The advice

Well, now you know why this blog is so boring. Because this stuff works. Here we go again:

(a) Always have a balanced and diversified portfolio
(b) Never sell into a storm.
(c) Ignore volatility. It’s noise.
(d) Never exit an asset class.
(e) Don’t try to time the market. You can’t.
(f) Ignore those who come here to tell you to (i) go to cash, (ii) buy gold, (iii) buy Bitcoin, (iv) buy GICs or (v) run screaming
(g) Invest in quality ETFs in the correct weightings, rebalance once or twice a year and ignore whatever the hell the Dow is doing.
(h) Never watch BNN. Like, never.

On Wednesday US stock markets (ours was closed – big day tomorrow) had the best rally in a decade. The Dow added over a thousand points as it and the S&P gained 5% in a single session. Oil surged ahead almost 10% in a historic romp. After being pummeled lower by close to 20% over the last two months, and losing 8% in just two sessions, stocks suddenly looked too cheap to pass up. Reality set in. Meanwhile Donald Trump was out of the country, stopped tweeting about financial stuff and – before he left – said he really did have confidence in the Fed.

Nice retreat. Just what markets needed to go with news of galloping retail sales that had companies like Amazon exploding higher. Also dawning on everyone after the Christmas break was the fact there’s no fundamental reason the selling should continue.

After all, look at the numbers.  The US economy is growing by a robust 3.4%. Unemployment is at a 50-year low of just 3.7%. Corporations have been making a ton of money. Central banks have indicated they’ll be throttling back on rate hikes. There are more job openings than applicants to fill them. Inflation is tepid and under control. In short, there is no recession looming. There never was. And so long as these conditions continue, the next one will not come soon.

Never look back: US market adds record 1,000 pts

Problems? Of course. Always got ‘em. Trump’s unpredictability and tactics. Trade wars. Brexit, Macron and Chinese growth. Political polarization and gridlock. Rising rates. And epic debt.

But that’s exactly why a correct portfolio is built as I have suggested. Balance means having 40% of so in safe assets (government, provincial and corporate bonds as well as high-yield debt and preferreds) and the rest in growth (equity-based ETFs with exposure to Canada, the US and international markets, plus REITs). As last week showed, when stocks plop, bonds plump and volatility is lessened.

Diversification means no individual stocks, but exchange-traded funds instead. No mutuals, of course, unless you like being savaged by fees or your BIL sells them (still refuse). Don’t overweight Canada just because you live here. And when you rebalance do the opposite of what your gut tells you – sell off winners that become overweight and buy losers with the profits. Remember – you have no idea what’s coming. Next year Bay Street could roar while Wall Street worries about the 2020 election. Bonds could melt up. Emerging markets surge back. You have no idea, so stick with the plan.

And did I mention never watch BNN?

93 comments ↓

#1 Penny Henny on 12.26.18 at 6:19 pm

Some random thoughts.
-Why, who, what happened to the CDN dollar?
Down 2.5 cents and now back up. What happened.
-US markets up 5% in one day, is this some sort of a record?
-Trump says it’s a good opportunity for investors and the markets go wild. Lots of money to be made off his tweets. Up or down.
-Hey Smoking Man where is the link to a FREE copy of your book as promised on many occasions.
-First, or second

#2 ian ryan on 12.26.18 at 6:20 pm

Thanks for all the great advice throughout the year.
happy xmas and a prosperous new year to one and all.

#3 Troy McClure on 12.26.18 at 6:22 pm

Point g, subpoint 2: “rebalance once or twice a year”

I rebalance once a year, on my son’s birthday. By forcing myself to do it on a certain day of the year, it keeps me from trying to time the market (see point e). I don’t know if it’s a good idea, or even if it works for me, but it lessens the stress.

#4 Eddie on 12.26.18 at 6:25 pm

Dead cat bounce, bigger the bounce harder the fall, totally algos, S&P up 4.96%, DOW up 4.98% and Russell up 4.96%, weird.

#5 Smoking Man on 12.26.18 at 6:31 pm

It’s finally here. See what your homes sold for.

http://Www.bungol.ca

Merry Christmas Doggies.

#6 acdel on 12.26.18 at 6:39 pm

Yep, Sorry Felix, although Garth did post a very flattering picture of you holding your pussy cat yesterday; just get a dog, let them lick your turkey, let the markets do what they do (although what a money maker today was on the Dow, wow). People who sold in a panic, well, just read the pic Garth posted!

Time to walk off all this Christmas Holiday extra calories consumed; with a very hyperactive lab that loves to chase Felixes’, all is good, just kidding around! :)

#7 akashic record on 12.26.18 at 6:44 pm

Trump out of the country is a nice try of objective analysis, but I still prefer the crazy views of ZH:

Pension Panic Sparks Biggest Dow Point Rise In History
https://www.zerohedge.com/news/2018-12-26/pension-panic-sparks-biggest-stock-buying-spree-3-years

Why Stocks Are Soaring: A Massive, $64 Billion Buy Order
https://www.zerohedge.com/news/2018-12-26/why-stocks-are-soaring-massive-64-billion-buy-order

#8 Nat on 12.26.18 at 6:46 pm

What do you consider overweight in Canada when you live there? 30% is reasonable?

Too fat. – Garth

#9 Figmund Sreud on 12.26.18 at 6:49 pm

And did I mention never watch BNN?
————————————
… in fact, Be Terrified:

https://thereformedbroker.com/2018/12/26/be-terrified-3/?utm_source=dlvr.it&utm_medium=twitter

Best,

F.S. – Calgary, Alberta.

