Outlook & themes

RYAN   By Guest Blogger Ryan Lewenza
.

“It’s tough to make predictions, especially about the future”
– Yogi Berra

The above quote has always been one of my favourites and I often think about this quote as I’m preparing my market outlook for the year ahead. It’s part of my job to analyze and forecast where the markets and economy are headed, but I’m fully aware of my own fallibility and the arrogance required to believe I can correctly and consistently predict an unknown future.

Take last year for example. Who would have predicted we would be hit with the worst global pandemic in over a 100 years! That said, we do the best we can on making these predictions with the information and knowledge that we possess. As I often say to clients, if I can go 6 or 7 for 10 then I consider that a win. So, let’s get started.

The next few months could be dicey as Covid rates rise exponentially, governments in turn roll back reopening measures and we transition to a new US president and a democratically controlled congress. But if we do see any volatility over the short-term it should prove to be a buying opportunity, as I’m fairly bulled up for this year.

First, critical to our positive market outlook is our expectations for a big ramp-up of vaccinations in the coming months and the high likelihood for developed countries to reach ‘herd immunity’ in the second half of this year.

With us being locked up in our homes for close to a year now, record savings and cash balances on hand and our profound desire to get back to normal and do all the things we miss, I believe once we near herd immunity that we’ll see an explosion of economic activity and a big rebound in the global economy.

This sentiment is echoed by many other economists as consensus is currently projecting the global economy to expand by 5.2% for 2021, after contracting by an estimated 4.4% in 2020. Canada is expected to grow at a faster clip than the US (5.2% vs 3.1% for the US) given its exposure to natural resources and that we were harder hit than the US in the downturn.

Economic Growth Forecast to Rebound Strongly in 2021

Source: Bloomberg, Turner Investments

The key to this economic recovery will be jobs! So far the Canadian and US economies have recouped 80% and 60%, respectively, of the jobs lost last year at the start of the pandemic. I see the potential for some job losses in February and March due to the lockdowns, but then strong job growth for the remainder of the year as vaccinations pick up.

Job growth in certain areas like business services, manufacturing and construction have actually been quite strong since last March, with the more service-based sectors like leisure and hospitality lagging well behind. But as we get vaccinated we should see people flooding back into the bars, restaurants, hotels and hospitality sector. This is why I see job growth surging in the second half of the year and this will be a sign that the pandemic is nearing its end.

Leisure and Hospitality Jobs to Accelerate in H2/21

Source: Bloomberg, Turner Investments

If I’m correct about this ‘pent up’ demand and a strong economic recovery, this should translate into a big rebound in corporate profits.

Stocks go up by either the multiple (i.e., P/E ratio) increasing or rising earnings. I see earnings growing at double-digit rates this year, which should help to propel the global equity markets even higher this year. Currently, consensus estimates point to S&P 500 earnings increasing by 30% this year. This is really the crux of our bullish call for this year.

Big Earnings Rebound Expected in 2021

Source: Bloomberg, Turner Investments

My conviction for further stock gains is pretty high this year, but, as always there are a few risks to my outlook that I’ll be monitoring closely.

First is the vaccine rollout and the expected time to reach herd immunity. A low adoption rate of the vaccine could greatly hamper how quickly we eradicate this virus and pandemic. Some surveys in the US showed only 60% of Americans would be willing to take the vaccine, but this has started to rise (now at 70%) as the vaccine rolls out, which is critical since it’s estimated that 70-80% of the population needs to be immune to the virus (either through vaccination or through natural infection) for us to reach herd immunity.

Second are the high equity valuations. Currently, the S&P 500 is trading at a forward P/E ratio of 23x, which is the highest level seen in many years. I do believe the historically low interest rates does support and justify a higher than normal P/E level, but clearly US stocks are expensive. This is one reason why we’ve introduced US value stocks into client portfolios.

When all is said and done, I believe earnings will rise more than the P/E will contract in 2021, and thus, equity markets will continue to rise this year.

High US Stock Valuations a Risk to our Bullish Outlook

Source: Bloomberg, Turner Investments
  • So that’s the call. Stocks will climb a wall of worry this year on a successful vaccination rollout, a rebounding economy and higher corporate profits. Now let’s discuss key themes for this year:As the economy rebounds and inflation picks up, long-term bond yields will rise, which should weigh on government bonds. In a rising rate environment, corporate bonds should outperform government bonds, which is why we’ve reduced our government bond exposure in recent months.
  • I see small-cap companies outperforming large-caps this year, which is why we added them back to client portfolios last summer.
  • With stronger economic growth and a weaker US dollar, emerging market equities look set to do much better this year and I see them potentially outperforming developed markets.
  • While the growth sectors – technology and healthcare – should continue to shine, I believe value stocks will finally come to the party and perform well over the next few years.
  • REITs, after a rough 2020, should rebound nicely as people return to the shopping malls and concerns over commercial real estate subside. I see REITs as a vaccine recovery play.
  • Biotech stocks are one of our favourite growth ideas right now and we see the industry outperforming this year.
  • Oil and other commodity prices will continue to rebound as demand picks up in the second half and therefore see the lagging TSX doing better this year.

Come this time next year I believe the markets will be higher and the world will be a better place. As always, I’ll review these market calls at year-end to see if I can prove Yogi Berra’s assertion wrong.

