By Guest Blogger Doug Rowat
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Check out the latest commentary from financial author and journalist Michael Lewis:
Just before a panic, all is well—usually more than well. Then the panic strikes, chaos ensues, and a dramatic status upheaval commences. People who were on top of the financial order plummet to the bottom. People whose opinion was most valued are now ridiculed. Others who were on the sidelines race onto the field of play. The guy out in the wilderness who had been saying for the past four years that the good times were an illusion and a sham is wheeled in to take a bow and then hustled off stage, so that everyone else can regroup, and the whole process can start over again.
Lewis has perfectly outlined the recurring characteristics of any market panic. But, in truth, it’s not actually his latest commentary. The passage above was written in 2009 following the financial crisis. But his observations of market crises, as we sit in one presently, are timeless. The specifics change each time, of course, but the main features remain identical.
Has Covid-19 followed a different pattern from other crises? Not really.
First, was all “well” or even “more than well” prior to Covid-19? You bet. The S&P 500 had advanced 29% in 2019, its second best calendar-year performance of the last two decades, and was up a whopping 400% overall from its 2009 lows. Meanwhile, the labour market was basking in a miniscule 3.5% unemployment rate and the US economic expansion had reached a new record in terms of duration. In short, things were fantastic.
Secondly, are people with the “most valued” opinions now facing embarrassment and ridicule? Yes sir. Here’s a sample of some of the 2020 outlook reports that I reviewed prior to the onset of Covid-19.
Fiera Capital, a respected asset manager with billions in assets worldwide, predicted we’d see “a revitalization of global growth” in 2020 and had this to say about equities:
Equities should continue to thrive on the back of both multiple expansion (ample liquidity/improved sentiment) AND earnings growth (stemming from a reinvigorated growth backdrop). Despite trading near all-time highs, multiples are not extended by historical standards, while unnerved investors have positioned defensively through 2019, which offers the opportunity to redeploy elevated cash and bond positions back towards equities that offer a compelling value proposition.
And here’s what the esteemed BMO Global Asset Management team had to say at the start of the year:
[We] expect continued global expansion underpinned by three economic drivers:
* Labor market strength
* Accommodative monetary and fiscal policy
* Stabilization in the manufacturing sector
A fourth driver of markets, and perhaps the least predictable, will be political developments in 2020.
Well, so much for labour market strength and a stable manufacturing sector (ISM Manufacturing at one point this year dropped into the low 40s). And BMO also entirely missed 2020’s fifth, and really only, market driver—a global pandemic. At least BMO was right about the accommodative monetary and fiscal policies, but I doubt that they had any clue that “accommodative” would mean interest rates at zero and US$8 trillion worth of stimulus.
And, finally, Credit Suisse, which globally manages a massive US$1.4 trillion in assets, bullishly raised its S&P 500 target to start 2020 and then fired out this rosy strategy report:
Credit Suisse: the wrong forecast that (accidentally) may be correct…
Source: Credit Suisse
Now, I don’t pick on these asset managers and strategists in particular—almost everyone had bullish outlooks at the start of 2020 and no one cited ‘global pandemic’ as a risk. Our own Turner Investments outlook report was also optimistic and made no reference to viruses of any kind. However, I actually wrote about the dangers of trusting year-ahead outlooks a few years ago on this blog. I cited New York Times columnist Jeff Sommer who highlighted the following:
Since the start of 2000, The Standard & Poor’s 500-stock index has ended in negative territory in five calendar years (2000, 2001, 2002, 2008 and 2015) and has been virtually flat once (in 2011). But while a handful of individual forecasts have, from time to time, predicted mildly negative years for stocks, the Wall Street consensus in every single year since 2000 has predicted a rising market.
Consider the calamity of 2008. … The S.&P 500 fell 38.5% in the course of those 12 months…the forecast for 2008 was unusually bullish, calling for a rise of 11.1 per cent. Wall Street missed the mark by 49 percentage points that year.
In other words, Wall Street forecasts for this year, or really any year, are deserving of ridicule.
Next up in the Michael Lewis market-crisis playbook: the appearance of the perma-bears.
Naturally, there’s been no shortage of pessimists patting themselves on the back in 2020. Some, such as Nouriel Roubini (aka, Dr. Doom) are even doubling down. Roubini is now warning of a 10-year depression. While such predictions stoke fear, the vast majority of the time these doomsayers are actually contrary market indicators. And, naturally, as the market has roared back over the past three or four months, Michael Lewis’s other observation—that the pessimists will be quickly “hustled off the stage”—is also proving accurate. But don’t worry about Mr. Roubini, he’ll survive.
Dr. Doom’s fun side
Source: Google Images
So what does all of this mean? It means that every market panic, though unique in its own way, follows a familiar pattern. Things will be good, often very good, and then suddenly they won’t be. And almost no one will have accurately predicted the transition. The perma-bears will then take a victory lap, usually stoking more fear as they do so, and soon disappear. Finally, the market itself will “regroup” and rally. And every five or 10 years, we’ll do the same thing all over again. Bon Jovi said it best: it’s all the same, only the names will change.
