Where to invest (and not)

  By Guest Blogger Sinan Terzioglu

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After dropping over 35% in 3 weeks the S&P 500 has rebounded over 54% and sits slightly below February’s all-time high. However fear still persists as many believe there’s another storm coming around the corner. So they sit in cash.

It’s incredibly unproductive to your long-term investment results when you think only of the things that can go wrong.  It keeps you looking backwards instead of forward. You miss the big picture and what actually drives the equity markets up over the long term. While the economy is still very challenged, it is improving. Vaccines and better treatments are coming and we will adapt as we always have.  Corporate profits are recovering and expected to grow again in 2021. Interest rates will remain low for a prolonged period making equities even more attractive.

Recently I spoke to someone who said they cashed out of the market two months ago. His excuse:

“None of this makes any sense.  There is a second wave coming and the markets are overvalued.  It feels like the technology bubble again with Apple, Amazon, Microsoft, Facebook and Alphabet now making up over 22% of the S&P 500.  I clearly remember how the tech bubble ended and I don’t want to go through that again”

During that bubble 20 years ago the valuations of tech companies were absurd.  Many were not even profitable.  Today the FAANG stocks are comparatively well-priced.  Given their incredible and long runways of growth it can be easily argued that they’re undervalued.  Four out of the five just grew revenues by a double digit pace in the last quarter – remarkable given their size and since all were impacted by the virus.  Sure, they benefitted from millions staying at home but their growth during the pandemic was incredible.

Free cash flow for Amazon, Apple, Microsoft, Facebook and Alphabet is expected to swell by 20% in 2021.  The cash flow they collectively generate now accounts for 20% of the entire free cash flow thrown off by the 500 companies in the S&P index. Astonishing would be an understatement.   The FCF yield of the group is ~3.5% vs. a yield of ~0.60% for the 10-year US Treasury.  These are by far the most incredible and most profitable corporations ever.  They earn very high returns on their invested capital and are able to borrow money for essentially nothing.  The can easily continue to move the market higher over time.

There will certainly be lots of volatility, but sitting in cash and waiting for another blow-out like we had in March is a risky strategy.  Don’t be your own worst enemy.  Investing in high quality ETFs that hold the world’s most profitable corporations is one of your best chances of growing your money over the long term and staying ahead of inflation.

Gold – at your peril

Since the price of gold recently rose above US$2,000 an ounce I’ve been getting questions such as:

“Should I buy some gold for my portfolio? Isn’t gold a good store of value and a good hedge against all the uncertainty right now?”

Gold is not a productive asset. There’s no internal rate of return as it produces nothing and therefore is impossible to value. It costs money to store and insure it. A buyer is betting someone will pay more for it at some point in the future, so it’s a speculative asset rather that an investment based on expected cash flows. If you are a trader go ahead and buy, but if you’re investing towards a pension-like income stream in the future, I’d recommend steering clear.

Over the very long term the real (inflation adjusted) return of gold has been substantially less than equities. When gold hit its previous all-time high in 2011 an ETF of senior gold producers (GDX) was trading above US$60 and fell below $20 over the following 5 years. GDX is now trading in the low $40’s. So if you bought a basket of senior gold equities in 2011 based on the same investment thesis as today then you’d be down ~35% vs the S&P 500 which is up well over 150% during the same period.

Technically gold looks strong but always keep in mind how easy it is to blow money in resources.  If you lose 25% on an investment it requires a 33% return to get back to even. So if you insist on making gold part of your holdings, ensure it makes up only a very small portion and only if you only have a large portfolio. Buy a diversified ETF of gold producers and place it in a non-registered account so if losses come you can at least apply future gains against them.

REITs – don’t believe all you hear

As malls have been empty and offices closed over the last few months there’s been a lot of pessimism about REITs, particularly retail and office REITs.  Over the last few months I have gotten many questions such as:

“Is it not very risky to buy REITs right now?  It looks like the work from home trend is here to stay so office properties are going to sit empty and likely never recover.”

There will certainly be some changes in the way we work and shop but we believe the concerns are overblown and more than priced into the sector.  In fact, the risk is much lower now as many retail and office REITs are trading for substantially less than their net asset values, and even their replacement cost.  Real estate is a tangible asset so there will always be value in the building and the land.  Properties can be converted to mixed use. For example, when I lived in New York one of my first apartments was in a building that used to be a Goldman Sachs office tower.

Many of the largest office property managers have been seeing an uptick in demand as businesses plan to return and prepare for more space between employees.  One of the largest property managers in the world, Brookfield Property Partners, announced last week that their office portfolio is 92% leased on a long-term basis with a remaining average lease term of almost 9 years. The CEO wrote:

“While there has been some discussion over the last several months as it relates to the ‘future of the office’, it is our belief that a corporate office represents much more than a place for employees to sit every day; companies utilize their offices as incubators of culture and as an important tool to recruit and train younger talent. Collaboration and innovation cannot take place remotely or over conference calls and some companies are already observing a decline in these areas amongst their employees. As time goes on, we think the loss of innovation and collaboration will become even more apparent and companies will shift emphasis back to having employees in the office. However, until a vaccine is discovered and widely available, it is likely that companies will need to have portions of their employees working remotely as they simply don’t have enough space currently to accommodate them all. In the long run however, we do not think remote working represents a threat to the office as we know it. In fact, concerns around social distancing and density ratios are very likely to drive additional office demand in the future and may prove to reverse the trend of increased densification we have witnessed over the past 20 years.”

Risk can be kept in check so long as you position size your exposure accordingly and hold a well-diversified REIT with exposure to residential, retail, industrial, office, healthcare and diversified properties.  The dividends yields are attractive and paid monthly.  You get the benefit of being a landlord and having experienced management teams allocate and recycle capital for you all the while you don’t have to lift a finger or fix a toilet.  It sure beats buying a single overvalued condo and being cash flow negative.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

 

152 comments ↓

#1 T on 08.16.20 at 10:03 am

Remote work is proving to be a detriment to corporate culture and productivity. There are just too many distractions at home and web meetings can’t fully replace the experience of in-person collaboration with coworkers.

#2 Joe on 08.16.20 at 10:17 am

Hi – what are your thoughts about the continuous money printing (in the trillions) by central banks Since 2000? Do you think it’s whats propping up businesses, Stock buy backs, markets and real estate?

#3 KNOW IT ALL on 08.16.20 at 10:17 am

What a cheery forecast.
Only time will tell.

I was once told that if you just built a cash hoard and waited until the market dropped 30 – 40 percent then jumped in with everything and let it ride back to a point of overvaluation, cashed out and did it all over again you’d be massively ahead of any investor out there.

And with very little effort or worry and virtually no fees.

#4 crowdedelevatorfartz on 08.16.20 at 10:34 am

While I agree that REIT’s are a good investment strategy.
My previous financial advisor would use REIT’s …any Reits….to dump my investment cash into.
Utter garbage with exorbitant management fees and illiquid holdings.
Unsellable unless I was willing to take a 100% loss.
The result ?
One REIT went bankrupt and the others are struggling along at values of pennies on the dollar compared to the purchase price.
And when I asked him why so much of my portfolio was in REIT’s he treated me like some uniformed dolt and gave me a smart assed answer.

Two months later I moved my entire portfolio to another company and they began reorganizing it OUT of the crappy REIT’s that lazy prick stuck me with for his exorbitant fees.
However some of these REIT’s are locked in and cannot be sold to anyone BUT the owners of the REIT. And they have no money so…….the loss continues.

And you wonder why people ignorantly invest in gold?

Commission based, lazy, sales hucksters in ALL industry’s ruin it for the honest sales people.
It just took 10’s of thousands of dollars in losses for me to figure that out.
Caveat Emptor.

#5 MF on 08.16.20 at 10:47 am

All good arguments put forward, but there is definitely some fear out there.

It’s related to central bank manipulation. A lot of people think the seemingly undending zero interest rate/expanding balance sheet policy is setting us up for another crash of some sort.

It’s pretty obvious the longer prevailing interest rates are zero bound (or near it) and QE drops bond rates even lower, assets will increase in price. People/businesses/government can take on more debt. No suprises there.

It’s when rates rise that is the problem.

Can they stay low forever? Why not just tell us that interest rates will be .25% and QE will continue forever if this is the plan?

The last time rates started to poke upward in 2018 the market wobbled, and the Fed chair stupidly dropped rates again in response to some politician’s idiotic wailing. It eroded any trust the system was non partisan, focused on the dollar, inflation, or whatever the official mandate is. It fueled all the conspiracy theories about central banks, and gave credit to all the doom sayers.

Meanwhile, after COVID, the central banks again went back to to same old, tired, predictable, and short sighted playbook..and even doubled down on bad policy. Rates back .25, QE again (even bigger) this time etc.

So of course people are worried. They aren’t buying gold for an investment, they view it as a hedge to maintain wealth in the event the central banks lose control (they don’t look very competent). Ditto REITs. Just more low interest rate fluffed up properties. Equities look attractive when bond rates are so low, but how long can QE go on? Forever?

All this low interest rate environment fueled debt is what worries me. What about us who have investment horizons of 30-40 years? Can debt just accumulate forever also??

I’m no gold bug. I’m no doom sayer or conspiracy theorist. But it’s obvious where the fear is coming from. It all looks like an experiment that could go wrong at any time. Where with this debt go? No one seems to have an answer to that question.

MF

#6 Derek Ross on 08.16.20 at 10:53 am

Definitely too late to buy gold. If you’re going to buy at all, you buy when nobody wants it. And then you sell when it’s the hot topic.

Not vice-versa.

#7 Derek R on 08.16.20 at 10:54 am

Give me a nice REIT any day of the week!

#8 Karlhungus on 08.16.20 at 11:04 am

Never understood the love for REITS. I have yet to hear a solid argument to own REITS over just index funds. Keep it simple, far more effective. CAN,US,INT.

#9 MF on 08.16.20 at 11:05 am

Here’s a great article that touches on why there is fear despite markets moving upwards:

https://www.thestar.com/business/2020/08/15/as-the-pandemic-continues-the-rich-are-getting-richer-than-ever-before-and-economists-are-getting-concerned.html

Cliffs:

-COVID increased the wealth disparity (Garth has mentioned this many times)
-The wealth disparity has already been increasing since the 1970’s due to globalization and deindustrialization. This is because of a reduction in unionized work, lower relative wages, and decreased taxes at the top.
-CERB and all these other benefits benefitted stocks because the money eventually flowed into rent/utilities/food (owned by the wealthy)
-Dropping interest rates is only useful to the mega wealthy, who go on spending sprees when markets collapse
-This is worrying economists who know that recovery will depend on spending, and if there are huge swaths of our population who are still underemployed that spending will be reduced. This is why people are using debt to make up the difference, and our debt levels are dangerous.
-One of the economists advocated for a wealth tax, estate tax, house tax etc.
-No one knows how we will get out of this, hence the fear.

MF

#10 Sail Away on 08.16.20 at 11:20 am

I just read the weekend Globe and Mail, and see the Canadian Democratic Party is in paroxysms of ecstasy over Kamala Harris.

What’s not to love? Multi-racial, gender other than male, immigrant… wow

Not much info about her policies but she is looking great and apparently has the CDPs exuberant support.

She was born in California. How is that being an immigrant? – Garth

#11 Watermelon Sugar on 08.16.20 at 11:23 am

Apparently, Buffett no longer agrees on your/his stance on gold. Sold bank positions to buy Barrick. I’m sure he bought more, since that filing end of June.

Barrick is an equity buy, not a bullion purchase. It is measurable. – Garth

#12 MF on 08.16.20 at 11:25 am

#1 T on 08.16.20 at 10:03 am

That doesn’t mean that there won’t be a huge impact on business real estate. There will still be lots of downsizing of the real estate footprint. The cost reductions are too attractive, and the WFH technology will only continue to improve with time. Corporate culture will have no choice but adapt, which is what always happens after a time of crisis/change.