#10 Spectacle on 12.26.18 at 6:54 pm

“… sell off winners that become overweight and buy losers with the profits”

So please do tease us with some details regarding this specific topic. Call it a prelude to another weekend blog post by the ever vigilant and detailed help.

M

#11 HoweStreet.com on 12.26.18 at 6:56 pm

Ross Kay on HoweStreet.com Radio:
Why is Warren Buffet Laughing all the Way to the Bank?
Best Real Estate prediction for 2018 made last year.

https://www.howestreet.com/2018/12/24/why-is-warren-buffet-laughing-all-the-way-to-the-bank/

#12 arfmoocat on 12.26.18 at 7:04 pm

Anything worth while playing in the Canadian markets?

I can’t take the 30% hit just for the exchange rate to play the U.S. markets.

#13 BC_Doc on 12.26.18 at 7:05 pm

2nd biggest single gain day in the Dow?
October 13, 2008

At the time, investors still had five months of down ahead of them.

Dead cat bounce? We’ll see.

Merry Christmas Garth.

https://en.m.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

#14 Ernie on 12.26.18 at 7:06 pm

George Carlin on stupid people
https://www.youtube.com/watch?v=8rh6qqsmxNs&feature=share

#15 AACI Home-Dog on 12.26.18 at 7:07 pm

Methinks Trump & his buddies are making a whack on the futures market or such every time he plans to make these “announcements”…

#16 TDS on 12.26.18 at 7:10 pm

DOW +1086. It’s Trumps fault — he said ‘buy the dip.’

#17 Dan on 12.26.18 at 7:11 pm

Never watch BNN? You’re missing out on the beauteous Catherine Murray. She’s hot, she’d make a good Amazon for you. Do you know her? Has she ever interviewed you?

#18 AK on 12.26.18 at 7:14 pm

“And did I mention never watch BNN?”
============================

Agree. All they talk about is Cannabis.

#19 BobC on 12.26.18 at 7:15 pm

I thought for sure since Trump’s tweets caused a “normal”, “healthy” correction of the longest bull market in history you would give a shout out to him for ending it by his tweeting to buy the dip.
I was wrong. He only gets blamed. (TDS)

https://www.bloomberg.com/news/articles/2018-12-26/trump-says-buy-the-dip-and-why-not-at-valuations-like-these

Without the shadow of a doubt he exacerbated the correction and was primarily responsible for the Dec 24 carnage. He’s been trying to walk it back. Maybe just shutting up would be the best strategy. – Garth

#20 Smoking Man on 12.26.18 at 7:16 pm

Penny Henny on 12.26.18 at 6:19 pm

Some random thoughts.
-Why, who, what happened to the CDN dollar?
Down 2.5 cents and now back up. What happened.
-US markets up 5% in one day, is this some sort of a record?
-Trump says it’s a good opportunity for investors and the markets go wild. Lots of money to be made off his tweets. Up or down.
-Hey Smoking Man where is the link to a FREE copy of your book as promised on many occasions.
-First, or second
…..

Gartho Caught me red handed.. I posted a link to a 6 page version of the book. With instructions on where you can buy it.

Nice try on my part. He’s pretty good at keeping this sight spam free no matter how sneaky we get.

Dude it took me 6 years to write it. I’m not putting the full version out there for nothing. Not fair for people who paid.

If you or anyone else is hard done by. Email me, give me your sad story, ill send you a free copy. But if you’re not struggling don’t bother me.

[email protected]

Offer expires at midnight.

Also when socks are selling off USD gets strong. When bought USD gets weak. Crude had a big rally as well. Not rocket science.

#21 Terry on 12.26.18 at 7:18 pm

Great post Garth! I love these “Rip Your Face Off Rallies” after I have been adding to our current positions since October. Buy, hold, collect dividends and other distributions, continue investing when you have more cash ready and re-balance as necessary staying diversified. Wash, rinse & repeat. The markets always come back.

Ka-Ching!

#22 Long-Time Lurker on 12.26.18 at 7:29 pm

#56 Alex in YVR on 12.25.18 at 8:11 pm
Hey blog dogs – any advice for those who do *not* have diversified portfolios? I came to Canada 2 years ago and faced with the situation in Vancouver I had lived minimally and invested all earnings into a tech-heavy portfolio (mostly QQQ/XLK/SKYY but some individual stocks as well; around 100K at this point; down 10K if I were to sell).

I’m not panicking and will not sell but have basically stopped investing at this point. Should I eschew tech completely now and invest in something else (what?) or should I buy the dip, tech included? I feel all of these companies have real value in them and will come back eventually.

>Use the present rally to sell at an opportune time and get your portfolio diversified — Read Garth’s posts. Right now, you’re at the roulette wheel putting everything on Red-30.

http://www.greaterfool.ca/2013/09/27/investing-101/

Investing 101 by Garth Turner
September 27th, 2013

Most people suck at investing. The banks know this. Mutual fund salesguys depend on it. Insurance hawkers, too. Plus the cowboys who flog gold and silver. The vast majority of us make two one of two mistakes. We get greedy and end up taking huge risks. Or we get scared and bury money in dead-end GICs. Either way, we lose.

>If this stock market rally lasts a week or two: It was me — just early. If it doesn’t last: It was the other guy.