However, through each market panic what’s most important is 1) having a balanced and diversified portfolio to begin with (remember: you’ll never anticipate the next crisis—if the investment behemoth Credit Suisse can’t do it, you definitely can’t) and 2) remaining invested once the crisis is underway. Why? Because trying to time your way around a panicking market is futile. Either your exit point or your re-entry point will be incorrect, likely both.
Further, be conscious of investment horizons: if you can be disciplined in the face of a crisis and play the long game, making a profit eventually becomes almost a certainty (see chart below).
So, once you recognize that the basic characteristics of market panics repeat themselves each time, you’ll deal with the next one like Bill Murray dealt with “Ned!” in Groundhog Day—you’ll (metaphorically speaking) punch it right in the face and keep on walking.
S&P 500: probability of a positive return
Source: First Trust; data range: end-1936 to end-2017
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.
80 comments ↓
NEVER, EVER underestimate the power of doom!
Any of you inbred southern hillbillies thinking, stupidly and selfishly, of coming up here this weekend?
Then get ready to pay, idiots!
New parking fees have taken effect for non-residents.
$50 a pop.
https://www.orillia.ca/Modules/News/index.aspx?feedId=e2ed807c-4514-469d-a4a7-0f8ebb5fb91d&page=2&newsId=484e2240-80cd-44ed-8613-fb717d93a7bc#
https://www.barrie.ca/City%20Hall/MediaRoom/Pages/Detail.aspx?MediaRelease=852
That’s just part of the fun you can expect. Don’t forget your tire pump and scratch remover. Apparently there are some really big mosquitoes damaging cars from the GTA these days.
#123 Boomer Bill on 07.24.20 at 10:59 pm
News from the ground folks. This sale took place last week across the street from a bud’s house. Decrepit bungalow, 5 minute walk to the subway in Etobicoke, listed for $1.1 million, sold for $1.35 million in 4 days. Obviously bought only for its lot value…
/////////////////
Hmmm lets do some math here.
The lot is 49.5 x 122.5 = 6063.75 sq ft
Property sold for $1,328,000
That is a very reasonable $219.00 per sq ft of soil.
snicker, snicker
So early today.
Yes. I hope I have learned by now not to try to time the market. I have lost enough trying to do that in the past. Buy and hold until I need to liquidate.
The top influencer has got to be the person who got his dream job of being the advisor to Trump – Larry Kudlow. (Lawrence Alan Kudlow )
An influencer is someone in your niche or industry with sway over your target audience. Influencers have specialized knowledge, authority or insight into a specific subject. Their pre-existing presence in a niche makes them a useful launching pad for brands in search of credibility.. An influencer does not have the burden of making decisions and must have the ability of speaking with a forked tongue while saying nothing.
#2 Suggestion:
Go Play in the traffic on the 400 or 11 its a free country and you have no right got it!
P.S. i live in the near north and most local businesses depend on the summer migration to survive so quit being such a jerk
The doomers and semi doomers all know how the prophets must have felt. No one ever listened to any of them either – and in this life especially and absolutely in this day and age ever will !!
WHO’S THAT young lady to the left in the black dress.
SMOKIN HOT!!!
Everyone has his own plan – until he doesn’t.
The main market driver this year was covid-19 and things won’t change until a antiviral medication that targets covid-19 comes into the market. Experts say the antiviral will be available (early) next year. An antiviral is much easier to develop and test than a vaccine. When that happens, markets will go up sharply fueled by the news and near-zero interest rates. Compared with upcoming covid-19 cure, the outcome of the election in US and the China-US frictions are a non-factor.
@#2 Cottagers stay away
I talked to a friend yesterday who makes deliveries all over the maritimes on a weekly basis.
The rural towns and villages that rely on tourism in the summer are dead.
Jobs? Non existent.
Business? Closed.
Economys? Dead.
People? Worried.
Careful what you wish for.
The number of people who’ve been diagnosed with COVID-19, linked to the Kelowna cluster, is now at 86. Seventy-four are residents of the Interior Health region.
Two weeks ago, Interior Health announced that a single group of tourists from Alberta, the Lower Mainland and the Interior met in Kelowna and spread the virus to a number of people in late June and early July. Since then, public health officials have been contact tracing hundreds of people across the province who were connected to this group, or to others who had been in contact with them.
Dr. Bonnie Henry said earlier this week that close to 1,000 people in B.C. were self-isolating due to this Kelowna cluster of cases.
https://www.castanet.net/news/Kelowna/306170/86-people-across-B-C-COVID-positive-stemming-from-Kelowna#306170
#4 Reasonable on 07.25.20 at 10:08 am
So early today.