MF

#13 Sinan Terzioglu on 08.16.20 at 11:56 am

#2 Joe

Hi – what are your thoughts about the continuous money printing (in the trillions) by central banks Since 2000? Do you think it’s whats propping up businesses, Stock buy backs, markets and real estate?

– There is no doubt that the enormous amount of monetary stimulus has propped up the credit markets and the economy and is the main reason the financial markets have recovered as much and as quickly as they
have. While there are risks with this they are well worth it because without it the economic consequences would have been severe – Sinan

#14 Catalyst on 08.16.20 at 11:57 am

My main concern with reits are:
– not always the most tax efficient. As a result, not often looked at by US investors. Without their capital chasing the stock, it just never goes up.

– they often payout 90-100% of cash flow and yield 6-10%. Right now I can get a bank paying out 5-6% yield and 40-50% cash flow and building capital levels too.

– I can never understand why public reits often trade at discounts to NAV despite their liquidity yet in the real world these assets sell at premiums.

#15 VicPaul on 08.16.20 at 12:09 pm

What is a nice REIT Derek? I hold REET for international exposure and SmartREIT (they’re diversifying, it’s ok I think…) and BAM – which owns/manages so much RE it might as well be.
Maybe too much Can. concentration – hey dogs, who’s got another good international – maybe less US exposure than REET (70%ish, I think)?

M56BC

#16 Sinan Terzioglu on 08.16.20 at 12:10 pm

#8 Watermelon Sugar

Apparently, Buffett no longer agrees on your/his stance on gold. Sold bank positions to buy Barrick. I’m sure he bought more, since that filing end of June.

– Berkshire’s investment in Barrick Gold equates to 0.20% of BRK’s equity capital. With an asset base of US$800 billion it’s currently an insignificant position for them. Maybe they buy more but it will very likely never be significant portion of their equity portfolio. – Sinan

#17 Sail Away on 08.16.20 at 12:14 pm

#10 Sail Away on 08.16.20 at 11:20 am

Re: Kamala

What’s not to love? Multi-racial, gender other than male, immigrant… wow

“She was born in California. How is that being an immigrant? – Garth”

—————

Whoops, missed a word:

…’immigrant background’

And my future in politics evaporates due to this one small gaffe. Sigh.

You sounded like birther Trump. What a disgrace. Luckily you’re just remiss. – Garth

#18 kingston boy on 08.16.20 at 12:14 pm

@#1 T on 08.16.20 at 10:03 am
Remote work is proving to be a detriment to corporate culture and productivity. There are just too many distractions at home and web meetings can’t fully replace the experience of in-person collaboration with coworkers.

not the case for me, my fellow employees and most folks I know in the corporate world. productivity and quality of work and life have never been better. online collab with team is fine outside of the odd internet lapse. only thing we do in person is onboarding new peeps.

#19 ElGatoNerodeYVR on 08.16.20 at 12:15 pm

#3 KNOW IT ALL on 08.16.20 at 10:17 am
It is an interesting theory,however extremely few people would have the courage to buy when it looks like marketwise there is nowhere to go but ” more down and out”. The other challenge is to figure out the floor as sometimes the swing back is extremely fast and technical indicators are all but useless in high volatility. And lastly you don’t know which stocks /funds are a falling knife destined to forever swim at the bottom and which ones will rebound. It is pure grambling.
Most people are not prepared to deal with the wild swings hence the market timing is discouraged.
Personally since Vegas is closed ,I have a very small portion of the portfolio as “play money” and I used that to do opportunistic buys. Some buys doubled,other are still down 50% or more.
To each it’s own; though I would agree with the overall theme this blog promotes of responsible investing and no betting a significant amount of portfolio on market timing.

#20 ElGatoNerodeYVR on 08.16.20 at 12:22 pm

#4 crowdedelevatorfartz on 08.16.20 at 10:34 am
Our family and friends experience with advisors is that no matter how much money you have and how well the track history is you have to have clear defined guidelines and keep on top of the investments. At first sign of trouble you “get on it”. And never ever let a brand new to you advisor buy anything without your specific permission for every individual stock ,fund.
I’m with you on that one ,burnt hand knows best and education can be expensive .

#21 Avner on 08.16.20 at 12:30 pm

Sinan, you make a good argument for investing in REITs. A longer term horizon is always used as a justification for buying into a down sector… energy, gold (pre-2020), heck even tech after the dot com crash. I’m more worried about the structural changes that will inevitably come out of this crisis. When I consider the terrorist attacks of 9/11… there are still many changes that remain today, almost 20 yrs later. Think about security in airports, border crossing, procedures at tourist spots. So what will be the lingering changes from covid – because there will be some. Will malls re-open and draw the crowds they once did? If not… what happens to commercial real estate, where a significant part of the their valuation is based on the rent per sq ft that they can command? Yorkdale is a perfect example. If they can’t bring through the foot traffic of the past, why would companies pay the exorbitant rent charged for the privilege of being there…. they won’t. So I’m not sure if we’re there yet to make the call to step into REITs. Covid part 2 seems to be a high probability event. Why not wait and see how this shakes out before stepping into the fire?

#22 Flop... on 08.16.20 at 12:41 pm

Reits?

Should have harvested the gain on that one, didn’t, back to where we started roughly, will hold.

Gold.

Precious Metals Fund, harvested that gain, reduced position,still remain in, Barrick Gold has 10% holding so we’ll see what the Buffet Bucks do.

Faangs.

Global technology fund, harvested that gain multiple times, been slowly reducing position,but when looking at a Morningstar article the other day, the guy that runs that type of fund lays out his case for the good times to continue. (Jonathan Mzengeza)

Do you know this guy?

Sinan, maybe you and Jonathan should start a company.

Mzengeza and Terzioglu will give the sign-writers fits…

M46BC

“The reason I am bullish is that technology and communications companies have shown significant resilience during this period,” says Mzengeza, portfolio manager and information technology analyst at Toronto-based CIBC Asset Management Inc. “In most cases, they have been able to sustain their revenue growth. In some cases, they have actually accelerated revenue growth, as secular trends that they are exposed to have accelerated.”

Mzengeza cites three factors driving the sector:

First, e-commerce and digital advertising have gained momentum. “They are here to stay and will continue to grow at a fast pace,” says Mzengeza, a native of Zimbabwe who joined CIBC in May 2012, three years after moving to Canada and earning a bachelor of engineering, electrical and computer engineering at University of Capetown. He assumed the portfolio in 2017.

Second, many companies have sustained revenue growth even in a grim economic environment. “Recently, we saw large-cap companies such as Apple Inc. and Facebook Inc. report robust growth despite what was a very depressed economic environment. Even as things open up in the second half, and the lockdown eases, we should see that performance accelerate further.” Overall, he adds, expectations for revenue growth for the S&P 500 are quite muted. “Outside communications and tech, most sectors expect declines in revenue growth. But if you look at the large-cap tech companies all expect revenues to grow this year.

https://www.morningstar.ca/ca/news/204543/3-reasons-to-buy-big-data.aspx

#23 crowdedelevatorfartz on 08.16.20 at 12:50 pm

@#20 ElGato
“I’m with you on that one ,burnt hand knows best and education can be expensive .”

++++
Yep.

Burned = Lesson learned

#24 R on 08.16.20 at 1:03 pm

“Be on the right side of change” Cathie Woods of ARK Investments. The 2020s will see more disruptive technologies supplant older established industries faster /greater than the disruptions that occured in the early 19002. The disruptive technologies then were electricity, telephone and automobiles. Cheap batteries, AI, robotics, gene editing, 3D printing will experience exponential growth. The potential synergies of combining these technologies eg cheaper & higher energy batteries, robotics, and AI could transform the markets . Kodak was the first to invent the digital camera in their “Skunk Works ” lab, but failed to act on it because the management culture refused to believe it could complete with chemical film. Equivalent managements now are doing the same thing with Autonomous Battery Electric Vehicles. Invest in the right side of change !
https://www.youtube.com/watch?v=vqcegHLx_Hs

#25 The Milky Weigh on 08.16.20 at 1:19 pm

#3 KNOW IT ALL on 08.16.20 at 10:17 am

What a cheery forecast.
Only time will tell.

I was once told that if you just built a cash hoard and waited until the market dropped 30 – 40 percent then jumped in with everything and let it ride back to a point of overvaluation, cashed out and did it all over again you’d be massively ahead of any investor out there.

And with very little effort or worry and virtually no fees.

————————————————————

And since you are in fact “Know It All” you of course didn’t follow this most egregious advice.

You knew that market timing is tantamount to a fool’s paradise.

You knew that markets don’t go down 30-40% very often and that throwing ALL of your cash into the market when the world is running for safety takes gonads of steel!

You knew that knowing precisely when to buy and when to sell was more like speculating, not investing!

You knew that this was 2020, not hindsight is 20/20 … because you are Know It All and that is why you read this blog!

#26 SoggyShorts on 08.16.20 at 1:25 pm

#3 KNOW IT ALL on 08.16.20 at 10:17 am
I was once told that if you just built a cash hoard and waited until the market dropped 30 – 40 percent then jumped in with everything and let it ride back to a point of overvaluation, cashed out and did it all over again you’d be massively ahead of any investor out there.

And with very little effort or worry and virtually no fees.*****************
1. which is it, 30 or 40%? Because if your trigger was 40% then you only had 3 opportunities in the last 90 years. Even at a 30% trigger there’s only 7 in the last century.
2. Overvaluation? When exactly is that? People said FAANG was overvalued since…. well since someone came up with the term FAANG, and they were wrong basically every single year, so how do you get that right?

If market timing worked people would do it, but I’ve never heard of anyone going to all cash for 20-30 years and then buying the crash.

#27 DON on 08.16.20 at 1:28 pm

@MF

Your #5 and #8 posts were spot on.

The main swaths of the population are not paying attention due to various reasons attributed to human nature…two of which are recency bias ans the fact summer is here.

Real fear hits when everyone starts to pay more attention and consumer spending takes a bigger hit as folks actually realize they are spending debt to buys things. When you can no longer take out more equity via the heloc another crutch will be taken away. Besides the gov seemingly have their sights set on that large amount of equity.

Logic takes a back seat when human nature is partying but it always suddenly reappears.

#28 Dogman01 on 08.16.20 at 1:31 pm

#9 MF on 08.16.20 at 11:05 am

Worry about the small things as you have no control over the big things, but ya these big things could affect you and society, but once again there is not much you can do if a tsunami comes.

– Dad used to hold down a job that paid for a Middle class family. Single income = Middle Class
– In the 1980-90’, the bills started getting tight and mom had to go back to work. Double Income = Middle Class
– In the 2000’s dual income is the norm as well as going into bad debt
– Looks like now it is huge debt everyone working to maintain a status quo, No retirement savings , kids in the basement.

A collapse over 4 decades of wages and the middle class in Canada. Decline of the standard of living held back by increasing household workforce, increased household debt and precarity.

I do not see the next leg down, perhaps a return to mutigenerational households?

How do you boil a frog…slowly.

The precarity , fragility and numbers of these households worries me, they are one small misfortune away from a cliff, and if they fall they will take the others down with them. (increased Govt Debt, Bank fragility, unemployment, crime etc.)

In Viking Greenland, the northern colony failed, and they then sought refuge at the southern Viking colony, the increased strain collapsed the southern colony soon after. Collapse is a cascading event.

In Gold some trust…. It is a measure of lack of confidence in the system. Which appears fragile, precarious and that on a long term trend line.

#29 mansters on 08.16.20 at 1:32 pm

Gold silver are in a bull market. The biggest corrections happen in bull markets. This one has just started. If u tuck a dollar away it will just sit there and tease u until u risk it’s existence in an overvalued market while being eaten by inflation. If u tuck away gold it sits there and makes u feel stupid for having a dollar that’s disappearing

#30 AM in MN on 08.16.20 at 1:55 pm

Gold is not a productive asset. There’s no internal rate of return as it produces nothing and therefore is impossible to value. It costs money to store and insure it.

