That thing you do

DOUG  By Guest Blogger Doug Rowat

We’re often asked how we make our investment decisions. Some advisors guard their methods like they’re the KFC recipe, which brings to mind the old trope: ‘I’d tell you, but then I’d have to kill you.’

We’re not nearly as secretive. I’ve mentioned in the past some of the indicators that inform our decisions (corporate profitability, labour market strength, yield curve, etc.), but one of our key active management tools is relative-strength analysis.

So, allow me to get technical for a moment.

Relative strength is a price momentum strategy that compares index or security performance and looks for continuation of outperformance (or underperformance) or, alternatively, violations of relative-performance trendlines. In other words, relative strength often seeks to identify either a continuing trend or an inflection point. A broken trendline, for instance, may indicate an index now ready to outperform (or underperform) for an extended period. One of the tenets of relative-strength analysis is that momentum persists, so when momentum changes, the new trend will potentially last. And, conversely, if there’s no sign of changing momentum then it’s best to favour the outperforming index. In other words, if it ain’t broke, don’t fix it.

As an example, our EAFE (Europe, Australasia and Far East) equity exposure currently remains lower than our US equity exposure. Why? Because the relative-strength trend remains firmly in favour of the US market. Relative-strength charts are plotted by dividing one index level into another. Below is the S&P 500 versus the MSCI EAFE Index over the past 20 years. The US market remains in a clear leadership position. Is further US outperformance a certainty? Of course not, but the positive trend certainly supports our higher US weighting.

S&P 500 vs MCSI EAFE: no sign of waning US outperformance

Source: Bloomberg

Because relative-strength analysis (and active management in general) is not infallible, we still maintain EAFE exposure. To exit EAFE entirely would reduce diversification and therefore increase risk. The purpose of relative-strength analysis is not to make massive shifts away from the areas that we don’t favour (or towards the areas that we do), but rather only to slightly tilt portfolios in the desired directions. After all, we could be wrong.

Unfortunately, retail investors usually don’t tilt slightly. Their portfolio management style is more all-or-none. For example, a common retail investor mistake is to take an entire portfolio and move it to cash—a massive gamble almost always based on fear, not fundamentals. After the short-term volatility of Q4 2018, for instance, several of our clients wanted to do exactly this—sell everything and sit in cash. But the error of such an impulse is highlighted by the double-digit equity-market gains that we’ve now seen throughout the first half of 2019. Sadly, we had one client who we simply couldn’t convince to remain invested after Q4. As the market subsequently heated up, rather than admit his mistake, swallow his pride and turn control back to us, which was, after all, what he was paying us for, he simply transferred out. One mistaken emotional decision made worse by another.

Incidentally, the chart below illustrates how wrong investors usually are with their decisions to raise cash, especially at the extremes. The chart compares US money market fund levels (cash) and US equities over the ‘tech wreck’ and financial-crisis bear markets. Notice how the highest cash levels coincide with the market bottoms. Theoretically, investors should be fully invested at such moments.

ICI Monet Market Funds Assets (white line) vs S&P 500 (orange): erroneously, investors often hold the highest levels of cash at market bottoms

Source: Bloomberg

Relative-strength analysis helps determine the market’s most likely outperformers and underperformers, but its use should only result in minor portfolio adjustments. Relative strength can justify favouring a particular market, but it can’t justify holding that market exclusive of all others. Relative strength is a useful tool, but it’s not perfect. So, the key is to wager small, never go all-in. All-in bets not only create risk, but they’re usually driven by emotion, which only increases the odds of failure. Abandoning equities entirely during periods of volatility to sit in cash, for instance, is usually done out of fear and is highly likely to cripple performance.

Also remember that cash earns you nothing. Inflation will beat you every time. Sitting on your big cash nest-egg, keeping it warm and cozy, might make you feel better, but sitting on eggs doesn’t make you an investor, it makes you a chicken.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

91 comments ↓

#1 Mike in Airdrie on 07.27.19 at 1:56 pm

I didn’t know Monet had a fund (caption on lower graphic). I suspect it looks good but doesn’t pay well.

#2 Andrewski on 07.27.19 at 2:04 pm

Thanks Doug, great advice to remember that: it’s time in the market, not timing the market.

#3 Jimmy on 07.27.19 at 2:05 pm

I’m eating KFC while reading this.
A whole bucket!
Yummy.

#4 Danny Boy on 07.27.19 at 2:32 pm

You don’t find it strange that as people stuck in using a financial world manipulated and monopolized by central banks, corporate monopolies and governments that there is no real option to invest your money without an real decent return above inflation.

I don’t see much difference than what distorted money system we have now and China’s fake capitalism real communism. It is not only rigged against the general population but don’t have a free, capitalistic market enterprise system. We are losers with some having less or more digits in our accounts.

#5 Joseph R. on 07.27.19 at 2:45 pm

#1 Mike in Airdrie on 07.27.19 at 1:56 pm
I didn’t know Monet had a fund (caption on lower graphic). I suspect it looks good but doesn’t pay well.

———————————————–

Yes, since the colour red will predominate.

#6 Flop... on 07.27.19 at 2:48 pm

Any decent Howmuch articles to pass on since I’ve been on hiatus?

Anything touching on subjects discussed on this blog lately?

What about this one?

Debt? ….check.

Cars? …..check

Tesla?…. Check.

Now I just have to find something on Glocks and Stocks…

M45BC

“Visualizing the Unstoppable Car Debt in America

Debt is a pressing issue in the United States, with total private and public debts hitting $70 trillion. At the federal level, growing budget deficits are contributing to this rise, while the private sector has a new growing source of debt: auto loans.

Auto loan balances in the U.S. hit a record high $1.28 trillion in Q1 2018.

The average state-wide auto debt load per capita hit $4.7K

This is a 67 percent increase over the last six years
The flow into serious delinquency is up to 2.4 percent, up from 1.5 percent in 2012

The data comes from the Federal Reserve’s New York branch, which puts out quarterly reportson household debt and credit for all 50 states. For this report, we will look at the most recent figures for auto debt balance per capita, as of Q4 2018, and what these numbers mean for the automotive industry. Our viz shows the average auto debt balance per capita for all 50 states. A darker shade of purple indicates a higher debt load.

The Top 5 Auto Debt Balances by State

1. Texas: $6.7K
2. Louisiana: $5.7K
3. Georgia: $5.4K
4. New Mexico: $5.4K
5. Arkansas: $5.3K

The Lowest 5 Auto Debt Balances by State

1. District of Columbia: $3K
2. Connecticut: $3.6K
3. New York: $3.7K
4. Rhode Island: $3.7K
5. Michigan: $3.7K

At an average debt load per state of over $4,500, the nationwide auto debt load increased by over $9 billion in Q4 2018 to $1.3 trillion. This number, boosted by historically strong levels of new loans, also comes with a boost in serious delinquency rates to 2.4 percent. To learn more about how auto loans work, check out our Auto Loan Cost Guide.

Four of the five states with the highest per capita auto debt loads are in Southern states, and four of the five states with the lowest loads are in Northeastern states (including the District of Columbia in first place). Michigan, not known for its economic robustness, has the fifth-lowest auto debt load. Of course, the cost of the car loan alone is not the only driving expense: there are also factors like parking, fuel and insurance rates.