Yes. I hope I have learned by now not to try to time the market. I have lost enough trying to do that in the past. Buy and hold until I need to liquidate.
——————
Re: timing the market
There’s a danger here. Don’t swing too far the other way. Here’s an example:
You try to time the market and lose… repeatedly… so you make the decision to not try that again and begin to ignore major market signals since that feels like ‘timing’.
The markets drop to a ten-year low. You ignore. The markets drop 40%. You ignore. The markets gain 50%. You ignore.
Everybody needs to time the market to some extent. It’s not a bad word. Call it ‘rebalancing’ if it helps, but, in my opinion, one should not take ‘never timing’ as their new religion.
#2 you need to see a DNA analyst. It is apparent neanderthal forms a large portion of your genetics.
re: Cottagers STAY THE HELL AWAY! Get a life.
Time invested vs. Probability of return > 0 is worth keeping in mind to help stay disciplined and not exit.
So is expected 10 year return vs. CAPE 10. Interestingly, in recent years the correlation has only been getting stronger. Expected return now a couple percent higher than GICs. Not clear it’s worth the downside risk at the moment. Seems likely there will be better entry points if you look at the historical data and the way things are going. Scale contributions up/down as the multiples change. Doesn’t need to be all or nothing.
#2 Cottagers STAY. Yup what I’ve been saying all along. This is about taking away our travel rights.
Slow steps. This war will be won by Incrementalism.
Later on it will be approved license plates allowed travel only.
That’s why tolls/cameras/A.I. is being floated for GTA highways.
That’s why my city and many other had streets dug up for 5G cabling as soon as the shut down began. For the electronic contu grid. Toronto Star already said the city is to be covered by sensors.
Fear is the weapon.
Are we in a long drawn out process to go cashless or not?
I use it exclusively.
My wife prefers the plastic.
I just watched a report where they stated that the U.S is experiencing a coin shortage and businesses want you to dig out your old coins.
Walmart wants cards and correct change where possible.
I want Canadian Walmarts to sell Redvines Licorice.
I will give the, correct change for it…
M46BC
Thanks Doug for the Saturday post
I agree and disagree.
Hopefully for positive discussion!
I agree long term thinking is always better and you can point to all the charts you want history has shown we will recover. But the past cannot predict the future
I disagree with your comment as there are lots of other factors, Robin Hood! in the US the Care act has given many Americans tons of money and they are gambling
People are not gambling on sports so they are gambling in the market. Many charts show this in the past few months.
It’s been shown that this gigantic rise is due to fed stimulus and combined with all the gamblers pushed 10 stocks to record highs and the majority of stocks are lagging.
Is this time different?
I honestly do not know?
My stock portfolio is up almost 10 percent since January 1 and I have three stocks in the negative out of 10.
No high flyers all what I consider safe dividend paying stocks. So all good for long term.
But what happens if 2019 normal never returns? Yes there will be a new normal and we don’t know what that is yet!
So yes you are correct a balanced portfolio should be okay and individual stocks will be a hit and miss. I don’t know?
In conclusion
Next few months is scary
short term 1 to 3 I am worried,
Long term 5 To 10 years yes we will be fine. Some sectors will fail others the same and some big gainers in new innovative technology.
But I am almost 60 can I wait 10 years?
We have tax worries as well
And while Garth pointed to debt yesterday and rising. Interest rates on debt, which I honestly don’t understand as all the federal banks created this debt on paper and issued no bonds, I guess?
I still maintain this cannot be good 15 trillion of created money world wide and then what? Musical chairs?
Anyway I am not doom and gloom just very worried as it’s quite a pot of stew with so many variables ! Let’s not even discuss the swords rattling around the globe
Just noise as they say? Or boiling over of the stew.
Have a great weekend!
Happy to discuss!
>Jair Bolsonaro update. He said he had tested negative for Covid-19.
So, (from memory) Bolsonaro tested positive for Covid-19 on July 7th and started taking hydroxychloroquine. He said the hydroxychloroquine made him feel better within 12 hours. He had no loss of smell or shortness of breath. He had a slight fever and slight cough. He displayed little weakness and could walk about without any trouble.
On July 25th, Bolsonaro said he had tested negative for Covid-19. So, 18 days from testing positive for C19, he is now clear of C19. He took hydroxychloroquine for these 2 1/2 weeks. He never experienced any debilitating symptoms or conditions.
My score-card says:
Hydroxychloroquine, Real Medicine, Real Science: Win.
No Hydroxychloroquine, Fake Medicine, Fake Science: Loss.
—
Brazil’s Bolsonaro says new COVID-19 test came back negative
Lisandra Paraguassu
JULY 25, 2020
SAO PAULO (Reuters) – Brazilian President Jair Bolsonaro said on Saturday that he has tested negative for the novel coronavirus after weeks quarantined in his residence due to an infection.