>I didn’t look into it but maybe the CAD drop was caused by the USD spiking up with their stock market rally.

#23 rmccam on 12.26.18 at 7:31 pm

Hi Everyone,

Long time reader, first time poster here. I’m 38 without debt and deploying funds for the first time based on the principles of this blog. I want to stay diverse with minimal fuss. I’m just looking for some feedback. How does this look?

• VCN.TO – Vanguard FTSE Canada All Cap Index ETF – 20%

• XUU.TO – iShares Core S&P US Total Market ETF – 20%

• XEF.TO – iShares MSCI EAFE IMI Index ETF – 12%
• VEE.TO – Vanguard FTSE Emerging Mkts All Cap ETF – 8%

• CPD.TO – iShares S&P/TSX Cdn Prefr Shr ETF Comm – 10%
• PFF – iShares US Preferred Stock ETF – 10%
• ZAG.TO – BMO Aggregate Bond ETF – 20%

Thank you kindly.

#24 TRUMP on 12.26.18 at 7:33 pm

What’s BNN ????

#25 Lawnboy on 12.26.18 at 7:38 pm

All the best Garth and puppies…
Keep her going…luv the advice, planning to rebalance and rethink “the big giant egg”.

Thanks for all you do.

Lawnboy

#26 Godth on 12.26.18 at 7:46 pm

we took our 14 month old pooch to my mom’s for dinner, he’s been there before plenty. this time he promptly lifted his leg and marked her couch as his. she’s a complete clean freak, so it was scotch guarded. i chalk it up to the same phenomenon whereby people that hate cats always wind up with the cat pestering them. worst nightmares realized sort of thing. then again we did buy him off a crazy russian woman so it could have been a putin plot to sow discord.

#27 Interstellar Old Yeller on 12.26.18 at 7:57 pm

Pleasantly surprised to find new daily posts when I check, but you deserve a day off somewhere, Garth! Happy Boxing Day.

#28 Mike on 12.26.18 at 8:03 pm

Hey Garth, what is the cause of your disdain for BNN?

#29 Smoker's Book on 12.26.18 at 8:08 pm

I gave a copy of his sordid book to the neighbour’s pit bull to read, and he attacked the content thereof with no mercy. Was it the spelling errors, foul words, or the aliens from another world? The pages went flying like a snow storm, and the barking never ended, keeping all awake for hours.

#30 domain on 12.26.18 at 8:12 pm

Two words for today.

Bull Trap.

Better value ahead, but at much lower prices.

#31 Mirza on 12.26.18 at 8:12 pm

Million$$$ Question is who was buying today when Funds mangers were holidays.These days market always trade in thin and no volatility. who was buying ????

#32 Balmuto on 12.26.18 at 8:45 pm

Bear market rallies are always the sharpest.

Just sayin’.

#33 Gogo on 12.26.18 at 8:51 pm

Dead cat bounce

The deep wisdom of the comment section on full display tonight. – Garth

#34 WhichIsIt on 12.26.18 at 8:56 pm

You tell us to ignore the Dow and then brag that it has gone up 1000+ points. Which is it?

I said all major markets advanced, which they did, as painful as that was for you. – Garth

#35 Neil Stan on 12.26.18 at 9:05 pm

“And did I mention never watch BNN?”

What about when Ryan is on?

#36 JSS on 12.26.18 at 9:09 pm

“And did I mention never watch BNN?”

BNN or Bart’s Neverending Network was a Dutch public broadcasting association supported by Netherlands Public Broadcasting. BNN was founded in 1997 by Bart de Graaff, Gerard Timmer and Frank Timmer and targeted teenagers and young adults.

#37 For those about to flop... on 12.26.18 at 9:18 pm

CONFIRMED PINK SNOW.

As the bottom fell out of the market during the summer and we crashed through the million marker and then bounced around the 900k market for a starter home in Vancouver people said only old time purchases were selling and still making good coin.

While true to an extent,I also saw a different side of things in my neighborhood,where people were forced to look at different options to stave of taking a loss,two failed flips nearby decided to roll the dice and build new.

This particular case was a sign to me that there was going to be no pity party, and it was game on at the bottom of the market.

Despite buying one of the cheapest detached options in 2016 they still took a loss in early Autumn.

The details…

2171 e 36th ave ,Vancouver

Paid 1.03 January 2016

Sold 975k September 2018

Assessment 1.2

https://www.zolo.ca/vancouver-real-estate/2171-east-36th-avenue

https://www.bcassessment.ca/Property/Info/QTAwMDAwMzdLUg==

P.s ,I am still on holiday but my feet needed a rest.

Liver still o.k.

About the photo…

I toured the Garden District today with Mrs Flop and we came across a house with around 30 of these types of dog signs on the fence.

I gave them to Garth today to use when he was desperate.

He desperate…

M44BC

#38 Smoking Man on 12.26.18 at 9:18 pm

#28 Smoker’s Book on 12.26.18 at 8:08 pm

I gave a copy of his sordid book to the neighbour’s pit bull to read, and he attacked the content thereof with no mercy. Was it the spelling errors, foul words, or the aliens from another world? The pages went flying like a snow storm, and the barking never ended, keeping all awake for hours.

Haha. So that’s what happened to you’re cell phone. Deplorable’s by the Dyslexic Smoking Man has always been an ebook. 20 reviews by verified buys. 19 five star reviews 1 four star review. If you hate my invented character that much buy a copy and write a bad review.
Get revenge.

