Free money

RYAN By Guest Blogger Ryan Lewenza

It’s official, we’ve taken a one way trip to crazy town and it’s glorious. That is for European borrowers who can currently borrow money at negative interest rates. Even more insane is the headline grabbing story that the Danish bank Jyske Bank is offering 10-year mortgages at -0.5%! If you can’t wrap your ahead around -0.5% (don’t beat yourself up as I think this might be the first time in history this has occurred), this means that a borrower will play back less than they originally borrowed on the mortgage. Pretty sweet deal for Danish home buyers, but I’m not so certain it will work out for the bank offering these loans.

Today I discuss why we’re seeing negative rates across much of Europe and Japan and whether this trend will make its way west, with Canadian bond yields also going negative.

Danish Bank Offers 10-Year Mortgage Rate of -0.50%

Source: Jyske Bank

Currently, there is roughly USD15 trillion of bonds around the world trading with a negative yield. According to Dynamic Funds this works out to 27% of all secondary debt trading at a negative yield. Most of this is in Europe with Switzerland, Germany, Japan and France 10-year government bonds currently yielding -1.03%, -0.65%, -0.23% and -0.37%, respectively, as an example.

Why is this happening?

International Bond Yields Go Negative

Source: Bloomberg, Turner Investments

As with most things it’s a whole host of factors that are driving bond yields lower.

More recently it’s this darn Trump/China trade war that is clearly starting to weigh on the US/global economy and sentiment. This is leading to a risk-off environment with investors bidding up ‘safe’ government bonds.

Economic growth in Europe and Japan is lackluster to say the least, with Europe and Japan both expected to grow at just 1% this year.

Another critical driver behind these absurdly low interest rates is all the central bank buying through their quantitative easing (QE) policies. Recall, QE is when central banks are aggressively buying their own government bonds in efforts to push interest rates even lower. This has provided huge demand for government bonds and is greatly manipulating the overall bond markets.

The Fed and ECB have ended their QE programs while Japan has maintained them. At last check, the combined balance sheets of the Fed, the ECB and Bank of Japan stand at US$14 trillion, up from US$3 trillion back in 2007.

There are other long-term factors affecting bond yields like aging demographics (more demand for safe bonds) and very low inflation levels.

Below I chart inflation (CPI Y/Y) for Europe and Canada. Nerd Alert! I calculate a 3-year rolling average to help smooth out the data and show the underlying long-term trend. Europe inflation has been declining steadily since 2013 and is well below Canada’s inflation rate. Currently, inflation in Europe is running at 1.1% versus Canada at 2%. This is one reason why I believe Canadian bond yields are unlikely to go negative.

Canadian Inflation Running Hotter Than Europe

Source: Bloomberg, Turner Investments

Additionally our economy is growing at a faster rate than Europe and our central bank looks to be holding rates steady while the ECB is considering cutting rates and embarking on another round of QE, to help boost growth and inflation in the region.

For these reasons I believe it is unlikely that we will see negative interest rates in Canada.

Now having analyzed the financial markets for nearly 20 years and made countless calls and recommendations (some of them terribly off the mark), you always have to look at the other side of the argument to see where you could be wrong. In this case, if the global economy were to experience a severe economic recession (not our base case) then Canadian bond yields could go negative.

Let’s hope it doesn’t come to that!

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

47 comments ↓

#1 Ray on 08.17.19 at 4:01 pm

What do you think is the probability that MMT will happen ?

#2 Rob in Germany on 08.17.19 at 4:07 pm

Quite interesting. Mortgages in Germany are currently running in the 1-1.2% range 10 years locked. Meanwhile Spain finally recovering from the bubble mortgages are in the 5-6% range!

Now here’s the real killer, buying a place in Germany costs between 8 and 16%, while in Spain the costs for a cash purchase are an eye watering 15% for a cash purchase and 20% for a property requiring a mortgage!

That is on top of any down payment you have!!!!

#3 what the what?? on 08.17.19 at 4:14 pm

how would negative rates affect the preferred share market? fixed and floaters?