In a photo posted to social media, Bolsonaro appeared with a box of hydroxychloroquine, an anti-malarial drug he credited for his recovery despite a lack of scientific evidence about its effectiveness. In an accompanying text, he said his RT-PCR test for Sars-Cov 2 was negative.
He did not say when he took the test nor did he provide any further details.
Bolsonaro reported testing positive three times this month, including an initial diagnosis on July 7 for COVID-19, the illness caused by the new coronavirus.
Since then he has been in partial isolation at the presidential residence, filling his official agenda with videoconferences. He was spotted outdoors occasionally, including at a rally where he greeted supporters, removing his mask occasionally when at a distance of a few meters….
https://www.reuters.com/article/us-health-coronavirus-brazil-president-idUSKCN24Q0IT
#20 Long-Time Lurker on 07.25.20 at 12:16 pm
————-
Re: hydroxy, Jair B
I expect Jair’s immune system was fully up to the task regardless of the hydro. As is the case for nearly everyone.
In most cases, putting less into one’s body is better than putting more.
I always assumed that there was a relationship between the market value of the shares of companies within the S&P 500 and the average net profit margin of companies within the S&P 500.
Average net profit margins within the S&P 500 peaked a 12% in the third quarter of 2018 and were projected to decline to 7.1% for the second quarter of 2020.
Is their a metric that links average annual returns realized from investing in the S&P 500 and the average net profit earned by the member companies.
The reason I ask is that the net profits of quite a few companies within the S&P 500 have been substantially reduced as a result of Covid 19 and yet the index remains quite strong. Garth provided me with a very good explanation of factors contributing to current value of the S&P 500 but I still think that lower profit margins should lead to a lower value for the S&P 500.
I understand that profits might pick up at some point in the future but today the future looks pretty sketchy for some. If employment does not improve significantly by January 2021 I can’t see how an economy driven by domestic spending will generate an increase in average net profit margins and growth of the S&P 500 for the balance of 2019.
What am I still missing.
Well, as someone pointed out the other day the fiscal years don’t match up but I’m a persistent, stubborn bugger and continue to try and use Australia as a yardstick to see how things are out of control here in Canada.
The numbers that come of of Australia on Thursday were 85.8 billion deficit for the year just completed 2019/2020 and 184.5 billion projected for 2020-2021.
Here in Simpleville, I added those two numbers up and got 270.3 billion out of the old Flopulator.
Canada’s fiscal year is closer to when all this kicked off, with 343 billion being mentioned for this year (2020/2021) and I don’t know if the 19.8 I saw for last year is official but we’ll go with 20 and call Canada’s combined numbers 363 billion.
So this comparison is deeply flawed like the guy writing it but close to a hundred billion difference when they are running a lot of the same types of programs is enough to make you say hmmm, no?
One final point, they have extended their version of CERB again, but one major difference this time is that the amounts have supposedly been reduced after late September , the government website I just visited had the old numbers, slightly higher than CERB up, so I’ll visit that occasionally to see if they renege on that front.
This has been a botched attempt at informing you from The Greaterfool International News Department…
M46BC
https://www.bloomberg.com/news/articles/2020-07-23/australia-s-fiscal-2021-budget-deficit-seen-at-a-184-5-billion
#3 Penny Henny
That is a very reasonable $219.00 per sq ft of soil.
snicker, snicker
—————————————————————
Expensive potatoe patch.
Is everyone asleep? All of this is in the open! It is an engineered virus!
Look up THE GREAT RESET https://www.weforum.org/great-reset
The elites want to create a NWO at any cost! These people are evil!
In 2017 @ the Davos W.E.F. Bill Gates outlined the need for a corona virus vaccine? In the fall of 2019 EVENT 201 @ John Hopkins university was a mock corona virus drill! Miracelusly at the SAME time in Wuhan China the world military games were held! Novel corona virus was started in the USA under Dr Fauci! His own staff complained of the risks so Fauci sent the project to? Wuhan China!
This whole pandamic is a planned event!
Garth you should Obey to the rules YOU CREATE!
Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.
WILL NOT BE CENSORED EH?
So, how do you explain Druckenmiller, Tudor Jones, Bill Dunn, Richard Dennis, Ed Seykota, Tom Basso… Etc etc?? These people all have returns far far exceeding the buy and hold , balanced portfolio approach. Over a long period of time. They all “time” markets one way or the other. They are not the only ones …
#Cottage troll
Speaking of “paying”
In order to preserve this hallowed land for you stewards of epidemiological expertise exclusively a few things need to happen but are likely not palatable due to revenue shortfalls
Presumably all those municipalities have invoked plans to refund the tax revenue to those” southern inbred hillbilly cottage dwellers” They (and you) apparently consider persona non grata.
You gleefully report the apparent spike in petty crime. Presumably the law abiding and concerned residents that you are clearly not one of are in favor of increased attention to vandalism caused by local vigilantes.
You are a tiresome, repetitive, minor irritation who appears to enjoy pissing in the wind. Stay dry my friend.