While a large-scale default crisis in the auto market has not occurred yet, high debt levels have contributed to an already shaky automotive industry. Auto sales were down in the first half of 2019, driven by higher interest rates and larger fleets of used vehicles. General Motors CEO Mary Barra, sensing industry shifts, said in a meeting with leaders of the United Auto Workers that “our collective future is at stake.”

One way to reduce debt burdens and sell more cars might be to cut the price of cars. That’s what Tesla is doing, by cutting the price of its best-selling Model 3 by $1,000 to $38,990. Unlike GM, Tesla does not have a union, which does reduce overhead, perhaps at the expense of worker well-being.”

25 July 2019

Visualization

https://howmuch.net/articles/americas-car-debt-by-state

#7 RunningWithTheDevil on 07.27.19 at 2:50 pm

BlackBerry CEO Chen on Classic philosophy: ‘if it ain’t broke…’

A couple of years later, Blackberry stopped making smartphones – permanently! Not to mention, this is what put the company on a downward spiral in the first place. The company founders were so arrogant in thinking their products would always be the star of the show and they would never have to modernize or at least keep up with the competition.

#8 AlbertsGuy on 07.27.19 at 2:56 pm

“sitting on eggs doesn’t make you an investor, it makes you a chicken” … Ok that made me snort my Calgary folk fest “SIDE HOPPER” through my nose ( 1 part apple cider – 1 part your favorite beer -lager mine) question for Dougie what changes are made at inflection point and then again at some technical support breakdown ?

#9 Yukon Elvis on 07.27.19 at 3:08 pm

You forgot to mention the dart board and how often the chimp hits it.

#10 baloney Sandwitch on 07.27.19 at 3:26 pm

Doug, in your second diagram you show that cash level peaks as markets bottom and use it to conclude that investors are stupid. However if you look at the diagram investors start building up cash as the market goes down and start deploying the cash as market goes up. This appears to rational investor behaviour, as they are responding to market momentum on aggregate. In aggregate there is smart money and dumb money. All diy investors are not dumb money.

#11 Parksville Prankster on 07.27.19 at 3:30 pm

“The greatest enemy of a good plan is the dream of a perfect plan. Stick to the good plan. Traditional”

“The index fund(or ETF) is a most unlikely hero for the typical investor. It is no more (nor less) than a broadly diversified portfolio, typically run at rock-bottom costs, without the putative benefit of a brilliant, resourceful, and highly skilled portfolio manager. The index fund simply buys and holds the securities in a particular index, in proportion to their weight in the index. The concept is simplicity writ large.”

― John C. Bogle, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

#12 Flop... on 07.27.19 at 3:35 pm

Still searching.

No mention of Glocks and a Beretta.

More of a Birra Moretti guy myself…

M45BC

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

“The Biggest Corporate Debts Visualized in One Chart

In the first quarter of 2019, the total private and public debt of the United States hit a record $70 trillion, raising concerns about the possibility of widespread defaults. Non-financial corporate businesses hold about $9 trillion of that debt. What companies are holding the most debt, and which are more concerning?

Of the four firms with long-term debts over $100B, three are in telecommunications

Tech firms carry big debt loads, but small debt-equity ratios

GE’s debt load is a combination of financing and industrials

Ford and GM also hold financing operations, contributing to higher debt loads

The data comes from 24/7 Wall Street’s analysis of the long-term debt for companies in the Fortune 500 with data from each company’s SEC 10-K filings. Long-term debt is any financial obligation that matures in more than one year. The data excludes financial companies, as the usual amount of debt for these firms is much higher than for non-financial firms. The companies are grouped by industry in the viz. A larger bubble indicates more long-term debt, as indicated by the legend.To put this debt into context, we also look at the debt-to-equity (D/E) ratio. The D/E ratio is calculated by dividing a company’s total liabilities by its shareholder equity.

Top 5 Companies With the Most Long-Term Debt

1. AT&T (Telecommunications): $166.3B
2. Comcast (Telecommunications): $107.3B
3. Verizon (Telecommunications): $105.9B
4. Ford Motor (Motor vehicles & parts): $100.7B
5. General Electric (Industrials): $95.2B

Top 5 Companies With the Highest Debt-to-Equity Ratios

1. General Electric (Industrials): 8.35
2. UPS (Mail, package & freight delivery): 6.56
3. Ford Motor (Motor vehicles & parts): 2.
4. FirstEnergy (Utilities): 2.61
5. Amgen (Pharmaceuticals & Health Care): 2.36
This is used to measure how a company is financing its operations and how capable the company is to cover its debts in the event of a business downturn. A higher D/E ratio indicates a higher risk for investors, as in the event of bankruptcy, they are less likely to have their investment returned. In fact, the standard debt load for a company ranges widely across industries outside of finance, and this context is helpful for understanding the data.

The viz lets us look at debt levels and D/E ratios to get a better look at each company’s total debt burden. Companies are grouped by industry as what constitutes a normal level of debt varies by industry. Capital-intensive industries such as manufacturing tend to have D/E ratios above 2. Companies in these industries have more assets to use as leverage in the event of a business downturn, which allows them to safely take on more debt. In contrast, service-based and tech firms often have a D/E ratio under 0.5.

This distinction is clear in the viz: automotive and telecommunications firms have tend to have higher D/E ratios than tech firms. While Microsoft and Apple have nearly as much long-term debt as Ford and GM, their D/E ratios are much lower, because of higher shareholder equity.

Earlier we mentioned that this analysis excludes financial companies because of the high levels of debt that are normal for that industry. This makes sense, then, that two of the top five companies by D/E ratio operate significant financial-services operations: GE and Ford. While it is true that both of these companies are capital-intensive to begin with, GE Capital and Ford Credit, respectively, are large contributors to the overall debt of each company.”

24 July 2019
Visualization

https://howmuch.net/articles/americas-biggest-corporate-debt

#13 Smoking Man on 07.27.19 at 3:40 pm

Flip a coin, go all in.

You either lose huge’ or win huge.
If you talk to God before the flip your odds go up.

#14 An Illusion on 07.27.19 at 3:51 pm

The economy is an illusion, just like seeing Colonel Sanders doing his KFC commercials on the television like an old man from Kentucky. Since 1964 he never lived in the USA, but in Mississauga, Ontario.

#15 Flop... on 07.27.19 at 3:59 pm

This blog often talks about multiple income streams.

The average person needs this nowadays to survive.

I’m trying to get with the times.

As a dumbo construction worker I am used to making a living from the neck down.

Over my break from the blog something just fell in my lap.

Dorothy Turner offering me $500 bucks a month to drive her husband nuts enough to shut the blog down, so she can spend more quality time with her man was an offer I couldn’t refuse…

M45BC

#imback

#hatersgonnahate

#16 tccontrarian on 07.27.19 at 4:13 pm

“Below is the S&P 500 versus the MSCI EAFE Index over the past 20 years. The US market remains in a clear leadership position. Is further US outperformance a certainty? Of course not, but the positive trend certainly supports our higher US weighting.”

A comment on ‘leadership’ (of the US Market):

In my highly developed contrarian thinking, I see this type of ‘leadership’ as the kind approaching a cliff – not a points race like the NHL/NBA etc.
In other words, the longer the ‘leadership’ trend, the closer we are to an unpleasant event (ie falling prices).

Normally, in everyday life, ‘leadership’ is synonymous to increased odds for success (as in winning a championship – think Raptors etc). In investing, it lures participants to precisely when the risk is actually highest (think ‘complacency’).