#4 Westcdn on 08.17.19 at 4:25 pm

It will be interesting if NA interest rates go negative since many believe banks only loan out cash deposits. Paper (digital) money is under higher loss risk as a store of value. I can guess the outcome and it is not positive. I do believe our leaders will fight deflation to taxpayers’ death. So, I prepare with real things and companies with cash flow – I do fail but it is my life (for now) – win more than you lose. Plus, don’t rely on an economist no matter how sound they speak, they are just an opinion and I can get that from neighbours but weigh the source and listen.

#5 Dalke McEndertom on 08.17.19 at 4:34 pm

Ryan, I want to hold my preferred shares for the next 25 years. Will they eventually recover in this seemingly perpetual low interest rate environment?

#6 Stan Brooks on 08.17.19 at 4:38 pm

1. Additionally our economy is growing at a faster rate than Europe

This is factually incorrect.

https://tradingeconomics.com/european-union/gdp-annual-growth-rate

https://tradingeconomics.com/canada/gdp-growth-annual

2. Our growth is credit based, EU curbed their private borrowing long time ago. Their private debt is way lower that our in terms of % of GDP.

3. Our inflation is much, much higher than the inflation rate in EU as our M2 expansion is higher – at 5 % annually. EU’s is lower.

4. Our rates are going lower, BoC will be cut probably 50 basis points pretty soon/for sure this year.

5. We will have negative nominal interest rates, that will be combined with horrific inflation, it is a given, a certainty.

6. We have much smaller social net, in terms of pensions and government benefits so we will fill it much more painfully.

#7 Jo on 08.17.19 at 4:53 pm

Hi Ryan
Great blog post as usual. Do you think the sell off of CPD and ZPR is in anticipation of interest rates going much lower or negative in Canada?

#8 Stan Brooks on 08.17.19 at 5:03 pm

#1 Ray on 08.17.19 at 4:01 pm
What do you think is the probability that MMT will happen ?

MMT is already here – central banks ‘buy’ gov bonds – these will never ever be sold out on the open market again, so we have the unlimited monetization of government debt that nobody in their right mind will consider at current yields and market conditions/inflation.

What is really idiotic is that this translates into lower rates for borrowers instead of just plain government debt/deficit subsidy that spawn growth through tax rebates.

The end game will be the real destruction of currency, there is no way current subsidy of borrowers can continue any longer, savers and retirees are already squeezed.

If incompetent central bankers continue current policies, we will see both strongly negative real rates and bad inflation and very, very expensive gold.

#9 palebird on 08.17.19 at 5:39 pm

I agree with Stan on most points. Don’t know about gold. There is not enough of it. The USD will still be king. But there will be some serious upheaval coming shortly. This is all uncharted territory.

#10 JSS on 08.17.19 at 5:40 pm

Hi Ryan, what will be the impact on Canadian defined benefit pension plans, as bonds head towards zero, and in some cases below zero? Thanks

#11 Tony on 08.17.19 at 6:03 pm

Re: #5 Dalke McEndertom on 08.17.19 at 4:34 pm

They’ll do well between the start of May 2020 and through to the end of September 2020. After that don’t even ask you don’t want to know if you’re still holding them. I’ll be buying TBT late April 2020 and will watch the U.S. dollar strengthen and interest rates increase.

#12 Steven Rowlandson on 08.17.19 at 6:07 pm

Negative yields on bonds sounds like a concession to insolvent governments. The objective is to prevent an outright in your face default and keep the farce of a global financial system going for a little while longer….
How long can it last before some one pulls the plug?

#13 St rider on 08.17.19 at 6:10 pm

Ryan, Given the expected direction of rates, why haven’t perpetual preferred shares faired better?

#14 theoryAndPractice on 08.17.19 at 6:34 pm

Ryan, What is the check mark for a well balanced 60/40 portfolio vs indexes (relative movements) ? How would you alter it against severe recession proactively rather than hoping it won’t happen ?