Doug,
Nouriel Roubini (aka, Dr. Doom) is a world renown economist so he deserves some credit. With all due respect you have quite some number of shoes to shine on your part to get to that status.
Of course there is a depression. The reduction of consumption and production is horrible due to the health situation partially and due to peak credit.
Printing some money to ‘address the situation’ will just make it an inflationary depression.
How in your opinion will the credit zombies with no jobs and no savings survive and continue to drive consumption? That is insane as a preposition.
On another hand: have you seen the action in currencies and precious metals lately?
Of course stocks could serve as inflation hedge as part of your portfolio.
We both know that stock market will keep going up due to the ‘stimulus’, we both know that it will be like that in the next 5 years. But is that ‘growth’ organic? In some sectors and for some companies, absolutely. But for the ‘economy’ overall? I don’t think so.
In the next 5-10 years we will see all the fun in the world, things that most of the herd has never seen or imagined.
Cheers,
Awesome post Ryan. Very good read. Thank you so much again. You guys just keep raising the bar. I never miss a post.
#13 Sail Away on 07.25.20 at 11:05 am
#4 Reasonable on 07.25.20 at 10:08 am
So early today.
Yes. I hope I have learned by now not to try to time the market. I have lost enough trying to do that in the past. Buy and hold until I need to liquidate.
——————
Re: timing the market
Everybody needs to time the market to some extent. It’s not a bad word. Call it ‘rebalancing’ if it helps…
—
Unfortunately, during a crisis we’re rarely asked “is it time to rebalance?”. More commonly it’s “is it time to sell everything?”.
Explaining the impossibility of such a wager is how we earn our money. Moving to 100% cash is actually a forecast. A certain forecast.
We don’t want clients to learn the hard way that there is no such thing.
–Doug
Re: Cottagers Stay Away:
Our cottage driveway can fit more than 20 cars.
Most cottages either have driveways or parking spots either deeded or at a marina on a yearly lease.
As property owners and municipal tax payers, we are considered local, and not subject to “out of town” parking fees.
Oh, and we do have a number of cameras located around the place.
I hope we don’t catch anyone messing with the cars on the driveway.
We are recording YOU.
Don’t be a Karen….
#19 What if? on 07.25.20 at 12:14 pm
Thanks Doug for the Saturday post
I agree and disagree.
My stock portfolio is up almost 10 percent since January 1 and I have three stocks in the negative out of 10.
No high flyers all what I consider safe dividend paying stocks. So all good for long term.
—
Ten stocks is insufficient diversification, and your consideration of them being “safe” is irrelevant.
None of us are privy to what goes on in the sanctity of boardrooms.
Many a ‘safe’ blue-chip has imploded leading to a trail of tears. Former dividend-aristocrat General Electric immediately comes to mind, but the list is endless.
–Doug
#26 Andrew on 07.25.20 at 2:01 pm
Garth you should Obey to the rules YOU CREATE!
Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.
WILL NOT BE CENSORED EH?
—–
In my experience, Mr. T is very liberal with the comments he allows and deletes… Maybe you should shove off… If you’re going to attack the host of this blog, I doubt we want to read what you have to say anyways
@#25 &26 Andrew
Forgot to take your paranoia medication today did you?
@#30 Habitt
“Awesome post Ryan. Very good read. Thank you so much again. You guys just keep raising the bar….”
++++
While I agree that it was a very good post.
Give credit where credit is due.
Doug …not Ryan….. authored the post.
#29 Stan Brooks on 07.25.20 at 2:26 pm
“…Printing some money to ‘address the situation’ will just make it an inflationary depression.
How in your opinion will the credit zombies with no jobs and no savings survive and continue to drive consumption? That is insane as a preposition.”
—————————————————————–
Oh Stanley, you poor old broke boomer. Take a course in logic. On the one hand you say that all this money printing will lead to an inflationary depression and then you turn around and state that all the out of work zombies will not have any money to boost demand. Tha is classic deflation cowboy. Now I know why you are confined to a mental ward. Your economic schizophrenia is coming though loud and clear…
Calming words. Good.
Last chart the best; though, if it were possible to sneak in a “100 Year” probability bar…it would be all the more reassuring.
But alas, only 63 yrs possible.
#26 Andrew on 07.25.20 at 2:01 pm
Garth you should Obey to the rules YOU CREATE!
Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.
WILL NOT BE CENSORED EH?
—————-
You should be censored just for the above, you jackhandle.
#31 Doug Rowat on 07.25.20 at 2:28 pm
#13 Sail Away on 07.25.20 at 11:05 am
#4 Reasonable on 07.25.20 at 10:08 am
So early today.
Yes. I hope I have learned by now not to try to time the market. I have lost enough trying to do that in the past. Buy and hold until I need to liquidate.
