1967

 

DOUG  By Guest Blogger Doug Rowat

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Ah, recency bias. Perhaps the most dangerous and pernicious of all behavioural investing biases.

As Covid-19 runs rampant across the US, volatility rises throughout global equity markets and the catastrophic 33% plunge in US Q2 GDP sits fresh in our minds, it’s tempting to simply wrap the entirety of one’s investment portfolio in the security blanket of US bonds.

And why not? The US is the wealthiest and most powerful nation in the world and its bonds are amongst the very safest. And in the face of all of this year’s horrible news, the Barclays Aggregate US Bond Index is up an impressive (and comforting) 13.7% y-t-d, obliterating the y-t-d total return of the S&P 500. But this is what recency bias does—it fixates investors only on the present and coerces them into thinking that what is happening now will persist long into the future.

But, naturally, such conclusions are incorrect. With recency bias undue importance is given to performance and events that have occurred, well, recently, resulting in the more predictive long-term market trends getting overlooked. And I don’t need 22 years in the investment industry to understand the powerful and misleading effects of recency bias. I live in Toronto—a hockey-mad city that succumbs constantly to it. Every brief Maple Leaf winning streak or nifty Auston Matthews goal will, in the collective mind of this city, translate to Stanley Cup glory and a parade down Bay Street.

But back to US bonds. A much more meaningful performance timeframe wouldn’t be the few pandemic-dominated months of 2020, but rather the entire previous decade. Examining this 10-year timeframe, everything reverses. From end-2009 to end-2019, on a total return basis, the S&P 500 returned 13.5% annually while US bonds returned only 3.7%.

This long-term track record is why we tilt the vast majority of our client portfolios towards equities. High-quality bonds are essential for stabilizing portfolios and controlling emotion during periods of turmoil, but this doesn’t make them worthy of being the dominant component of one’s asset allocation.

First, the obvious. US bond yields have been declining for decades and therefore overall US bond returns have been declining right along with them:

US bond returns have declined decade after decade

Source: Bloomberg, Turner Investments

We, of course, don’t know if overall US bond returns will decline this decade as well, but it’s rarely a good idea to bet against a well-defined multi-decade downtrend. Btw, US 10-year Treasury yields have declined 95% over the past four decades and if you think they won’t eventually go negative, which longer term would mean even more anemic overall bond returns, take a closer look at France, Germany, Switzerland, the UK and Japan.

Second, US bonds no longer yield meaningfully more than inflation. There was a time when their advantage over inflation was double-digit. Ancient history. Granted, the present US inflation rate is low, but the long-term inflation rate has averaged about 3%. With the US 10-year Treasury yield, for example, currently at only about half a percent, it’s unlikely that bond yields will be eclipsing long-term inflation rates any time soon. Remember: the Fed raised interest rates NINE times from 2015 to 2019 and even that streak only took the 10-year Treasury yield above 3% very briefly. Is anyone predicting nine interest-rate increases from the Fed now? A US 10-year Treasury bought now and held to maturity would almost certainly lose money after inflation.

US 10-year Treasury yield minus inflation rate: it’s becoming more and more unlikely that Treasury yields will beat inflation

Source: Bloomberg

Finally, US equity dividend yields currently provide much better value. Yes, you have to take more risk, but if a main consideration is simply income, you’re better off with equities. Again, the yield advantage for Treasuries, which was once double-digit, has evaporated. Also, historically speaking, US corporations raise their dividends 5-6% annually, so your equity dividend, unlike a bond coupon, will almost certainly grow at a faster rate than inflation. I also haven’t even touched on the preferential tax treatment of dividend versus interest income.

US 10-year Treasury yield minus S&P 500 dividend yield: equities now generate substantially better income

Source: Bloomberg

So, before you succumb to the fear created by the recent dire headlines and flee to the safety of US bonds consider the tricks that recency bias may be playing on you. The bigger picture is actually suggesting that most US bonds offer poor value at the moment.

And combating recency bias always demands looking at the bigger picture. What holds more importance? A pattern that presents itself over just a few months or a pattern that presents itself over more than four decades?

Or in the case of the Maple Leafs, more than five decades.

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

 

96 comments ↓

#1 crowdedelevatorfartz on 08.08.20 at 11:29 am

Doug,
A well reasoned, thoughtful argument for staying in equities.
Now if only I could rid myself of the unexplained sense of dread I feel with a US election looming …….

#2 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 08.08.20 at 11:40 am

MORE THAN FIVE DECADES OF AWESOME INCOMPETENCE DOUG!!!

BUT IT’S DIFFERENT THIS TIME!!!

EVERY TORONTURD KNOWS IT!!!

JUST LIKE THE CONDO MARKET THERE WILL NEVER DROP!!!

GO MAKE BELIEVES!!!

TORONTO IS #1!!!

#3 Baba Novac on 08.08.20 at 11:53 am

Thanks for reminding us of historical trends, Doug.

In fact, the opposite question was troubling me for many of the same reasons you gave to combat recency bias: in light of necessarily sub-inflationary yields and their necessarily more limited cushioning role for the volatility of portfolios in the medium term, shouldn’t one hold less bonds in the years/ (likely) decades to come?

I also meant to ask after Garth’s Aug. 3 post about the most recent target portfolio allocation: is there a reason you guys reduced your exposure to preferreds (sometime since fall 2019) from 15% to 13% and increased the total bond exposure from 24% to 26%?

Also, is there a technical reason nowadays to shift away from some of the short-term and ultra short-term exposure your portfolios had back in fall 2019, in light of limited short/medium-term likelihood for interest rate increases?

If possible, it would be really helpful to know what your current approach is within the 26%–not actual ETF recommendations, but strategic allocation between an enhanced yield like CAGG, global fixed income, high quality corporate and just plain old VAB/ZAG-like holding (assuming not skewed towards ultra short-term anymore). Is there now more of an argument towards longer-term (or even long-term) maturities?

Your analysis and posts are always much appreciated, both here and in the weekly calls. Thanks for doing this.

#4 Ponzius Pilatus on 08.08.20 at 12:02 pm

Who was the best Bond?
Sean Connery, hands down.

Regency bias.
I can’t stand the Royal Family.

Sorry, just got up.

#5 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 08.08.20 at 12:05 pm

TORONTHOLE IS SPECIAL!!!

THE MAKE BELIEVES ALWAYS WIN!!!

PAY NO ATTENTION TO THE LAST 53 YEARS!!!

#6 NFN_NLN on 08.08.20 at 12:09 pm

Prior to this “pandemic” I was looking to diversify my portfolio by buying more bonds.

A friend of mine talked me out of it: “Think about it, when interest rates go up bonds go down. Interest rates are at historic lows, do you really think they’re going to go any lower.”

Literally two months later the pandemic hit and bonds exploded. Thanks.

#7 NFN_NLN on 08.08.20 at 12:12 pm

#1 crowdedelevatorfartz on 08.08.20 at 11:29 am
Doug,
A well reasoned, thoughtful argument for staying in equities.
Now if only I could rid myself of the unexplained sense of dread I feel with a US election looming …….

—-

Relax. The MSM polling numbers are as fake as their regular reporting. Trump will win and Garth will have 3 weeks of material to post on this blog in November.