———————————————-

It is wrong to look at gold as an asset. Gold is an insurance policy against the fiat currency system, which is why central banks hold it. It is the ultimate liquidity when no one trusts the other party to fulfill their end of a trade.

Just like your car insurance doesn’t add value to your car, but is necessary for the bank to finance your car, or house insurance, these are costs but can pay off big in times of crises.

It is mathematically not sustainable for the world’s central banks to just print forever. With balance sheets sitting at $28T, if the velocity of this money ever increases, look out.

If the derivatives market, including the 100x paper to physical for gold, ever blows up and causes bank or exchange failures, which need to get bailed out by printing even more fiat, physical gold goes through the roof.

As an insurance policy, 10% of portfolio in an investment that is backed by actual physical gold and not just relying on the confidence in the fiat system and counter-party promises to make good, is a prudent move. Invest the other 90% in you productive equities for a retirement income stream.

#31 Dave on 08.16.20 at 1:59 pm

Real Estate is heating up…is there anything coming up that will cool it?

#32 Sinan Terzioglu on 08.16.20 at 2:01 pm

#21 Avner

– Thanks for your comments. There will certainly be some structural changes but in my opinion all of the concerns and uncertainties you pointed out are more than priced into the REIT sector right now. By waiting and seeing how things shake out you may miss the deep discounts. So long as you position size appropriately and buy a diversified REIT ETF you can keep your risk in check and also get exposure to some very strong segments such industrial and residential properties. – Sinan

#33 SoggyShorts on 08.16.20 at 2:05 pm

#24 SoggyShorts on 08.16.20 at 1:25 pm
#3 KNOW IT ALL on 08.16.20 at 10:17 am
continued:
Actually the more I look into it the less the cash strategy holds up.
Even if you did only invest after a 30% drop and cashed out again once things got back to all time highs you wouldn’t beat the returns of the 10-30 years between such drops.
Easy to check: a 30% drop means about a 50% gain to reach new highs and cash out. How much have markets advanced between crashes?
From 1975 to 1987: 441%
From 1988 to 2000:655%
From 2003 to 2007: 86%
From 2009 to 2020: 374%

So yeah, even with perfect hindsight the
“all-cash buy @30% drops, sell at new high”
strategy sucks hard compared to buy and hold.

#34 Bill on 08.16.20 at 2:08 pm

Gold hater Warren Buffet sold all his bank shares and took a huge position in Barrick Gold…
There has been a massive move in gold and the move was accelerated due to the printing presses running full boar. Its currency debasement. Also smashing down interest rates again to record lows and while I don’t need the fake inflation numbers just go to the store or lumber yard you will get your answer.
A major driver of gold is “negative real rates of interest”
You can do your own research. It has been prime time to owns some gold for 2 years. Their related stocks are making a big moves now. Sorry but investment advisors hate gold because they can’t get MERs or related fees. You need to buy PMs when everyone hates it.. The move is not over but you should have a LOT of knowledge in this arena or you will be buying at the top like most. The run will get wild and this correction is nothing. In CND we hit $2,750.00 oz. Its a bull market and you can make a killing if you know what your doing.
I own REITS as well as many other assets like commercial RE paying 8% and is my favorite asset.
Good luck!

#35 SoggyShorts on 08.16.20 at 2:08 pm

#28 SoggyShorts on 08.16.20 at 2:05 pm
#24 SoggyShorts on 08.16.20 at 1:25 pm
#3 KNOW IT ALL on 08.16.20 at 10:17 am
OOF 1 more:
From 1975 to today buy and hold returns 11,000% vs 4 chances to gain 50%.

#36 Watermelon Sugar on 08.16.20 at 2:17 pm

#16 Sinan Terzioglu on 08.16.20 at 12:10 pm

Did you expect him to put 5% of his portfolio all at once? If 0.2% is such an insignificant amount, why bother at all. This is a sea change in Berkshire positioning. They won’t stop there.

You guys are so biased it’s hilarious. It’s doubled in the last few years. It will double again.. and you’ll just be singing the same old song. Oh well.

#37 Opinions on 08.16.20 at 2:26 pm

Lots of good opinions today
In the end nobody knows the future it’s a guess.
I was talking with a fellow about the crash and he pump his chest and said my broker is the best he said everything will be higher in 20 years. well that sums it up. Wow!
The best I have read so far is there will be many people going back to normal quicker than expected, but many sectors of the economy like hospitality will take many years. So we will see a choppy recovery.

Yes I fear a correction I am still fully invested but ?
I am extremely worried about all this debt, but I guess since nobody cares why should I care!
I think what happens is a persons fears extrapolates their opinions and forecasts into worst case and thus there stock market opinions.
The next best thing I read was yes many business will go bankrupt but flip the coin and there are tremendous opportunities think about it if an airline goes broke all those planes will be cheap maybe I can even get one ha ha but seriously a new company will form get the planes real cheap and off we go again.
Same goes for cruise ships how about a five star floating hotel off B.C. west coast. Can’t get any better.
Thanks for the posts and it’s a lovely weekend and after the storm the sun will shine.

#38 Doug in London on 08.16.20 at 2:29 pm

I’ve said it many, many, many, many times but will say it again. If you’re afraid of buying equities because they are too expensive, then you should have been on a buying blitz in March when they were on sale. As for REITs, I’m glad I had the presence of mind to buy some when they were even cheaper that right now.

#39 Do we have all the facts on 08.16.20 at 2:30 pm

The CEO of Brookfield seems to be suffering from realiteetotalism. The premise that businesses are going to lease additional office space to give each employee more room after Covid 19 subsides stretches the furthest boundary of reality.

There is clear evidence that the vacancy rates in existing office buildings are increasing every day and that many companies are offering their employees the opportunity to work from home on a permanent basis. Technology has made the renting of office space at $25.00/ square foot or more unnecessary.

What comes next a prediction that the vacant space in hundreds of regional shopping centres will be leased by a wave of nouveau companies at twice the rent of former tenants.

Their seems to be no end of the hubris being exuded from every corner of the investment community these days.

No need to let reality interfere with ones dreams.

#40 Vice President on 08.16.20 at 2:41 pm

Saw the comments about Kamala Harris.
A good article on CBC lived in Montreal
Anyway when I skimmed the article it sounded like she was an immigrant and my first thought would be if Biden died in office she would not be eligible to be president. And I thought since trump has not commented about that yet then a no story.
Anyway born to immigrant parents.
Hopefully she will be a great asset to Canada in the White House. I am sure our political masters will find someone she went to school with and promote them to senior ranks to meet with the VP over national interests.

Just curious if trump died before the election will the republicans need a new leader to run In November or does the VP Who would then become president stand and run?

#41 Leftover on 08.16.20 at 2:43 pm

Maybe we should all just follow Meagan and Harry and take out a gigantic mortgage (US$9.5 million!) for 30 years:

https://variety.com/2020/dirt/heirs-heiresses/meghan-markle-prince-harry-buy-14-7-million-montecito-compound-1234733871/

They must be taking Garth’s advice.

#42 Cristian on 08.16.20 at 2:47 pm

“It costs money to store and insure it. A buyer is betting someone will pay more for it at some point in the future,”

Both statements are absolutely wrong, the second more so than the first.
I stored large amounts of gold for years in a safety-deposit box at the bank that cost me $45 per year, without insuring it.
Sold it for almost 50% profit when everybody was talking about buying gold.
And profit is not the reason for buying gold. The reason should be decreasing portfolio risk, since gold has little to no correlation to any other asset. The reason for holding some gold in a portfolio is the same with the reason for holding some bonds that pay close to nothing (nobody is really buying bonds for income nowadays anymore) or some cash: decreasing risk.
That was proven over and over again during the last severe fall in stocks, when my portfolio with 12.5% gold in it went down less than 10% at a time when markets were down 35% – gold was at the time the best-performing asset in the portfolio, much better than bonds (which also went up).

#43 The Totally Unbiased, Highly Intelligent, Rational Observer on 08.16.20 at 2:56 pm

RE: The death of oil? from yesterday.

In one of his numerous best-selling books called GREAT AGAIN: How to Fix Our Crippled America, that incredibly stable genius Donald J. Trump wrote, “The truth is, we have sufficient energy supplies in this country to power us into the next century — all we have to do is develop them. Among all the gifts that God gave to America was an abundant supply of natural energy. According to the Department of Energy, the natural gas reserves we have in the ground could supply our energy needs for centuries.”

He also mentioned that, “Researchers at Rice University in Houston, Texas, have estimated we might have two trillion barrels of recoverable oil, enough to last the next 285 years.”

He noted that, “The oil is there for the taking; we just have to take it.”

As that great energy expert Donald Trump so wisely pointed out, “The good news is that we have tremendous supplies of fossil fuels. We just need to decide to go after it.”

Unfortunately, many people have gone bad and have lost their minds. They do not want to burn the things that were designed to be burned, and that were meant to be burned, and that want to be burned, such as good clean coal, oil, and natural gas. Some people’s New False Religion of woman-made climate hysteria tells them that they should rudely and stupidly reject these wonderful gifts and blessings from God. The result is that the only things they can burn now with a clear conscience are their marijuana cigarettes, American flags, Bibles, police stations, and other people’s stores. Sad.

Truly, there is a vast difference between a very stable genius and people who have lost all their marbles.

#44 JacqueShellacque on 08.16.20 at 3:15 pm

Hi Sinan,

“It’s incredibly unproductive to your long-term investment results when you think only of the things that can go wrong. It keeps you looking backwards instead of forward. You miss the big picture and what actually drives the equity markets up over the long term.”

Isn’t it actually true that most financial models use the past fluctuations of prices as the only source of randomness, therefore it’s actually the financial analyst community that looks backwards, only able to price in something (LTCM, 2000, 2008, 2020) after it’s already happened? Isn’t it also true that the sequence of market gains and losses matters a great deal to the eventual value of one’s portfolio, meaning the ‘long run’ is of less concern than protecting what one has now? If both of those points are true, it seems like strategies ranging from holding cash through to more sophisticated hedging actually make sense.

#45 Stan Brooks on 08.16.20 at 3:37 pm

Sinan,

It seems people in Turkey disagree with you.

https://www.reuters.com/article/us-turkey-currency-gold-analysis/gold-rush-at-turkish-bazaar-a-test-of-trust-for-lowly-lira-idUSKCN25A0GW

As your name and family name shows Turkish ancestors, can you please explain to me how they are wrong?

Cheers,

Ignorant. You can leave now. – Garth

#46 Stan Brooks on 08.16.20 at 3:38 pm

https://greekcitytimes.com/2020/08/16/turks-think-of-selling-their-houses-to-buy-gold-as-economy-declines/

Is this coming to Canada?

#47 Give a mortgage to anyone on 08.16.20 at 3:42 pm

You missed one of the biggest reasons to NOT buy gold: Central banks around the world have stored many decades worth of bullion in their vaults. If any cash-strapped nation decides to sell for any reason, they will flood the market. They won’t even announce their intention ahead of time, it will be a surprise.

#48 Andrew on 08.16.20 at 3:43 pm

#9 MF on 08.16.20 at 11:05 am

Very well said.

Ignoring the obvious social problems, excessive wealth inequality also slows the economy down as hoarded wealth is no longer being cycled through productive means. That hurts the investments and pensions of most people.

Hidden Brain has a good episode on this problem:
https://www.npr.org/2020/06/15/877401074/buy-borrow-steal-how-debt-became-the-sugar-rush-solution-to-our-economic-woes

#49 BlorgDorg on 08.16.20 at 3:58 pm

Great post today, especially since I’m someone who liquidated a significant amount of my portfolio a few weeks ago to reduce risk (or “out of fear” if you prefer). Everything was in the black, so a little lost upside since then is no big deal.