—————–
Re: timing the market
Everybody needs to time the market to some extent. It’s not a bad word. Call it ‘rebalancing’ if it helps…
—————–
Unfortunately, during a crisis we’re rarely asked “is it time to rebalance?”. More commonly it’s “is it time to sell everything?”.
Explaining the impossibility of such a wager is how we earn our money. Moving to 100% cash is actually a forecast. A certain forecast.
We don’t want clients to learn the hard way that there is no such thing.
–Doug
—————–
Oh, I do not envy you your job.
I’m sure you deal with jackhandles like #26 Andrew all the time: happy when things are good; all your fault when things are bad.
Doug Ryan. Good post! It all seems so simple when you guys spoon feed everything out for free to the masses. I have read every post from every day of this Blog. It felt like I had struck gold finding Garth’s blog. I most definitely had.
Freedom First
#37 Johny Keynes on 07.25.20 at 3:27 pm
Let’s take that course in logic.
1. there is a hit in productivity and consumption due to the health situation. It translates to 5-15 % decline in GDP this year alone across the world despite all the deficits and money printing. And countless loss of jobs.
2. Less productivity and more money floating around means inflation of necessities like real food.
3. money in this world never stands in the hand of idiots like you/the proverbial sheeple. it just flows through it and ends in the financial sector and the big companies, in the hands of the people with money who invest in the stock market. So the stock market is inflated.
General asset prices are inflated.
4. Have you watched what happened to the price of precious metals this year? What does that mean to your 2 bit, 1 wrinkle brain? Inflation, of course.
Inflationary depression means important stuff costs more and the average joe, i.e. the ‘intelligent, sophisticated you’ has no money to pay for it.
It is that simple.
You might think that there is no inflation as you GMO antibiotic treated, pesticides rich, glucose-fructose syrup flavored franken-food meal increases by only 8-10 % yearly as you don’t pay attention to the shrinking packages and decreased quality but for normal stuff /necessities there is and will be inflation.
Deflation with current monetary policies exists and will exist only in your fluoride rich brain.
Cheers,
I started my TSFA well before my wife.
When I finally convinced her that she should be doing both the RRSP and TSFA, she said that I should pick some funds for her.
Looking around to see what her financial institution, had that mine didn’t, to complete more of the pie, I put a global technology fund and a precious metals fund in there besides some reits and some balanced index funds.
The precious metal fund is up 60% yoy and the global technology fund is up mid 40s, I think.
She doesn’t want to sell some to take the cream off the top, even though I just told her Robax said it was a good idea.
Lesson learned.
I should have said Bethenny Frankel, or one of the other Real Housewives of New York said it was a good idea…
M46BC
“Nobody knows nothing.” – John Bogle
@#39 Sail Away
“You should be censored just for the above, you jackhandle.”
++++
Jack handles are useful.
I would place Andrew in the “tick” category.
DELETED
2009 was great
Bought low fee US index and US rental real estate for 5 years
Retired in my 40s
NEVER, EVER underestimate the power of doom!
…i thought it was the power of myth?
======================
foaming the runway expensive
closing the coughway cheap
hamsters : masks
…This research is some of the first to specifically investigate whether masks can stop symptomatic and asymptomatic COVID-19 carriers from infecting others.
The team placed hamsters that were artificially infected with the disease next to healthy animals. Surgical masks (level 1) were placed between the two cages with air flow travelling from the infected animals to the healthy ones. Read more @
https://www.understandinganimalresearch.org.uk/news/research-medical-benefits/masks-reduce-covid-19-transmission-between-hamsters/
Thanks for replying to my post
Somewhat blunt but that’s okay.
Picking one stock Like GE and saying dividends are not guaranteed, point Well taken nothing is guaranteed.
I could argue and list many good companies have years of good management and increasing revenue and income and dividends.
Hopefully I picked those, time will tell.
in the last ten years my portfolio has return averaging 12 percent per year, so hopefully I choose wisely. Happy to send my last statement as proof.
All good I respect your opinions and always like hearing all viewpoints. That’s how we learn by hearing viewpoints that are different from ours. And I have learned allot from your weekend posts. And have switched some stocks into ETFs those were my three losers this year. But I did not choose wisely as I believe in banks just bought at the wrong time. But love the 6 to 8 percent monthly dividend.
Have a great weekend.
Looks like that CEF and Sailo are neck and neck in the race for the coveted “Blatherer of the Month” award for July.
Congratulation Jockeys! May the better Blatherer win.
Doug,
The Eurozone is doing a much better job handling the Covid crisis than the USA.
I’m not a stock Jockey, but I believe that the Eurozone will come out of this quicker and stronger than the US.
The DAX is making some noise.
What’s your opinion on the above.
Thanks for you good work.
Stats, stats, stats…
Given the near all-time highs,
I am willing to wager the SP500 will be lower than today in 1,2,3,4,5 years (bragging rights only here at GF; I have an actual $ bet with someone who is a ‘permabull’…and eager to part with some of his $$s).