#8 Ponzius Pilatus on 08.08.20 at 12:21 pm

#1 crowdedelevatorfartz on 08.08.20 at 11:29 am
Doug,
A well reasoned, thoughtful argument for staying in equities.
Now if only I could rid myself of the unexplained sense of dread I feel with a US election looming ……
—————————
Agree, it does not matter who wins, the States will be a mess for quite a while. I’ll stay physically and investment wise away from the US.
Maple is just fine, and I’ll also look at the Eurozone.

#9 Dogman01 on 08.08.20 at 12:23 pm

ZTL worked for me, a shock absorber, when S&P500 went down it went up. Did not buy it for yield but for plunge protection.
With S&P500 at a near high, COVID 2Nd wave uncertainty and US Election chum in the water, seems like some rebalancing to safe stuff is wise in the medium term.

Now with the bond market being larger than the Stock Market, Bonds below inflation, Pension funds unsustainable in Bonds, all signs say money must flow to Equities.

I am just not so sure in context of a 6 month time frame if some re-balancing back to safety is now in order.

#10 Grunt on 08.08.20 at 12:53 pm

Why don’t you TI guys pick a cheaper physical address. Possibly connecting a sports venue?

#11 Stone on 08.08.20 at 12:54 pm

the Barclays Aggregate US Bond Index is up an impressive (and comforting) 13.7% y-t-d, obliterating the y-t-d total return of the S&P 500.

———

Wow. I was feeling great that my balanced and diversified portfolio was at +4.28% YTD as of end day yesterday but must say my bubble of exuberance has been deflated. Oh well.

#12 Wrk.dover on 08.08.20 at 12:55 pm

That photo shows an era when almost only Cops had Harley’s in Toronto. A neighbor bought a pair of old beaters for a few hundred dollars that year. A 650 Bonneville was a BIG bike back then!

Zero interest insured deposit cash is just as good as a 1% bond to me. Takes a pretty big balance to earn a cup of Tim’s a day so I brew mine at home and don’t need that 1% return foolishness.

Re-yesterdays will post, what a wonderful opportunity for a small town income side line. Hired executor. Our local guy has more toys than almost any other local guy. 5% of a million dollar estate with all the duck lined up by his financial service business before the death occurs, sounds pretty lucrative to me!

Might be why Garth can afford a large dog.

#13 Inequity on 08.08.20 at 1:18 pm

#5 50 YEARS OF MAPLE LEAF INCOMPETENCE!

Dang, it looks like the cottage hillbilly has latched onto the puck. :P

Thank dog for the scroll Wheel.

#14 jess on 08.08.20 at 1:42 pm

Paradise Papers trust company fined $793,000 for ‘serious breaches’

Singapore’s financial watchdog has fined trust company Asiaciti for failing to guard against money laundering and terrorism financing
By Will Fitzgibbon
Image: Rocco Fazzari / ICIJ
July 24, 2020

Among Asiaciti’s other U.S. trust clients were Sean Novis and Gary Denkberg, marketing executives who targeted pensioners in a mail-fraud scheme, according to a civil complaint filed by the U.S. Justice Department. Novis, Denkberg and others told elderly victims that they had won more than $1 million and asked them to pay a fee – “generally in the range of $19.99 to $24.99” – to receive the prize, the 2016 civil complaint alleges. Victims often received nothing in return, according to the complaint. Over four years, the marketers and others allegedly pocketed more than $30 million.

Novis and Denkberg had one trust each with Asiaciti that at one stage held more than $1 million each, according to Asiaciti’s files. In February 2007, Novis asked the firm to help him find a bank that did not have “a presence in the USA.” Both men’s trusts were active in 2016 when Asiaciti learned of the civil case.

In 2016, a court imposed an injunction that prohibited Novis and Denkberg from mailing prize offers and sweepstakes in the United States. The Justice Department took no further action, a spokesman told ICIJ.

Denkberg told ICIJ that his trust was not involved in the civil case and that, to his knowledge, it had not held more than $1 million. The trust complied with the law and was declared to tax authorities, he said. Novis did not reply to requests for comment.
========================

https://www.icij.org/investigations/paradise-papers/paradise-papers-firm-managed-millions-carousel-millionaires-fraudsters/

Singapore’s financial watchdog has fined trust company Asiaciti heavily for failing to guard against money laundering and terrorism financing.

The Monetary Authority of Singapore (MAS) fined Asiaciti Trust $793,000 (S$1.1 million) this week for “serious breaches” of requirements relating to secretive offshore vehicles known as trusts. The infractions occurred over more than a decade between 2007 and 2018, according to the MAS announcement.

Asiaciti did not adequately identify and monitor risks associated with high-profile, political clients, according to MAS. In one case, MAS found Asiaciti ignored the origins of a client’s money and “simply relied” on his claims without adequate corroboration. MAS did not name the client.

In other cases, Asiaciti “did not inquire into the background and purpose of unusually large transactions with no obvious economic purpose” made by customers with political connections, according to MAS.

#15 SoggyShorts on 08.08.20 at 1:58 pm

I was all equities this year and after getting back to even I switched to 20% HTB so that I wouldn’t have to go through that again.

If US 7-10y treasury isn’t great for the safe(r) portion of a PF, then what? Preferreds crashed right along with everything else, as did REITs, so those wouldn’t have helped as a shock- absorber.

Is yield really that important? Isn’t total return what matters, regardless of the capgains/yield split?

#16 Dave on 08.08.20 at 2:02 pm

Canadas mortgage holiday is set to end in September.

Is this a big event on minor blip??

#17 The other Doug, in London on 08.08.20 at 2:33 pm

Why would ANYONE want U.S. bonds when there are FAR BETTER places to put your money? First and foremost, you should have gone on a blitz of buying equities when they were on sale back in March. If not, or you have more money to invest (probably from dividends) then buy stuff that’s still relatively cheap now like REITs, pipeline companies like Enbridge, and telecom stocks like Bell or AT&T.

#18 Drinking on 08.08.20 at 2:35 pm

The only thing of value that I see here is the autographed picture that you have! No leafs fan, but I must admit the last three and a half minutes was classic hockey and hairy lip potted in a nice one in O.T.

#19 SoggyShorts on 08.08.20 at 2:45 pm

Doug:
“A much more meaningful performance timeframe wouldn’t be the few pandemic-dominated months of 2020, but rather the entire previous decade. Examining this 10-year timeframe, everything reverses. From end-2009 to end-2019, on a total return basis, the S&P 500 returned 13.5% annually while US bonds returned only 3.7%.”
****************************
What has anything else on the 40 side of a 60/40 PF returned in that timeframe? I can’t seem to find anything that does better that also didn’t tank this year.

I’m not looking for magic bullet that always goes up, but your timeframe of After 2008 crash but Before 2020 crash isn’t going to make anything safe look good.. or am I missing something?

#20 Doug Rowat on 08.08.20 at 3:08 pm

#16 Drinking on 08.08.20 at 2:35 pm

I must admit the last three and a half minutes was classic hockey and hairy lip potted in a nice one in O.T.

It was damn exciting. Just ask Justin Bieber: https://www.narcity.com/gossip/ca/on/toronto/justin-bieber-leafs-victory-reaction-is-how-every-fan-must-have-felt-video

But it’s a new day and I’ve tempered my enthusiasm.

Me 1, recency bias 0.