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

 

92 comments ↓

#1 Linda on 01.16.21 at 1:32 pm

Ryan, do hope that the rebound occurs as predicted. The main issue regarding vaccines right now appears to be manufacture & supply. Yes, there are always those who will resist vaccination for various reasons, some valid, some not. However I for one would roll up my sleeve today if I could. Problem there is I don’t fall into any of the priority groups, so will have to wait my turn. I am hoping I’ll be able to receive the vaccine by September, but given the recent news headlines will count myself lucky to get it before the end of 2021. Hopefully the issues with production/delivery will be sorted sooner rather than later.

#2 TurnerNation on 01.16.21 at 1:33 pm

Yesterday a blog dog wondered Who would be going to Mexico when 128,000 people died in a year!
Friends of friends, two couples, the work from home set, are doing an extended tour of S. America and Mexico.
Maybe they did the math and divided that figure by the ~128 million total population of Mexico?
And looked at the figures for the under 60 set, (165 ppl in Ontario!) The doomer death-obessed set do not do math or actuarial science, apparently. From the pictures I saw they hare having a great normal life down there. Don’t be jealous.

The one single thing they are holding over our heads to lock us down for years while the First World countries get reset, is this:
“We need lockdowns so the hospitals don’t get overrun, so we printed enough cash to quintuple the money supply and spent 0% of it on expanding ICU capacity.”

For the Global Government crew, “Italy’s govt is falling apart. Netherlands govt resigns over scandal. Merkel & Putin announce they’re stepping down this year. What is going on”

……………
Real simple guys. This new global order is about control over our Feeding, Breeding and Movements/Travel.

“U.S. State Department warns Americans to “immediately” return home if they’re staying in a country which cannot provide COVID-19 testing prior to flight. If you stay, you will not be able to return to the U.S.”
https://twitter.com/BNODesk/status/1350265800188436480


Control over our food supply. The trend is toward banning meat or culling them due to “CV”. And getting us eating….bugs. That’s the trend being pushed not only this article but others. As if we were animals.

https://www.msn.com/en-us/news/world/mealworms-are-safe-to-eat-eu-agency-says/ar-BB1cLgAI
“Mealworms have tubelike bodies and a mild taste that has been compared to pumpkin seeds. The decision could clear the runway for approval of new insect-flecked snacks in Europe.”


Movement/Land…the Siberian gulags are back. Blistering heat this time. Banished to the actual work kamps:
See now they have the “new strains” to terrorize us with endlessly. Fancy that. It’s like a bad script. And it is.

https://archive.is/G97K1
Wall Street Journal
“The premier of Queensland state wants to repurpose camps designed for resources workers as isolation hubs in remote scrubland where temperatures can top 100 degrees Fahrenheit.
Fearing the import of new coronavirus strains, one state wants to repurpose remote camps designed for resources workers”

#3 Frugal Xennial on 01.16.21 at 1:39 pm

I would have expected developed markets to have an edge on emerging markets due to the correlation with vaccine access and the expectation that areas with better vaccine access and rollout will return to “normal” economic activity sooner.

#4 SoggyShorts on 01.16.21 at 1:47 pm

#175 Nonplused on 01.15.21 at 10:21 pm
#159 SoggyShorts on 01.15.21 at 8:50 pm

Reasonable response, I only take exception to one point:

““Where is the gain?”
You bought a 300K house and now you are selling it to buy a 400K house…how is that not a gain?
I just sold some investments to buy other investments, and I will have to pay taxes on my “gains” regardless of inflation. Why the special treatment on a house?”

The point I am trying to make is that the new house was probably $300,000 when it was first bought too, so nobody actually made any money if they are staying in the home ownership market. You need all the illusionary “equity” you gain just to buy the same house closer to work.

*************************
I get that, but the same thing happened to my investments.
E.G. I bought 300K of stocks which grew to 400K.
If I sell them, because I have to pay capital gains tax I will not be able to buy 400K of another stock (which also used to be 300K)

Even if some/most/all of my gains are just inflation, my purchasing ability is reduced due to tax.

The same seems fair for a homeowner.

#5 Comments! on 01.16.21 at 1:48 pm

Hi Ryan, thanks for the analysis. Do you think that almost every remotely possible positive outcome imaginable, has already been priced in astronomically, into all markets? I mean, every piece of horribly negative news that would have destroyed the markets at any other time, is simply shrugged off and we hit new highs, which seems kind of ominous to many investors (reminiscent of 1999 and 2008). Any concerns over 35% of all existing money being printed in the last year or so? Would a sharp correction be healthy to blow off some of the insane P/E’s and zombie corporation valuations?

Much appreciated.

#6 Faron on 01.16.21 at 1:52 pm

#204 IHCTD9 on 01.16.21 at 11:09 am

Ha! Now your talking.

#7 Dogman01 on 01.16.21 at 1:53 pm

Out of habit and laziness I continue to watch the CBC, however I continue to shut if off when they veer into woke identity politics, usually can’t make it more than 5-10 minutes.

“the CBC, no one even pretends that the place still exists to serve ordinary Canadians, so there is no longer any real metric for evaluating performance. “

“a largely dysfunctional bureaucracy, in which union rules and identity politics are weaponized to prosecute grubby internal feuds.”

The article is interesting as it describes that when you hire political activists instead of journalist they inevitably go after “each other” once they have routed the obvious targets, the ideologically impure professional journalists. It reminds me of French revolution executions, they run out of aristocrats so they eat any moderates and become more and more strident.
https://nationalpost.com/opinion/jonathan-kay-the-cbcs-toxic-workplace-exposed-after-arbitrator-sides-with-fired-reporter

I looked at the hiring criteria of a large Canadian corp recently, you had to align to the “values”, none of which seemed to be about increasing shareholder value, but quite a bit about ESG.
The cancer spreads.