#15 Camille on 08.17.19 at 6:41 pm

I agree. Everything is already here in some mild form, or elsewhere more engrained in other developed countries. For those who want to see its worrysome. That’s probably why the idea of hope is mentioned. You can’t predict the future. Much worrysome talk from heavyweights like Ray Dalio, Jeffrey Gundlach…

#16 Mdq on 08.17.19 at 7:02 pm

‘hope’ is not a strategy

#17 Mike on 08.17.19 at 7:12 pm

https://www.youtube.com/watch?v=MzKLs8l9UPM#action=share

#18 Shawn Allen on 08.17.19 at 7:17 pm

Explain what costs

#2 Rob in Germany on 08.17.19 at 4:07 pm
Quite interesting. Mortgages in Germany are currently running in the 1-1.2% range 10 years locked. Meanwhile Spain finally recovering from the bubble mortgages are in the 5-6% range!

Now here’s the real killer, buying a place in Germany costs between 8 and 16%, while in Spain the costs for a cash purchase are an eye watering 15% for a cash purchase and 20% for a property requiring a mortgage!

That is on top of any down payment you have!!!!

*********************************
Are we supposed to know what costs you are talking about?

#19 Ryan Lewenza on 08.17.19 at 7:22 pm

Jo “Hi Ryan. Great blog post as usual. Do you think the sell off of CPD and ZPR is in anticipation of interest rates going much lower or negative in Canada?”

The sell off in CPD is because interest rates are declining. The GoC 5-year yield (main benchmark yield for preferred shares) has fallen dramatically which is why prefs are down over the last 6 months. Whenever rates recover so will prefs. We’ve been adding to them on this weakness. – Ryan L

#20 Glibbie on 08.17.19 at 7:24 pm

@#11 Tony

What will happen after Sep 2020?

#21 Ryan Lewenza on 08.17.19 at 7:26 pm

what the what?? “how would negative rates affect the preferred share market? fixed and floaters?”

It would be negative up until a point. Fixed floaters would likely keep declining as rates decline but then great value will surface and institutional buyers would then return. This is why you also need bonds in a portfolio as a hedge to this. – Ryan L

#22 Debtslavecreator on 08.17.19 at 7:26 pm

The junk monetary policy will be put on overdrive in Canadstan too by the end of October meeting at the latest. The fraudulent manipulation of rates and other forms of government intervention (CMHC, etc) have helped dramatically inflate our shelter costs and general inflation much higher than what is justified by productivity / real wage gains
The system amounts to more Soviet central planning and has nothing to do with free market economics
It’s very concerning when financially illiterates use government subsidies such as CMHC and gamble with 5 % down to pay an inflated price for a run of the mill house and 5 years later these illiterates talk like geniuses claiming they “made”400 k” tax free
This junk interest rate and QE game uses the debt counterfeiting operation to tax away our disposable income as the artificially cheap fake money (credit) inflated nominal asset prices far higher than the median salary so that over time most households see their take home pay shrink due to property taxes, mortgage payments, insurances , fees, rents all rise much higher than the take home pay
Many end up calling me every 12-18 months to apply for a refi using the imaginary price as collateral to pay off the accumulated LOC/CC debt

Lowering rates from here will only make the final collapse much worse as society is torn apart with no interest income , explosive housing inflation and general inflation and an eventual collapse that wiped out pensions and most of us

If the BofC drops rates over the next year or do the timer on the financial systems detonator will have been set
That’s what you get for entrusting your financial system to a bunch of quacks who have been indoctrinated in junk theories loaded with faulty assumptions and garbage statistical methods

#23 Ryan Lewenza on 08.17.19 at 7:30 pm

St rider “Ryan, Given the expected direction of rates, why haven’t perpetual preferred shares faired better?”

Perpetuals have rallied a bit but not as much as I would have expected. Lower rates are good for perps but credit spreads (the yield on corporate bonds over government bonds) has also widened out recently which may explain why they have rallied as much as would be expected with the decline in yields. – Ryan L

#24 Blandy McShoreline on 08.17.19 at 7:32 pm

Just a thought, what would it take in the macro economic sense (negative interest rates, QE, Operation Twist to the extreme etc) for a Portfolio Manager to recommend something other than 60/40?

#25 Ryan Lewenza on 08.17.19 at 7:32 pm

theoryandPractice “Ryan, What is the check mark for a well balanced 60/40 portfolio vs indexes (relative movements) ? How would you alter it against severe recession proactively rather than hoping it won’t happen ?”