In my personal case, I’m now thinking it would be a good time to initiate short positions in SP500 and Russell 2000, among other things. I’m smelling ‘risk’ again.

Just one opinion, FWIW

tcc

#17 Pizza man on 07.27.19 at 4:16 pm

I moved to Toronto 21 yrs ago from abroad. In my pockets US$ 10K. Today I own +600K in a paid downtown Toronto condo. +625K invested in RRSP, TFSA, DC plans and cash account. Most of it in DC Mutual funds (0.2% ~ 0.4% IMF) from my employer, some ETF and stocks. I’d say 85% of +625K all in equity, 15% Money market. Forgive me, but I don’t like bonds so no 60/40 rule.

I just turned 50 y/o and I feel (did I say feel?) I’ll start moving into Cash (MM) soon. Perhaps by October will be 50/50 assuming no corrections/crash between now and then. Whenever recession or a crash kicks in will move back into equity again, or not.

I reached an age where $ value is important. 6.8% annual return over past 20 years.

3 changes are happening at same time that will make investing (retirement in my case) very challenge: technology, debt and generational shift (bye consumer boomers, hello broken millennials.

Read this blog every day. Thanks for all the great advice!

#18 Yukon Elvis on 07.27.19 at 4:24 pm

It seems that potential property buyers from Hong Kong – are showing considerable interest in Canadian property. With widespread protests over the erosion of its autonomy by the Chinese government, and the resulting global trade tensions, it’s not surprising that Hong Kong residents are considering the safest harbours in which to extract and park their money.

According to a recent Bloomberg article, Metro Vancouver real estate agents are seeing a significant uptick in interest from Hong Kong buyers, with more Hong Kong than Chinese people at open houses. That’s quite the reversal from a few years ago.

The foreign buyer tax of 20 per cent is unlikely to be a major deterrent to a motivated overseas buyer. The 11 per cent price decline for a typical detached house – which is likely to be a steeper decrease for higher-priced luxury homes – takes care of much of that tax burden.

What’s more, the Hong Kong dollar is stronger against the Canadian dollar than it was a year ago, despite the political unrest. A $3 million home in Vancouver today would cost a Hong Kong buyer just under 18 million Hong Kong dollars, compared with 19.5 million a year ago. That’s a discount of 7.6 per cent. Not to mention the fact that the same $3 million home might have cost $3.8 million a year ago, which at currency rates of the time would be 24.5 million Hong Kong dollars. So the reduction to 18 million HK dollars is actually a 26 per cent discount – more than outweighing the foreign buyer tax.

You believe everything Vancouver realtors tell media about Asian buyers? Haven’t we’ve been through this before? Naive. Manipulated.- Garth

#19 Dolce Vita on 07.27.19 at 4:27 pm

#135 crowdedelevatorfartz on 07.27.19 at 8:29 am

2 Queens in a harbor.

That must of been something to see. Your town so nice in Summer and outskirts in fall, wonderful, just wonderful…here well you know, Inferno. Still, Italia a kick ass country to visit for so many reasons.

Clarification for YVR & 416:

The 2 Queens, that wasn’t English Bay or the Lakefront I was referring to.

Just ‘sayin (they usually have a lot more than just 2 Queens in YVR Davie St. or Church and Wellesley in Trauma).

—————————————

Kidding aside, Garth et. al. and this is TOTALLY OFF THE WALL but imagine this:

Dick Proenneke had a Love Child and he moved to warmer climes in some Australian jungle:

Primitive Technology

https://www.youtube.com/channel/UCAL3JXZSzSm8AlZyD3nQdBA

I love modern day conveniences like everyone else but this guy (does not talk during his videos, so turn on Captions for a heads up on what he’s up to) has to be the most ingenious, resourceful and laconic primitive I have ever seen.

9.5 MM Subscribers. Basically about Stone Age, Dawn of Man technology, you name it, he does it.

Some viewer Comments (he is very good at what he does:

-Next on Primitive Technology: Colonizing Mars.

-Episode 4568: How to Build a Fusion Reactor.

I know it sounds stupid, but watch a few of his videos…you’ll get hooked to.

Personally, I can’t wait until he discovers Copper and Tin deposits near his jungle ‘hood so he can take us thru the Bronze Age.

—————————————

Buonanotte e Ciao d’Italia.

#20 TRUMP on 07.27.19 at 4:32 pm

DOUG.

What levels were the RSA’s at before each stock market crash over th past 100 years???

#21 Doug Rowat on 07.27.19 at 4:53 pm

#10 baloney Sandwitch on 07.27.19 at 3:26 pm

Doug, in your second diagram you show that cash level peaks as markets bottom and use it to conclude that investors are stupid. However if you look at the diagram investors start building up cash as the market goes down and start deploying the cash as market goes up. This appears to rational investor behaviour…

As I mentioned, the chart is most illustrative at the extremes. But it’s also the speed of the deployment. It took almost 3 years for cash levels to return to normalized levels after the financial crisis, 3 years where the market roared.

Also, if investors were truly rational, cash levels would actually never fluctuate. The rotation should be elsewhere. Cash earns you nothing–virtually any other asset class outperforms cash.

–Doug

#22 tccontrarian on 07.27.19 at 5:14 pm

One more word on Relative Strength…

I actually hope you do look into this D.R. et al, for it’s a lesser known feature of the markets (probably <5% of Financial advisors pay attention to it).
Since October 2018, the SP500 has made new highs, yet the RUT is ~10% lower. Now, that's RELATIVE strength (or weakness actually), that matters!
The SP500, although a very popular and well known index (heck, it's got Apple, Google, Amazon, … just about everyone and their dog is familiar with those names, hence comfortable owning them), is actually a distractor from what's going on in the internals of the Markets.
Now, how many investors know of some names within the Russell? Heck, even I don't! But I DO know that the Russell is more representative of the state of the health of the market; so the above-mentioned divergence should be noted (and adjustments to portfolios made).
Otherwise, being 'risk-averse' is just lip-service…and then the usual "no-one could see this coming". Well, if I can see it, so can everyone else!
Thank You (and You're welcome, maybe)

tcc

#23 Doug Rowat on 07.27.19 at 5:15 pm

#16 tccontrarian on 07.27.19 at 4:13 pm

A comment on ‘leadership’ (of the US Market):

In my highly developed contrarian thinking, I see this type of ‘leadership’ as the kind approaching a cliff – not a points race like the NHL/NBA etc.
In other words, the longer the ‘leadership’ trend, the closer we are to an unpleasant event (ie falling prices).

If the S&P 500 were to begin to fall (or, more specifically, fall faster than another benchmark) then the relative-strength trendline would fail. You could then make weighting adjustments as appropriate.

However, you have to wait for evidence of weakness, not simply assume something bad is going to happen because you feel the good times have lasted too long.

The US economy has expanded for an incredible 8 straight years now, far longer than the average of previous economic expansions. So, surely, we’re due for a recession.

Wrong. Proof? The current US economic expansion is actually in its 10th consecutive year.

–Doug

#24 Retail investor on 07.27.19 at 5:15 pm

That’s me!

80%- spy
20%-private equity

Easy peasy

Slept through Dec 2018 with easy peasy

#25 I’m stupid on 07.27.19 at 5:20 pm

Q4 of 2018 wasn’t pleasant, watching my portfolio shed more money than my wife makes a year was tough. Being a client of yours (the one that never calls you) I understood that exiting would be a mistake. Fortunately I make all the financial decisions in my household and my wife trusts my judgment. I can understand why others would bail, if staying invested meant arguing with my wife I’d be call to cash out too.

