec – 53.31%
BC – 49.8%
Alberta – 48%

Source: Taxtips.ca

The thresholds were said top marginal rates kick in range from around $200K (Quebec) to slightly over $300K (Alberta). I’ll leave you to look up the rest.

#147 Stan Brooks on 10.12.18 at 3:35 pm

https://ca.finance.yahoo.com/news/darkest-days-canadian-crude-plunges-u-s-benchmark-183701331.html


The price of Western Canadian Select (WCS) crude dropped more than US$55 per barrel below North American benchmark West Texas Intermediate on Friday. The widening discount is evidence the commodity may be in its “darkest days,” according to one industry analyst.

Dan McTeague, senior petroleum analyst at GasBuddy.com, points to a confluence of factors including U.S. refinery outages and issues with Enbridge Inc.’s (ENB.TO) plan to replace its aging Line 3 pipeline. However, he says none are more pressing than the lack of new takeaway capacity to relieve the growing crude glut in Western Canada.

“Even basket-case Venezuela can get $67 for it’s heavy oil. We’re lucky to get $15. That should be a national disgrace,” he told Yahoo Canada Finance on Friday. “We’re in this situation primarily because we have allowed ourselves to find our capacity boxed in with no viable short-term, reasonable solutions.”

WCS, Canada’s main grade of crude, has seen a dramatic decline in recent months, plunging below $16 a barrel. Meanwhile, WTI prices rallied to a recent peak above $76 earlier this month, before retreating to about $71.

#148 Gypsy on 10.12.18 at 3:45 pm

What’s with this John Kenneth Galbraith guy insulting everyone.

Wow – not nice!

#149 Debtfree on 10.12.18 at 3:54 pm

Is anyone watching the gong show that has erupted in Kitimat and area ? 40 billion dollars changes everything . western investor has a story , one of many . So far , this is the most startling example of Garth’s meme of real estate being local that I’ve seen . What a frenzy .

#150 Braj on 10.12.18 at 3:59 pm

If you want a fool proof way to detect bullshit from commentators in this steerage section you just have to see how much they are talking others down. The more they do, they dumber they are.

#151 Gypsy on 10.12.18 at 4:01 pm

Who is this John Kenneth Galbraith guy anyways and why does he have three names?

#152 Stan Brooks on 10.12.18 at 4:02 pm

Somebody here was arguing that gas prices would not go to $ 2 CAD by 2023 in order to justify 8-10 % yearly increase.

Guess what? It is already close to $ CAD 1.70 in BC.

https://www.vancouverisawesome.com/2018/10/11/metro-vancouver-gas-prices-double-saturday/

#153 Shawn Allen on 10.12.18 at 4:08 pm

Because there is no “we”

Stan, just above quoted Dan McTeague

“Even basket-case Venezuela can get $67 for it’s heavy oil. We’re lucky to get $15. That should be a national disgrace,” he told Yahoo Canada Finance on Friday. “We’re in this situation primarily because we have allowed ourselves to find our capacity boxed in with no viable short-term, reasonable solutions.”

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I am a broken record on this. But of course there is no “we” in economics. A relatively free market is the antithesis of a “we” mentality.

It can be argued that all Canadians are hurt to some degree by the big discount. That’s true.

But only very few of “us” Canadians are hurt a lot immediately by a low price for Canadian heavy oi.

Is a teacher or other government worker really going to see a noticeable cut in wages or higher taxes due to this? Certainly not immediately. Maybe not ever.

Is my defined benefit Alberta pension going to be cut? I would certainly guess not.

So yeah, someone has to push for pipe access and that must be those immediately impacted by the discount. Governments have to decide how strongly they will push for pipelines.

Everyone has a different level of financial interest in the matter and a different level of emotional support or opposition.

There is no national disgrace because there is no one public interest here. The public is diverse and has diverse interests economically and emotionally.

To suggest that “we” Canadians are economically in it together is simply not very true at all. Teachers know this. Those in favor of the pipelines (including me) should know it too. To suggest that those opposed to pipelines are jut hurting “us” collectively or themselves is simply wrong.

#154 Gravy Train on 10.12.18 at 8:22 pm

#136 AB Boxster on 10.12.18 at 12:34 pm
“So, you have a balanced and diversified portfolio but you have no bonds at all.” And liquid. 68/32 equities/cash. :)

#155 Gravy Train on 10.13.18 at 7:23 am

#133 AB Boxster on 10.12.18 at 12:19 pm
“I’ll simplify the post for you. For the past 3 years the value of bond fund XSB has declined by 5.22%.” Yes, according to its Fact Sheet, XSB has an effective duration of 2.76 years, so—if the market interest rate rises by one percent over the next year—you can expect the value of the fund to fall another 2.76 percent.
https://www.blackrock.com/ca/individual/en/literature/fact-sheet/xsb-ishares-core-canadian-short-term-bond-index-etf-fund-fact-sheet-en-ca.pdf

“Are individual federal or provincial bonds paying 0% or negative interest like the ETF fund is returning?” Individual bonds have duration, and are sensitive to interest rate changes. In a rising-interest-rate environment—whether you’re talking about bonds or bond funds—you will take a hit. Get it? No? I give up! :)

“The point is that it seems that owning individual bonds in a rising rate environment seems better than holding the ETF.” Good luck with that! :)