If we believe a severe recession is coming we would increase cash and our weight to government bonds. – Ryan L

#26 Ryan Lewenza on 08.17.19 at 7:41 pm

Dalke McEndertom “Ryan, I want to hold my preferred shares for the next 25 years. Will they eventually recover in this seemingly perpetual low interest rate environment?”

Yes they will recover. While rates will remain low they will still ebb and flow with the business cycle and economy. We’re in a lull right now but ultimately rates will rise from these low levels and so will prefs. But I am witnessing higher volatility with prefs than in years past due to these low level of interest rates. Given this pref investors may have to be more tactical than they were in the past by trimming into rallies and adding back on weakness. – Ryan L

#27 Ryan Lewenza on 08.17.19 at 7:57 pm

Stan Brooks “1. Additionally our economy is growing at a faster rate than Europe. This is factually incorrect.”

https://tradingeconomics.com/european-union/gdp-annual-growth-rate

https://tradingeconomics.com/canada/gdp-growth-annual

Stan, I have no problems being challenged on my positions, I’m just not a fan of know-it-alls, who think they are smarter than everyone else. You’re referencing Y/Y numbers versus Q/Q. I look at both but prefer Q/Q when trying to assess shorter term momentum of an economy. Europe’s economy slowed to a crawl in Q2 at just 0.2% Q/Q whereas Canada is tracking at 2.5%-3%. Moreover, based on the first two quarters and forecasts for the second half, Canada is expected to grow 1.7%-2% this year, whereas Europe is forecasted to grow at 1%. Am I still factually incorrect? – Ryan L

http://www.rbc.com/economics/economic-reports/pdf/other-reports/ecotrend.pdf

https://www.reuters.com/article/us-eurozone-economy/euro-zone-gdp-slows-in-second-quarter-as-growth-in-germany-shrinks-idUSKCN1V40UD

#28 Long-Time Lurker on 08.17.19 at 8:03 pm

Good article and analysis, Ryan. I thought your technical chart and analysis on Garth’s Thursday post was also good.

What do you think the odds are for a no-bid scenario on all these negative bonds? Who’s buying all these negative-yield bonds other than (their own) governments and government-mandated pension funds?

About a decade ago when Japan had negative interest rates I read that lots of people were buying safes and were putting their cash in them.

#29 Out Of Work CEO, Will Travel on 08.17.19 at 8:28 pm

My family included seven kids with Mother at home and my dad had his own business running the trucking firm in a small town in the 1960’s and early 1970’s. During this fifteen year period in our house most of the disposable money went to pay for the two oldest girls university education. For the fifteen years no furniture was bought. We wore hand-me-down clothes. We did not bother asking for anything as we knew my sisters were finishing university. My parents got married in the second World War and did not get past grade 6. So I guess I know what negative interest rates will bring….we won’t be shopping; we won’t be going out to eat in restaurants…fun will be home-made and church will again be attended. It’s not the end of the world not having any disposable money it just FEELS LIKE IT.

#30 Shawn Allen on 08.17.19 at 8:29 pm

Credit Spreads on Rate Reset Shares

Perpetuals have rallied a bit but not as much as I would have expected. Lower rates are good for perps but credit spreads (the yield on corporate bonds over government bonds) has also widened out recently which may explain why they have rallied as much as would be expected with the decline in yields. – Ryan L

***********************************
And vastly wider spreads versus some years ago also explains much of the reason rate resets fell. The five year government yield fell, but in many cases the widening of the spread was even greater.

Possibly as rates fall and the yields on high interest savings accounts fall from today’s 1.6% to close to 3% in some cases down under 1% then rate resets will be more competitive and they will rise in price.

Some bank rate resets years ago were issued at yields under 4% (even 3.6%) because that seemed decent compared to 0.25% on a high yield savings account… and the five year rate was expected to be higher upon rest.

When high yield savings accounts went back to about 2% rate resets at under 4% seemed like a bad idea.

Well, that is conjecture, but it is a fact that the spreads over the 5 year widened very considerably. If those spreads narrow then rate resets will recover somewhat.

But those issues that came out at say 3.6% years ago and have already reset once, and now trade under $15, will very likely never see anything close to $25 again. Investors were too burned the first time on that.