Nice post!

#26 Flop... on 07.27.19 at 5:22 pm

You believe everything Vancouver realtors tell media about Asian buyers? Haven’t we’ve been through this before? Naive. Manipulated.- Garth

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

Argh!

Apologies to Mrs Flop.

Hate myself so much right about now.

Here Four Fingers Watson/ Yukon Elvis have a look at this recent sale in my hood.

In Spring 2016 it would have fetched 1.4 million all day long.

Still assessed at 1.25

Just over 3 short years later it went for 880k.

That is at the very bottom of the Vancouver proper market.

Don’t look higher up the ladder, it is even more rotten.

This is the inconvenient truth Gore should have done a bloody movie about.

Great, now I have to sleep in the back of my car tonight with a cricket bat…

M45BC

https://www.zolo.ca/vancouver-real-estate/5304-fraser-street

#27 Flop... on 07.27.19 at 5:24 pm

Actually went for 840k

Even worse…

M45BC

#28 Drake Leabault on 07.27.19 at 5:25 pm

Eh, Danny Boy, inflation statistics are such a lie. Inflation at 2% a year. Come on, everything from property taxes, rent to food to utilities to car insurance etc. are up from 5% to 10%. My father would be turning over in his grave seeing 2% to 3% GIC’s. Back in his day inflation at 8% but GIC’s at 13%.

#29 Giver - AB on 07.27.19 at 5:26 pm

Hi Doug,

Interesting read. How do square momentum strategies like this with periodic re-balancing? Seems to me it would be likely these two strategies would be frequently at odds. Do you use momentum indicators to move out or push forward re-balancing? Or ‘tilt’ the re-balancing percentages?

Cheers

#30 Yanniel on 07.27.19 at 5:35 pm

There are momentum strategies that take you fully to cash (or bonds). There is a conscious decision to get in and out of cash. It is systematic if you will.

Also there are momentum strategies that are very concentrated; yet do pretty well in the long run.

Consider Dual Momentum. These are historical returns:
http://optimalmomentum.com/gem_trackrecord.html

History does not predict the future. But the momentum anomaly is very persistent.

The biggest issue I see with momentum strategies that are very concentrated is the whipsaw. This can be minimized by having longer lookback periods; but it is a risk that will always be there.

#31 Flop... on 07.27.19 at 5:37 pm

O.k so here’s what I want the people that are interested in Vancouver real estate to do.

Be more like Drake.

No, don’t act all douche.

Start from the bottom of this post.

Follow what happened.

Flipped six times since 2015.

Everything was fine, until it wasn’t.

This condo is at the very bottom of condo listings in the Inner Ring.

Don’t come cheaper than this.

Started at 110k and maxed out at 262k, now back down to 183k

Another guy that hung around Toronto for a while once made this statement while waving his hands.

Vince Carter.

It’s over…

M45BC

MLS® Sales History (Since Jan 2015)
# 382 8160 WILLIAMS ROAD
Date Comments MLS® Number
2019-Jun-27 Sold $183,800 R2371924
2019-May-22 Listed $208,000 R2371924

Homelife Benchmark Realty Corp. (White Rock)
2019-May-21 Terminated $225,000 R2348633
2019-Mar-13 Listed for sale R2348633

Homelife Benchmark Realty Corp. (White Rock)
2018-Oct-26 Sold $262,000 R2317126
2018-Oct-21 Listed for sale R2317126
Macdonald Realty Westmar

2018-May-28 Sold $232,000 R2270727
2018-May-22 Listed for sale R2270727
Oakwyn Realty Ltd.

2017-Mar-03 Sold $188,000 R2138518
2017-Feb-09 Listed for sale R2138518
Macdonald Realty Westmar

2017-Jan-19 Expired $177,000 R2092666
2016-Jul-18 Listed for sale R2092666
Royal Pacific Realty Corp.

2016-Mar-19 Sold $126,000 R2021585
2015-Dec-23 Listed for sale R2021585
Macdonald Realty Westmar

2015-Aug-03 Sold $110,000 V1122609
2015-May-12 Listed for sale V1122609
RE/MAX Metro Realty

2015-Mar-23 Sold $110,000 V1111391
2015-Mar-17 Listed for sale V1111391
Sunrich Realty

#32 Stephanie Jakes on 07.27.19 at 6:14 pm

In the U.S. most have IRA’s of just $125,000 ob average which is not much. Even if they were to get average stock market return of 9% to 10% a year over the next 15 to 20 years with new contributions they might get to $750,000 to $1,000,000, maybe a stretch $1,200,000. Most will be probably having in the $500,000 to $600,000 range because of poor planning and circumstances beyond their control.

This is wishful thinking and in 20 years with the real cost of living much, much higher and much higher income tax rates, newer, higher taxes too, it is a lost cause. It is better than having little to average savings but like most they will have to live a much lower lifestyle than they ever imagined.

#33 georgist on 07.27.19 at 6:26 pm

https://www.zerohedge.com/s3/files/inline-images/COTW-Housing_Bubble_by_Countries_V5.jpg

Guess who’s in the top five of very measure?

I wish they would calculate this and exclude Quebec, this would make Anglophone Canada look even worse.

#34 gimme stuff on 07.27.19 at 6:59 pm

yup – follow the crowd – what can go wrong?

#35 Shawn Allen on 07.27.19 at 7:04 pm

Winners Win and Losers Lose

Relative Strength appears to be a subset of a sort of predictive theory I came up with around 2003 (I know I was not the first) that explains the world fairly well.

“Winners Win and Losers Lose”

That is winning people and sports teams and companies and stocks and probably even plants and animals tend to keep on winning and people and sports teams and companies and stocks and probably plants and animals that have lost tend to keep on losing.

It’s a nasty observation and unfair and politically incorrect. But the older I get the more it seems to be true.

For people who don’t win, attitude is often the reason.

#36 Shawn Allen on 07.27.19 at 7:08 pm

Don’t Mistake Average for typical

#32 Stephanie Jakes on 07.27.19 at 6:14 pm
In the U.S. most have IRA’s of just $125,000 ob average which is not much.

******************************
I think it is wrong to conclude that most or even very many at all have “average” savings or close to it. The bell curve on that is wide.

#37 Ronaldo on 07.27.19 at 7:29 pm

Sitting on your big cash nest-egg, keeping it warm and cozy, might make you feel better, but sitting on eggs doesn’t make you an investor, it makes you a chicken.
—————————————————————–
Best statement in a long time. Was that your own Doug?

#38 Janice Chen on 07.27.19 at 7:31 pm

This is an entrepreneurial job where you have the opportunity to build your own business, create equity in your own career and make an unlimited amount of money. My only regret in making this change is that I did not do it 10 years ago.

#39 acdel on 07.27.19 at 7:34 pm

#4 Danny Boy has many great points.

Good blog today smartass; what you are really saying that it is really is a crap shoot out there; even you people that have spent years in the industry; highly educated, have no idea on what is going to happen in the next few years when so many so called experts are expecting another recession within two years.

For me personally; I work in the trades, talk to the engineers; other builders, etc, it is a very scary situation out there. Invest wisely!

#40 Tim on 07.27.19 at 7:34 pm

Great last paragraph, Doug. I look forward to your columns.