I’m hedging inflation by keeping a small position in a combination of preferred and REIT ETFs (which are nicely negatively correlated). At around 5.5% yield, I only need keep 15% invested (and 85% in cash) to offset the current 0.7% CPI.

The key points here are short-term (huge volatility, admitted by Garth) and long-term (stick with the plan, stay invested). I’m not worried about long-term, but the next few months are the very definition of risk.

If there’s a big market drop, I buy back in.
If inflation explodes (unlikely) I buy back in.
Once the election is settled (January, maybe), I’ll buy back in.

Otherwise I’ll be at the Winchester, with a nice cold pint, waiting for all of this to blow over. How’s that for a slice of fried gold?

#50 MDQ on 08.16.20 at 4:02 pm

It always boil down to risk vs. reward.

The market wanted a ‘V’ shape recovery, and that’s what happened.

Where is the reward at this level? I only see risks…

Stay alert my friends, winter is coming.

#51 Looking up on 08.16.20 at 4:07 pm

#45 Stan Brooks on 08.16.20 at 3:38 pm
https://greekcitytimes.com/2020/08/16/turks-think-of-selling-their-houses-to-buy-gold-as-economy-declines/

Is this coming to Canada?

—————————-

Ha! Not likely! This is Canada:

Economy good – buy house at any price
Economy tanks – buy house at any price
Record unemployment- buy house at any price
Pandemic – buy house at any price
Nuclear detonation in Vancouver- buy house at any price

#52 Where's My Money Going Gweedeau7? To REITs !! on 08.16.20 at 4:13 pm

Re: #174 crowdedelevatorfartz on 08.16.20 at 9:56 am
@#76 Where’s My money Gweedo?

https://www.msn.com/en-ca/finance/topstories/big-money-bets-big-on-bc-rental-good-news-for-investors-worst-fears-for-residents/ar-BB17ZF27

=======
Yep
Excellent article.

I live in a 40 year old rental property that was purchased last year by a commercial REIT from Ontario.
+++++++++++++++++++++++++
Happening with family pwners’ also.
Rental I moved to in Fraser Valley almost 2 years ago (only other rentals available were in house basement suites) had an increase of 50% compared to existing rents I found out later and the only update was a new fridge.
So easy to get around the rules when there is no policing of rentals.
Rental space has not improved in that time; I have been looking every couple weeks because the building I live in is 40+ years old. Have noticed what little new rental product out there is priced out of regular folks pay grade and sit empty. I phone them to see, since they are empty, if they will budge on their rents and they hang up on me. Now what kind of money can sit with no inflow for years? My answer is drug money.

The only new properties being built are new houses in tear-down lots (doesn’t matter condition of house), that look the same, just like downtown Vancouver with the non-descript, drab towers built by Concord Pacific (old Triad money that just paid a billion $ for Vancouver’s St. Pauls hospital property). Disgusting.
I have noticed rentals all across the western provinces (except Edmonton) being close to the same because of the same (foreign) REITs owning these buildings.
How is it that they can ask the same rental money for an apartment in Moose Jaw, Sask, as you get in the Fraser Valley when 5 years ago it was 60%.
We know gov’ts of all stripes are allowing this rape of the citizenry. Look at the exorbitant municipal pay/benefits in the last 10 years.
They are not our friends and there will be a reckoning, cue the movie “Network”.

#53 Sinan Terzioglu on 08.16.20 at 4:21 pm

#35 Watermelon Sugar

Gold’s performance over the last few years comes after it lost about half its value the previous 5 years so someone that bought in 2011 is back to break-even now. Barrick Gold is at levels it traded at in the 1990’s. Commodities and commodity producers are much better for trading around (which most should not do) rather than compounding money. – Sinan

#54 YouKnowWho on 08.16.20 at 4:24 pm

The destabilizing effect of this pandemic has laid bare the economic inequality on which our society functions. Class disparity, the resistance to universal income, systemic racism, the militarization of the police and the rhetoric of the current political climate are not the result of the pandemic; they are the endgame of capitalism. We’ve merely paused the machine long enough to see them clearly.

Heck of an opinion piece…read it all.

https://www.theglobeandmail.com/opinion/article-the-life-you-thought-you-were-going-to-have-is-gone/

#55 willworkforpickles on 08.16.20 at 4:51 pm

#5 MF
Precisely what I said 6 months ago and again here recently. The debt driven society of the last ten years fueled by QE and low interest rates has pumped up asset value namely real estate to grossly overvalued levels and far out of line with incomes. The deficit spending continues on down the slap happy road to ruin unabated at any rate.
Unless governments shift focus away from QE and the like (including reckless cerb, support payments even deferrals) the correction put off – future tense… nullified by way of more stimulus now instead of letting the market correct in this recession and reset as it should will bring us to a debt cliff.
80% of society the ones barely making ends meet now job or no job will erupt over austerity measures that will be imposed. A reality by far much worse than most can foresee.
Not to be naive idealistic or engrossed in wishful thinking…its easy enough to assume a market correction will not be allowed to happen in the months ahead. More QE is coming and with more CERB or equivalent support payments and deferrals as cowardly governments blinded by their own greed and self serving agendas keep kicking the can of fiscal restraint down the road – eventually right over the coming debt cliff.
The smoke and mirrors are in place and the illusion is real and the mother of all tomorrow’s never comes.
And then it does.

#56 Victor V on 08.16.20 at 5:08 pm

Trudeau’s rift with finance chief weighs on virus recovery plan

https://www.bnnbloomberg.ca/trudeau-s-rift-with-finance-chief-weighs-on-virus-recovery-plan-1.1480403

After spending hundreds of billions to prevent a major depression, Justin Trudeau will make critical decisions in coming weeks on the next steps to support Canada’s economic recovery. That will include whether to keep or drop the only finance minister he has ever had.

The strains between Trudeau and Bill Morneau, the two most powerful men in the government, burst into public view this week. On Monday, Bloomberg News reported the prime minister has been taking advice on an economic recovery plan from Mark Carney, the former Bank of Canada and Bank of England governor who is known to have political ambitions. By Tuesday afternoon, Trudeau was forced to issue an extraordinary statement expressing “full confidence” in Morneau, to quiet the drumbeat of speculation about the minister’s future.

#57 Doug in London on 08.16.20 at 5:42 pm

@Give a mortgage to anyone, post#46:
Yes indeed, what you described has happened before. That song 1999 by Barns Courtney comes to mind. Say, is the world going to survive when the date rolls over to Y2K?

#58 Ponzius Pilatus on 08.16.20 at 5:51 pm

#17 Sail Away on 08.16.20 at 12:14 pm
#10 Sail Away on 08.16.20 at 11:20 am

Re: Kamala

What’s not to love? Multi-racial, gender other than male, immigrant… wow

“She was born in California. How is that being an immigrant? – Garth”

—————

Whoops, missed a word:

…’immigrant background’

And my future in politics evaporates due to this one small gaffe. Sigh.

You sounded like birther Trump. What a disgrace. Luckily you’re just remiss. – Garth
—————
Freudian slip.
We know who you are.

#59 Idiocy on 08.16.20 at 5:52 pm

Looks like Morneau is on his way out and Carney is on his way in.

Looks like Trudeau, with the assistance of a green tinted Carney may spend billions more on green endeavours to “help out” the economy.

Can it get any worse ?
You betcha !

#60 it cant happen here! on 08.16.20 at 5:58 pm

https://www.smh.com.au/lifestyle/life-and-relationships/on-par-with-north-korea-three-out-of-four-requests-to-leave-australia-refused-20200814-p55luj.html

#61 Ponzius Pilatus on 08.16.20 at 5:58 pm

#23 crowdedelevatorfartz on 08.16.20 at 12:50 pm
@#20 ElGato
“I’m with you on that one ,burnt hand knows best and education can be expensive .”

++++
Yep.

Burned = Lesson learned
—————–
CEW.
I guess you’ve been on this blog for about 10 years.
And still you don’t trust Garth and the boys with your money?

#62 YouKnowWho on 08.16.20 at 6:16 pm

Am I reading this right? Liberals are going to try to take Canada out of THIS recession with environmental spending? Really?

Justin still has that no-limit spending card until September, right?

#63 ABK on 08.16.20 at 6:24 pm

Re: #9 MF

Totally agree but what I can’t understand is why these “smart” billionaires don’t realize that they are becoming easy targets to hate and blame for pretty much everything by governments and the general population.

I can’t believe that they don’t immediately and voluntarily donate 25% of their fortunes to high profile charities to improve their image and get the target off their backs! They can afford it!

#64 Drinking on 08.16.20 at 6:25 pm

Good article but no one can predict what will happen in the next two years; the trillions printed to benefit the stock markets around the world; mostly the rich will reach its point and it will be like 2008/09 all over again with the exception that the youngsters no longer care; I cannot blame them.

All there lives they have been told to look after the elders, respect, etc, (why do you think so many are mocking Covid?)and I am by no means young. Now or in the near future they will be asked to pay more with less opportunity, less or no pension relying on a stock markets artificially inflated by make believe dollars! What a joke!!

Yes, stay invested but cash out as much as one can; if you are handy buy something for a couple of hundred (), touch it up and sell it with a nice mark up!

#65 Nonplused on 08.16.20 at 6:47 pm

Gold is sure pretty though. But at $2,600 CAD an ounce I suspect the demand for mint coins is not all that high. I have a few I bought years ago mostly for the novelty but I don’t think I’d do so again today, prices are roughly 3 times higher. $2,600 is a lot of money for a novelty item, as beautiful as they are. And they are so expensive now I am afraid to display them. Luckily most people have no idea what they are.

#66 Dirty Dan on 08.16.20 at 7:00 pm

It’s hard to find new ways to amuse yourself during the “quarantine”.

However, I believe Americans have found the solution.

1. Plant “Trump 2020” signs in your yard.
2. Shoot hippie sign thieves with pellet guns / water guns.

Fun for the whole family. Even democrats can plant Trump 2020 signs to get in on the fun!

#67 crowdedelevatorfartz on 08.16.20 at 7:00 pm

@#61 Ponzie preamble
“And still you don’t trust Garth and the boys with your money?”
++++

Of course I do.
Thats why I moved from the lazy Vancouver shyster to a balanced and diversified portfolio.
Far far better off.
Just giving my experiences with crappy REITs to the fellow blog dogs….take it or leave it…..it matters not to me if you do.

#68 crowdedelevatorfartz on 08.16.20 at 7:03 pm

@#52 Gweedo
“We know gov’ts of all stripes are allowing this rape of the citizenry. Look at the exorbitant municipal pay/benefits in the last 10 years.”

++++
The politicans of all levels of govt only care about voters on election day.
The rest of the time they sell their souls to the highest bidding lobbyist with a cheque book.

#69 crowdedelevatorfartz on 08.16.20 at 7:09 pm

@#63 ABK
Buffett and Gates and a few others have donated hundreds of millions to charities and Buffet plans on giving all his money away when he dies……
They are well aware of the bad press their money has generated.

https://philanthropynewsdigest.org/news/warren-buffett-to-give-bulk-of-fortune-to-gates-foundation

#70 Andrew on 08.16.20 at 7:15 pm

When bitcoin sir?

#71 Keith in Rio on 08.16.20 at 7:24 pm

It is so comforting to hear that all is well and that there is nothing to see here.

Pile into those paper gold ETF’S boys………heh.

#72 Nonplused on 08.16.20 at 7:26 pm

#9 MF on 08.16.20 at 11:05 am

“-One of the economists advocated for a wealth tax, estate tax, house tax etc.”

We already have all these things in one form or another.

Capital gains taxes are a wealth tax, the only difference being the tax is assessed once the asset is monetized rather than assessed annually based on some phoney baloney notional appraised value or stock price close.

Property taxes are house taxes and over time they lead to 100% or even more taxation of the value of the house. At a 3% property tax rate the city gets the entire value of your house every 33 years. Assuming taxes don’t go up which they do every year. Then there is HST, land transfer fees, and the fact that the mortgage gets paid with after tax dollars. I would say that houses are already taxed more than most other things because of those pesky property taxes.