–Doug

#21 TurnerNation on 08.08.20 at 3:08 pm

So what’s really going on? (Besides the rollout of UN Agenda 21, in time for 2021). This is part of the continues social and economic attack against the West.
Particularly against women. Why?
A farmer controls his animals: feeding, movement and breeding. (Line up in prison supermarkets much?)
Our Tax Farmers , likewise

Women are the key to this. Look around nobody is sick. But their Minds are gone. Women might be more suseptable to this health warfare – leading to pill consumption. And we are living a multi-pronged attack. Total Spectrum Domination.

They weaponized the Western woman a few months before this: KAREN.
(Yes, google “Meme Warfare”. All the agencies around the globe have cyber and even meme warfare units. Because Look around. No one is sick but many have lost their Minds. )

Already child care in Ontario was unafforable. Now they want to ‘distance’ kids – for even fewer spaces. Equals Most Cost. Ah that silent weapon again, distancing.
How could anyone afford kids now? That’s the point. They are controlling our breeding.
What awaits is the dysptopian online world + drugs.
In WW2 it was IBM running the camp ledgers. With Bayer providing the drugs.
In WW3 now it’s FANG running the data. With Bayer-Monsanto permiating our every cell and food item. Same old. WW3 is not playing out on the streets; it is for you MINDS.

Some have pointed out the endless VIRAL things, which were totally manufactured to gauge our level of Compliance:
Ice Bucket Challenge
Planking
Ganham Style (by, ahem, PSY-ops…)
Harlem Shuffle.

Yes all went Viral – to our minds – and social media postings and hashtags gave them the level of compliance achieved. For the next meme attack. Now go and wear your Freedom Masks and don’t forget to Smile!
Maybe this compliance will earn you back your rights. But did you really miss them? Do you really want them back? I thought not. Here, turn on the screen, take this pill or joint and kick back and relax. The Global Government will take care of us all
The Old System has been torn down – it fell in one week in March.

#22 Ace Goodheart on 08.08.20 at 3:17 pm

We are mandatorily masked now in most of Ontario.

I have started a “fun with flags” masking regime.

Yesterday it was Costa Rica.

Someone actually asked me why I had a “Confederate flag” on my mask. Seriously. Costa Rica’s flag looks nothing like the Confederate flag.

People have to learn their flags.

All religions are based in fear and the COVID religion is no different.

However the COVID religion is tearing down modern society.

It isn’t run by elites. The elites are getting destroyed by this. They are being revealed as Emperors with no clothes. People are quickly losing faith in them.

Our cornerstone institutions are being revealed as pumped up garbage.

How many parents now feel that elementary school is mostly a waste of time? Kids can go part time or not at all. Compulsory education feeds the greedy teacher union / school charity complex, which with the downfall of the “We” empire, is being revealed as a massive fraud.

So much of our society, once revered and worshiped, feared and respected, is just being trashed by the relentless COVID religion.

Two points to take from this:

1. COVID is real. And it kills and maims randomly. Its after effects for those who survive it are unknown.

2. Fear creates it’s own reality, it’s own rules. It exists apart from itself. There is no logic or rational behavior possible when a society is running on fear.

If we keep going with the COVID new normal we are going to reset our economics. No current business model can make money in the new normal. We either get ourselves out of the new normal, or all of our businesses will fail. At that point we will be fully reliant on the government for our needs. No business will be economically viable providing goods or services to us during COVID religious times.

#23 TurnerNation on 08.08.20 at 3:18 pm

High house prices + unaffordable childcare = One Child Policy. Got it? Let by the Banks of course.
Some say all wars are bankers wars. They wasted no time in March after the global shut down of the Old System didn’t they. For our health.

Ps the US border is being kept closed for their election destruction season. It will re-open after that is rolled.

What could like be like outside the 27/4 media and cyber attacks are we living – if this online report is correct?:
….
“A quick hello from the province next to Hubei (China), which is to say, Corona Central as was. Not that anyone remembers that anymore of course.

Perhaps no one wants us to remember on account of the fact that corona is ancient history here. Okay, it’s three months ago, but it feels like forever.

No one talks about it, no one cares, no one wears a mask, no one warns you about staying in, no one inquires after your health, and people go wherever they want, do whatever they want, same as it ever was. Honestly, it may as well have never happened.

Meanwhile, all the (as were) theoretically problematic things like open air butchery right-there-on-the-footpath carries on with yours truly buying the product none the worse for it. Just like the entire rest of the population whom we may safely declare to be in blooming health.

Honestly, virus? What virus? What is the West on about?”

#24 baloney Sandwitch on 08.08.20 at 3:44 pm

The problem with the S&P 500 is that it is not becoming concentrated in tech. If you were to remove the 10 leading tech stock, the other 490 are not that hot. So basically you are getting set up for a fall. Most of the investment world is now getting indexed. You are siting in crowded theater with only a few narrow exits. Now imagine some one yells “fire”. The rush to the exit will only happen at fire-sale prices. We saw that between Feb 19 and Mar 23rd. Till the Fed stepped in with 2 trillion dollars. Can be rely on the Fed again?

#25 ever after on 08.08.20 at 3:50 pm

good article

my portfolio was down $300k in early March . didn’t phase me a bit .. honestly

i knew it would change . so i sold ALL my bond and PF’s etfs

and had extra cash .. i spent $500k in March ( it just made sense , at 30 , 40 % down ) …

you should see my 100 % equity portfolio now

sold Shopify 2 weeks ago 196 % profit . and many others in triple digits .

so i keep some cash for a ( healthy ) correction .. ( won’t be a another crash )

thanks for giving me the knowledge . i used it

#26 Camille on 08.08.20 at 3:52 pm

Hello Doug. Thank you for that information. A well balanced portfolio with no market timing is definitely the way to go. I am risk averse so my portfolio is more or less 50/50. Not as productive but not selling in a downturn is my biggest issue, which I managed this time around, with a little help from this blog.

I have a question. You have previously said derivatives are not a good option for most. What about covered call ETFs and similar. Do you consider these derivatives? They performed poorly in the recent downturn and are slow to recover. I limit them to 5% of my portfolio, but dig the extra return. I thought these hold the same securities as an equivalent ETF with no covered calls. But I can’t make heads or tails how and when they go up or down?

Do you have any thoughts on holding covered call or put ETFs? Thank you.

#27 Dan in Vancouver on 08.08.20 at 4:06 pm

Debt expansion is contracting – banks are tightening their lending qualifications. Contracting debt expansion = a contracting economy. When/If the DXY starts to rise, look to the bond market to signal the shift to deflation.

#28 Scarbro on 08.08.20 at 4:20 pm

First childhood memories were from ’67 Centennial year fireworks. Leafs wins, apollo, new neighborhood, shows me that my old noggin still works.

#29 Wondering on 08.08.20 at 4:55 pm

Forgive me if this has already been addressed. A recent blog indicated that the “60/40 portfolio weightings are 26% in a variety of bond funds, 13% in preferreds”. Wow! What happened to 20% bonds and preferreds at around 18%?? What is the reasoning? Is this due to the covid impact on business?

#30 IHCTD9 on 08.08.20 at 5:17 pm

#92 Bdwy on 08.08.20 at 1:04 am

Re. Bum valves.

As a BESc ( mech eng) from a top cdn university i feel i have a good understanding of the design, function and
construction of a wide range of valves , be they rotary, gate, ball, butterfly, check, etc.