#31 akashic record on 08.17.19 at 8:29 pm

You can ask for negative interest rate, if the cost of money you lend is zero.

The bank offering negative rate obviously does not lend out depositors money, who collect some (positive) interest from the bank.

Negative interest rate is “the emperor is naked” moment, the illusion is broken.

It raises the question for the future: on what basis are borrowers charged with *interest*, instead of some nominal fee for administering the (deposit cost)free money accounts?

It raises the question: is banking the largest ponzi of all times, ever since gold was removed from the system and banks can top up depositors real money with bottomless central bank free money?

#32 Ken M. on 08.17.19 at 8:39 pm

#61 Life Insurance on 08.17.19 at 11:16 am
Why does the Smoker need life insurance with all the $millions he proclaims to have made?

0000000

He mumbled something about not being a risk taker.

#33 Ryan Lewenza on 08.17.19 at 8:45 pm

Long-Time Lurker “Good article and analysis, Ryan. I thought your technical chart and analysis on Garth’s Thursday post was also good.

What do you think the odds are for a no-bid scenario on all these negative bonds? Who’s buying all these negative-yield bonds other than (their own) governments and government-mandated pension funds?”

Thank you! Almost 0%. There will always be a buyer. Now at what price. While I’m deeply concerned about the high debt levels seen around the world, I’m not in the doomsday camp on the global economy. Yes there will be pain but we’ll deal with it. We always do! My other concern is how little ammunition the Fed and other central banks have to combat any severe contraction, but again we’ll figure it out. As you can see I’m a glass half full kind of guy. – Ryan L

#34 Reality is stark on 08.17.19 at 8:48 pm

There is a reason why they call it “husbandry”.
You were supposed to know that the 2008 financial crisis was a catalyst for deflation. Globalization is also deflationary.
This in no way means that the government will slow down the rate of your property tax increases, but you are responsible for knowing that you will need to get by with less.
Those that borrowed to maintain a lifestyle for someone that practices retail therapy will come to the realization of the effects of deflation in family court.
Canadians heavily indebted who insist on borrowing their way to prosperity will have all their equity wiped out.

#35 Nonplused on 08.17.19 at 8:59 pm

I thought I understood discounting as I learned it in econ 101, but apparently not. See, I was taught that a dollar today is worth more than a dollar in 10 years, which is why you discount cash flow to get net present value. It is also why loans and bonds carry an interest rate, because the lender has to be compensated for waiting to get his money back at some future date, and also the risk he won’t get it all back. So far that all makes sense. i (the risk free rate usually that of a US government bond) plus r (a risk adjustment based on the quality of the loan) factored by n (the time to maturity). (i+r)^n. Simple stuff.

But zero and negative interest rates? What perceived economic conditions could possibly inspire someone to take the risk involved in making loans when one knows for sure he won’t get all his money back due to negative interest rates? It reverses everything! For one it implies that money in the future will be worth more than it is today (-i). If you believe that I have a bridge to sell you! Second, it implies that loans are less risky than sitting in cash (-r). (-i-r)^n???? Who ever heard of such a thing???? I certainly never saw it in any text book.

So what could cause negative interest (-i)? It certainly implies deflation ahead but that wouldn’t explain why people wouldn’t rather just sit in cash. During deflation your cash grows more powerful without being invested in anything. Things get cheaper. You’d be ahead just waiting for prices to drop, no risky investing or lending required. So we have to assume that rational investors are not lending money at negative interest rate. Zero really is the boundary for that kind of business and it’s a hard one. So the (i) part is not negative.

That leave risk or (r). But what would cause the risk of a loan to be negative compared to cash? What would drive the equation to be (i-r)^n???? Why would people (or banks for that matter) want to get rid of their cash in exchange for a loan promising to pay them back less than they lent? It’s a real brain stumper. Not much comes to mind besides a fear of confiscation. Or perhaps a fear of the bank you have your money in collapsing and your money being “bailed-in”. I can’t think of anything else that would make someone accept a promise to pay at negative interest rates. The only thing I can think of is that savvy investors think the odds of their money in the bank disappearing is not zero. For example if inflation is currently 2% and taxes are 50% then the break even interest rate on a bond is 3%. For (i+r) to be -0.5, r must be -3.5%. Not a huge number, less than 4 in 100 odds, but not trivial.