#8 Don Guillermo on 01.16.21 at 2:11 pm

#7 Dogman01 on 01.16.21 at 1:53 pm

I looked at the hiring criteria of a large Canadian corp recently, you had to align to the “values”, none of which seemed to be about increasing shareholder value, but quite a bit about ESG.
The cancer spreads.
****************************************
ESG – Had to DuckDuck it. Seems like every other day the “woke” give us a new acronym.

#9 Tarot Card on 01.16.21 at 2:14 pm

Thanks for the blog Garth
Thanks for the forecast Ryan.

Yes I agree predictions are really hard, but we need to make them and then adjust as we go along.

And wall of worry indeed!
Just saw a Irish chart showing the new variant spiking cases 30 times normal in the last two weeks. So I agree we may see a large wall of worry, at least till April when we start to vaccinate one million beavers per week. A big hurtle onto itself!

Have a great weekend everyone,
I own stocks and ETF in oil and banks I will sit on the dividends waiting for the forecast to materialize.

I own biotech, I think this will be a home run once the covid vaccine is out of the way and then all these other companies will shine with their discoveries.

#10 Dr V (not DV) on 01.16.21 at 2:19 pm

Lots of graphs here

https://www.yardeni.com/pub/mscipe.pdf

Note the ratios given are “forward P/E” which is
Price divided by 12-month forward consensus expected operating earnings per share.

Seems ‘marka is overvalued even by that measure.

Other developed economies more fairly valued (for that projected future earning).

Asain EMS looking fair value, latin ‘Marka and Eastern
Europe looking cheapest.

#11 KNOW IT ALL on 01.16.21 at 2:19 pm

We can only hope you right.

#12 Dr V (not DV) on 01.16.21 at 2:26 pm

7 Dogman01

“Out of habit and laziness I continue to watch the CBC, however I continue to shut if off when they veer into woke identity politics, usually can’t make it more than 5-10 minutes”

Yep. I would also turn it off awhile back when they would bring the daily Trump tweets report.

#13 Ryan Lewenza on 01.16.21 at 2:33 pm

Comments! “Hi Ryan, thanks for the analysis. Do you think that almost every remotely possible positive outcome imaginable, has already been priced in astronomically, into all markets? I mean, every piece of horribly negative news that would have destroyed the markets at any other time, is simply shrugged off and we hit new highs, which seems kind of ominous to many investors (reminiscent of 1999 and 2008).”

Two key points. First, the stock market leads the economy by 6-9 months so it’s pricing in now better economic times in the future. Now if those better economic times don’t materialize then we get a good correction in the coming months. Second, it’s all about stimulus. We can debate whether this is a good thing or not longer term but the simple fact is that stocks love QE and stimulus, so this is part of my bullish view. This recovery will be similar to 2008/09 where the economy was under extreme duress, the central banks and governments pulled out all the stops in trying to revive the economy and it ultimately worked. Once the economy was strong enough on its own two feet they pulled back the QE. I see the same thing playing out. Don’t get me wrong. Markets will endure sell-offs during this recovery, but the trend should be up. – Ryan L

#14 Regjeg on 01.16.21 at 2:42 pm

I dispute Yogi’s assertion. It’s in fact very easy to make predictions. The tough part is consistently making predictions that turn out to be correct, other than in the realms of death and taxes.

In any event, love your upbeat projections for 2021, Ryan. What is your call for the total return on the TSX this year?

#15 Dominoes Lining Up on 01.16.21 at 2:45 pm

Ryan, I am less encouraged by prospects for the retail sector and REITs.

Around Toronto, it is stunning to see the number of stores shuttered completely these days. Even lots of Starbucks, in great locations, have been closed permanently.

In the last five or six years I had already been noticing a trend at various mid-size shopping malls in Southern Ontario. Anchor tenants close down and move out, leaving big vacant boxes.

Who moves in? Nobody, for a while. Then, if the owners are lucky, another gym/fitness franchise opens up, scooping up the huge square footage at a desperate discount. The places look vacant most of the time when I pass by. (I’m not a gym-type, and sadly accept that I will never have Garth’s fabulous chiseled abs)

But those anchor-replacement tenants have been empty now for a year. They were already the last gasp of many property owners, and an important element of REIT investments to keep malls at least looking hopeful.

Now, more and more people are giving up on private gyms entirely. Here’s a survey from TD:

https://www.cnbc.com/2020/07/23/many-dont-plan-to-renew-their-gym-memberships-post-pandemic-survey.html

59% say they will give up their gym memberships forever after the pandemic is over. Wow! That could really gut that industry.

Maybe the impact on malls could be the beginning of teardowns and repurposing. Who would replace those sites? Amazon mini-distribution centres? Unlikely, I think. Maybe bulldoze them down for residential developments? When so many are fleeing to the soulless 905?

It would be good to see some real leadership from REIT management in facing what may be ahead. I don’t see any of that right now. Envisioning what the future may hold seems beyond their imagination.

I would stay well away from REITs for quite a while. Wait for them to crash, which may come very soon, and then take a position possibly could be a strategy.

Overall, I think we have only had a taste of what the retail retrenchment is going to be. The effects on commercial property will likely be worse and more sudden than on residential, but both will take a big hit before too long, imho.