Notwithstanding any formal medical training whatsoever, i can can confidently say that bums don’t work that way
——- –

Heh, I’m not an engineer, but I still know a bit about valves. One valve you didn’t mention is an “iris valve” – and they do kinda work like bums!

#31 MF on 08.08.20 at 5:22 pm

#23 ever after on 08.08.20 at 3:50 pm

Yeah..and then you woke up.

I’m not sure selling all your bond funds and going 100% equities is exactly what the message is.

MF

#32 drongo on 08.08.20 at 5:24 pm

@#2 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 08.08.20 at 11:40 am
————————-

you ok buddy?

#33 Brian Ripley on 08.08.20 at 5:30 pm

“We, of course, don’t know if overall US bond returns will decline this decade as well, but it’s rarely a good idea to bet against a well-defined multi-decade downtrend.” Doug Rowat

My post of May 28, 2020 has charts and snippets from various sources that show the real rate of return has been dropping for the last 6 centuries!

http://www.chpc.biz/history-readings/suprasecular-decline

“By the late 2020s, global short term real rates will have reached permanently negative territory and by the second half of this century, global long-term real rates will have followed.” Paul Schmelzing, JAN 2020, Bank of England Staff Working Paper No. 845

Low mortgage rates does not mean we should pay a premium for real estate that over the long term is a wasting asset, it means we have to live with low rates of return and that means we should apply a check on our manic behaviour and ask at the very minimum the question before we purchase: “Can I derive enough income from this real estate to provide a real rate of return in the event that I have to rent it out in my absence and cannot find a buyer?”.

#34 MF on 08.08.20 at 5:32 pm

#20 Ace Goodheart on 08.08.20 at 3:17 pm

“How many parents now feel that elementary school is mostly a waste of time? Kids can go part time or not at all. Compulsory education feeds the greedy teacher union / school charity complex, which with the downfall of the “We” empire, is being revealed as a massive fraud.”

-Not sure if you are serious?

How many parents like to have their kids away in elementary school being baby sat for 8 hours a day? Probably somewhere around 95-98%.

The little jab at teachers is already tiresome and weak. Why didn’t you become a teacher then if it’s so good then?

And, yeah that’s it..every kindergarten teacher, every grade 6 teacher, every grade 8 teacher is involved in WE somehow. Sure.

MF

#35 Doug Rowat on 08.08.20 at 5:34 pm

#27 Wondering on 08.08.20 at 4:55 pm

Forgive me if this has already been addressed. A recent blog indicated that the “60/40 portfolio weightings are 26% in a variety of bond funds, 13% in preferreds”. Wow! What happened to 20% bonds and preferreds at around 18%??

We haven’t been at an 18% preferred share weighting in many years.

Best not to assume that we’ll send out memos.

–Doug

#36 Stone on 08.08.20 at 5:49 pm

#27 Wondering on 08.08.20 at 4:55 pm
Forgive me if this has already been addressed. A recent blog indicated that the “60/40 portfolio weightings are 26% in a variety of bond funds, 13% in preferreds”. Wow! What happened to 20% bonds and preferreds at around 18%?? What is the reasoning? Is this due to the covid impact on business?

———

Prefs are now 13% because they dropped about 30% in value. Deduct about 30% from 18% and you get 13%.

I dropped prefs from my portfolio in January 2020 (I saw the writing on the wall) and bought ZPR back when it was $7.20. Yeehaa!

#37 drongo on 08.08.20 at 5:49 pm

@#32 MF on 08.08.20 at 5:32 pm
#20 Ace Goodheart on 08.08.20 at 3:17 pm

“How many parents now feel that elementary school is mostly a waste of time? Kids can go part time or not at all. Compulsory education feeds the greedy teacher union / school charity complex, which with the downfall of the “We” empire, is being revealed as a massive fraud.”

-Not sure if you are serious?

How many parents like to have their kids away in elementary school being baby sat for 8 hours a day? Probably somewhere around 95-98%.

The little jab at teachers is already tiresome and weak. Why didn’t you become a teacher then if it’s so good then?

And, yeah that’s it..every kindergarten teacher, every grade 6 teacher, every grade 8 teacher is involved in WE somehow. Sure.

MF
————-

ace obviously does have kids or he’s just a straight up bad parent lol. i’m going with the latter.

#38 Don Guillermo on 08.08.20 at 5:52 pm

#28 IHCTD9 on 08.08.20 at 5:17 pm
#92 Bdwy on 08.08.20 at 1:04 am

Re. Bum valves.

As a BESc ( mech eng) from a top cdn university i feel i have a good understanding of the design, function and
construction of a wide range of valves , be they rotary, gate, ball, butterfly, check, etc.

Notwithstanding any formal medical training whatsoever, i can can confidently say that bums don’t work that way
——- –

Heh, I’m not an engineer, but I still know a bit about valves. One valve you didn’t mention is an “iris valve” – and they do kinda work like bums!
***************************************
Ball and Butterfly valves are rotary. Uncanny attribute with bum valves is they have a unique ability to distinguish between solids and gas (usually but not always fail safe).

#39 Doug Rowat on 08.08.20 at 5:54 pm

#17 SoggyShorts on 08.08.20 at 2:45 pm

Doug:
“A much more meaningful performance timeframe wouldn’t be the few pandemic-dominated months of 2020, but rather the entire previous decade. Examining this 10-year timeframe, everything reverses. From end-2009 to end-2019, on a total return basis, the S&P 500 returned 13.5% annually while US bonds returned only 3.7%.”
****************************

I’m not looking for magic bullet that always goes up, but your timeframe of After 2008 crash but Before 2020 crash isn’t going to make anything safe look good.. or am I missing something?

I also included a bar chart that showed four decades worth of returns. On this basis, US bonds have always provided positive returns. So, I’m not saying that holding safe assets has no value; however, I’m pointing out that history is strongly suggesting that the returns for these safe assets will be even lower this decade.

Based on the trend, decide for yourself if relying solely on safe assets will be enough to fund your retirement.

–Doug

#40 Reality Check on 08.08.20 at 6:00 pm

People today don’t even know basic economics. Deflation is a myth. There is always inflation over years and years.

The trend is devaluation, inflation, higher cost of living, higher taxes and higher confiscation of wealth, income, time etc.

You guys got fooled and stolen from and you don’t even know it. Low interest rates and all this QE, bond buying, financial engineering, money printing always ends up badly. Don’t be surprised that we all will be living in a second, third world country if Canada exists in 10, 15 years.

#41 crowdedelevatorfartz on 08.08.20 at 6:26 pm

@#32 MF.

I’m waiting for the teachers in BC to walk out due to “Covid Class Size”
They are kicking around 15 students max in the classroom for social distancing.
“Hire hundreds of more teachers” ( From where is anyone’s guess…)….Cost? Several hundred million $$$$

On another public sector bash.
Anyone from Ottawa?
My spies there tell me over 76,000 ( yes , thousand) public sector employees booked off on stress leave, sick leave, accumulated time off, accumulated vacation time off, etc etc etc…..
They are NOT working. Just off, with pay.

Has anyone noticed?

Time to cull the public sector herd of a 50,000 dead weight staffers?
Only a bankrupt federal govt knows for sure……..