#39 Leo Trollstoy on 12.26.18 at 9:23 pm

If you sold, you deserve the losses

#40 Herly McSneeth on 12.26.18 at 9:23 pm

Tsx up 2000pts tomorrow? Go Canada goo! Long oil and long Canada.

#41 Dolce Vita on 12.26.18 at 9:47 pm

“…Maybe just shutting up would be the best strategy. – Garth”

Ya, like that’s ‘gonna happen with a brash trash talking New York billionaire celebrity businessman that right now is sitting on top of the World (and running it).

Christmas was 2 days ago Garth…

He did back down as predicted.

#42 reynolds531 on 12.26.18 at 10:03 pm

So is there going to be an arbitrage opportunity tomorrow morning for a few minutes. xsp underpriced for two minutes at opening?

There are lots of USA based assets listed on the tax. The ETFs are still priced at two day old pricing. If I place a market order will it match to a market order sell someone placed Christmas Eve? Or will they artificially price the trade high? Normally they allow premiums and discounts..

#43 Dolce Vita on 12.26.18 at 10:09 pm

I share your enthusiasm for the US Garth but not for Canada, yet.

There is this albatross around the neck of Canada called falling RE asset values and its Wealth Effect. Add to that unprecedented levels of debt, rising rates and an unhealthy RE share of Cdn. GDP…the result will be a made in Canada recession by the end of 1st Qtr 2019.

On US enthusiasm, you forgot the American Consumer. They just handed US Retail their best Christmas in 6 years.

For the time being, the American Consumer seems unconcerned about QE + rising rates. Mr. Market just woke up to that fact.

Having said that, I’d wait until Feb. 2019 before pronouncing judgement (the bills roll in Jan. 2019).

#44 Lee on 12.26.18 at 10:25 pm

Larry Berman says crypto still has 90% downside from here! Then why, even now, are so many people calling it the wave of the future?

I think Maple really cheap right now. Don’t mind being at 30% of my portfolio including some Canadian big bank and enb/trp equity. Just fill in the tfsa with USA Jan1.

#45 acdel on 12.26.18 at 10:25 pm

Never mind BNN or CNN; this is what the future looks like.

https://www.dailymail.co.uk/news/article-6531513/First-grader-gets-caught-camera-mother-using-Alexa-cheat-winter-break-homework.html

#46 slick on 12.26.18 at 11:10 pm

#17 Dan;
I seen a pic of her without make-up.
changed my whole opinion.

#47 You know on 12.26.18 at 11:40 pm

Ah what to believe? fake news?…..suck’en and a blow’en rhetoric?… everybody wants a piece of you . People are fed up!…. keep your cash turn off the TV put a do not disturb sign out on the lawn …Happy New Year

#48 Shank McSocks on 12.26.18 at 11:45 pm

Instead of selling the winners I top up the laggards with dividend income, buying more on sale on a regular basis. The only two guys I know who get a rise out of you selling your winners are the tax man and Garth. My one and only question when buying more is “Will Garth pay his hydro bill next month”? If the answer is yes, I keep buying to enjoy the income stream I receive from the regularity of Garth paying his bills. As it is, not selling kicks Trudeaus tax ghouls in the nutz and I get a dividend tax credit instead of subsidizing that smarmy puke with my taxable capital gain crystalized. Yummy yummy, ENB now yields over 7% with a growing income from American assets, reporting in USD, now thats the global ETF I was looking for.

#49 LG on 12.26.18 at 11:47 pm

@ #5

Thanks Smoking Man….just what I’ve been waiting for.

#50 Not So New guy on 12.27.18 at 12:34 am

This is great. Should be taught in schools. Maybe we could show it to Justin.

https://www.economicprinciples.org/

#51 Frederick F Furtsten III on 12.27.18 at 12:50 am

Garth,

2 words, “Dead cat bounce”
Oops it was 3, never mind!

#52 kommykim on 12.27.18 at 1:29 am

RE: #10 Spectacle on 12.26.18 at 6:54 pm
“… sell off winners that become overweight and buy losers with the profits”

So please do tease us with some details regarding this specific topic. Call it a prelude to another weekend blog post by the ever vigilant and detailed help

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

I have a very simple setup in my TFSA:

20% ZLB (Canadian Low volatility)
40% VXC (USA and rest of world)
40% TDB8150 (TD “High” interest savings fund)

Every year, when I top up my TFSA, I buy/sell enough of each to keep them in the same proportions.
Even simpler would be to buy something like the VBAL ETF.

#53 Lord Humungous on 12.27.18 at 3:19 am

Buying the dip at this point is equivalent to catching a falling knife . The trend is clearly down. Bear markets have the most extreme reversals . The market was papered over back in 2008 at dow 6000. The market is sniffing to test that papered over bottom in the near future.

#54 Howard on 12.27.18 at 4:37 am

Short-covering rally out of short-term oversold conditions. Won’t last. But enjoy.

#55 neo on 12.27.18 at 7:38 am

Simply question Garth, if the economy is so robust and corporations are doing so well. Why the need for all these buybacks? Why not use that money to invest in the economy in plant and equipment to make that money more productive to the economy and not just to prop up their stock price?

S&P 500 broke its long term trend line. Ignore yesterday’s rally. It’s doesn’t mean anything. S&P needs to get back to 2,555 and pass it with conviction to keep this bull market going. 2,600 used to be the floor and now it is the ceiling after falling through 2,530 long term support. If S&P retests 2,530 then we have an air pocket down to 2,100 then 1,800 after that.