And there is also effectively an estate tax as upon death the entire estate is deemed to be liquidated and any outstanding taxes, including capital gains and income tax if there is an RRSP, are due. If the RRSP is substantial this can really screw with the deceased’s effective tax rate, bumping it up to the highest marginal tax rate.

One of the facets of the already burdensome “estate tax” treatments is that it is really burdensome for small business owners. For example my dad has most of his assets (besides the house) in a private partnership with some other investors. When he passes, his estate will have to pay tax as if he sold his shares. Well, I happen to know there is no money in the estate to do that, so if my siblings and I wanted to keep the shares we would have to come up with the cash to pay the tax due. Well, there isn’t any money there to do that either so we would have to mortgage our houses or sell part of the shares, more likely the latter. But sell to who? Most likely the other investors in the partnership. But who says they have any money lying about? Or want anymore shares?

We are at peak tax already. Raising taxes does not raise economic activity and at some point it becomes extremely counter-productive. If raising taxes, like money printing, was the key to wealth generation I think some society somewhere would have figured it out by now.

#73 Nonplused on 08.16.20 at 7:36 pm

“Barrick is an equity buy, not a bullion purchase. It is measurable. – Garth”

Well, mostly. Buffet is assuming gold prices will stay above Barrick’s break even price so they can pump out dividends. But I suppose that is no different than buying any other company. Even when buying Toyota you have to assume they can sell Corollas for more than they make them for.

#74 crowdedelevatorfartz on 08.16.20 at 7:46 pm

@#66 Dirty Dan

A relative once hooked up a liquid manure spreader, a small battery powered pump in a 20 gallon tank …wired on a motion detector…….. for the kids that kept bashing his mailbox at night in the summer.
Turn it on after dark.
Pig manure mixed with water and urine into a soupy milkshake…..

Only needed to use it once.
:)

#75 Dirty Dan on 08.16.20 at 7:54 pm

#63 ABK on 08.16.20 at 6:24 pm

Totally agree but what I can’t understand is why these “smart” billionaires don’t realize that they are becoming easy targets to hate…

I can’t believe that they don’t immediately and voluntarily donate 25% of their fortunes to high profile charities.

When are hippies going to realize that no one cares what they think. In fact, hippies don’t even care what hippies think. The SJW got arrested for throwing IEDs got the vest off Amazon (which led to his arrest BTW).

The only businesses going broke from hate, ironically are the ‘woke’ businesses. I believe Gillette did an $8B write down.

Anyone that got rich from being an entrepreneur doesn’t care. They got rich because they provided a service people want, not SJW garbage.

Why donate money to some do-nothing charity that dumps 80-90% of what it receives in administration costs. Elon Musk, Jeff Bezos, Bill Gates… they’re better off reinvesting that money into new business ventures and technology.

#76 Nonplused on 08.16.20 at 8:00 pm

#43 The Totally Unbiased, Highly Intelligent, Rational Observer on 08.16.20 at 2:56 pm

I would tend to dispute the numbers Trump quoted. “Recoverable” and “economic” are two different things. In order for oil, gas and coal to be useful as energy sources there has to be much more energy in the fuel than it takes to get it out of the ground (the same thing applies to all other energy sources). As the shale oil boom has proven I think beyond a reasonable doubt, there is plenty of oil there, but it is too expensive to extract to use as a fuel for happy motoring and all inclusive vacations to Mexico.

(Notice that I often bash “shale oil” but not “shale gas”? There is a geological and physical reason for this. Oil is too thick to migrate far through the shale so the oil to be extracted must be in contact or near contact with the frack. Gas is tiny molecules by comparison so much of it will slowly migrate to the frack. Also this is why they cannot ban fracking because no shale well, either oil or gas, can be economic without it.)

#77 Camille on 08.16.20 at 8:00 pm

Sinan, thank you for the interesting post. Its been said before, and after looking at the performance of the S&P versus other indexes, Cdn for example, over the past 10 years or so, I don’t think comparisons are appropriate (I know that’s not the point of today’s post but it really is annoying after looking at it). But this is Canada, and as per Garth’s allocations recently, your 60/40 portfolio is holding 22% US equity, out of 60%.
The reason (of many now) for queries about gold and a bubbly S&P are largely because of world debt and so many low and negative real interest rates around the world, and a high P/E on the stocks that propelled said S&P beyond “other markets”. And also especially the coming bankruptcies, mortgage delinquencies, etc. (have you noticed more homes for sale)
I hope you’re right, but you cannot avoid the real issues in any discussion (can’t just look backwards).
When do you think you’ll start having to answer questions about bitcoin, or are you already?

#78 Faron on 08.16.20 at 8:37 pm

Just curious if trump died before the election will the republicans need a new leader to run In November or does the VP Who would then become president stand and run?

Trump hasn’t been nominated. Convention would be wild given how dull Pence is. After nomination, Pence would take the ticket (Pence would be president after all) with a new VP. But the only thing the law says is Pence would be president until Jan 2021.

#79 Bytor the Snow Dog on 08.16.20 at 8:46 pm

#17 Sail Away on 08.16.20 at 12:14 pm
#10 Sail Away on 08.16.20 at 11:20 am

Re: Kamala

What’s not to love? Multi-racial, gender other than male, immigrant… wow

“She was born in California. How is that being an immigrant? – Garth”

—————

Whoops, missed a word:

…’immigrant background’

And my future in politics evaporates due to this one small gaffe. Sigh.

You sounded like birther Trump. What a disgrace. Luckily you’re just remiss. – Garth
——————————————————–
Dear Garth,

The point remains that it’s all about image, also known as identity, not about substance.

She seems to be full of substance. – Garth

#80 Yukon Elvis on 08.16.20 at 8:47 pm

#66 Dirty Dan on 08.16.20 at 7:00 pm
It’s hard to find new ways to amuse yourself during the “quarantine”.

However, I believe Americans have found the solution.

1. Plant “Trump 2020” signs in your yard.
2. Shoot hippie sign thieves with pellet guns / water guns.

Fun for the whole family. Even democrats can plant Trump 2020 signs to get in on the fun!
…………………………………..

Sitting around can be boring. Sometimes i go for a drive in the car. I have a coffee cup with a magnetic bottom that i put on the roof of the car. People wave and honk and point to the cup. I smile and wave back. At stop lights people roll down their windows and tell me i have a coffee cup on the roof. I smile and say “yah, i had a bath yesterday. How about you?” Or Mister u have a cup on your roof! “Yah i’m meeting friends at timmys for coffee. I’m buying! “ Usually get a Blank Stare. Mostly they just zoom off. I told one lady my hemorrhoids are hurting today that’s why I’m sitting on a pillow. She checked her locks, rolled up the window, and peeled out. Sometimes they follow me and write down my plate number. Maybe they call the cops. I don’t care. It’s a nice car and i like driving it.

#81 Ace Goodheart on 08.16.20 at 8:53 pm

Communist Broadcasting Corp is going nuts right now. Apparently the leaderless zombie party with no policy or atform, known as the conservatives, is now beating the liberals in the polls.

The cons could run a turnip and they’d still win now.

Trudeau is in free fall.

#82 Bytor the Snow Dog on 08.16.20 at 9:00 pm

@ #28 Dogman01-

Best post that sums up our decline that I’ve seen in a long time.

Common Man gets screwed, Buffet et al get rich(er).

#83 Kevin on 08.16.20 at 9:06 pm

So gold is speculative. Doesn’t pay dividends, has costs to hold it and insure it. Sells to whatever the buyer will pay.
Sounds like real estate and Canadians are addicted.

#84 meslippery on 08.16.20 at 9:56 pm

#28 Dogman01
– Dad used to hold down a job that paid for a Middle class family. Single income = Middle Class
– In the 1980-90’, the bills started getting tight and mom had to go back to work. Double Income = Middle Class
– In the 2000’s dual income is the norm as well as going into bad debt
– Looks like now it is huge debt everyone working to maintain a status quo, No retirement savings , kids in the basement.
——————
I was a kid when that started.
My wages were going up, they weren’t coming for me.
Ross Perot called it.
I herd it but did nothing.

#85 Wango Tango on 08.16.20 at 9:59 pm

#83 Kevin on 08.16.20 at 9:06 pm

So gold is speculative. Doesn’t pay dividends, has costs to hold it and insure it. Sells to whatever the buyer will pay.
Sounds like real estate and Canadians are addicted.

————————————————————————-

Yes, Kevin … you are absolutely right!

Except for the small fact, that you neglected to mention, is that my home provides a roof over my head. Try doing that with gold without getting a headache.

But hey, its your narrative …

#86 BS on 08.16.20 at 10:06 pm

“Gold – at your peril”

Gold and gold miners are just getting started. In addition to Warren Buffet buying Barrack Gold (up 8% after hours) many hedge funds are taking new positions in gold. Major hedge funds Mason Capital Partners, Sandell Asset Management and Caxton Associates all took new positions in gold in Q2. The gold bullion and gold miner equity market is tiny. If most funds want even a small exposure the price explodes.

Buffet has now given the green light and others will follow. Keep in mind Bufffet raised cash while buying Barrick. He was a net seller of stocks in Q2.

When Buffet bought Apple in 2016 it was his first tech stock. It turned heads. At the time Apple was about $95. He continued to load up after his initial positions and now Apple trades at $459 and makes up 43% of Berkshire Hathaway 4 years later. In another 4 years Barrick Gold and other gold miners will have a similar performance and I suspect Buffett will be in on it.

#87 YouKnowWho on 08.16.20 at 10:07 pm

#48 Andrew

What an excellent podcast. Thanks Andrew.

Debt used to be stigmatized, very much like renting is.

FASCINATING that marketing companies have pushed that borrowing and debt should no longer be stigmatized. But renting…still shameful.

#88 ImGonnaBeSick on 08.16.20 at 10:09 pm

#81 Ace Goodheart on 08.16.20 at 8:53 pm

I don’t like disagreeing with you Ace, I have been lately and I apologize. I enjoy your comments, but;

Cons would need to be polling at 100% to stand a chance of winning… We need an electoral college to be able the remove Toronto and Quebec’s influence… It’s funny that Justin is losing to a leaderless party though…

Honestly though, who would want to adopt this mess that is Canada at this point? We need major tax reforms, a ton of infrastructure work, cut the fat out of government on all levels, cut nonessential services, get that energy corridor mandated, get a ton of resources developed and increase our military massively… No one’s going to be able to get that done…

#89 chester in summer on 08.16.20 at 10:12 pm

to who wrote:

Apparently, Buffett no longer agrees on your/his stance on gold. Sold bank positions to buy Barrick. I’m sure he bought more, since that filing end of June.

complete bs, don’t believe everything you read.

buy wells f, boa while on sale,

the goldsmith fraud continues…..

#90 Don Guillermo on 08.16.20 at 10:27 pm

#81 Ace Goodheart on 08.16.20 at 8:53 pm
Communist Broadcasting Corp is going nuts right now. Apparently the leaderless zombie party with no policy or atform, known as the conservatives, is now beating the liberals in the polls.

The cons could run a turnip and they’d still win now.

Trudeau is in free fall.
***************************************

Hope you’re right. Last time I checked the CBC site they were still counting Covids. I believe I saw a tiny picture of Morneau after scrolling down for 5 or 10 minutes.

#91 april on 08.16.20 at 11:27 pm

#31 – real estate spin. From people outside the industry including Garth, do not buy a home at this time if you care about holding on to your money. Realtors will never say this is not a good time to buy. There’s a certain amount of info they hold back from the buyer… part of their training.