#42 IHCTD9 on 08.08.20 at 6:31 pm

Interesting open house on the go around the corner today. Quite a few folks milling around, East Asian couple, Middle Eastern couple, South Asian couple, no white folks at all other than the smiling realtor. All 30-40ish. Right here in lifted 4×4 redneck central. Seriously, we’re a little 500 pop. village in BF nowhere.

This area is an “old stock” Canadian throwback, but the times are a changing – GTA escapees are not just retirees anymore. Looks like the Toronto ethnoburbs are now just too expensive even with all their inherent conveniences enjoyed by folks from different cultures.

The place is actually quite nice, and well priced at just over 300k – maybe too well priced. Hopefully the local realtors aren’t trying to play the “bidding war” games out here now…

Mortgage would be 1300.00/mo. or so – less than renting some leaky dump condo in Toronto.

I don’t blame these folks a bit…

#43 IHCTD9 on 08.08.20 at 7:17 pm

#36 Don Guillermo on 08.08.20 at 5:52 pm
#28 IHCTD9 on 08.08.20 at 5:17 pm
#92 Bdwy on 08.08.20 at 1:04 am

Re. Bum valves.

As a BESc ( mech eng) from a top cdn university i feel i have a good understanding of the design, function and
construction of a wide range of valves , be they rotary, gate, ball, butterfly, check, etc.

Notwithstanding any formal medical training whatsoever, i can can confidently say that bums don’t work that way
——- –

Heh, I’m not an engineer, but I still know a bit about valves. One valve you didn’t mention is an “iris valve” – and they do kinda work like bums!
***************************************

Ball and Butterfly valves are rotary. Uncanny attribute with bum valves is they have a unique ability to distinguish between solids and gas (usually but not always fail safe).
—-

Yes, I hear the seals start to go with age on those intelligent sphincter valves. I hopefully have a few more years to go before I need some new packing :).

#44 Nonplused on 08.08.20 at 7:27 pm

“Every brief Maple Leaf winning streak or nifty Auston Matthews goal will, in the collective mind of this city, translate to Stanley Cup glory and a parade down Bay Street.”

I wouldn’t hold your breath. No Canadian team has one the cup since expansion, something which is nearly statistically impossible if you assume team parity in the league. So how did that happen? Well, there isn’t team parity. All the best players head south where the money and the taxes are better. Also if you could imagine an all-Canadian Stanley cup final, it would be a ratings disaster for the NHL and set them back years.

#45 IHCTD9 on 08.08.20 at 7:32 pm

#26 Scarbro on 08.08.20 at 4:20 pm
First childhood memories were from ’67 Centennial year fireworks. Leafs wins, apollo, new neighborhood, shows me that my old noggin still works.
——

First year for the Camaro too. Unfortunately, I was still a tadpole in ‘67.

#46 Ace Goodheart on 08.08.20 at 7:41 pm

#35 Drongo:

If you’ve ever home schooled an elementary student you know that you can teach the Ontario elementary curriculum up to the end of grade six in about 1 hr per day.

The rest of what they do with the kids is just wasted time. Lots of colouring (which is useless after SK as kids will have fully developed fine motor skills by then and they don’t need colouring). Lots of repetitive seat work that doesn’t teach anything.

It’s baby sitting. Taking care of kids all day so their parents can work.

For people who actually like spending time with their kids, school is mostly not necessary.

Grade 7 and 8 are where things start getting harder and it is very difficult to home school high school math and science.

#47 SoggyShorts on 08.08.20 at 7:45 pm

#37 Doug Rowat on 08.08.20 at 5:54 pm
#17 SoggyShorts on 08.08.20 at 2:45 pm
I’m not saying that holding safe assets has no value; however, I’m pointing out that history is strongly suggesting that the returns for these safe assets will be even lower this decade.
Based on the trend, decide for yourself if relying solely on safe assets will be enough to fund your retirement.
–Doug

*******************
I agree that a 0/100 PF would be terrible, but this sounds a bit like an argument against even a 60/40.
I mean if bonds are gonna suck doesn’t that mean overall returns are going to be worse unless something makes up for it?

What part of the 60/40 is going to do well enough to overcome the drag of even lower performing bonds, and shouldn’t that part be more heavily weighted?

Perhaps 80/20 is needed to maintain those 7% historical returns going forwards?

Or is maintaining the reduced volatility that 60/40 provides that much more important to your clients than returns?

#48 Nonplused on 08.08.20 at 7:57 pm

#39 crowdedelevatorfartz on 08.08.20 at 6:26 pm
@#32 MF.

I’m waiting for the teachers in BC to walk out due to “Covid Class Size”
They are kicking around 15 students max in the classroom for social distancing.
“Hire hundreds of more teachers” ( From where is anyone’s guess…)….Cost? Several hundred million $$$$

————————

Where are they going to find “100’s” more teachers? Last I checked you need a 4 year degree and there wasn’t a huge surplus of teachers around.

Also how are they going to work smaller class sizes without more classrooms? Even if there was money to build more classrooms they wouldn’t be ready until covid was over. I suppose they could use temporary structures but then you still need more teachers.

This whole back to school thing I predict will end in a colossal failure and a big spike in cases. Students are crammed in the hallways much tighter than meat plant workers. Also those masks aren’t going to stay on all day. You have to take it off just to have a drink of water. And these are kids we are talking about, so half of them aren’t going to take it seriously. Enforcement is going to be darn near impossible. I mean, we haven’t been able to stop head lice outbreaks in the schools and that is easy to detect and easy to treat. All you need is a comb and some Nix. If a kid catches covid and brings it to school there is no doubt there will be a large outbreak.

#49 Sail Away on 08.08.20 at 8:06 pm

#15 The other Doug, in London on 08.08.20 at 2:33 pm

Why would ANYONE want U.S. bonds when there are FAR BETTER places to put your money? First and foremost, you should have gone on a blitz of buying equities when they were on sale back in March.

—————

Too simplistic, OD. Most people would not be able to buy at equity lows without owning bonds to sell.

Are you promoting being overweight equities at all-time market highs, or what exactly are these ‘FAR BETTER’ places you mention? And today please, no 20/20 hindsight.

#50 TurnerNation on 08.08.20 at 8:13 pm

If only Ace Goodheart spent as much time warning and educating people on the dangers of heart disease and diabetes. It really is an indiscriminate disease.
About not smoking. Eating well. Exercising.
Your insurance company already know how you will be dying. They can tell you will amazing accuracy the top three tortruous methods by which you will depart . So much so they are willing to bet a million bucks on you. Or more.
Anything less is not worth discussion.

#51 Sail Away on 08.08.20 at 8:17 pm

#41 IHCTD9 on 08.08.20 at 7:17 pm

Yes, I hear the seals start to go with age on those intelligent sphincter valves. I hopefully have a few more years to go before I need some new packing :).

—————-

Um… ah… err…

How ’bout them Maple Leafs?

#52 Ronaldo on 08.08.20 at 8:27 pm

1967….the year I was married and the year that Nancy Green won the inaugural world cup. The year of Trudeaumania. The year of the Hippies. Twas a good year.
https://www.youtube.com/watch?reload=9&v=wiFn4ciqEWU

#53 truefacts on 08.08.20 at 8:42 pm

Is it only me that thinks it’s wrong to have Covid rules for some people, while those in power simply break the rules?