I said back in October if 2,500 doesn’t hold because Trump is an idiot and will do things to destabilize the market and he hasn’t disappointed in that regard. We could be heading for 2,100.

Great buying opportunity here. Been putting cash to work all the way down. We haven’t had stocks on sale to this degree since 2008-09. Can see this lasting into February/March.

Companies buy back stock to increase shareholder value. That’s why corps exist – to make money for the people who own them. Duh. – Garth

#56 Tater on 12.27.18 at 7:57 am

#41 reynolds531 on 12.26.18 at 10:03 pm
So is there going to be an arbitrage opportunity tomorrow morning for a few minutes. xsp underpriced for two minutes at opening?

There are lots of USA based assets listed on the tax. The ETFs are still priced at two day old pricing. If I place a market order will it match to a market order sell someone placed Christmas Eve? Or will they artificially price the trade high? Normally they allow premiums and discounts..
————————————————————–
Consistently amazes me how people are investing their own money and don’t understand how the market actually works.

No, the stocks won’t open at a discount. Opening bids and offers will be placed before the open. Inter-listed stock prices will be bid and offered at about the same price when adjusted for the FX. Every equity market making desk has algos to do this automatically for any inter-listed stock they trade. If there is an arbitrage that is greater than transaction costs, it will be recognized and snapped up by a machine before you even see it flash on your screen.

#57 Mike on 12.27.18 at 9:02 am

1000pts, bah. Humbug.

The Dow just completed a large dead cat bounce. Watch for continued lower lows into at least mid Jan. Then a retest of previous highs.

#58 Cristian on 12.27.18 at 9:22 am

“Ignore those who come here to tell you to (i) go to cash, (ii) buy gold, (iii) buy Bitcoin, (iv) buy GICs or (v) run screaming”

All good except for cash and gold. A small percentage of both gold and cash have served me really well in past bear markets or crashes and I intent to keep them both as part of my portfolio to decrease risk.

#59 Wendy Markonich on 12.27.18 at 9:23 am

Why are we still with $1,000,000 CIPF protection against failure, closure of investment, brokerage firms since September of 1999.

They doubled it from $500,000 to $1,000,000 but getting close to 20 years later with all inflation from food prices to gas prices to property taxes, insurance rates, real estate and stock prices all much higher we are still stuck here.

Garth, CDIC went from $60,000 to $100,000, DICO went from $100,000 to $250,000. They should make a historic rise here too, $1,700,000 to $2,000,000 CIPF account protection. Oh, by the way, RRSP, RRIF, RESP accounts have $1,000,000 separate CIPF protection but TFSA accounts do not.

Come on make 2019 the year they increase this CIPF $1,000,000 protection. This is not keeping up with 20 years of purchasing power plus more.

#60 neo on 12.27.18 at 9:57 am

Companies buy back stock to increase shareholder value. That’s why corps exist – to make money for the people who own them. Duh. – Garth

Except they have put those same shareholders at risk by doing this for too long with these rates artificially low. Now all that debt will be a risk going forward. I know why they do it, duh, it’s the extent that they have done it that will be a problem.

#61 reynolds531 on 12.27.18 at 10:01 am

#55 tater

You didn’t really read my question.

I’m talking about ETFs. Not dual listed stocks. They normally do vary slightly from NAV. But sure you’re a genius so let’s go with what you said.

#62 Tater on 12.27.18 at 10:42 am

#60 reynolds531 on 12.27.18 at 10:01 am
#55 tater

You didn’t really read my question.

I’m talking about ETFs. Not dual listed stocks. They normally do vary slightly from NAV. But sure you’re a genius so let’s go with what you said.
—————————————————————
An ETF is just a portfolio of stocks, the mechanics are exactly the same.

And you don’t have to be a genius to know this stuff. But I get that you prefer not knowing. And that’s fine. People like me are happy to trade against you. Good luck.

#63 Howard on 12.27.18 at 10:44 am

Companies buy back stock to increase shareholder value. That’s why corps exist – to make money for the people who own them. Duh. – Garth

——————————–

But is it sustainable to rely on buybacks rather than, you know, innovating? What happens now that the Fed has partially taken away the punchbowl by raising rates somewhat?

Btw 50% of Americans, likely about the same in Canada, do not own stocks or ETFs. Yes I know, you’re going to say they’re stupid for not buying in, etc. But that isn’t my point. All these buybacks have zero impact on half of all households therefore using buyback-driven corporate profits as a barometer for the economy is faulty and perhaps flat out wrong.

So become an investor and stop moaning. – Garth

#64 Godth on 12.27.18 at 11:10 am

the lord giveth and the lord taketh away. today Mammon taketh away.
then there are real problems.
Building blocks of ocean food web in rapid decline as plankton productivity plunges
https://www.cbc.ca/news/canada/newfoundland-labrador/ocean-phytoplankton-zooplankton-food-web-1.4927884

#65 Ex Pat Canuck on 12.27.18 at 11:18 am

What we are witnessing in the markets is the classic signs of the start of a serious bear market. Eerily similar to 2007/08. We will probably see this market move sideways for days/weeks/months (no way to tell how long) followed by another significant leg downward. Then and only then would a smartie pants start buying again…let’s compare notes in the fall of 2019 and see where we are at then. Ugliness in the future, Trump may exacerbate the situation but make no mistake, this is the unwinding of ZIRP, and the Fed has no ammo to shore the freefalling markets up like they did in 08. Be careful, this is your retirement we are talking about here. Take Garth’s advice if you’re a ways away from retiring, but if you are like me being 2-3 years from retirement, consider getting super conservative. Or be prepared to work longer to make up for your losses…