#92 millmech on 08.17.20 at 12:08 am

#36
I have posted before when a coworker bought 500k of gold at $1700 ounce in August 2011, strutting around lately that what a good deal it was and how financially astute he is.
I just kept my cash in fiat currency and have doubled his gains in the same time frame, keeping my mouth shut and praise his above average market timing skills.(he has achieved less than 5% compounded annual growth rate over the last nine years)

#93 AM in MN on 08.17.20 at 12:18 am

DELETED

#94 Ponzius Pilatus on 08.17.20 at 2:49 am

#86 bs
When Buffet bought Apple in 2016 it was his first tech stock. It turned heads. At the time Apple was about $95. He continued to load up after his initial positions and now Apple trades at $459 and makes up 43% of Berkshire Hathaway 4 years later.
—————-
Buffet is a market maker. When he decides to load up on a stock, the herd of market takers will turn their heads and ask: what does he know?
Then they load up too. And guess what?
The stock goes up.
Nothing to do with the intrinsic value of the company.
Crafty old sage.

#95 BillyBob on 08.17.20 at 4:39 am

#80 Yukon Elvis on 08.16.20 at 8:47 pm

Sitting around can be boring. Sometimes i go for a drive in the car. I have a coffee cup with a magnetic bottom that i put on the roof of the car. People wave and honk and point to the cup. I smile and wave back. At stop lights people roll down their windows and tell me i have a coffee cup on the roof. I smile and say “yah, i had a bath yesterday. How about you?” Or Mister u have a cup on your roof! “Yah i’m meeting friends at timmys for coffee. I’m buying! “ Usually get a Blank Stare. Mostly they just zoom off. I told one lady my hemorrhoids are hurting today that’s why I’m sitting on a pillow. She checked her locks, rolled up the window, and peeled out. Sometimes they follow me and write down my plate number. Maybe they call the cops. I don’t care. It’s a nice car and i like driving it.

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

Me and my buddies used to do the same thing with an empty baby seat on the roof.

But we were 16.

Juvenile humour is funnier with juveniles. After that it just becomes…odd.

#96 Howard on 08.17.20 at 4:47 am

Bungol.ca has had its data access cut by TREB. The real estate mafia is dangerous. When will their control over our laws, our governments, and our lives come to an end? Will any of the RE bulls speak up in defence of our country, or does Canada come a distant second to the cult of taxpayer-funded and government-supported RE appreciation?

https://www.bungol.ca/treb-data-suspended/

On August 5, we received a letter from TREB telling us that our MLS data access has been suspended. This came with no prior notice or warning.

TREB told us we breached some of their rules.

We are faced with a kafkaesque situation. TREB was vague in their letter so we don’t know exactly what breaches we made. We tried asking them to tell us specifically what we are doing wrong so we can fix them, but they wouldn’t give us any details. Instead of giving us an opportunity to fix things, they are immediately putting us through an “administrative process” that will take “several months”.

Honestly we are terrified of TREB and would have done whatever they told us to do. We don’t understand why they are doing this to us.

We don’t know what is going to happen and there is a chance that TREB is going to shut us down completely.

We feel really bad for not being able to keep our data up to date and we know a lot of you are unhappy with our lack of updates. But unfortunately all we can do is wait and see what TREB decides to do because we are powerless in this situation.

#97 Kool Aid on 08.17.20 at 6:55 am

The greatest buying opportunity in a generation is mentioned in todays comment section – ironically the opportunity has nothing to do with gold, reits, or any balanced, diversified etfs. Good luck.

#98 McSteve on 08.17.20 at 7:16 am

I hold some gold stocks, and silver coins. A small amount, kind of a combination of speculation and a numismatic hobby. I figure you never know and it acts as a bit of insurance. Seems ludicrous that a shiny rock would have value, but then again so does faith in a piece of paper from a broke government (and silver has limitless industrial uses).

Surprised to see OPTrust, one of the few “above water” public pension funds, holds 2.5% gold. Interesting….

#99 Phylis on 08.17.20 at 7:38 am

#81 Ace Goodheart on 08.16.20 at 8:53 pm No worries, Ace. Butts will jot down a new list of warm fuzzy words and give it to Justin. Please note: er, em and ah are not on the list and are Justin’s contribution’s. I think I did hear Butts say, “dig up”.

#100 crowdedelevatorfartz on 08.17.20 at 8:05 am

@#81 Ace
“The cons could run a turnip and they’d still win now.
Trudeau is in free fall”

++++

Well the choices for Con leadership are almost as bad as a turnip.
And if they are anything like the Vancouver Canucks who perpetually seem to snatch defeat from the jaws of victory…….. I wouldnt be too smug until after election day.
Con minority is almost as bad as another Trudeau minority

#101 crowdedelevatorfartz on 08.17.20 at 8:13 am

@# 79 Bytor
“The point remains that it’s all about image, also known as identity, not about substance.”

+++

While I agree that politics these days leans heavily towards “image”.
Sarah Palin as a VP choice comes to mind…..

Ya might wanna check the bona fides of Harris.

She’s no bimbo.

https://en.wikipedia.org/wiki/Kamala_Harris

#102 Do we have all the facts on 08.17.20 at 8:20 am

The extrinsic value of assets that have no relationship to productivity such as; houses, older automobiles, paintings, sports memorabilia, diamonds, gold, bitcoins etc. is based on two forces.

The first force is the belief that a range of unproductive assets will become more valuable with age. This belief is grounded on an assumption that the supply of any many unproductive assets is limited. The mere perception of scarcity, or rarity increases extrinsic values. Millions of people around the world are dedicated to creating impressions that the rarity of unproductive assets will increase extrinsic values year after year.

The second force is the generation demand to purchase unproductive assets at extrinsic values that greatly exceed their intrinsic values. Once again millions of people around the world, including government officials, are dedicated to the generation of demand for unproductive assets.

One of the popular ways of increasing demand is improve access to affordable debt. This is where the perception of rarity and increasing extrinsic values combines with the use of credit to purchase unproductive assets. The efforts of millions of individuals combine to create a perception that extrinsic values will escalate at rates higher than the carrying costs of debt assumed to purchase the assets.

The flaw in market places based on the purchase and sale of unproductive assets is that at some point the income required to purchase assets at inflated values must be earned through productivity. If an economy becomes unproductive incomes and accessibility to credit will decline along with the extrinsic values of all unproductive assets.

The underlying message of this blog since its inception is to invest in a diverse and balanced portfolio of assets where the value is based on productivity. Economies cannot survive on the purchase and sale of unproductive assets. Without productivity all economies will eventually fail.

The belief that a country can print their way to productivity has created a false sense of security within the population of Canada. At some point, and that point is getting closer every day, increasing productivity must become the focus of our governments.

Without an increase in productivity our total economy can be viewed as one big bubble being maintained by unsustainable debt.

#103 Dharma Bum on 08.17.20 at 8:41 am

The rank and file average joe run of the mill retail investor equities trading dabbler out there (yah – that means you!) knows very little about what is actually happening at a deeper level on all fronts.

What they THINK they know is less than the tip of the iceberg in terms of the intricacy, complexity, and interconnectedness of myriad factors that are constantly affecting the economy, the stock markets, the real estate markets, commodities, energy, technology, etc., etc.

They base their actions on trite generalizations and overly simplistic explanations of what they hear in mainstream news soundbites, condensed articles, and bogus financial blogs (not this pathetic virus blog, however).

The percentage of financial wizards out there is miniscule.
The rest of us need to admit that we really know SQUAT about the deep inner workings of the financial markets and place our bets on the fact that in the long long run, we are better off staying invested than trying to outsmart the markets based on an article we read in the Toronto Star, or a talking head we heard on some third rate cable network. Or current events.

It’s pretty simple.

Stay invested. Stay diversified. Stay balanced. Keep only enough “cash” that will get you through the down times without having to sell low.
Hang in there.

Here’s why:

https://stockcharts.com/freecharts/historical/marketindexes.html

#104 Bytor the Snow Dog on 08.17.20 at 8:46 am

DELETED

#105 Ace Goodheart on 08.17.20 at 9:11 am

RE: #88 ImGonnaBeSick on 08.16.20 at 10:09 pm :

Interesting analysis.

I like it when people disagree with me. I learn things.

Trudeau is about to fire Wild Bill Morneau (who looks like he is ready to leave anyway – worried about his “legacy” of being remembered as the Finance Minister who presided over the financial destruction of Canada).

I don’t like Wild Bill’s policies and I don’t like how he operates. But he does have some knowledge of Finance and he understands things like debt to GDP ratios and how a Central Bank is supposed to work. He has been the glue holding the Trudeau government together.

Take away Bill, and you are left with Trudeau, who was really just reading the cue cards and has no knowledge of finance at all, and his band of green lefty followers, former rainbow gathering organizers, Green Peace agitators, closet communists and aged flower children.

The idea seems to be to substitute Mark Carney for Morneau, and then Mark will just magically allow Trudeau to do whatever he wants and keep Canada economically viable. A whiz kid. Someone who can make gold out of doggy do do on an ongoing basis.

Mark is said to be capable of transmutation. Of turning the lefty, closet communist, environmentalist slop that Trudeau is shoveling, into a flashy, money making, financially viable “green economic revolution”.

Problem is, that ain’t going to happen. Carney is more conservative than Bill. He is also smarter. There is no way he is going to let himself become Trudeau’s fixer.

The game board is being rearranged, and Mr. fancy socks seems to be unaware that they are tilting his position, in an effort to have him fall off. He is being isolated. I think Trudeau is in trouble. Best case scenario is his own party forces him out, and replaces him with someone like Carney.

#106 Oakville Rocks! on 08.17.20 at 9:23 am

@#79

“Dear Garth,

The point remains that it’s all about image, also known as identity, not about substance. ”

==========

If that were true and Senator Harris was image only, no substance, Trump would likely propose marriage. Well probably not marriage, as Trump seems to have an aversion to people of color. Instead, Trump has called her nasty which is as clear a sign as any that she is a woman of substance that scares him.

By the way Bytor # 104 Deleted is one of your few worthwhile posts here.

#107 Sara on 08.17.20 at 9:27 am

#104 Bytor the SLOW Dog

LOL

#108 Howard on 08.17.20 at 9:44 am

First poll since the election showing the Conservatives ahead of the Liberals.

http://warrenkinsella.com/2020/08/well-well-2/

#109 TurnerNation on 08.17.20 at 9:45 am

Some lookback/predictive fun. Apparently says the internet some dude spoke his knowledge of the New System coming many decades ago. I’ve known this was planned for a while and called it as the New System back in March.

The text attributed to this person goes as follow, notice any similarities? We awoke one cold March Monday to the new global system. Then the bankers went to work – giving us just enough length to hang ourselves lower over the pyre of debt.
Most everyone I talk to about this knows the goal is to frig with the USA this fall.

Harvest Season. In Fall 2008 the bankers reposessed everyone’s homes in USA. This year?
…..
“The bringing in of the new system, he said, would probably occur on a weekend in the winter. Everything would shut down on Friday evening and Monday morning, when everybody woke up, there would be an announcement that the New System was in place. During the process of getting the United States ready for these changes everybody would be busier, with less leisure time and less opportunity to really look about and see what was going on around them. Also, there would be more changes and more difficulty in keeping up as far as one’s investments were concerned. Investment instruments would be changing. Interest rates would be changing, so it would be difficult to keep up with what you had already earned. “

#110 TurnerNation on 08.17.20 at 10:29 am

#54 YouKnowWho the point of newspapers is Headlines – that get inside your head. And predictive programming – via polls. “80% of people support giving up freedoms!”
and so on . Our way of life was destroyed by the global government and the New System they rolled out in March. Why sugar coat it. All those years they told us “They Hate Our Freedoms”. Flip that statement 180 deg. to make sense.

Say where is “ISis” these days? Laid off, no longer needed. CV is scarier. No body is sick…but still better give up our freedoms just in case eh. To be safe.
Most know it’s a joke by now but we gotta maintain the illusion. Masks, caution tape as stage props to pretend people are sick.
In the New System we comply. Do not ask why.