Didn’t our PM go to his cottage during lockdown – crossing interprovincial borders nobody else could?

Now (according to this), the mayor of Brampton plays hockey with his buddies while kids are not allowed.

https://www.rebelnews.com/brampton_ontario_mayor_patrick_brown_caught_breaking_pandemic_rules_closed_hockey_arena?utm_campaign=dm_patbrown_8_8_20&utm_medium=email&utm_source=therebel

If this is true, it’s a disgrace. Either the law is for everyone or not..

#54 Lone Star on 08.08.20 at 8:54 pm

Awesome post tonight Doug!

Great content, but I especially loved the opening and the close.

#55 Wondering on 08.08.20 at 9:09 pm

27 Wondering on 08.08.20 at 4:55 pm
Forgive me if this has already been addressed. A recent blog indicated that the “60/40 portfolio weightings are 26% in a variety of bond funds, 13% in preferreds”. Wow! What happened to 20% bonds and preferreds at around 18%?? What is the reasoning? Is this due to the covid impact on business?
———
#34 Stone on 08.08.20 at 5:49 pm
Prefs are now 13% because they dropped about 30% in value. Deduct about 30% from 18% and you get 13%.
I dropped prefs from my portfolio in January 2020 (I saw the writing on the wall) and bought ZPR back when it was $7.20. Yeehaa!

—————–
Last year in July, the recommended weighting for fixed income portion was bonds at 20% and preferreds15% (not the 20% that I said). When values dropped in the Spring, I increased my preferreds to 18%. I’ll re-balance at some point. Maybe bonds would’ve been a better choice as they are positive on the year.

#56 LP on 08.08.20 at 9:23 pm

re valves

HEART valves, people. Heart valves!!!

#57 Russ on 08.08.20 at 9:26 pm

IHCTD9 on 08.08.20 at 7:17 pm

#36 Don Guillermo on 08.08.20 at 5:52 pm
#28 IHCTD9 on 08.08.20 at 5:17 pm
#92 Bdwy on 08.08.20 at 1:04 am

Re. Bum valves.

As a BESc ( mech eng) from a top cdn university i feel i have a good understanding of the design, function and
construction of a wide range of valves , be they rotary, gate, ball, butterfly, check, etc.

Notwithstanding any formal medical training whatsoever, i can can confidently say that bums don’t work that way
——- –

Heh, I’m not an engineer, but I still know a bit about valves. One valve you didn’t mention is an “iris valve” – and they do kinda work like bums!
***************************************

Ball and Butterfly valves are rotary. Uncanny attribute with bum valves is they have a unique ability to distinguish between solids and gas (usually but not always fail safe).
—-

Yes, I hear the seals start to go with age on those intelligent sphincter valves. I hopefully have a few more years to go before I need some new packing :).

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

Another Power Engineer here:
why not add “pinch valves” to the list?

As we can hear Flop yell to the lackey on the jobsite. “Pinch ‘er off mate. We gotta get rollin’. Crikey.”

And regarding seals and aging… it is well known with ageing that what doesn’t dry up, leaks.!

Enjoy the weather.

Cheers, R

#58 crowdedelevatorfartz on 08.08.20 at 9:28 pm

@#43 IHCTD9
“Unfortunately, I was still a tadpole in ‘67.”
+++++

Ahhhh 1967.
Or as Pierre Berton claimed, “The Last Good Year”.
Perhaps he was warning us of “Papa” Trudeau’s election in ’68?

I’m old enough to remember the cheesy Expo 67 song that played nonstop on the radio that year.

https://www.youtube.com/watch?v=Uj4LZB5oarA

#59 Pascii on 08.08.20 at 9:40 pm

I like how that photo was taken so long ago that it was back when the playoffs ended in the chillier months. Everyone would be in shorts and t-shirts today….

#60 SoggyShorts on 08.08.20 at 10:11 pm

#47 Sail Away on 08.08.20 at 8:06 pm
#15 The other Doug, in London on 08.08.20 at 2:33 pm

Why would ANYONE want U.S. bonds when there are FAR BETTER places to put your money? First and foremost, you should have gone on a blitz of buying equities when they were on sale back in March.
—————
Too simplistic, OD. Most people would not be able to buy at equity lows without owning bonds to sell.

Are you promoting being overweight equities at all-time market highs, or what exactly are these ‘FAR BETTER’ places you mention? And today please, no 20/20 hindsight.
**********************
Exactly this. I had all of my money in things “far better than bonds” which means it all tanked in March and “going on a buying blitz” was impossible.

#61 Ponzius Pilatus on 08.08.20 at 10:19 pm

Doug has an FCSI designation
He’s quite a rare bird.
Blog dogs, show him some respect.
He’s a jolly good Fellow.

• Fellow of the Canadian Securities Institute (FCIS): The FCIS is a credential granted by the Canadian Securities Institute (CSI), given to financial professionals recognized as industry ambassadors and mentors to future financial leaders. It can actually be held by both Investment Advisors and Financial Planners alike, but of Canada’s 700,000 financial services professionals, only 3,500 hold the credential, and it signifies a high standard of education, ethics and experience. To qualify for the FCIS, individuals must hold one of a select group of financial designations, pass addition CSI courses from outside of their professional stream, and attend regular ethics seminars.

#62 The other Doug, in London on 08.08.20 at 10:47 pm

@Sail Away, post #47:
As a matter of fact, I DID sell bond funds back in March to buy those DIRT CHEAP equites, as everyone should have done. During 2019 I took some profits selling equities while they were expensive and bought some bond funds. During those Boxing Day, Black Friday BLOWOUT clear the inventory out RIGHT NOW dirt cheap equity sales in March I reversed the flow and bought back into equities. I’s so simple, it’s what everyone should do. I still have a heavy weighting in equities, particularly those that are in what people need. I wonder about the future of REITs when I live in a building, or the future of pipelines as I drive my gasoline fueled car, and buy goods like groceries transported by a truck or train with a diesel engine, or use water heated by natural gas. As for telecom, correct me if I’m wrong but isn’t my computer hooked up to a telecom network, or is it by magic from Hogwart’s School? When equities go up more, as they always do over time, I may sell some off and buy bond funds again, but it’s not yet optimum time.

No hindsight at all here, none whatsoever, in March I actually did say the market was at or near bottom. Where did I say that?

Are we toast? Posted March 23/20 In post #243 I said stock market at or near bottom

Mr. Money Mustache post: Lessons in Fear and Wealth from the Coronavirus dated March 3/20. My comment was posted March 19, 2020, 9:46 pm

#63 Entrepreneur on 08.08.20 at 10:49 pm

I agree with #20 & #44 Ace Goodheart…send the kids part time, some in the morning, some in the afternoon.

Since the kids only need an good hour to keep up their grade as pointed out by AG.

Schools are too long, boring. Schools need updating, lol.

My blog yesterday about VI being a cesspool, I tell it like it is. Do we see any improvements? No! What I have seen is a decline. And this is not on the news, bias reporting.

#64 Shallow Pal on 08.08.20 at 11:55 pm

“Ch ch ch ch ch changes” sang Bowie.

https://www.cnbc.com/2020/08/05/the-ballooning-money-supply-may-be-the-key-to-unlocking-inflation-in-the-us.html?recirc=taboolainternal

When inflation rages, and it will as money becomes increasingly worth less, T-Bills will go stratospheric. Just because it ain’t happened yet, that don’t mean it ain’t gonna happen. As soon as the Fed starts draining the pool ch ch ch ch ch changes.