The reason said investor would prefer a bond he priced with r at -3.5% is because assets like loans and bonds are not subject to confiscation Cyprus style in a bank collapse. They aren’t liabilities of the bank in the same way deposits are. Some entity owns them directly. Once the dust settles the bonds are matched up with their owners. Much the same way that your broker cannot loan out shares you have in your RRSP account, that account is custodial and the broker is required to have possession of the shares. The reason for this is so that if the brokerage collapses (and some have before) your RRSP and the stocks and other assets (bonds for example) it contains can be transferred to another brokerage and the people do not have their retirement savings wiped out by the collapse of the brokerage. But deposits are not like that. For a bank they are liabilities, and about the last one they have to pay out in bankruptcy. So for Canadians that means anything above the CDIC insurance limit in your account is pretty much unrecoverable if your bank fails. Canadian banks aren’t likely to fail, but r isn’t that negative in Canada either. I’m not sure it’s negative at all but it certainly isn’t -3.5%.

So my theory explained above in exquisite detail is that the reason yields have gone negative for certain asset classes is that some people somewhere in the world don’t trust their banks. It’s not the (i), it’s the (r).

#36 Bore us Becker on 08.17.19 at 9:02 pm

Big daddy call no ceiling. A time to fly a time to fry. Time to pick up the kids before the whole shithouse up in flames

#37 islander on 08.17.19 at 9:05 pm

Closer to home:
https://www.theglobeandmail.com/report-on-business/pipes-with-asbestos-still-used-in-new-buildings/article19357158/

How many of your readers realize that asbestos is still being used in new buildings in Canada?

“Pipes containing asbestos are being installed in new condominiums, hospitals and high-rises in Canada, despite widespread health concerns that have led many countries to ban its use.”

#38 Nonplused on 08.17.19 at 9:11 pm

“As you can see I’m a glass half full kind of guy. – Ryan L”

Perhaps you need one of these:

https://despair.com/collections/glassware/products/pessimists-mug

I’m reminded of the saying “an optimist sees the glass half full, a pessimist see the glass half empty, and an engineer see the glass as over-designed”.

#39 Nonplused on 08.17.19 at 9:16 pm

PS if you haven’t been to dispair.com before check it out, good for a few giggles. Their motto:

MOTIVATIONAL PRODUCTS DON’T WORK. BUT OUR DEMOTIVATOR® PRODUCTS DON’T WORK EVEN BETTER.

#40 Sail Away on 08.17.19 at 9:50 pm

#32 Ken M. on 08.17.19 at 8:39 pm
#61 Life Insurance on 08.17.19 at 11:16 am

Why does the Smoker need life insurance with all the $millions he proclaims to have made?

0000000

He mumbled something about not being a risk taker.

——————————-

Haha! Subtle… Thanks for the belly laugh

#41 Nonplused on 08.17.19 at 11:17 pm

Of course I forgot the 1. The correct formula is (1+i+r)^n. But I was thinking about the factors of influence, the 1 never changes.

#42 Nonplused on 08.17.19 at 11:25 pm

And of course I was using compound interest as an example with (1+i+r)^n. With no compound interest it would be (1+i+r)*n. But regardless the other points remain the same. If you understand what I’m talking about, you probably already know the formulas. Negative yields mean people think their money is not as safe in the bank as it could be. There is no other explanation that makes sense.

This also happens to be why “non-custodial” gold isn’t such a great safe haven. If you don’t have assigned bars, your gold in the bank is just another liability to the bank same as a deposit. I think that’s why it hasn’t rallied higher in the face of negative interest rates. You won’t be anymore entitled to it than you are your cash deposited at the bank, in the event the SHTF, and it isn’t insured.

#43 acdel on 08.17.19 at 11:37 pm

Ryan, great post. As you illustrate what is happening in certain parts of Europe is just the tip of the iceberg.

As I mentioned a couple of posts back; batten down the hatches dawgs, (ok felix as well) a new reality and recession is upon us.

As Ryan, Doug and Garth always state, stay diversified but also be smart about it; it is a whole new ballgame now in which we have never seen before. Yep, I am concerned!