#16 TurnerNation on 01.16.21 at 2:45 pm

How’s that vax going to handle the “mutant strains’ they keep threatening us with and shutting down more of our rights and First World Countries?

Maybe they can whip up another vax in a month or two.
Say where’s the vax for Cancer? Chop chop guys. In the past 80 years trillion of dollars has/is been raised for that cause, plus all the private funds and companies. Endless research. Where is it? 80 years…still waiting.


Jan 2021 in Brazil video, normal life. Having fun. Why? Because they are not a First world country.

https://www.youtube.com/watch?v=i1PGVbfEtJ0

RIO DE JANEIRO – BRAZIL From Ipanema To Copacabana Beach – January 2021 [FULL TOUR]
Scenes of the Sunny Beach in Rio De Janeiro, Brazil 2021

….

For Yellow Tractor guy they be sending more farmers out your direction. Get them started with 80 year old yellow gear gear? ;-)

https://www.blogto.com/eat_drink/2021/01/start-your-own-farm-just-outside-toronto/

A family is now offering the opportunity to apply to start your own farm on their land just outside Toronto, and they’re prioritizing those that “identify as BIPOC or face systemic barriers that make traditional farming opportunities inaccessible.”

The job posting is on BIPOC- and female-run family farm Raining Gold’s website, hiring for one or two farm crew positions depending on funding. They’re located in Hillier in Price Edward County,

#17 Dolce Vita on 01.16.21 at 2:57 pm

VAX Scorecard End of Week 2, Jan. 16, 2021

Cdn Population ≥ 15 yrs old = 31,966,591

WEEKLY people (not doses) required vax’d to be done by:

End of Sept., Week 39:
= 819,656

End of 2021, Week 52:
= 614,742

Thus End of Week 2 this many SHOULD have been vax’d to achieve the:

Week 39 Goal
= 1,639,312

Week 52 Goal
= 1,229,484

———————————–

How many PEOPLE were ACTUALLY vax’d at least ONCE End of Week 2:

517,491
[503,400 one jab + 28,182 deux jab)

People vax’d (at least once) behind schedule to achieve:

Week 39 Goal
= -1,121,821

Week 52 Goal
= -711,993

No comment other than yesterdays pole (and results) asking Cdns if they are concerned about the vaccine rollout pretty much says it all:

https://i.imgur.com/wTC6ESv.png
[4526 responded, statistically significant results to the say the least.]

Canadians are smart. Can’t pull the wool over their faces.

New developments (projections) next Comment as this one too long already.

#18 NoName on 01.16.21 at 2:59 pm

How long before Skynet? Anyone?

https://twitter.com/nypost/status/1350511593545756672

Drones are replacing cowboys to track cattle in new study.

#19 Nixter on 01.16.21 at 3:02 pm

Sure feels like we are cattle, in the barn for the winter, out on pastures , or out to pasture come spring and summer. Also cattle and livestock are tagged and vaccinated.
Looks familiar.
Would you rather be a bull or a cow, or a sheep?

#20 Drinking on 01.16.21 at 3:14 pm

#2 TurnerNation

I did mention yesterday that I was surprised that people would vacation in Mexico; especially since there medical system is under enormous strain; as well as the new strains appearing. As of today 139,000 (in 9 months) have perished and another 21400 cases today; not jealous , just concerned for them and us!

I hope you are right Ryan; I have a few extra dollars that I would like to invest!

#21 SoggyShorts on 01.16.21 at 3:17 pm

Vaccine passports coming?

“…businesses (like airlines or movie theatres, where people are in close contact) having the right to bar a customer who does not have proof of vaccination.
In the results, 45 per cent of Canadians surveyed said they support the idea, 27 per cent said they somewhat support it, eight per cent said they somewhat oppose the idea, 16 per cent said they oppose it, and four per cent said they were unsure.”

*************
My question is does anyone who got the vaccine so far have proof? Also, what about those who have been infected and recovered: Would an old positive test result effectively count as being vaccinated?

Personally, I am eager to get both vaccinated and some sort of (digital?) stamp of proof.

https://www.ctvnews.ca/health/coronavirus/more-than-7-in-10-canadians-support-barring-unvaccinated-people-from-businesses-nanos-survey-1.5269773

#22 Dolce Vita on 01.16.21 at 3:21 pm

VAX Canadense

• 1/2 vax supply next 2 weeks = 104,325 doses/week
• 1/2 vax supply February = 183,788 doses/week
• March no data, assume February number of doses/week
• April doses/week = 1,000,000 (or more?)
[sources in CTV Nat’l News last night]

Take end of Week 2 PEOPLE vax’d + above ÷ 2 and you get:

32M people vax’d by somewhere in between:

May 28 to June 4 2022

[no typo, that’s 2022 and NOT 2021]

——————————

– “Optimism the economy will quickly accelerate once the pace of vaccinations picks up.”

– “I want to be very clear: this does not impact our goal to have enough vaccines available by September for every Canadian who wants one”

——————————

Only way to make “every Canadian who wants one” by end of 2021 let alone end of Sept.:

• AstraZeneca gets approved yesterday, already producing, 20M doses ordered for 2021.
• Novavax* delivers in May 2021.
• Johnson** & Johnson delivers in March 2021.
• Pfizer stealth builds a duplicate plant this week.

*Results due end of April + 1 month approvals (what it took Pfizer & Moderna) + immediate production May 1, 52M doses ordered for 2021 by Canada.
**Results due end of January + 1 month approvals + immediate production March 1, 10M doses for 2021 ordered by Canada.