No, this is not 2008. Even if it were, being a few years from retirement you likely have 30 more years of life and will suffer by trying to time markets and staying on the sidelines. Stay invested and ignore the noise. Re-read the rules, and stop being emotional. – Garth

#66 reynolds531 on 12.27.18 at 11:43 am

#61 Tater

Ok one last time and we can agree to disagree. An ETF has what’s referred to as a “market maker”. It’s an agent authorized to create or redeem units to meet buy-sell demand. It’s not a perfect system. What I’m suggesting is that under certain circumstances there might be an opportunity to front run the agent. Mutual funds (ie ETFs) aren’t perfect. Consider the scandal around Putnam Funds some years back.

You are correct though in a perfect world these things don’t happen. And in the real world you may indeed need a machine to trade for you.

#67 Frank Stansforde on 12.27.18 at 11:50 am

The poster about CIPF. It looks to me that they are sending out a message that $1,000,000 is all your worth.

If you have more than a $1,000,000 then you will lose the rest. It does not matter how high a return or historic return 10%, 20% a year you make you will not keep it.

I don’t know why I never hear about this is the financial news or anywhere else.

Portfolios are typically made up of fully-negotiable securities which, like all such assets, are not guaranteed. CIPF covers cash balances held in your accounts by a hosting institution. If that company fails, you are covered for $1 million in cash (as opposed to just $100,000 at the banks), plus you still own all of your portfolio. It is reasonable coverage. – Garth

#68 Anthony Salindski on 12.27.18 at 12:26 pm

I read about this CIPF issue and $1,000,000 is covered but $1,000,000 today is not $1,000,000 of 20 years ago. It is worth much less.

This is what I understand is the main problem with current CIPF coverage today reading from this forum. Garth, maybe the financial industry should go to bat for their clients and ask for at least another $500,000 bump up to $1,500,000 as they did back in 1999.

It has been 20 years man, things cost alot more today, get real it is almost 2019.

#69 Bob Dog on 12.27.18 at 12:51 pm

Oil production by country

https://www.youtube.com/watch?v=Fu7D8eRnFyM

Canadians sell an awful lot their of oil to the world. Its inconceivable that so many of us live on the streets Vancouver and Toronto.

Our worst enemy is our own corrupt puppet government.

#70 Tater on 12.27.18 at 12:51 pm

#65 reynolds531 on 12.27.18 at 11:43 am
#61 Tater

Ok one last time and we can agree to disagree. An ETF has what’s referred to as a “market maker”. It’s an agent authorized to create or redeem units to meet buy-sell demand. It’s not a perfect system. What I’m suggesting is that under certain circumstances there might be an opportunity to front run the agent. Mutual funds (ie ETFs) aren’t perfect. Consider the scandal around Putnam Funds some years back.

You are correct though in a perfect world these things don’t happen. And in the real world you may indeed need a machine to trade for you.
—————————————————————
You seem to think you’ve found an arbitrage. I’m telling you that you haven’t and giving you the reason why. But, you have a way to prove you’re right. You can try and trade this anomaly you think you’ve found. If you make money, congrats.

But as the only one in this conversation who’s actually been a market maker, I’m pretty sure I’m right.

#71 reynolds531 on 12.27.18 at 1:28 pm

#69 tater

Really? I thought I was talking to a person. Turns out you’re an investment bank. With several hundred million in capital. I’d love it if you’d share details on the markets you’re creating.

#72 Crazed and a little confused on 12.27.18 at 1:31 pm

Well guys,
Bnn/ Bloomberg is alright. Just don’t take everything said at face value. Even garth is wrong at times. He does give good advice. But every market is different. So 1 formula fits all is not the answer. Again me: I sold in the middle of the storm but to keep my gains and they are mutual funds with high fees.

I’m not all in cash. Since selling I’m about 18% cash. Mostly in rrsp since that’s where I held my mutual funds. I have 4 reits: 1is 23% down. , 2 are 13-18% down and 2 are close to break even. Am I selling it…No. the dividends are 4.3 to 8.9% and in drip status

2 bond etfs which 8 % down …low volatility little cash flow 2.3-3.4%
The rest in blue chip stocks like Manulife, Mcdonald, Apple, Bristol, Honda. Yes they are all down.but I bought and traded them a number of times to get more shares…so I am timing the market sort of.
I have no physical real estate.
But you can figure out by now my investment cash flow covers my rent. .
I want to buy a place. But it just so ridiculously high. So you see my point. Garth is right and wrong
Balance portfolio will keep you going and provide a little piece of mind..I won’t go hungry.
Real estate is a obsession…should have bought 10 years ago. But no one can predict the world would be as it is now.
23 trillion in debt and Trump is prez. Everyone would have lost $$$ on that bet

#73 tccontrarian on 12.27.18 at 1:40 pm

Although there’s much a agree with here, let’s tweek it a bit (and see it squeezes past the ‘dogs’ at the gate):

(a) Always have a balanced and diversified portfolio – CHECK

(b) Never sell into a storm. – CHECK

(c) Ignore volatility. It’s noise. – Even better, try to embrace it and make it your ‘friend’.