It’s possible however (50-50 chance), that there will be a summer rally and thus slightly higher over the next few months.
But after that, fogedaboudit …
tcc
Anyone who believes Bolsonaro actually took Hydroxychloroquine is summarized by the title if this blog.
#29 …it’s all well and good for the upper 20% of the population, those possessing varying levels of wealth.
Doom has no bearing in their worlds.
The remaining 80%… those who possess varying levels of debt to the down and outers with nothing will go through and will suffer the effects of yet worsening economic conditions looming on the horizon.
The rich will simply pay and carry on.
Economic upheaval on it’s way will sweep through the ranks of the lower 80 percent where impending doom has real bearing leaving many a casualty in its wake.
But alas, there is always always always the greater fool/s where doom is nowhere to be found in their vocabulary and with no immediate bearing as if such circumstantial evils don’t exist. No ! … they just can’t is all. At least not where it could have an effect on them. No! no no no… not on them it can. Not ever !
Until it does…….
…..penniless fools as many are and will remain.
RE doesn’t endlessly go up and up in price beyond a breaking point in time that is always reached.
That breaking point is imminent and soon.
#50 Ponzius Pilatus on 07.25.20 at 6:03 pm
Looks like that CEF and Sailo are neck and neck in the race for the coveted “Blatherer of the Month” award for July.
Congratulation Jockeys! May the better Blatherer win.
—————
Jealousy is never pretty, No. 8.
@#51 Ponzie’s Petard
“Looks like that CEF and Sailo are neck and neck in the race for the coveted “Blatherer of the Month” award for July.
Congratulation Jockeys! May the better Blatherer win.”
+++++
Jealousy wont help. You’re still 3rd in a three horse race.
The US economy was getting near a labor shortage before this outbreak.
Won’t this shutdown mean many businesses that survive will make more profit once this passes because of lower labor costs and more choices on who to hire? Wouldn’t this be especially true for the big corporations the make up the S&P 500 or Dow 30?
How did Mr. Roubini get to be so wealthy being wrong all the time? (Hint: He isn’t bearish on everything and a rising tide lifts all boats.)
I keep on top of the markets and really take all of the investment banks projections but also use my own knowledge to interpret these varying views. I knew about Coronavirus in mid December 2019 because in addition to business news, I also check other news sources. I suspected that the Coronavirus would be the trigger for a correction so I did take money off the table and hedged my positions. I never anticipated a full out pandemic though and the market crash was worse than I thought would happen. My point is that people have to use a variety of data sources for their analysis. I recently hedged my positions by buying S&P 500 puts this past Wednesday because the probability of increased gains was less than the probability of declines based on my analysis of the major Wall Street investment banks S&P500 targets. This is not rocket science and people have to use their heads. When something is way out of wack in terms of value, some caution is warranted. My advice to people is to look at all the data, not just the Wall Street investment banks research.
#24 Ronaldo on 07.25.20 at 1:38 pm
#3 Penny Henny
That is a very reasonable $219.00 per sq ft of soil.
snicker, snicker
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Expensive potatoe patch.
——————————————-
I paid $10.80 per square foot of potato patch and got a very decent house thrown in for free. The ex-urbs are where it’s at.
to Comment # 3 Penny Henny
Actually it is more expensive than that;
add ;
1) land transfer tax
2) closing costs
3) demolition permits
4) demolition costs
5) demolition debris dumping costs (tipping fees)
6) environmental compliance survey
7) land re -survey costs
8) arborist assesment costs if a treed lot
9) utility and sewer disconnection costs
etc.
and that’s just to clear the land
so add another $ 75 to $100 K to the “land value” equation.
#26 Andrew on 07.25.20 at 2:01 pm
Garth you should Obey to the rules YOU CREATE!
Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.
WILL NOT BE CENSORED EH?
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He who has the gold makes the rules. Or in this case the blog. I’ve had a few DELETED’s in my time but in those cases where I didn’t understand why already Garth has explained the rules, which at time I thought were new but hey things evolve and I haven’t had a DELETE in a while now. The rules aren’t that hard. “Civil” is the key word. This isn’t Portland.
PS, last comment because I am over quota but I did not write an essay today.
Doug, good post. I don’t totally agree because I have made a lot of money on 3 specific, sell researched, ahead of the crowd gambles where I had some insider angle on at least 2 of them. But you don’t bet the farm on that kind of stuff and once you run out of ideas you turn the money over to the guy who manages your balanced portfolio. So I would use as an example Garth’s ice cream store. That was pretty speculative. But I bet he sold it at a profit and revitalized a small town in the process. But you can’t do that every day and you should never bet the farm. Never call the whole market because the whole market isn’t a thing. If you know something about a particular investment that others don’t maybe put some money in it. But I am not talking about insider trading or following the comments on RobinHood. I’m talking about an ice cream store.
#3 Sarah on 07.24.20 at 3:35 pm
This has nothing to do with finances or real estate, but just a suggestion. If you want to say “god” in the blog, go ahead and say it, what’s the point of saying it backwards?