#23 S.Bby on 01.16.21 at 3:51 pm

We won’t reach herd immunity to Covid through vaccines by Q3 2021 for a number of reasons:

1. Vaccine distribution and application logistics problems.
2. Not everyone will bother to get vaccinated.
3. Not everyone will get their second shot.
4. Not everyone will get their second shot within the prescribed time frame. (see points #1 & #3)
5. Covid is mutating into more virulent strains.
6. The vaccines won’t stop infections, it will only make people less sick and hopefully keep them out of the hospital.
7. Even with a vaccination people can still be infectious to others, especially with these more virulent strains.
8. It appears we can get reinfected with Covid and so we’ll need to keep getting booster shots.

No one seems to be anticipating this pandemic lingering on until 2023 or so. The Spanish flu lasted 3 years and we are only one year into Covid.

#24 Dolce Vita on 01.16.21 at 3:51 pm

VAX Populi Sus Guinea

1. Pfizer (Moderna same type of vaccine, mRNA):
The Ph. 3 trial showed that the immunity began to take effect 12 days after the first dose, but that only “52.4% vaccine efficacy was observed between dose 1 and dose 2.”

2. Days between doses recommended by Pfizer: 21 days, Moderna: 28 days.

3. Health Canada, January 12, 2021, Recommendations on the use of COVID-19 vaccines:
Table 2: Min, Authorized, Alternate
(Pfizer-BioNTech) 2-dose schedule: 19 days 21 days 28 days
(Moderna) 2-dose schedule: 21 days 28 days None
https://www.canada.ca/en/public-health/services/immunization/national-advisory-committee-on-immunization-naci/recommendations-use-covid-19-vaccines.html#b4

4. Jan. 15: Dr. Howard Njoo, Deputy Chief Public Health Officer, Health Canada, up to 42 days under exceptional circumstances.

5. What the Provinces are doing, days between doses (today ON may go to 42 days from CTV News):

https://i.imgur.com/3xxQeuB.png

Everyone following Health Canada (not incl. whack job Dr. Njoo’s 42 days), Pfizer, Moderna days between doses recommendations EXCEPT:

Duchy of BC (Don’t Test, Don’t Count) = 35 days
AB = 42 days
ON = May be changed to 42 days from 21-28 days.

– Duchy of BC probably a typo since they test at 1/2 the Nat’l rate; thus, 35 should be 17.5 days (all things being equal in the Duchy).
https://health-infobase.canada.ca/covid-19/?stat=rate&measure=tested#a2

– AB does not Trudeau on deliveries and on 2nd thought, ON may not either + their Conservatives.

——————————

Is the Kunickstan Free Range Herd being used as GUINEA PIGS?

I leave that up to you. And on that note, MAYBE expect more of this:

“Jan. 13 Seven Quebecers test positive for COVID-19 despite first vaccination, heightening questions over delayed boosters” – 7 people at the Maimonides long-term care home in western Montreal “were infected within the first 28 days after their first [vaccine] dose,” the regional health-care authority that oversees the home said in a statement.
https://montreal.ctvnews.ca/seven-quebecers-test-positive-for-covid-19-despite-first-vaccination-heightening-questions-over-delayed-boosters-1.5265389

Math: at the time Quebec had administered 107,364 doses =7/107364 = 0.0065%.

Again, I leave it up to you (RE: Guinea Pigs, Duchy of BC included).

#25 cuke and tomato pickere on 01.16.21 at 3:53 pm

When we get the vaccine we’re off to Hawaii first class,
Disneyland, Vegas to see the canucks play, the gym and
Mayfair Mall.

#26 Faron on 01.16.21 at 4:16 pm

#21 SoggyShorts on 01.16.21 at 3:17 pm

This is in the US, but my sister has a COVID vaccine card issued by the US CDC. Notably, the card has multiple empty entries for vaccine despite their only being two doses necessary. So, in the US anyway, there is proof. Not sure if is being asked for it just yet to conduct any kind of business there. I’m hoping to arrange a visit for her up here in the next couple months, and for that Canada will require proof and I’m sure her card will work.

I’m curious about the lack of weight given to previous infection in discussions of immunity. The worried and cynical side of me thinks that it isn’t discussed because previous infection doesn’t grant much long term immunity. Add to that a recent statement by Moderna that COVID might be around essentially for ever and I have to think that there is some strategic downplaying of acquired immunity in order to keep people from getting their hopes up and then travelling broadly when they aren’t in fact immune or at best are immune but still capable of transmission.

I have a hunch that immunization will be an ongoing battle for our lifetimes. Yuck.

#27 Penny Henny on 01.16.21 at 4:17 pm

Does anyone have faith in DV’s numbers anymore?
Too many errors and no accountability for accuracy.

#28 Faron on 01.16.21 at 4:27 pm

Thanks for the post today Ryan. I really appreciate your balanced analysis and optimistic outlook. Based on that, it’s a good hint at why Garth hired you and takes pride in his staff.

Nice work picking up small caps in the summer. That’s done very well for your clients. Do you think that the small cap run still has legs though (on a relative basis)? I’ve read some analysis that it’s been latched onto as a laggard/rotation and even a quasi value play, but the laggardness is long gone, rotation is questionable given what’s in the Russel 2000 and likewise value. I’d be curious to hear what your basis for continuing to hold small caps is rather than rotating to industrials or some other sector that will soak up a Biden infrastructure bill or just giving more weight to value? I do realise that small caps aren’t a “sector”, but perhaps you get my drift.