#111 kingston boy on 08.17.20 at 10:31 am

@#106 Oakville Rocks! on 08.17.20 at 9:23 am
@#79

By the way Bytor # 104 Deleted is one of your few worthwhile posts here.

Hehe, truth.

#112 Bytor the Snow Dog on 08.17.20 at 11:11 am

Typical of lefty loons to celebrate a DELETED post when you don’t even know what the substance of it was.

It could have been something Garth disagreed with and didn’t publish. It could have been an off colour joke that Garth found a bit too racy for this blog. It could have been something you actually might have agreed with….. never mind, strike that.

All of you Cancel Culture folks prove my point that you’re intolerant of differing views every single day.

Thank you!

#113 Bytor the Snow Dog on 08.17.20 at 11:18 am

101 crowdedelevatorfartz on 08.17.20 at 8:13 am sez:

“@# 79 Bytor
“The point remains that it’s all about image, also known as identity, not about substance.”

+++

While I agree that politics these days leans heavily towards “image”.
Sarah Palin as a VP choice comes to mind…..

Ya might wanna check the bona fides of Harris.

She’s no bimbo.

https://en.wikipedia.org/wiki/Kamala_Harris
——————————————————————-
She might have all of the best bona fides in the world but she was chosen because she is a black woman. Biden pretty well broadcast to the world that he was picking a black woman.

You’d have to be living under a rock to have missed it.

#114 JB on 08.17.20 at 11:26 am

It sure beats buying a single overvalued condo and being cash flow negative.
…………………………………………………….
sign of the future

#115 JB on 08.17.20 at 11:32 am

#105 Ace Goodheart on 08.17.20 at 9:11 am

RE: #88 ImGonnaBeSick on 08.16.20 at 10:09 pm :

Interesting analysis.

I like it when people disagree with me. I learn things.

Trudeau is about to fire Wild Bill Morneau (who looks like he is ready to leave anyway – worried about his “legacy” of being remembered as the Finance Minister who presided over the financial destruction of Canada).

I don’t like Wild Bill’s policies and I don’t like how he operates. But he does have some knowledge of Finance and he understands things like debt to GDP ratios and how a Central Bank is supposed to work. He has been the glue holding the Trudeau government together.

Take away Bill, and you are left with Trudeau, who was really just reading the cue cards and has no knowledge of finance at all, and his band of green lefty followers, former rainbow gathering organizers, Green Peace agitators, closet communists and aged flower children.

The idea seems to be to substitute Mark Carney for Morneau, and then Mark will just magically allow Trudeau to do whatever he wants and keep Canada economically viable. A whiz kid. Someone who can make gold out of doggy do do on an ongoing basis.

Mark is said to be capable of transmutation. Of turning the lefty, closet communist, environmentalist slop that Trudeau is shoveling, into a flashy, money making, financially viable “green economic revolution”.

Problem is, that ain’t going to happen. Carney is more conservative than Bill. He is also smarter. There is no way he is going to let himself become Trudeau’s fixer.

The game board is being rearranged, and Mr. fancy socks seems to be unaware that they are tilting his position, in an effort to have him fall off. He is being isolated. I think Trudeau is in trouble. Best case scenario is his own party forces him out, and replaces him with someone like Carney.
……………………………………………………………..
Great news let the snot nosed little brat fall on his own sword. Good riddance.

#116 TurnerNation on 08.17.20 at 11:40 am

As the ‘new guy’ said – spaces can be re-purposed.
An old GTA mall being re-built this time avec condos:

https://www.styledemocracy.com/cloverdale-mall-redevelopment/


It looks like Etobicoke’s Cloverdale Mall is getting a totally new, cool look.

According to Urban Toronto, a major developer, QuadReal, has submitted zoning applications for the mall and the surrounding area. If approved, the empty space around the mall will be built up to be a series of multiple different condo buildings, ranging in size from low, mid, and high-rise.

The ground level of the complex will feature many storefronts and restaurants for both residents and passersby to enjoy. Additionally, there will also be plenty of parks and greenspace throughout the area, including rooftop greenery as QuadReal focussed on creating a sustainable community’

#117 IHCTD9 on 08.17.20 at 11:42 am

The hinterland is providing some good entertainment this month.

1. SFD Listings for some of the highest “price to value” ratios I’ve ever seen. Souped up bungalows on an acre for over a Mil? Yes I know – they’re fishing and won’t sell, but they aren’t blushing anymore setting the price. The greed among sellers has definitely gone uppa.

2. Local folks advertising directly to GTA buyers. Realtor signs with agents and companies I’ve never seen before with 416 contact numbers. Open houses literally looking a lot different than the norm. I suppose FOMO and bidding wars are next?

3. But the biggest knee slappers have been the businesses which are up for sale. The listings indicate that local business owners believe GTA folks are coming down and paying triple and quadruple market value for pretty much any unremarkable commercial properties with operating businesses on them. Even with a crap business on them. Even with no business on them.

4. Finally – 99% but still yet to be confirmed, it looks like Toronto specuvesters and amateur landlords have broken into the sticks. Not sure what the plan is because you can’t make worthwhile money on local rents even with 2% mortgages, home appreciation out here is glacial, and property taxes are high (and only going up as they advance to becoming the primary source of revenue for the near jobless municipality).

#118 Bytor the Snow Dog on 08.17.20 at 12:04 pm

DELETED

Masks are mandatory in most public places. Don’t bother posting anti-mask messages. – Garth

#119 IHCTD9 on 08.17.20 at 12:49 pm

#112 Bytor the Snow Dog on 08.17.20 at 11:11 am

It could have been an off colour joke that Garth found a bit too racy for this blog.
____

That’s probably the bulk of my “DELETED” comments right there. Bad jokes.

Hell, I remember a few posters quizzing me about my handle years ago. A couple dogs thought they had figured out what IHCTD9 meant after reading a bunch of my tripe here in the comments section. Something to do with Harper and Conservatives haha!

Their minds must have really slammed into overdrive trying to figure it out – they never thought to just punch it into Google.

#120 kingston boy on 08.17.20 at 12:54 pm

@#117 IHCTD9 on 08.17.20 at 11:42 am
The hinterland is providing some good entertainment this month.

1. SFD Listings for some of the highest “price to value” ratios I’ve ever seen. Souped up bungalows on an acre for over a Mil? Yes I know – they’re fishing and won’t sell, but they aren’t blushing anymore setting the price. The greed among sellers has definitely gone uppa.

2. Local folks advertising directly to GTA buyers. Realtor signs with agents and companies I’ve never seen before with 416 contact numbers. Open houses literally looking a lot different than the norm. I suppose FOMO and bidding wars are next?

3. But the biggest knee slappers have been the businesses which are up for sale. The listings indicate that local business owners believe GTA folks are coming down and paying triple and quadruple market value for pretty much any unremarkable commercial properties with operating businesses on them. Even with a crap business on them. Even with no business on them.

4. Finally – 99% but still yet to be confirmed, it looks like Toronto specuvesters and amateur landlords have broken into the sticks. Not sure what the plan is because you can’t make worthwhile money on local rents even with 2% mortgages, home appreciation out here is glacial, and property taxes are high (and only going up as they advance to becoming the primary source of revenue for the near jobless municipality).
————–

GTA money jacking up prices in the sticks can’t be a good thing – unless you’re a seller of course.
just means the cost of living goes up for the locals.
Seeing it happen in places like PEC. rents, prop tax all going up.

#121 Faron on 08.17.20 at 1:01 pm

#113 Bytor the Snow Dog on 08.17.20 at 11:18 am

101 crowdedelevatorfartz on 08.17.20 at 8:13 am sez:

@# 79 Bytor

She’s no bimbo.

https://en.wikipedia.org/wiki/Kamala_Harris”
——————————————————————-
She might have all of the best bona fides in the world but she was chosen because she is a black woman. Biden pretty well broadcast to the world that he was picking a black woman.

Bytor, did you/could you consider that both reasons apply? Try thinking of it this way: there’s a decently large pool of highly qualified democrat party members who all would serve as an excellent VP. These are people of all genders and races (although they will skew disproportionately white/male because of reasons). If they are all equally qualified and you are in a political contest, then maybe some politics comes into play. Don’t you think that Trump chose Pence to appease the mild christian voters who were starting to rebel against him because of the offensive vagina-grabbing comments? That was political and fell along religious lines. Why can’t a democrat, when choosing among qualified candidates, pick along racial/gender lines? And when those lines may help quiet deep unease in the nation, how is making such a pick a bad thing?

#122 Sara on 08.17.20 at 1:14 pm

Bytor The Slow Dog: “It could have been something Garth disagreed with and didn’t publish. It could have been an off colour joke that Garth found a bit too racy for this blog. It could have been something you actually might have agreed with…..”

Or it could be that you are just dumb and fun to laugh at.

#123 Bill on 08.17.20 at 1:27 pm

115 JB on 08.17.20 at 11:32 am
Down with Trudeau….cluess as one could be.
Bill not smart enough to stay out of trouble.
I sent many emails talk to people telling them to RESIGN.
You see i cant print or steal from my business’s.
Crooked as hell.
Go Mark C.

#124 TurnerNation on 08.17.20 at 1:27 pm

Cancel Canada, cancel culture. The Blue Jays baseball team was banned from the country.

CFL is cancelled, Government refused them a loan:

https://www.sportsnet.ca/football/cfl/report-canadian-government-denies-cfls-request-30m-loan/

…Which is why I said watch this story. Apparently football and baseball are too region-specific for the New System, to be eliminated? Did you keep an eye on this story?:

“#11 TurnerNation on 07.26.20 at 1:34 pm

Get this. Someone in late 60s apparently detailed part of the planned New System he was privy too.
One part was that the only sport left would be soccer.
Toronto’s baseball team was banned from the country. If US shuts down this means no longer NHL, NBA, NFL. Which leaves…soccer (Europe)
Keep an eye on this story.”

#125 Stan Brooks on 08.17.20 at 1:31 pm

CRA hacked in the ‘high tech’/G7/excuse me/ nation:

https://ca.finance.yahoo.com/news/thousands-cra-government-accounts-disabled-142844538.htmls

This currency is going down in flames, boy:
https://ca.finance.yahoo.com/news/canadas-trudeau-finance-minister-clash-161518745.html

While the idiots buy real estate:

https://ca.finance.yahoo.com/news/torrid-rate-canadian-real-estate-breaks-records-in-july-162851518.html

Now even bitcoins looks pretty sexy.
Cheers,

#126 Ronaldo on 08.17.20 at 1:45 pm

#89 Chester in summer

the goldsmith fraud continues…..
—————————————————————–
The fraud has been in the suppression of the pm’s over the past 20 or so years. So if you understand how the fraud works, you capitalize on it. Worked for me.

#127 Ronaldo on 08.17.20 at 1:55 pm

#91 april on 08.16.20 at 11:27 pm
#31 – real estate spin. From people outside the industry including Garth, do not buy a home at this time if you care about holding on to your money. Realtors will never say this is not a good time to buy. There’s a certain amount of info they hold back from the buyer… part of their training.
————————————————————–
There are many areas of the country where real estate is at bargain prices and why would you not buy in these areas that have been hit the hardest if you are retired or in a vocation that is unaffected by the current crisis. Son renewed his mortgage a couple months ago at prime minus 1.2 so his new variable rate is 1.25%. What’s not to like about that? He will certainly not be locking in. There are better places to live and raise a family that Vancouver and Toronto.

#128 Stone on 08.17.20 at 1:55 pm

#118 Bytor the Snow Dog on 08.17.20 at 12:04 pm
DELETED

Masks are mandatory in most public places. Don’t bother posting anti-mask messages. – Garth

———

Thank you. About time.

#129 Faron on 08.17.20 at 1:57 pm

#124 TurnerNation on 08.17.20 at 1:27 pm

Cancel Canada, cancel culture.

TN, I’m surprised that you, as a seemingly free thinking out-of-the-boxer, have latched onto a term that is used by the sheeple of all stripes.