#41 Ronaldo on 07.27.19 at 7:43 pm

One thing I recall fairly clearly is that when the markets bottomed in March of 2009 the recovery came very quickly on very low volumes. So if the dumb money (mutual fund companies) weres sitting on a pile of cash I assume the smart money (???) were the ones that moved the markets on very low volume or was it just the computers (HFT) buying and selling to each other that caused the markets to come back so quickly? I do recall that the big bank stocks pretty much all bottomed out on Feb. 23/09 after falling 50% from their previous highs. I clearly recall the CEO of RBC in early Feb. stating that he would be investing his 2.5 mil in bonus money in RBC stock. To me, that was smart money. Which others would we fit into this category?

#42 Shawn Allen on 07.27.19 at 7:54 pm

Cash on the Sidelines?

I always have trouble with the notion of the total pool of investor cash building up and down.

Cash is a whakimole substance. If I sell my shares to “sit in cash” then another investor must use cash to buy my shares. Net cash coming out of the market is precisely zero (ignoring trading fees which are minor).

The cash position graph above is for mutual funds and suggests retail investors move the wrong way. Correspondingly it may be institutions and non-mutual fund investors that had cash going the opposite way.

#43 Keith in Rio on 07.27.19 at 8:02 pm

https://www.zerohedge.com/news/2019-07-24/mapped-countries-highest-housing-bubble-risks

Canada is the housing bubble capital of the world according to this article in Zero Hedge.

#44 Yukon Elvis on 07.27.19 at 8:11 pm

One of Vancouver’s most popular beaches is closed to swimming due to high E. coli levels, the third local-area beach currently shut for this reason.

On Saturday, the Vancouver Park Board announced the closure. Trout Lake has been closed since July 17 and Bowen Island’s Snug Cove has been closed since June 27, CTV reports.

Ambleside Beach in North Vancouver and Sunset Beach in Vancouver were also closed due to E. coli earlier this month, but have since reopened.

The Kits Beach closure to swimming comes at a time of year when hundreds of thousands of people expected in the area to watch the first night of the 2019 Honda Celebration of Light.

Viewers will still be able to watch the show from the beach, but won’t be allowed to take a dip.

The high levels of E. coli increase a swimmer’s chance of contracting gastrointestinal illness or skin and eye infections.

#45 april on 07.27.19 at 8:51 pm

#18 – Someone who obviously wants to see BC LowerMainland home sales and prices increase.

#46 NoName on 07.27.19 at 9:01 pm

Earler today wife and kids were buying a cacke for after diner desert, i was outside on a parking lot pulling Mcgyver trying to fix safety restain system with airbag, using leterman and paper clip. Sucsessfuly id like to add. No word of the lie here.

While i was using enhanced sentances and paperclipping safety disconect, for some strange reaseon inflation came to my mand and its ben festering in it ever since, last coupole of hours.

I do have to admit that i do have that cognitive disckonectance with inflation numbers, i understand numbers and how they are calculated, you take number from table do the math and its number as they say. Than i came across this chart. Even at 2% inflation is cuting working stiff deep. man we are at 2001 level all those years…

interesting read, pictures much more interesting.
https://seekingalpha.com/article/4152222-january-2018-median-household-income

#47 Doug Rowat on 07.27.19 at 9:02 pm

#29 Giver – AB on 07.27.19 at 5:26 pm

Hi Doug,

Interesting read. How do square momentum strategies like this with periodic re-balancing? Seems to me it would be likely these two strategies would be frequently at odds.

The overall portfolio still remains balanced, relative strength just helps inform which markets get the bigger slices of the pie. We also place ranges around our weightings, so we give our winners room to run and are not constantly blunting momentum through rebalancing.

–Doug

#48 NoName on 07.27.19 at 9:12 pm

#30 Yanniel on 07.27.19 at 5:35 pm
There are momentum strategies that take you fully to cash (or bonds). There is a conscious decision to get in and out of cash. It is systematic if you will.

Also there are momentum strategies that are very concentrated; yet do pretty well in the long run.

Consider Dual Momentum. These are historical returns:
http://optimalmomentum.com/gem_trackrecord.html

History does not predict the future. But the momentum anomaly is very persistent.

The biggest issue I see with momentum strategies that are very concentrated is the whipsaw. This can be minimized by having longer lookback periods; but it is a risk that will always be there.

want that momentum strategy now called factor investing?

#49 BC Renovator on 07.27.19 at 9:36 pm

Great post Doug. My question is- what percentage should one hold in cash for dark days, the unexpected, recession etc? What is the general equation for a single guy in his late 30’s?

Thanks

TFSA- $105k invested
RRSP’s $30k(ish) Building/invested
Business- $50k cash
Savings- $70k cash
Rental Property with cheap mortgage- $300k

#50 the Jaguar on 07.27.19 at 9:48 pm

Must have been asleep at the switch, but the InstaG photo of Bandit references falling asleep in a food bowl, but any credible, investigative research would support (based on the size and pattern in the photograph) an ‘ice cream bowl”. (sign me, ‘Jag’, a.k.a Sherlocke Holmes)

So Doug, assuming a person on the brink of retirement stupidly plugged too many assets into cash equivalent holdings, registered and otherwise, exactly how do you slip a toe back into ETF’s or other safe investments without laying awake at night fearing Oct.2008 deja vu all over again, as Yogi Bera might say….?
Is Radical Indoctrination Therapy strapped to a gurney the only way to go, or can one dip a toe ever so slowly in the murky water..? Does it really matter anyway given the average life expectancy? Only ‘outliers’ live into the early/mid eighties. Why do we lie to ourselves about these things? If you have significant cash, goverment and employer pensions, why gamble on catastrophic world disorder and financial ruin?
When is being a ‘scaredy cat’ the smart bet?

#51 Robert Ash on 07.27.19 at 9:53 pm

Going to Cash is not all that easy, in Canada, at least from my latest experience. I learned a lot from this Blog, and made a determination, to consolidate, my holdings, into one major Chartered Bank… And to set up a TFSA…I had never used this useful tool to date…
On April 25th 19, I stayed another full day in Vancouver, to fill out the Paperwork, to cash in a high MER mutual fund… Power Financial, and an RRSP from HSBC… While the Mutual as hoped went to a NAV and a Money market fund, that preceding 24 hour period… I still haven’t received the Funds.. HSBS is 60K, and they claimed the RRSP was in a term deposit… no dialogue, no contact… Just No MONEY…
Prior to the Consolidation effort the Manager of the Chartered Bank… suggested there would be delaying tactics.. in other words, this may take a while.. I did not Check today, but so far no MONEY and it is over 90 days… The last email, from the Chartered bank when a polite inquiry was put forward.. Was “I know this can be frustrating, but the CFA my financial advisor is just the middle man… for some reason they keeping picking apart our transfer request.. I had to phone several times to get the exact details, and pass them along.. Still no money… So in my opinion, this is a bit of a disconcerting experience…I feel that Financial Markets today are very difficult for the FINTEC industry, and of course when there was a reasonable interest rate… there was a balance.. There is nothing normal about the Financial markets today in my opinion… I am quite inexperienced however… but made my money with my back… and body… This is a wake up call for me.

#52 Grunt on 07.27.19 at 10:41 pm

What if the Zero Waste movement gained serious traction?

#53 Nonplused on 07.27.19 at 10:55 pm

The problem with “relative strength”, or any measure that isn’t fundamental, is that it is self-reinforcing. Although as George Soros pointed out you can make a lot of money betting with a self reinforcing trend and then against it when it breaks. Mostly against it when it breaks. But that isn’t a game for everyone.