(d) Never exit an asset class. – ??? YVR RE too??

(e) Don’t try to time the market. You can’t. – Very, very hard to time with precision, but with a highly disciplined strategy, you can buy (sort of) low, and sell (sort of) high. Close is good enough.

(f) Ignore those who come here to tell you to (i) go to cash, (ii) buy gold, (iii) buy Bitcoin, (iv) buy GICs or (v) run screaming

Don’t Ignore anyone who has experience and a proven record. Then, make up your own mind. Don’t follow like sheep. Be aware to spot conflict of interest.

(g) Invest in quality ETFs in the correct weightings, rebalance once or twice a year and ignore whatever the hell the Dow is doing.

CHECK, but rebalance only when appropriate (based on the market’s schedule, not yours.)

(h) Never watch BNN. Like, never.
Watch it often and see how clueless most guests are (track their ‘top-picks’ and see how they perform).

TCC

#74 Ex Pat Canuck on 12.27.18 at 1:46 pm

Re-read the rules, and stop being emotional. – Garth

No emotions involved here. Emotions are not helpful when making business or investing decisions, I think that fact is well established. I work much too hard running my business to not put a great deal of energy into my retirement investing decisions. Thanks for the blog, it definitely makes the dreary inter webs a much better place! 2019 is going to be a doozy!

#75 Stan Brooks on 12.27.18 at 2:27 pm

Do not buy gold.

GDXJ will probably tipple in Canadian loonie (down 1.4 % against the euro today) in the next 2 years.

But hey, if you are able finally to retire where is the fun of paying that mortgage? Go all in in TSX/Canadian preferreds, remember it is the value play in the late cycle….

#76 Stan Brooks on 12.27.18 at 2:37 pm

#72 tccontrarian on 12.27.18 at 1:40 pm

We are hitting classical late cycle phase, WITH LIMITS ON INTEREST RATES.

My bet is on:

1. Euro and Europe value stocks
2. Emerging markets ETFs
3. Gold junior stocks
4. Oil majors
5. Dividend paying stocks
6. US LONG TERM Treasuries.

#77 Lee on 12.27.18 at 3:02 pm

#76 Stan Brooks,

So basically, everything.

#78 Tater on 12.27.18 at 3:22 pm

#71 reynolds531 on 12.27.18 at 1:28 pm
#69 tater

Really? I thought I was talking to a person. Turns out you’re an investment bank. With several hundred million in capital. I’d love it if you’d share details on the markets you’re creating.
—————————————————————-
And seems I’m talking to an idiot. Market Maker is both an institution AND a job title. Shocking right?

And as for size, the books I used to run would have had VARs in the 1-2mio range. But I’m sure you don’t know what that means.

#79 Jake Slavakos on 12.27.18 at 3:24 pm

I don’t have alot of money. It is not alot of money to me anyway.

I just took my money in RRSP’s,($175,000), TFSA’s($71,000), cash($225,000) and put them into highest 5 year GIC’s I could find 3.75% at 3 financial institutions, CDIC, DICO covered up to principal and interest.

I am happy with the $95,189 in compound interest for the next 5 years. When it comes to my money I don’t like worrying about losing my principal.

I’ve worked 20 years and still working, 55 to 60 hours a week in my brother’s Greek restaurant living rent free so I have to make sure that my money is there when the time comes.

You will pay tax on 100% of the interest in the non-reg account, and have to do it with money you have not yet collected in interest. After taxes and inflation, your return will be less zero in that account and little better in the others. You will regret this in five years, but it’s why people fail – and you are not alone. They let emotion win. – Garth

#80 tccontrarian on 12.27.18 at 3:32 pm

76 Stan Brooks on 12.27.18 at 2:37 pm

#72 tccontrarian on 12.27.18 at 1:40 pm

We are hitting classical late cycle phase, WITH LIMITS ON INTEREST RATES.

My bet is on:

1. Euro and Europe value stocks
2. Emerging markets ETFs
3. Gold junior stocks
4. Oil majors
5. Dividend paying stocks
6. US LONG TERM Treasuries.
—–

I’ve been Loading up with following (US) ETFs:

GDXJ/GDX/SIL (precious metals)
FCG (Nat. Gas)
OIH (Oil Services)
ELD (Emerging Mkt. Debt)
ASHR (CSI 300 China)
SEA (Shippers)

In CAD, picking away at some juniors as well (speculations), along with beaten up Energy plays like Arc Energy, Encana, and a few other dividend paying stocks. Some are trading below levels seen since early 2016, when oil was below $30/bbl. Something’s gotta give!
I think 2019-20 will be very profitable years!

TCC

#81 SoggyShorts on 12.27.18 at 3:33 pm

#73 tccontrarian on 12.27.18 at 1:40 pm
(d) Never exit an asset class. – ??? YVR RE too??
*************************
Is YVR RE an asset class though? I think of it more like a single stock from an asset class. You can dump a single stock and still maintain exposure to that market segment in other ways (REIT?)

He was hoping you would not notice, since he was completely out of valid points. – Garth

#82 Stan Brooks on 12.27.18 at 3:47 pm

#77 Lee on 12.27.18 at 3:02 pm
#76 Stan Brooks,

So basically, everything.

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

Not really.

Real value + inflation protection.

#83 Stan Brooks on 12.27.18 at 3:54 pm

#79 Jake Slavakos on 12.27.18 at 3:24 pm

You will be king with these money in Greece.