Disclosure is that I’m currently short Russel 2000 in my fun account as of Thursday. Long B+D in the money that matters.

Cheers
Faron

#29 Dolce Vita on 01.16.21 at 4:31 pm

Sorry Ryan on Herd Immunity but…

Forgot in prior when is it projected Canada vax’s 75% (assumed herd immunity) at present deliveries by:

End of Week 5, 2022 or Feb. 5, 2022.

23,974,943 need to be vax’d at 75% of Cdn Population ≥ 15 yrs old.

Why Canada will have to approve other suppliers it has contracts with toute suite (AstraZeneca, Novavax and J&J…and pray for a 2nd Pfizer Stealth plant to be built).

Moderna doses just starting to trickle out and they are playing with the idea of a 3rd jab to increase efficacy.

Projections, very long, for the curious…(look when vax’d = 23,974,943 @ 75% assumed herd immunity and vax’d = 31,966,591 @ All of population, again ≥ 15 yrs old VS right hand column of projected people vax’d per current vaccine deliveries):

2021, Weeks 1 to 35:
https://i.imgur.com/6PDtCYs.png

2021, Week 36 to 2022, Week 20:
https://i.imgur.com/IgvkQo8.png

2022, Weeks 21 and 22:
https://i.imgur.com/CJS2b7B.png

—————————–

“Optimism the economy will quickly accelerate once the pace of vaccinations picks up.”

When will that be, who knows?

For the Cdn economy’s sake, the sooner the better. Though “sooner” is looking like 2022 at present.

#30 Trudeau’s Magic Money Machine on 01.16.21 at 4:40 pm

You’re telling me exactly what I want to hear.

And that’s what scares me.

#31 Dolce Vita on 01.16.21 at 4:41 pm

PS:

Sorry Ryan on Herd Immunity but…

Vax deliveries ÷ 2 shown for Jan remainder, Feb and Mar per WEEK and NOT cumulative. Done that way so I could check that I input the numbers correctly for those periods given recent depressing vax delivery news.

Week 13 shows ALL people vaccinated up to and including that week and cumulative from that week onwards (RHS column, other 2 columns show cumulative vax’ng to meet end of Sept and end of year vax’d goals – people not doses).

Not an error, on purpose, if some want to verify recent vaccine delivery numbers were input correctly*.

Again:
https://i.imgur.com/6PDtCYs.png

——————————–

*You never know, PM Trudeau may be stealth reading Garth’s Blog and being a politician may say inputs are inconsistent; thus, throw baby out with the bathwater.

Lesser minds will think that. The converse say otherwise.

#32 theoryAndPractice on 01.16.21 at 5:08 pm

#21 SoggyShorts on 01.16.21 at 3:17 pm
#23 S.Bby on 01.16.21 at 3:51 pm

There are pretty smart people in this blog I recommend you to read them as well as your own posts. Their posts are here today, before you, for example , read #2 today.

#33 BillinBC on 01.16.21 at 5:11 pm

Nice to have a post on investing and a few comments related to it. But then, back to Covid again :-( Can hardly wait until tomorrow.

#34 BillyBob on 01.16.21 at 5:12 pm

#23 S.Bby on 01.16.21 at 3:51 pm

No one seems to be anticipating this pandemic lingering on until 2023 or so. The Spanish flu lasted 3 years and we are only one year into Covid.

——————————————————

Yep.

Aviation sector is realistic at least. Not expecting a return to 2019 levels of international travel until 2024.

I’m ready for as long as it takes. Lots of ideas in the pipeline.

Not the least a wedding/party in Calgary.

#194 NoName on 01.16.21 at 8:05 am

I think that you guys underestimating trauma that would stay after alcohol weares off and party finishes…

————————

Pretty much every epic party I’ve ever attended had in the aftermath much pain of the physical and psychic varieties, accompanied by extensive self-reflective pondering of poor life decisions…you’re only kinda reinforcing our point!

Ryan, I do kinda like how “The Market” is a seer, looking ahead 6-9 months, but at the same time predictions are nigh impossible…? A slight contradiction of terms, n’est pas?

Just head to Vegas and put it all on black.

My Swiss bank details to send the 1% advisory fee are available on request.

#35 Ryan Lewenza on 01.16.21 at 5:17 pm

Faron “Thanks for the post today Ryan. I really appreciate your balanced analysis and optimistic outlook. Based on that, it’s a good hint at why Garth hired you and takes pride in his staff.

Nice work picking up small caps in the summer. That’s done very well for your clients. Do you think that the small cap run still has legs though (on a relative basis)? I’ve read some analysis that it’s been latched onto as a laggard/rotation and even a quasi value play, but the laggardness is long gone, rotation is questionable given what’s in the Russel 2000 and likewise value.”

Thank you for the nice feedback and yeah we really nailed that small cap trade. The Russell 2000 was up 20% in November, which was the single biggest monthly gain ever for small caps. Happy we got in early. In the short-term small caps are overbought and could see some profit taking but I think this trade has a lot of room to run. Small caps do well in the early stages of a recovery. They are attractively valued based on P/B ratio, especially when compared to the S&P 500. And money is flowing into small caps hand over fist. So you may want to close that short position on any weakness, as I see it going higher. – Ryan L

#36 Dolce Vita on 01.16.21 at 5:19 pm

#21 SoggyShorts

Garth has said to expect a VAX Passport. You’re poll says the majority of Cdns. want that for business.