The problem I see with any sort of charting measure is that everyone is using the same Bloomberg charting tools and all knows exactly where the Elliot wave counts and 50 day moving average and Fibonacci points are. And because of this everyone, including the computers, tends to move in a herd.

But, as one famous bankster said, it is a game of musical chairs, but until the music stops we all have to keep dancing.

Part of the problem is margin. 2X or 3X funds are a good example but anybody using margin can experience the same thing. As your portfolio goes up in value, more margin magically appears so you can buy even more. As long as the trend continues, you can make incredible returns. But when the trend turns OMG so does the margin and you may be forced to liquidate. In fact, your broker might do it for you, damn the losses whether paper or real.

Real estate is the same way only the margin here is incredible compared to what would be allowed when purchasing a stock. You would never be allowed to purchase a stock with 5% or even 10% down. It is assumed that real estate never goes down, or at least not for long, so there is little risk lending against it. And there is a long history to suggest that is true. Real estate tends to march along well ahead of the inflation rate. And when the bank does have to reposes, they at least get a house that they can try and sell. A house never goes to zero, even if it burns to the ground. At least the land is worth something. Depending on the house, the land might be worth more after the house burns to the ground because there is lest crap to landfill before you rebuild.

But this is not the case with stocks. Anyone remember Nortel? Zero is a very real possibility. Bre-X? Yellow Pages? Not quite zero but oh-so close. PG&E? Many retirees lost everything. Twice. Enron?

This further comment is meant for people who have some statistical background.

Commodities are usually modeled for risk management purposes as being log-normal, which means they can run quite high in value much more than their average price for short periods of time but they cannot fall below zero under normal circumstances. So for example during the California energy crisis and a couple of times in New York the price of natural gas went to $60 or more per Btu, but it is a rare day where it ever traded at or below zero. There is not a fixed upper boundary whereas the zero boundary is there. There is more upside than downside in an extreme event.

However this is not true for stocks, which are modeled with a normal distribution. This means the upside and the downside are about the same. So depending on what the stock price is and the standard deviation, it is possible for the potential downside to be much greater than zero. Although stocks tend to trade much slower than commodities, the possibility is there. So if you own a commodity, there might be a real chance the commodity will be worth zero or actually cost money to get rid of for a few days. But with a stock like those mentioned previously or perhaps Tesla or Boeing there is a real possibility, could be 30% to throw a number out, in some cases much higher, that the actual value of the stock is much less than zero. Fortunately for shareholders anything below zero is absorbed by the bondholders and lenders. However their risk is lower, because they end up with the assets and take some sort of loss, but the shareholders are completely wiped out in no less of a manner than when a house gets repossessed.

We live in very interesting times. So much self-reinforcing margin or credit or lending, whatever you want to call it, exists in the system right now that it is hard to imagine what would happen if the margin was recalled. Everybody would be selling everything. And there would be no bid.

I think a major confrontation with Iran would have drastic affects on the economy. That is the number one threat I see right now. Maybe it has to be done anyway because nuclear bombs. But I don’t know if going to cash is the right answer because it could lead to money printing in which case it is physical materials and profitable businesses you want to own.

Here is something to think about. In 1967 you could get a brand new 1967 Mustang for less than $4,000 from the dealer, never been driven before other than to drive it on and off the truck. Today, in show room condition, that same car is worth over $40,000. And it’s old technology, you aren’t going to drive it every day!

#54 Spectacle on 07.27.19 at 11:59 pm

RE::
” #4 Danny Boy on 07.27.19 at 2:32 pm
You don’t find it strange that as people stuck in using a financial world manipulated and monopolized by central banks, corporate monopolies and governments that there is no real option to invest your money without an real decent return above inflation. ”

——————:::—————–
Start an business enterprise of some sort. Look at what Garth does, read between the lines….Belfountaine Store etc etc.

Ps:: #6 Flop,
…Re notes on a Glock, the SIG sauer P226 in a .40 is a better “solution “.

PSS:: Doug, very well written & adds to the body of knowledge on Sir Turners site! Relative strength Analysis is a great philosophical strategy to 1)live life, 2) or make a change in business directions ( the Hubris of Blackberry would have been avoided , with a phone call to You…”

#55 Ponzius Pilatus on 07.28.19 at 12:13 am

Flop and his long posts are back.
Not sure if this is a good thing.
Blog dogs, let’s have a vote.

#56 Spectacle on 07.28.19 at 12:14 am

#39 acdel on 07.27.19 at 7:34 pm
#4 Danny Boy has many great points.

Good blog today smartass; what you are really saying that it is really is a crap shoot out there; even you people that have spent years in the industry; highly educated, have no idea on what is going to happen in the next few years when so many so called experts are expecting another recession within two years.

For me personally; I work in the trades, talk to the engineers; other builders, etc, it is a very scary situation out there. Invest wisely!

————- ::: ————-
Appreciate Your input #39 acdel.

How do you see things unfolding? From your recent perspective? New builds are over, Towers should slow to a trickle at best, otherwise…?

Until Doug noted it tonight, I had no idea I was using this specific “continuation of performance” is a beautiful Risk management technique, to make business change decisions. Time to make changes for sure.
Thanks

#57 Spectacle on 07.28.19 at 12:27 am

#47 Doug Rowat on 07.27.19 at 9:02 pm
#29 Giver – AB on 07.27.19 at 5:26 pm

Hi Doug,

Interesting read. How do square momentum strategies like this with periodic re-balancing? ……………

The overall portfolio still remains balanced, relative strength just helps inform which markets get the bigger slices of the pie. We also place ranges around our weightings, so we give our winners room to run and are not constantly blunting momentum through rebalancing.

–Doug
———————————–

Bam ! There it is, Perfect answer Doug.
Thanks..

#58 Stahom on 07.28.19 at 1:00 am

If you are 50 y/o plus, the October 1987 market shed, 2001 tech meltdown 2008 apocalypse taught you that if still in building mode one hopes for another massive slide such that the ETF portfolio can be padded with “sale” units. It comes back, and then some.

#59 SoggyShorts on 07.28.19 at 1:28 am

#35 Shawn Allen on 07.27.19 at 7:04 pm

Winners Win and Losers Lose

Relative Strength appears to be a subset of a sort of predictive theory I came up with around 2003 (I know I was not the first) that explains the world fairly well.

“Winners Win and Losers Lose”
*************************
My DIY (garth influenced) PF is largely weighted towards this as well.
I have pretty much bet 30% on it
20% Maple split between XRE&XIU
30% US all market (XUU&VOO)
13% EAFE (XEF/VEA)
7% EMERG (VEE/VWO
30% VGG/VIG <—American companies with a history of increasing dividends, this is my "Winners win" bet.

#60 Smoking Man on 07.28.19 at 2:12 am

Every Saturday the lefties are no where to be found in the comments section.

It’s like, talking about making money to these over schooled is like sunlight on a albino vampire.

#61 Al on 07.28.19 at 2:14 am

‘You forgot to mention the dart board and how often the chimp hits it.”

Haha! Monkeydex would kill these portfolio managers and their technical analysis!! Not even in the same league!

The funny part is that given Dougs background he’s obviously well aware that all this is BS, but he gets to have fun with others people’s money and get paid!!

#62 Smoking Man on 07.28.19 at 3:33 am

If the words “I Can’t” is in your vocabulary, you will punch a clock you’re entire life on the journey to certain death.