Assets will rock with inflation, interest rates will skyrocket. A fixed 10 ten year play might make you look like a genius in ten years time.

#65 Keith on 08.09.20 at 12:10 am

@ #39 crowdedelevatorfartz

“Time to cull the public sector herd of a 50,000 dead weight staffers?
Only a bankrupt federal govt knows for sure……..”

Generously estimating the cost per staffer at 100k per year, ignoring lost income tax revenue, increased EI costs and lost economic impact of those jobs, you just saved the taxpayer 5 billion per year. On pre covid spending of 350 billion per year, not much more than a fart in a hurricane. On the pre pandemic deficit of 30 billion per year, you now only have 25 billion more in cuts to get to zero. Good luck!

#66 Dave on 08.09.20 at 12:23 am

I didn’t like the wise ass comment about the Leafs

#67 Dave on 08.09.20 at 12:35 am

This article confused me…

I have heard analysts say that the bond market has been in a bubble the past 30 years. I thought as Bond yields decreased, the actual value of the bond increased for people holding the bonds.

#68 Doug Rowat on 08.09.20 at 1:27 am

#45 SoggyShorts on 08.08.20 at 7:45 pm

Perhaps 80/20 is needed to maintain those 7% historical returns going forwards?

Or is maintaining the reduced volatility that 60/40 provides that much more important to your clients than returns?

Generally speaking, an 80% equity weighting is too much for most investors.

Achieving better performance through more equities becomes only theoretical if an investor abandons the market entirely out of fear.

However, it is true that investors will need to take more risk in the future with their fixed income holdings to achieve better rates of return.

A 40% fixed income component being composed predominately of US Treasuries or Government of Canada bonds will no longer work. More exposure to corporate bonds, for instance, will likely be required instead.

–Doug

#69 majik on 08.09.20 at 5:38 am

#44 Ace Goodheart on 08.08.20 at 7:41 pm
————————-

To think that elementary school is just about education is very naive. This is a child’s first exposure to the real world of sorts, where they are no longer shielded by the cocoon of their parents. The child is forced to interact with other adults and children, it is here that the real self is formed.

Homeschooled children are often much more intelligent in certain areas as they have time to give specialised focus to particular subjects. Unfortunately homeschooled children are regularly maladjusted as in essence they become institutionalised with the same teacher and the same learning location for years on end.

#70 PBrasseur on 08.09.20 at 8:22 am

Simple fact: Covid is done in Sweden, same will happen soon in most of the US.

Here not so much.

#71 Sail Away on 08.09.20 at 9:00 am

#60 The other Doug, in London on 08.08.20 at 10:47 pm

—————-

Re: Far Better Places

Good call in March.

But… you said there are far better places to invest than bonds. What are these better fixed income places? The fixed income is the question, not contrarian equities.

#72 Not! on 08.09.20 at 9:40 am

Excellent post Doug.

#73 the Jaguar on 08.09.20 at 10:03 am

Sounds like a metaphor for life, especially the part about sacrifice and discipline……………….

“How was it that the 1967 Maple Leafs, a team that wasn’t exactly stocked with youngsters, could upset the Canadiens to win the Stanley Cup?”

“We were really good for one month. And we had a little bit of luck. Everybody on a team has to perform, do their part that’s set for them. Some people are asked to do a little bit more and they have to do that, too. But everybody has to sacrifice and discipline themselves. Sometimes you don’t win, even if you sacrifice and are disciplined, but it’s important that you do. We had good goaltending with John (Bower) and Terry (Sawchuk), and people played really well. You have to understand the difference between winning and losing is tiny. Maybe it’s making the right line change, not going back, coming off so a fresh guy can come on. It could be something stupid, but if you don’t get back, a guy scores.”

– Dave Keon

#74 Brett in Calgary on 08.09.20 at 10:07 am

Thanks Doug – great post.

#75 Jake on 08.09.20 at 10:13 am

Takeaway… Leafs win the cup this year, then it’s back to hope and dreams for another 50+ years. A victory followed by an asterisk, oh well, we’ll take it.

#76 truefacts on 08.09.20 at 10:16 am

How about 90% in US equities, 10% cash.

This guy seems to think that’s best:

https://www.cnbc.com/2019/02/26/warren-buffett-wants-90-percent-of-his-estate-invested-in-index-funds.html#:~:text=The%20Oracle%20of%20Omaha%20even,%E2%80%9CSquawk%20Box%E2%80%9D%20on%20Monday.

But what does this Warren Buffett guy know???

#77 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 08.09.20 at 10:27 am

BEST BLOG ENTRY EVER!!!!

BETTER THAN A STANLEY CUP!!!

(Oops, sorry – forgot to recognize that many readers here are GTAHoles so they may not understand this terminology. The “Stanley Cup” is a trophy awarded to competent, talented, skilled, professional hockey players who don’t find a way to quit every important game, as part of a properly managed team, when they actually win something of importance, not simply dupe gullible people out of their money for decades. The last “Stanley Cup” seen in the area of Trauma, Ontario was reportedly around the same time as the extinction of the Passenger Pigeon, hence the phrase is certainly quite unusual to Toronturds)

#78 crowdedelevatorfartz on 08.09.20 at 10:28 am

@#63 Keith
“Generously estimating the cost per staffer at 100k per year, ignoring lost income tax revenue, increased EI costs and lost economic impact of those jobs, you just saved the taxpayer 5 billion per year.”

+++

Gee, you left out inflation indexed pensions.
Add another 5 billion per year….

See how easy it is?
All you have to do is pretend you’re in the private sector ( the real world) and fire the useless dead weight.
:)

#79 VicPaul on 08.09.20 at 11:12 am

#39 crowdedelevatorfartz on 08.08.20 at 6:26 pm
@#32 MF.

I’m waiting for the teachers in BC to walk out due to “Covid Class Size”
They are kicking around 15 students max in the classroom for social distancing.
“Hire hundreds of more teachers” ( From where is anyone’s guess…)….Cost? Several hundred million $$$$

*********

Yes, fair comment/concern…and even if we spent 60 million on 1000 new teachers, or 300 million on 5000 new teachers, where would we put them? Schools are crowded as it is…there are no “extra” classrooms just sitting empty. Outdoor classrooms – yeah, like there aren’t enough ways/reasons for kids to be off-task, without the wind/sun/shadow/cold/heat/rain and other sensory distractions bothering a six year old practicing their decoding strategies.

So, what’s the answer for sixty+ y/o teachers who are in a higher risk category and are fearful of return?

Retire.

Why not encourage older teachers to retire and fortify the T.O.C list (teacher on call) with experienced mentors to substitute, and give thousands of young teachers full-time, career-building placements so they can hone their craft and begin funding their new families, becoming the next waves of consumers to drive our product/service economy. Out with a bunch of oldies making 80+k/yr, in with a bunch of young, vibrant, enthusiastic young professionals pulling down 60+k… easier on government coffers.

I would volunteer…with some incentive.