Being done in some measure in the EU already…

Spain has a database of those refusing vax’ng that can be accessed by other EU countries.

https://www.bbc.com/news/world-europe-55471282

Campania, 1 of the 20 major Regions (like Provinces) in Italia already rolling out a Health Card that shows if you have been vax’d with a chip in it (you know for “tap ‘n go”). Will be used to access Public places like theatres, restaurants, etc. and what it looks like.

https://www.lastampa.it/cronaca/2021/01/08/news/de-luca-la-campania-dara-una-card-di-avvenuta-vaccinazione-1.39748306

https://www.fanpage.it/napoli/de-luca-vaccino-card/

Travellers will, Airlines will, Hotels will, demand something showing they are immune to Covid, etc. and expect more of this to happen in the future otherwise:

The tourists who believe travel restrictions don’t apply to them

https://edition.cnn.com/travel/article/covid-tourist-rule-breakers/index.html

——————————-

Expect it. People will expect it. And as you point out, business will expect it.

Peace of Mind or Privacy?

I have always said this whole Cdn. Privacy mania is fine until their lives are at stake – long before S. L. Pathogen reared its ugly spiky head.

“Rather thee than me” the ultimate trump card.

-Next step a World VAX’d Passport all nations can agree on and trust. Expect it.

#37 SoggyShorts on 01.16.21 at 5:26 pm

#32 theoryAndPractice on 01.16.21 at 5:08 pm
#21 SoggyShorts on 01.16.21 at 3:17 pm
#23 S.Bby on 01.16.21 at 3:51 pm


There are pretty smart people in this blog I recommend you to read them as well as your own posts. Their posts are here today, before you, for example , read #2 today.

***********************
I read nearly all of the comments most days, but I installed a filter for Turner Nation long ago.
At your suggestion, I turned it off and read #2. Nothing of interest there.

#38 BillyBob on 01.16.21 at 5:30 pm

#205 Sky on 01.16.21 at 11:12 am

The Enlightenment is in its death throes. The En-dark-en-ment is next up. Despite this, I hope you make it to China for your planned travels. Political ideology & propaganda be damned!

——————————————-

Couldn’t agree more. Been saying this for some time, that we are racing away from science and rationality to huddle once again terrified by sounds and shadows, living by superstition and folklore. Entering another Dark Age, chanting around the Facebook cauldron.

So I’m a bit annoyed I didn’t coin “En-dark-en-ment” first.

Credit where it’s due. Perhaps I may use the term under license?

As for China, the CCP is evil incarnate. But from my time living in Taiwan I can tell you, Chinese culture in itself is amazing and the people are lovely. I support them being defended from the mainland party leader psychos at any and all costs. Yes, by that big bad American military that isn’t really obsolete quite yet.

#39 CJohnC on 01.16.21 at 5:34 pm

“#27 Penny Henny on 01.16.21 at 4:17 pm
Does anyone have faith in DV’s numbers anymore?
Too many errors and no accountability for accuracy.”

I have faith in DV’s numbers. Certainly more than the faith I have in the numbers you presented today.

Why the constant sniping at DV?

#40 Dolce Vita on 01.16.21 at 5:43 pm

One LAST DARK CLOUD on when Canada will see the backside of Covid and “Optimism the economy will quickly accelerate once the pace of vaccinations picks up”.

Recall: Cdn Population ≥ 15 yrs old = 31,966,591 that needing vax’ng.

Per Pfizer & Moderna, 5% of them will not get an immune response.

• That’s 1.6 MILLION Canadians. NO immune response. Nada. Goose egg.

They will probably have to try different varieties of Vax if the Pfizer, Moderna mRNA type vaccines don’t do the trick. Why even more so than ever Canada needs to approve, tout suite, other vaccines types like AstraZeneca (Adenoviral Vector type).

Everyone, even EXCELLENT CTV National News reporting on the topic as of late forgets that 5% will not get immunity when vax’d.

————————

What does PM Trudeau tell the 1.6M Canadians having dutifully done their pas de deux and are still NOT IMMUNE?

Can’t wait for that to happen and it WILL.

#41 Dolce Vita on 01.16.21 at 5:47 pm

#33 BillinBC

I know, silly us talkin’ Covid and such ’cause it has NO impact on the Masthead of this Blog Page (at the very top of the page):

“…on Economics, Money, RE and The Road Ahead.”

Us dumb Covid talkers. Silly us.

Then again you live in the Duchy of BC?

If so, 1/2 forgive all of us (like you count and test Covid).

#42 Dave on 01.16.21 at 5:48 pm

Re Turner Nation

People under 65 may be at less risk of dying but they still have long term complications and organ damage as a result of the virus…Why risk it?

#43 yvr_lurker on 01.16.21 at 6:02 pm

#4 Soggy

Even if some/most/all of my gains are just inflation, my purchasing ability is reduced due to tax.

The same seems fair for a homeowner.

——
Not so fast. IIf the Gov’t taxes capital gains on houses, there needs to be some accounting for substantial upgrades that have been done to the property (new roof, kitchen, etc..etc..). There are many who purchase houses in a poor state of repair, who then fix them up to live in more comfortable, and then due to job transfer or whatever, have to sell. This needs to be accounted for in any proposed capital gains tax. I am not talking about the legions of house flippers here.

With your post, you clear show your bias against homeowners. My bias, is that I would like to see the loopholes completely closed on those high earners who shelter untaxed $$ in a “corporation” consisting of one or two people, where the fiction is that the spouse or progeny is doing “work” for the corporation. This structure, as well as the very light taxation on the landed gentry who live off of dividends, looks like a very ripe setting for the Gov’t to squeeze out extra taxes to pay the Covid bill.