Say it loud. ” I CAN.” It will change your life.
Just takes some nuts and follow through.

Dr Smoking Man
PhD Herdonomics

#63 Stan Brooks on 07.28.19 at 5:09 am

Also remember that cash earns you nothing. Inflation will beat you every time.

Increase in M2 on yearly basis has been north of 5 % for quite a while, adding credit card use and rise of debt we are looking at inflation of at least 6-8 % maybe more.

The statistics massage the numbers (a polite way to say they lie) to come with made up CPI numbers of 1.5-2 %.

The expectation for the next decade and a half is for the inflation to increase, incomes to stagnate while interest rates to hit rock bottom, potentially even negative nominal rates.

Why would anyone keep the piece of crap called currency in their bank accounts is an interesting question, the same for bonds yielding strongly negative real returns. Apparently derivative of crap is suddenly a treasure.

The beautiful part is that banks charge you fees to keep the crap for you, if it was valuable then they would pay you real returns.

But again, what would you expect from a currency managed by the clueless clowns at the central bank?

———————————————-

#43 Keith in Rio on 07.27.19 at 8:02 pm
https://www.zerohedge.com/news/2019-07-24/mapped-countries-highest-housing-bubble-risks

Canada is the housing bubble capital of the world according to this article in Zero Hedge.

Of course, this has been known to be the fact for quite some time.

But with the limited intellectually and gullible sheeple and the incompetents in charge what would you expect?

Of course, it/housing can go even higher, we are unique(ly stupid).

#64 Stan Brooks on 07.28.19 at 5:23 am

#4 Danny Boy on 07.27.19 at 2:32 pm
You don’t find it strange that as people stuck in using a financial world manipulated and monopolized by central banks, corporate monopolies and governments that there is no real option to invest your money without an real decent return above inflation

There are options:

1. Top companies/economies
2. Really prime real estate – in the in-demand (by people with money, not credit) areas of world class cities (under 1 % of that in Canada qualifies here)
3. Farmland
4. Commodities and gold.
5. Top Food companies (like Unilever, Nestle) and pharmaceuticals.

But if government decides that it is in your ‘best interest’ to have a sizable portion of your pension plan in bonds that yield negative real rates of at least 5 % yearly, what can you do about that?

Nothing.

Remember, it is nothing personal, just business.

#65 crowdedelevatorfartz on 07.28.19 at 6:42 am

@#55 Pontious’s Preamble

Well, If we must “vote” in the Roman tradition.
Flop: Two Thumbs up.
Ponzie: Two Thumbs Down…..

The Dogs in the Circus Maximus roared their approval.

#66 Bytor the Snow Dog on 07.28.19 at 8:30 am

@65 fartzy-

Are you not entertained?

#67 IHCTD9 on 07.28.19 at 9:16 am

#46 NoName on 07.27.19 at 9:01 pm
——

These days, I have a hard time giving a rip about inflation. As we get older, expenses drop and incomes rise (hopefully). Houses get paid off, braces and tuition payments cease, kids eventually move out (again, hopefully).

Not to mention that individuals have a lot of control over their costs. When heating oil got too expensive, we switched to wood pellets. Stuff the freezer with chicken when it’s on sale, I get 4-5 flats at a time. Sell off your used “collectibles” on Kijiji for spare cash. If gas gets too expensive I can always sell the pickup.

So far, the effects of costs dropping and incomes rising more than covers whatever increases I have no choice but to pay.

#68 crowdedelevatorfartz on 07.28.19 at 9:30 am

@Bytor

Completely enthralled.
Did the touristy thing yesterday and walked the Halifax Pier looking for a broken man (apologies to Stan Rogers).

Breakfast is done and satiated with coffee…….
Off to Peggy’s Cove and Chebucto Head this sunny Sunday am…. Lunenburg, while historically amazing, was too crowded with turistas….

#69 Doug Rowat on 07.28.19 at 9:50 am

#49 BC Renovator on 07.27.19 at 9:36 pm

Great post Doug. My question is- what percentage should one hold in cash for dark days, the unexpected, recession etc? What is the general equation for a single guy in his late 30’s?

For most clients, we have cash weightings at the bare minimum. Enough to cover the expenses. Otherwise, cash is a waste.

–Doug

#70 Doug Rowat on 07.28.19 at 10:03 am

#61 Al on 07.28.19 at 2:14 am

‘You forgot to mention the dart board and how often the chimp hits it.”

Haha! Monkeydex would kill these portfolio managers and their technical analysis!! Not even in the same league!

The funny part is that given Dougs background he’s obviously well aware that all this is BS, but he gets to have fun with others people’s money and get paid!!

We’re fee-based advisors, so our interests are perfectly aligned with clients’ interests. If they make more money, I make more money. So why would I not want to employ active management techniques that are effective?

Also, we’re entirely transparent with clients about how we will manage their money. If they don’t like our approach then they can leave. But few do.

–Doug

#71 Dave Thomas on 07.28.19 at 10:04 am

DELETED

#72 theoryAndPractice on 07.28.19 at 10:32 am

…vs S&P 500 (orange): erroneously, investors often hold the highest levels of cash at market bottoms..”

===========
Or money escaped from the market is kept in cash

#73 Stan Brook's Fan Club on 07.28.19 at 10:39 am

#63 Stan Brooks on 07.28.19 at 5:09 am

“But again, what would you expect from a currency managed by the clueless clowns at the central bank?”

Stan, heed the club’s plea and run for office. You are wasting your time addressing a few blog dogs when the nation goes to hell in a handbasket. This great nation needs you at the helm!!

#74 Yukon Elvis on 07.28.19 at 11:07 am

#55 Ponzius Pilatus on 07.28.19 at 12:13 am
Flop and his long posts are back.
Not sure if this is a good thing.
Blog dogs, let’s have a vote.
……………………..

Two thumbs up for the Flopper.

#75 Dogman01 on 07.28.19 at 11:54 am

For those DIY investors I have found this example useful in confirming if my ETF’s performed the way I intended them in my portfolio.

Use the https://www.morningstar.ca/ca/
Chart function and compare.

Down Market: Oct1-Dec 31 2018
Up Market: Use the YTD Function

ZAG was supposed to offer some downside protection – it Did.

Down Market: Oct1-Dec 31 2018 +1.59%

Up Market: Use the YTD Function 4.66%

ZLU & ZLB supposed to offer some downside protection – They did

Down Market: Oct1-Dec 31 2018
ZLU -0.06%
ZLB -2.29%

Up Market: Use the YTD Function
ZLU +15.98%
ZLB +17.86

ZPR and CPD were supposed to offer some downside protection; but they did not
Down Market: Oct1-Dec 31 2018
CPD -11.82%
ZPR – 13.23%

Up Market: Use the YTD Function
CPD -2.08%
ZPR -2.66%

XLK was supposed to be very volatile with high risk – it did what was expected.

Down Market: Oct1-Dec 31 2018; -18.17%
Up Market: Use the YTD Function +33.7%

Makes me feel more comfortable seeing what does conform to my expectations.

#76 Ponzius Pilatus on 07.28.19 at 12:04 pm

#74 Yukon Elvis on 07.28.19 at 11:07 am
#55 Ponzius Pilatus on 07.28.19 at 12:13 am
Flop and his long posts are back.
Not sure if this is a good thing.
Blog dogs, let’s have a vote.
……………………..

Two thumbs up for the Flopper.
————–
Care to explain why.