#44 Ace Goodheart on 08.18.19 at 12:17 am

Katydids. Bush crickets. Long horned grasshoppers. 6,400 species. Primarily nocturnal in their habits.

Like your 19 year old son visiting the Pink Palace on Corfu for the first time. It is going to be a short, hazy, for the most part unconscious introduction to adult life, from which he will not emerge unscathed. But he’ll have a really, really good time (and you can hire a really, really good lawyer to deal with the custody and child support payments that come afterwards).

A bright green Katydid landed on our stroller this afternoon. Got us to thinking. These odd things only start flying around in August. When the sun has already gone and we are just running on fumes from June and July.

When every thunderstorm is a hail storm.

When the plants start showing that tell tale sign of lack of solar energy, the tomato plants slowly taking on that black mould that will eventually kill them, the beans wilting, the hot pepper plants with all of the peppers turning red.

We are heading into that 8 month period of the year, the normal state of affairs for a country located far too northwards, when the sun only provides what amounts to a night light of power, with its rays tilted at such an angle that they could not grow an ear of corn if the future of the planet depended on it.

The Katydid. The bug that shows up at the end of the party. Like your 13 year old brother picking up bottles after you and your 11th grade high school class have had the mother of all bush parties.

Like the toddler at the splash pad, chasing after the retreating waves.

Coming for the left overs. Actually born to eat stuff that has already gone bad.

What do the Katydid and equities investors have in common?

Well, pretty much everything. Turns out, by the time that IPO has been released to the public, most of the folks you are buying your shares from are just cashing out.

When you buy that stock that is on an upswing, you are just buying out options of the CEOs and the CFOs who already knew this was coming six months in advance and are selling into the storm.

The day to day investor is eternally screwed. Like the late summer Katydid. A late arrival to the feast. Eating stale left overs. The party is already finished. The ambulances and police cars have long since left, taking the over indulged to the drunk tank and the emergency room. You are just gorging on the rotten left overs.

What to do?

Well, there are a number of spots in the downtown Toronto where you can talk to the folks who get in ahead of time.

Private stock sales. Buy the next best thing before it becomes stale meat.

Get ahead of the pack.

Don’t be a katydid……

#45 Smoking Man on 08.18.19 at 12:44 am

#40 Sail Away on 08.17.19 at 9:50 pm

#32 Ken M. on 08.17.19 at 8:39 pm
#61 Life Insurance on 08.17.19 at 11:16 am

Why does the Smoker need life insurance with all the $millions he proclaims to have made?

0000000

He mumbled something about not being a risk taker.

——————————-

Haha! Subtle… Thanks for the belly laugh.
……..

You can start off with 10 k and turn it into a million in less that a year.
400 to 1 margin if you know how to work it is amazing.
I have told you muts how to do it free of charge.

Yet most of you mock me. Your lose Antifa.

It works. Two blog dogs emailed me their P&L that actually tried it.
Both quit there jobs.

Enjoy punching a clock for the rest of your life….I’m the one that is belly laughing… I get drunk , give out the KFC recipe at no cost….

And you communist laugh at me..

Your teachers are evil…

#46 will on 08.18.19 at 1:03 am

Ok so if a negative yield on a mortgage means you would pay less back over the long haul, does that mean if you own a negative yield bond it would pay you less than the coupon? Thanks in advance Ryan and thanks for the tutorial.

#47 Sail away on 08.19.19 at 12:09 pm

#45 Smoking Man on 08.18.19 at 12:44 am
#40 Sail Away on 08.17.19 at 9:50 pm
#32 Ken M. on 08.17.19 at 8:39 pm
#61 Life Insurance on 08.17.19 at 11:16 am

—————————————————

Why does the Smoker need life insurance with all the $millions he proclaims to have made?

———————————————

He mumbled something about not being a risk taker

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Haha! Subtle… Thanks for the belly laugh.

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I get drunk , give out the KFC recipe at no cost….
And you communist laugh at me..
Your teachers are evil…

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Hey Smokey, I’m just laughing at the risk taker comment, not mocking you.

It’s funny since insurance is all about reducing risk which seems to be exactly opposite your stance.

Why do you care about life insurance?