Withdraw all of it in tax efficient way and retire in Greece. These 3.75 % are ‘market return dependent’. You will regret it.

#84 Suburban Bob on 12.27.18 at 4:09 pm

Very odd day – I really thought things would dive based on pre-market info, and now the DOW is back up again. Good thing I didn’t sell I guess.

Read the rules again. – Garth

#85 Ace Goodheart on 12.27.18 at 4:15 pm

RE: #125 not 1st on 12.26.18 at 5:15 pm

#117 Ace Goodheart on 12.26.18 at 4:10 pm

—–

” If all your investments are paying your bills, whats paying for the 8% across the board inflation stalking the country. Bought any groceries lately. Whats paying for your carbon tax which is on like everything.”

That is why I said you need 3 mil minimum if you want to do this.

You can live off of the returns from a million. But you’d have problems with inflation and government meddling and the like.

3 mil and you’re golden. That’s around $120,000 per year pre tax at the very conservative return rate of 4% and taxes on a buck twenty in dividend income are $13,297.00 combined Federal and Provincial (if you live in Ontario) leaving you a comfortable after tax haul of $106,703.

You can reduce the taxes further if a portion of the 3 mil is held in TFSAs.

Just to compare, income taxes in Ontario on a buck twenty in employment income are: $36,542.00 and if you are self employed, they are: $37,348.00

So if you take the path of the wealthy and live off dividends, you save around $23,245.00 to $24,051.00 per year in income tax.

You can use the tax savings to pay for the increase in carbon tax, or inflation, or whatever you will.

Point being, you are in a better place not working and living off of the dividends thrown off of a 3,000,000.00 CDN investment, then you are working on the “sunshine list” and earning $120,000.00 per year, by around $23-$24,000 in extra income each year, if you take the dividend route.

And that is why rich people smile so much…..

#86 Marco on 12.27.18 at 4:16 pm

Never watch BNN? Never watch Catherine Murray?
Well, you spend too much time with dogs.

#87 Marco on 12.27.18 at 4:23 pm

Well You Sir always peddle ETF’s. Why not Index funds?
Some of them have low fees and are not prone to be abused by trading

Liquidity. – Garth

#88 tccontrarian on 12.27.18 at 4:39 pm

#81 SoggyShorts on 12.27.18 at 3:33 pm

#73 tccontrarian on 12.27.18 at 1:40 pm
(d) Never exit an asset class. – ??? YVR RE too??
*************************
Is YVR RE an asset class though? I think of it more like a single stock from an asset class. You can dump a single stock and still maintain exposure to that market segment in other ways (REIT?)

He was hoping you would not notice, since he was completely out of valid points. – Garth
*********
@ Soggy

Well, I don’t know how people can ‘diversify’ in YVR RE as they’re all in overvalued levels and highly correlated (on the way up, or down). So, the risk is high no matter the investment vehicle (detached, condos or commercial), including REITs. I can’t see how REITs will perform well in a declining RE market. Sure, if you HAVE TO participate (for emotional reasons), REITs are ‘safer’ and you get a dividend to claim as ‘income’.

@ Garth – why all the hate brother? For years you’ve been warning people about the dangers of overvalued RE in certain regions (as YVR) – what has changed? At 8-12x gross family income, are you seeing any ‘deals’? I certainly don’t.

Or do you just love trashing any other investment style regardless of merit? Geesh…

TCC

#89 Crazyfox on 12.27.18 at 5:46 pm

#80 tccontrarian on 12.27.18 at 3:32 pm

I wouldn’t bet on oil. Not long term anyway. Watched this lecture yesterday, its Tony’s best to this point and his outlook has reshaped how I think it will go down.

https://www.youtube.com/watch?v=TRcx-btcle4&t=5858s

More on this later…

#90 "You are wrong" on 12.27.18 at 9:37 pm

Garth, you say in reply to e-mail 55
Companies buy back stock to increase shareholder value. That’s why corps exist – to make money for the people who own them. Duh. – Garth
However till 1982,
‘Buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation. Duh. Could you explain which is the correct position?

Sure. Not illegal. Good for shareholders. – Garth

#91 fred flint on 12.28.18 at 11:57 am

I disagree with the advice of no individual stocks. For example, there is nothing wrong with an amateur investor buying the same top 5-10 stocks individually that are in most ETF’s. I would say those are safe. If any of those start having problems I would say we are all screwed anyways.

Diversification protects you. Why not own ETFs instead? Trying to pick ‘winning’ stocks is gambling, not investing. – Garth

#92 David on 12.28.18 at 12:10 pm

Regarding the GIC thing. I save regularly to buy a vehicle. So that’s money with a 5- to 7-year timeframe. I have TFSA room. So I’m planning to put these funds within the TFSA and just buy GICs with them. I understand that this isn’t “investing”, but “saving”. Is there a better strategy for these funds? I’m asking since you recommend against buying GICs.

(On the investment side, I’ve got 40% bonds and 60% ETFs, mostly Vanguard.)

#93 Doug Shelman on 12.28.18 at 1:29 pm

I did not know having almost over $500,000 is considered failure these days. Knowing this type of character, he is debt free too. It seems to me that as a single guy he doing better than 95% of the Canadian population.

It is just too bad that banks, credit unions are too cheap to pay even 5% interest that was the norm just a few years ago. Scrooge is alive an well in 2018.

Why should they pay you more in interest than they can make lending out the funds? You’re not a charity. – Garth