In that vein, if you haven’t already “cancelled” the NYT (which would be ironic I think but also not surprising), here are a couple of good podcasts on where cancel culture comes from, what it meant and what it means now and how it presents itself in the twitterified world we unfortunately live in.

Part 1

Part 2

The TLDR here is that so much has been compacted into the term, that it’s now almost meaningless. that cancel culture basically encapsulates the tendency of the internet toward binary ideas and all or nothing divisiveness. And, it has strong capabilities as a weapon (everyone sees it as having negative connotation) of which Trump has availed himself.

Have a listen, tell us what you think.

#130 Question for Kool Aid on 08.17.20 at 2:00 pm

Kool Aid on 08.17.20 at 6:55 am
The greatest buying opportunity in a generation is mentioned in todays comment section – ironically the opportunity has nothing to do with gold, reits, or any balanced, diversified etfs. Good luck.

It’s energy right?

Thanks a lot,

#131 IHCTD9 on 08.17.20 at 2:08 pm

#120 kingston boy on 08.17.20 at 12:54 pm

GTA money jacking up prices in the sticks can’t be a good thing – unless you’re a seller of course.
just means the cost of living goes up for the locals.
Seeing it happen in places like PEC. rents, prop tax all going up.
___

Maybe. Right now, the big fancy places are the ones going thru the roof on asking price. The most brash prices I’ve ever seen. I doubt many will sell at the asking, maybe 1-2 of the best of the best. All the other ones will eventually come off the market if there are no takers at a high enough premium – none of these sellers are interested in selling if the price is market value.

Every year though – there are 1-2 lucky local couples who get a couple GTA’ers fighting over their listing and bidding them up a couple hundred grand over (the actual real) asking price. These events fuel more listings.

PEC is a laugh. There is nothing there that 100 other small towns don’t also have except for the sandbanks and grapes. It’s too bad because now, nearby small towns that actually are really nice (like Wellington) are also super jacked up in price for the nicer stuff.

The real concern is the potential for hoards of amateur specuvestors showing up. These doorknobs will buy a place and worry about profitability later. They’ll be buying the sub 500K houses the locals and first timers tend to buy. There could be a lot of them.

I’ve already started on my colony of Giant Hissing Cockroaches (tenant removers/open house terminators) in case they do show up.

#132 Ronaldo on 08.17.20 at 2:19 pm

#92 millmech on 08.17.20 at 12:08 am
#36
I have posted before when a coworker bought 500k of gold at $1700 ounce in August 2011, strutting around lately that what a good deal it was and how financially astute he is.
I just kept my cash in fiat currency and have doubled his gains in the same time frame, keeping my mouth shut and praise his above average market timing skills.(he has achieved less than 5% compounded annual growth rate over the last nine years)
—————————————————————–
Yep, he’s up about 53% in that time frame. About 5% as you state in Cad anyway. Our dollar was actually higher than USD at the time, .984. Had he bought at beginning of the year when the exchange was 1.34 he would only have been up 38%.

This is one of the reasons that investing in pm’s can be very risky as they are priced in USD and people don’t seem to understand this. So a person dealing is USD’s who purchased in August 2011 at 1700 would only be up about 14% today. For most other currencies, people have done not too bad over the past 20 years. Personally I much prefer Ag since it is an industrial metal and much scarcer than gold.

#133 Stan Brooks on 08.17.20 at 2:32 pm

DELETED

#134 WhackoNation on 08.17.20 at 2:40 pm

#124 TurnerNation on 08.17.20 at 1:27 pm

Cancel Canada, cancel culture. The Blue Jays baseball team was banned from the country.

CFL is cancelled, Government refused them a loan:

https://www.sportsnet.ca/football/cfl/report-canadian-government-denies-cfls-request-30m-loan/

…Which is why I said watch this story. Apparently football and baseball are too region-specific for the New System, to be eliminated? Did you keep an eye on this story?:

“#11 TurnerNation on 07.26.20 at 1:34 pm

Get this. Someone in late 60s apparently detailed part of the planned New System he was privy too.
One part was that the only sport left would be soccer.
Toronto’s baseball team was banned from the country. If US shuts down this means no longer NHL, NBA, NFL. Which leaves…soccer (Europe)
Keep an eye on this story.”
….

World domination by stealth through soccer…. great work dude.. keep on it.. you’ve got them on the run

#135 Bill on 08.17.20 at 2:49 pm

#132 Ronaldo
——————————–
People need to understand PMs are a currencies play.
Watching USD Gold is a fools game because its the go to currency in crisis and is typically inverted to gold…for now…Gold has broken out in all other currencies and finally has happened in USD.
Timing is important and that was a bubble 2011. I sold my silver at $49 (got lucky nailed it) and gold at that time. I reloaded @ CND $1700. More importantly the stocks were on sail in the crash and have BLOWN away every other asset class. I’m up average 200-400% in 5 months. Now I’m watching for a top but likely will double that performance before that occurs. I have all my other assets paid for so I can remove all my emotions and really gamble here. I will easily take down a Mil$ this year on these trades….Its not my first rodeo.
The more people start talking about it the more nervous I get.
Good luck and remember to sell when fools rush in.

#136 Bill on 08.17.20 at 2:52 pm

DELETED

#137 Ace Goodheart on 08.17.20 at 3:00 pm

Re: #134 WhackoNation on 08.17.20 at 2:40 pm

“World domination by stealth through soccer…. great work dude.. keep on it.. you’ve got them on the run”

Sounds good to me. Only thing I watch anyway.

World cup is the best cup.

Until the Leafs start winning again (cough cough) there is nothing else worth watching anyway.

CFL? Who in the world follows that?

#138 TurnerNation on 08.17.20 at 3:05 pm

#129 Faron reading the transcripts. When it really is happening it seems odd to ignore it.
CC is a meme.
I know I know one should not pick up their enemy’s weapons.:
https://en.wikipedia.org/wiki/Memetic_warfare

#139 Bill on 08.17.20 at 3:10 pm

jeesh thx Garth that was a good piece.

#134 WhackoNation on 08.17.20 at 2:40 pm

No more fun for us….”Got you papers?”

Take your conspiracy, plandemic, whack-a-doodle stuff elsewhere. – Garth

#140 Benford's in-law on 08.17.20 at 3:25 pm

@#122 Sara on 08.17.20 at 1:14 pm
Bytor The Slow Dog: “It could have been something Garth disagreed with and didn’t publish. It could have been an off colour joke that Garth found a bit too racy for this blog. It could have been something you actually might have agreed with…..”

Or it could be that you are just dumb and fun to laugh at.

………………..

definitely the latter

#141 PetertheSeparatistfromCalgary on 08.17.20 at 3:26 pm

Russia says it already has a COVID-19 vaccine. They are calling it “Sputnik V”. Putin’s adult daughter has already been immunized with it so he definitely has skin in the game.

The West is making a mistake by dismissing this. Instead we should set aside our justifiable geopolitical rivalry and start working with them to produce more of this stuff.

Unfortunately, it is an election year in the United States and no one wants to be seen as too close to Russia. We cooperated with Stalin’s USSR in WWII. So why can’t we work with Putin’s Russia in fighting Covid-19?

#142 Bill on 08.17.20 at 3:35 pm

Take your conspiracy, plandemic, whack-a-doodle stuff elsewhere. – Garth
LOL
Ok visit Melbourne Garth I’ve got family there…Its a nightmare for them…Not a conspiracy. Can’t do jack or go anywhere…just SAD.

#143 Bill on 08.17.20 at 3:37 pm

And TurnerNations pieces?
A Conspiracy?

#144 Bytor the Snow Dog on 08.17.20 at 3:55 pm

@ 121 Faron-

Sure, absolutely agreed that’s what political parties do all the time.

Just wanted to make sure everyone knows what all of the factors are. That said, if one starts at the fact that a person must be “x” (x being colour, gender, human, not Sara, etc) then one must realize that one is limiting the pool of candidates.

As we see with Trudeau and our Canadian Cabinet, that may not be a good thing.

#145 JB CONDO DEATH on 08.17.20 at 3:56 pm

QUOTA

#146 JB CONDO DEATH on 08.17.20 at 3:58 pm

#116 TurnerNation on 08.17.20 at 11:40 am

As the ‘new guy’ said – spaces can be re-purposed.
An old GTA mall being re-built this time avec condos:

https://www.styledemocracy.com/cloverdale-mall-redevelopment/


It looks like Etobicoke’s Cloverdale Mall is getting a totally new, cool look.

According to Urban Toronto, a major developer, QuadReal, has submitted zoning applications for the mall and the surrounding area. If approved, the empty space around the mall will be built up to be a series of multiple different condo buildings, ranging in size from low, mid, and high-rise.

The ground level of the complex will feature many storefronts and restaurants for both residents and passersby to enjoy. Additionally, there will also be plenty of parks and greenspace throughout the area, including rooftop greenery as QuadReal focussed on creating a sustainable community’
…………………………………………………………………
It will never fly, no Subway connection past Kipling. We are just off the Danforth line and the further away from it the lower the want and the price.

#147 Bill on 08.17.20 at 4:05 pm

I say it again Garth
You can delete the complete post .
We now have authoritarian govs. Not a conspiracy. Trudeau is like a mini dictator

Believe it or not I may contact your firm for assistance.
I have (for a dum a$$) a lot of assets and $100 to $200k cash flow a year to park. I’ve done what I could but its a lot of responsibility and full time. Accounts RRSP, LIRA, TFSA, CASH 2 BIZ accounts its a bloody nightmare dealing with it…
Also I had a Sh$t head Sandy G lost me a million in 2010…I’m not trusting of brokers…until proven different…
As much as I know its NEVER enough.

#148 Ronaldo on 08.17.20 at 4:06 pm

#135 Bill

Well Bill, I will share my story. In Octobber 2008 when Ag dropped below 9.00 from a high of around $21.00 usa in March of that year, I purchased a substantial amount of Maples at a cost of $8.88 us. On May 1st 2011, on a sunday and 3 hrs before the metals markets opened via Kitco I locked in my sell order at $49.44 which turned out to be the top of the market. Eric Sprott who owned a large amount of silver had dumped a few million ounces in the third week of April plus there had been 2 or more increases to the margins as well. Given these occurences, I felt that we had reached a peak. It turned out to be a good call. A 456% gain over 2.5 years. I held the proceeds in US dollars since our dollar at the time was worth more than the USD at .944 and cashed in the USDs I believe 3 or 4 years later when our dollar was down to 1.45 for a further gain of 50%. I have repurchased Ag at various times since but never at more than 17.00 Cad. You are the only person that I know that actually sold at the top before markets opened. Once the market opened the price fell like a rock and by the time I got the cheque in the mail, the price had dropped to $32.00. My accountant was pretty impressed.

#149 Bill on 08.17.20 at 4:48 pm

There a time to speculate and a time to leave this stuff behind.
NUG.V up 27% today happy camper on that one. The trend is your friend until it breaks…..

#150 Tar Rafi on 08.18.20 at 3:24 am

Dear Mr. Turner: I was wondering if you will discuss the current situation and risk of Collateralized Loan Obligations (CLO) of Canadian banks. This was referred to as a risk for US banks here https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/
I tried to get BNN’s information desk to treat this as a story but they punted. Can you help us understand? Thanks. Tar
ps. I’ve been a loyal reader for over 10 years but only now writing because I feel this is an relevant and timely issue

#151 Shag Hammer on 08.18.20 at 5:58 am

Sinan , IMHO , REI.UN suits the diversification model perfectly. Great company, great management…most commercial exposure is not mall interiors. Collecting 85% of rents. Cashed up. A superior REIT….paying a whizzer dividend. Beats the pants of Simon.

#152 Damon Caster on 08.18.20 at 12:12 pm

Attention: George Soros has tightened his grip around your throat. Parliament is cancelled. The Finance Minister is sacked. If you can’t see what’s hspii Ooi need you’re deaf dumb and very very stupid.