#77 SNOOP DOG on 07.28.19 at 12:12 pm

If it ain’t broke….

(and you don’t have a regular maintenance program)

She gonna break when you least expect it and at the worst time.

#78 Groanpeace on 07.28.19 at 12:39 pm

#44 Yukon Elvis on 07.27.19 at 8:11 pm

It’s just Whale poop

#79 crowdedelevatorfartz on 07.28.19 at 12:50 pm

Peggys Cove sunny and warm. Fogbank rolling in about 5 miles offshore.
A few tourists. We left before the insanity started.

Up the coast to Prospect ( The Shipping News film locale when the |Hollywood producers needed a “Newfoundland ” village without actually being in Newf).
Zero tourists and hot and sunny.
Could only hear birds singing …. and the waves crashing on the shore.
Beaut.

Crawled back into downtown Hfx.
Another comfortably warm, sunny day in paradise…. :)

#80 Lizard Man on 07.28.19 at 12:58 pm

The “Shitty of Vancouver” is out if the closer as the most polluted city in the western world, or at least should be.

From Discover on Google https://vancouversun.com/news/local-news/kits-beach-closed-to-swimming-due-to-high-e-coli-counts

This has been denied by media as a story worth printing but it doesn’t change the facts. Hundreds of millions of liters of raw shitty and toxic hospital waste EVERY DAY floods into the waters if Vancouver Harbour, English Bay and False Creek.

Your million dollar False Creek condo smells like a beer parlour toilet at low tide every day, searing eye blustering piss smell. Huge outfall pipes line the shore, buried if course, and 24 outflows into False Creek including uncontrolled outflow from two major hospitals. It’s worse than third world.

They call Hong Kong “Fragrant Harbour”? What a joke the media effort to hide this is.

#81 Renter-Seeker on 07.28.19 at 1:10 pm

“Notice how the highest cash levels coincide with the market bottoms. Theoretically, investors should be fully invested at such moments.”
Doesn’t this put the cart before the horse? The move from cash into the markets leads to the markets getting bid up, so by definition peak cash levels will necessarily coincide with market bottoms in hindsight.

#82 Shawn Allen on 07.28.19 at 1:19 pm

The Blame Game

Imagine a person who blames their lack of financial success on the FED and the government and various perceived manipulators and purveyors of fake news.

And imagine if this person tends to say that “we” are mostly all in the same boat other than the 1% or whatever.

Now, would you bet that such a person will continue to suffer financially or that they will suddenly start doing much better?

#83 Leo Trollstoy on 07.28.19 at 1:23 pm

Typical investors dont need to hold cash

https://www.fool.com/investing/2019/02/27/warren-buffetts-112-billion-cash-problem-what-to-e.aspx

The wealthy need cash in order to get wealthier. They think of cash differently

“He thinks of cash differently than conventional investors. He thinks of cash as a call option with no expiration date, an option on every asset class, with no strike price.”
https://www.barrons.com/articles/what-warren-buffett-likes-about-cash-1473286224

#84 huibolshoi on 07.28.19 at 1:23 pm

Doug, such a handwavy explanation. Don’t you guys use math in your asset allocation decisions? There’s a Kelly criterion for multi asset portfolio allocations based on expected return probability distributions and correlations. See the papers by Ed Thorp.

#85 Shawn Allen on 07.28.19 at 1:34 pm

What Return Do We Need From Equities?

It would be nice to think that the equity portion of a balanced portfolio will return at least say 7% annually over the next ten or twenty years.

But what return are investors implicitly accepting these days?

In a world where government bonds held ten years are guaranteed to return no more than about 2% and where inflation is under 2% and where there are few alternatives, what return would you need to expect from stocks to entice you to invest. Might it be 5% or lower?

And therefore what P/E level should the S&P 500 trade at? Say at least 25 (earnings yield 4% but earnings grow)?

If the market has arguably been bid up in price to a level where it should be expected to return maybe 4 to 6% in the next ten years and if fixed income is generally lower than that should we now expect and be satisfied with more like 4 or 5% on a balanced portfolio? And is that such a bad return if in fact inflation is 2% or less?

#86 crowdedelevatorfartz on 07.28.19 at 1:58 pm

@#76 Prostrated Prostate
“Care to explain why?”
+++++

Simple.
We like Flop.

#87 crowdedelevatorfartz on 07.28.19 at 2:06 pm

@#80 Lizard Man
‘Hundreds of millions of raw sewage flows into Vancouver Harbour…”

+++++

Ahhh yes.
Toilet paper and poo.
Shades of Halifax Harbor 20 years ago.
Then the treatment plant finally became a reality.
I went swimming in Hfx harbour last weekend out by McNabs Island…..the “shrinkage factor” was high.
I was back on the boat almost as fast as I entered the water.
Less than 12 hours later Oceanographers detected a ping from a resident Great White Shark migrating back to McNabs from the Carribean.

Alas Ponzie.
As much as you would like to see another sequel of Jaws……..my timing was off and I survived to insult you for another day…….
:)-

#88 Damifino on 07.28.19 at 2:20 pm

#80 Lizard Man

Your million dollar False Creek condo smells like a beer parlour toilet at low tide every day
————————————

Uh… no, it doesn’t.

I live right beside False Creek and it’s not anywhere near that bad. Granted, I certainly wouldn’t swim in it, but hundreds of ducks, seals, otters, cormorants, seagulls and geese do so every day. They seem to be thriving.

#89 Frank Sentinel on 07.28.19 at 5:12 pm

Let’s get real. If it wasn’t for central banks and governments printing money and pumping up stock markets we would be in a very different financial world. The only way they can keep this fake economy going is because they have to cut ant competition to stocks. This is not a real economy, it is all fake. You will not publish this comment because you know it is true.

#90 Lizard Man on 07.29.19 at 5:37 am

#88 Damfino, OK, we agree, it stinks. I say it’s a horrible stench, you close your windows and say it’s not to bad, tomato, tomatoe. Perhaps as we age our sense of smell isn’t as offended by the crusty line of raw shit that clings just below the lip of the seawall at low tide.

The last court case against the “Shitty of Vancouver”, which it lost , included a study by the Suzuki Foundation, no less, which showed that the ducks etc and ground fish all showed signs of precancerous lesions from exposure to sewage and leeching heavy metals. False Creek is not a healthy environment. In fact if it were a much cleaner tailings pond attached to an oil sands play it would be banned and surrounded by eco warriors . Far more animals die from exposure to Vancouver water than any tailings pond.

False Creek has 24 sewage outfalls lining the seawall all emptying raw sewage and untreated toxic hospital waste, where untreatable superbug have been discovered, your lucky dog. Is exposed when running on the beach.

The three big humps you walk across East to west along Sunset to Kits beach are buried 8 foot sewage pipes flooding straight into English Bay. A massive pipe flushes straight into the harbour at the foot of Main Street. If we had to think up a new way to spell Green Vancouver it would be something like HYPOCRETIN-VILLE.

There’s so much more to this story but the media won’t carry it.

#91 Concerned Reader on 07.29.19 at 11:06 am

What percentage of a portfolio do you rebalance when you see a relative strength trend emerge? If you are currently 20% Canada, 15% EAFE and 25% US and you noticed the relative strength trend change would you simply rebalance the 5% that you are overweighted towards the US or would you then overweight a different region? I suppose my question is how much is too much before you incur too much risk for a balanced/diversified portfolio?