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OK one more post. I am late replying because I didn’t know how exactly to respond to someone who didn’t get the joke. One of the reasons I started using “Dog” even before it really caught on is because dogs are such good and loyal creatures, and we deify them here in this comment section and blog. Whereas as an alternative you could use God but you don’t want to piss him off. I’ve read the bible more than once and whew, you really don’t want to piss that guy off. Modern media never came up with anything worse than the books of Moses until Darth Vader destroyed Alderaan with his death star.
ALMOST pulled a Phil today at work.
https://www.youtube.com/watch?v=gOwhG_y0HQg
#59 Tim123 on 07.25.20 at 8:42 pm
This is not rocket science and people have to use their heads…. My advice to people is to look at all the data, not just the Wall Street investment banks research.
—
What data? Like ALL the data? You’ve just made it rocket science. No one has time for this.
–Doug
oakville
time to panic
rob burton says this covid bug is going to increase your tax rate to 7.2%
so, does the 7.2 stay
there was no mention of a termination
While it’s true that trying to time the markets is futile, I’ll add another rule to the first two you posted, namely: 3) if stock markets take a big drop then cash in some of those boring bond funds and DIVE IN HEAD FIRST to scoop up some DIRT CHEAP equities.
Whassup? Skinny postings tonight.
Guess I will fan the flames a bit with the following video clip from 1974.
Hint:: there is a clue here hiding in plain sight. Maybe think about who might not be getting polled ( not having a land line), and what it might mean in November. ( He who cannot be named).
This is an old interview, but like a fine wine only improves with age…………….
https://www.youtube.com/watch?v=SH1c0cgORA0
Isn’t insane explained as doing the same thing and expecting a different outcome?
Nothing has changed regarding the Virus, there’s no vaccine.
Are people expecting the Virus to magically disappear?
This Virus will continue to ebb and flow and deteriorate the financial markets.
How does anyone logically expect things to improve when the problem is still present?
#25Andrew ¡Spot-on!
#68 The other Doug, in London on 07.25.20 at 10:19 pm
While it’s true that trying to time the markets is futile, I’ll add another rule to the first two you posted, namely: 3) if stock markets take a big drop then cash in some of those boring bond funds and DIVE IN HEAD FIRST to scoop up some DIRT CHEAP equities.
—————-
So… time the market… is what you’re saying?
Good post, Doug. Thanks.
#70 Wakeup
How does anyone logically expect things to improve when the problem is still present?
——————————————————————–
It’s called Adaptation. [ad-uh p-tey-shuh-n]
People become accustomed and desensitized to things.
Then, what was once fearsome, becomes normal.
We get used to it.
Fear subsides.
Life goes on.
#36 Fartzy thanks for the correction.
#72 Sail Away on 07.26.20 at 9:34 am
“So… time the market… is what you’re saying?” Time in the market, is what Doug is saying! :P
fear may subside perhaps who are financially able to but in some that fear can transform into protest and anger
The Edmund Pettus Bridge carries U.S. Route 80 Business across the Alabama River in Selma, Alabama. Built in 1940, it is named after Edmund Winston Pettus, a former Confederate brigadier general, U.S. senator, and leader of the Alabama Ku Klux Klan.
========
kettle black :
usa critical of the chinese doctor speaking out
..”hospitals have allegedly dismissed health professionals who spoke out against conditions and practices harmful to staff and patients and disciplined workers who refused to work without adequate personal protective equipment.”….
In one Midwestern community, for instance, non-compete agreements locked a group of colorectal surgeons out of their specialty and meant that 700,000 people were served by just one colorectal surgeon. The result was longer wait times for patients with serious conditions such as colon cancer. …According to one multistate survey from 2018, approximately 45% of primary care doctors are bound by non-compete clauses. Research has found that employers have also imposed non-compete clauses on nurses. Health care employers see non-competes as an important and valuable tool that binds workers to their present position. For example, in May, one hospital in Grand Rapids, Michigan, citing financial troubles, allegedly gave its more than 1,000 doctors an ultimatum: Sign a non-compete or face up to a 25% pay cut.”
https://www.cnn.com/2020/07/06/perspectives/non-compete-clauses-health-care/index.html
Probably, the only thing that can beat that probability graph is a GIC.
@Sail Away, post #72:
What I’m saying is 1) buy low, sell high, 2) rebalance during highs and lows, and 3) ALWAYS take advantage of AWESOME buying opportunities when they come along.
#79 The other Doug, in London on 07.26.20 at 1:14 pm
@Sail Away, post #72:
What I’m saying is 1) buy low, sell high, 2) rebalance during highs and lows, and 3) ALWAYS take advantage of AWESOME buying opportunities when they come along.
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Absolutely, and I agree completely. Just pointing out that doing it is, in actuality, timing the market. Which I agree with.