M56BC

#80 Dharma Bum on 08.09.20 at 11:34 am

I wanna say one word to you, just one word:

“Utilities”.

https://www.youtube.com/watch?v=Dug-G9xVdVs

https://www.fool.com/investing/stock-market/market-sectors/utilities/electric-stocks/

#81 Sail Away on 08.09.20 at 11:36 am

#77 VicPaul on 08.09.20 at 11:12 am

I’m waiting for the teachers in BC to walk out due to “Covid Class Size”

They are kicking around 15 students max in the classroom for social distancing.

—————

Or we could do as Sweden did and just let the kids go to school normally.

Weird how none of the Swedish kids died and, actually, nobody in Sweden is dying from Covid anymore.

But that would involve applied logic.

#82 Dogman01 on 08.09.20 at 11:38 am

#62 Shallow Pal on 08.08.20 at 11:55 pm

If inflation rages, why would a fixed 10 year do well?

Since they pay less than 2% I would think the opposite.
Am I missing something?

#83 ever after on 08.09.20 at 11:54 am

#29 MF

its the truth .. i have a long time frame regards investing .
. i am retired and have enough income . so don’t care about any short term dip in equities .

thats why 100 % ..

i held PF’s for years . . i prefer dividend stocks now .. and ETF’s

#84 Don Guillermo on 08.09.20 at 11:55 am

#71 the Jaguar on 08.09.20 at 10:03 am
Sounds like a metaphor for life, especially the part about sacrifice and discipline……………….

“How was it that the 1967 Maple Leafs, a team that wasn’t exactly stocked with youngsters, could upset the Canadiens to win the Stanley Cup?”

“We were really good for one month. And we had a little bit of luck. Everybody on a team has to perform, do their part that’s set for them. Some people are asked to do a little bit more and they have to do that, too. But everybody has to sacrifice and discipline themselves. Sometimes you don’t win, even if you sacrifice and are disciplined, but it’s important that you do. We had good goaltending with John (Bower) and Terry (Sawchuk), and people played really well. You have to understand the difference between winning and losing is tiny. Maybe it’s making the right line change, not going back, coming off so a fresh guy can come on. It could be something stupid, but if you don’t get back, a guy scores.”

– Dave Keon
**************************************
Katz should hang that Keon quote in the Edmonton Solar Panels dressing room :)

#85 TurnerNation on 08.09.20 at 11:58 am

#113 Entrepreneur last blog what’s all that about in Vic? You said:
“The gates are up (restrictions in the forest) and know where TurnerNation is coming from, that lost of freedom and total control. We have tons of gates and Campbell River next. Slowly at first then more and more.”

— Keep in mind the UN goals aka insane new green deal include setting aside much of the planet as off limits to mere mortals like us. Aka kicking us off the crown land.
— One goal is elimination of Air Conditioning. But how? Already here. Schools in Texas banned A/C, fans even because…wait for it..it might ‘spread CV’.
— Many times I posted here that people soon will be kicked out of perfectly livable properties due to failing ‘energy audits’. Easy peasy now, all they will say is AC spreads CV, spend $$$ to retrofit or get out.
UK Councils already passed a law allowing them to bulldoze homes all due to CV. Last week.

Incrementalism folks. Sept 11 fear of VeryBadMen overseas and “IS” only l went so far (say where’d those chap get to?) , petered out after 10-14 years. (Code Orange or Pink or what?) Now they got a new tool.

#86 kingston boy on 08.09.20 at 12:10 pm

@#68 PBrasseur on 08.09.20 at 8:22 am
Simple fact: Covid is done in Sweden, same will happen soon in most of the US.

Here not so much.

——-

fact eh?
interesting.

#87 GO LEAFS GO on 08.09.20 at 12:11 pm

hoping Canada’s team can pull off a win tonight.
not counting on it though lol.

#88 SoggyShorts on 08.09.20 at 12:12 pm

#66 Doug Rowat on 08.09.20 at 1:27 am
Thanks, that makes sense. After going through March with an all equities PF I can totally understand why it’s a bad idea- I almost bailed at least 3x and lost loads of sleep.
Since I did make it through without selling I think I can handle 80/20, and at least next time I’ll have something to sell. I’ll look into corporate bonds though.

#89 The other Doug, in London on 08.09.20 at 12:16 pm

@Sail Away, post#69:
Bonds are a lousy investment because 1) they don’t pay much and 2) interest rates are at record lows. If inflation should come back and interest rates go up bond funds will be hammered. The only fixed income I have in preferred share ETFs. While I haven’t made any big capital gains here, they pay out nice dividends month after month after month after month. Speaking of which, their value has rallied nicely in the last 2 months. They are like those nuke plants that reliably put out a constant base load power output around the clock. Otherwise I’m heavily into equities, as I described in my previous post. I also have some power producers like NPI and AQN. Again, buy producers of what everyone uses on a daily basis, and for best results buy when it’s on sale like in March of this year and December 2018. It’s another example of Ockham’s Razor, and look for the easiest and simplest solution to a problem.

#90 Masks really do make some people more attractive on 08.09.20 at 12:24 pm

A 40% fixed income component being composed predominately of US Treasuries or Government of Canada bonds will no longer work. More exposure to corporate bonds, for instance, will likely be required instead.

–Doug

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

How does the US Fed buying $1.250 trillion in corporate bonds affect this strategy?

#91 Bill on 08.09.20 at 1:28 pm

#21 TurnerNation and others.
—————————-
Yup nobody sick in Powell River.
Masks becoming mandatory in all Walmarts. Why?
Truduea works for CCP I have no doubt.
Our friends finally got back from the Philippines.
There..You would go to jail for drinking a beer
You needed your paper to go into town
And you could be executed on site for non compliance
FACT
So much for our VAC home.
This takeover is woring well.
So many ignorate people bought into it.

PS wait till the cheques run out. You cant have 1/2 an enconomy or even 75 percent. It dont worky.

#92 Bill on 08.09.20 at 1:36 pm

My family from Ferndale cant visit their cabin in Powell cause of this Scamdemic. Their Canadian!! Wtf

#93 Sail Away on 08.09.20 at 1:45 pm

#87 The other Doug, in London on 08.09.20 at 12:16 pm

————-

Re: Prefs vs bonds

I hear you, but prefs got hammered along with equities this year. Bonds didn’t. With an equity/REIT/Pref portfolio, there would have been zero dry powder at the low.

Just saying, there needs to be a nonvolatile or inversely volatile fixed portion. Whether this is cash or bonds or …? Otherwise there is no way to take advantage by rebalancing.

And right now is rebalancing time. Yes, I’m buying prefs, but also bonds for the dry powder.

#94 The other Doug, in London on 08.09.20 at 1:59 pm

Sail away, post #93:
My dry powder consists of cash from dividends I get from the dirt cheap stocks and equity ETFs I scooped up in March. Another source of dry powder is margin. In fact the ONLY time you should use margin debt is when equities are on sale, then sell enough to pay margin debt off when the stock market recovers, as it always does. It’s amazing, because when you do so you’ve effectively created money out of nothing. And most people think only governments or counterfeiters can do that. Wow, truth is stranger than fiction.

#95 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 08.09.20 at 8:01 pm

MAKE BELIEVES ARE DEPLORABLE!

JUST LIKE TORONTHOLE!

#96 Shallow Pal on 08.10.20 at 10:40 am

#82 Dog

A 10 year fixed mortgage won’t be 2.5% in 5 years.