#44 Zoommmba on 01.16.21 at 6:03 pm

Hi Ryan, I can see that the COVID-19 clouds should disappear soon.
But we were already heading into a recession before COVID struck us. Why is nobody talking about it? Why should these pre-COVID recessionary conditions disappear with COVID?
Thanks for the blog.

#45 Dolce Vita on 01.16.21 at 6:07 pm

#27 Penny Henny

Where are the errors?

All public domain numbers. Math clearly shown.

If you are referring to the FV Annuity calcs as the supposed past error alleged by people that do not understand it, nothing wrong with it other than annual rate for monthly rate used, to be conservative – supposed “mixing” intended (lost on lesser minds). Do a calc of yearly compounding vs. daily, little difference.

Why I gave up explaining it to certain Commenters that talk a good story but do not show the correct math yet natter on about supposed errors. Taught 8-10,000 Univ. Engrg., Acctg Fin. that and so far their Sinking Fund calculations in Canada have not brought the economy down to my knowledge.

Show me your Math and then we can talk.

Otherwise your conjecture (and that of others in the past) vs. my Math with public domain data.

#46 Sunburned canuck on 01.16.21 at 6:10 pm

Interesting read about big tech and YOU!

https://youtu.be/OG6QqtnYMXc

#47 It’s crazy on 01.16.21 at 6:14 pm

It’s crazy how many on this blog wants higher taxes. They never go away you know.

#48 Elon Fanboy on 01.16.21 at 6:22 pm

#16 Turner Nation….”Jan 2021 in Brazil video, normal life. Having fun. Why? Because they are not a First world country.”

Depends on where you get your info from.

Brazilian Nurse clip, frantic because they’ve run out of oxygen.

“Guys, I’m asking for mercy. We are in a terrible situation here. The oxygen of this entire unity has just ended. There is no oxygen. There is so many people dying right now. Whoever has a tank of oxygen at home, please, bring to this hospital. There is so many people dying. Oh my god, I ask you to share this vídeo, we need help. There is to many people dying. Please! Please! Oh my god!”

https://youtu.be/YQJ1kUiXlYU

#49 Skeptic on 01.16.21 at 6:34 pm

All of this depends on how well the vaccine works of course. mRNA technology is pretty new and this is the first major test. But I suppose we’ll get to “herd immunity” sooner or later even if the vax isn’t very effective. Could delay the timing of things though.

#50 Nonplused on 01.16.21 at 7:01 pm

#4 SoggyShorts on 01.16.21 at 1:47 pm

“Even if some/most/all of my gains are just inflation, my purchasing ability is reduced due to tax.

The same seems fair for a homeowner.”

I’m no tax expert, but I thought that if you bought a “similar asset” within a year then capital gains taxes did not apply? Could be wrong about that.

In any case maybe that is what they could do with capital gains on houses too, not apply the tax until after a year so that people who are just moving for work purposes (or whatever reason) don’t get hit with it. Of course then you would have to keep track of the cumulative capital gains on all the houses owned but I think all you would need is the purchase and sale price of each home. That would automatically capture any houses that were sold at a loss as well.

And realtor fees should definitely be deducted from the perceived gain, as well as any of these outrageous “land transfer taxes” that one may incur. If those two things are done, I don’t think there is a whole lot of money outside of VVR and and YYZ to be had by taxing capital gains on houses.

As I have often contended, the main difference between a house (PR) and an investment is that a house to live in is an expense, not an asset. Other than people who sell in a bubble, once you count mortgage interest, repairs and maintenance, property taxes, realtor fees, land transfer taxes where applicable, inflation, etc., I don’t think anybody really “makes money” on their primary residence.

The same could be said about the cabin or cottage but second homes are already subject to capital gains. But I see that as more of a wealth tax. And of course if you are a landlord your rental properties are subject to capital gains but I see that as more of a business so it would be treated similarly to stocks.

So I remain in favor of the primary residence exemption. Outside YVR and YYZ I don’t think anybody is truly making money by owning the home they live in. And the ones who did aren’t the ones who are buying the houses now.

#51 SoggyShorts on 01.16.21 at 7:11 pm

#43 yvr_lurker on 01.16.21 at 6:02 pm
#4 Soggy

Even if some/most/all of my gains are just inflation, my purchasing ability is reduced due to tax.

The same seems fair for a homeowner.

——

Not so fast. IIf the Gov’t taxes capital gains on houses, there needs to be some accounting for substantial upgrades that have been done to the property (new roof, kitchen, etc..etc..). There are many who purchase houses in a poor state of repair, who then fix them up to live in more comfortable, and then due to job transfer or whatever, have to sell. This needs to be accounted for in any proposed capital gains tax. I am not talking about the legions of house flippers here.

*******************
It’s not like you lose all of that though.

If the gains were treated the same as other investments it would be at 50%, but that doesn’t mean you lose half, just that it gets added onto your income and taxed at your marginal rate.

So if you do $50,000 in upgrades which increases the sale price of your home by $60,000, then $25K is added onto your income, taxed at your 30%(?) marginal rate.

That means you pay 9K more in taxes on $10,000 in profit. so you get the benefit of the upgrades and still come out ahead.

Still, if you want to be allowed to deduct some portion of expenses that you paid to a professional (who then declared it as income), I guess that’s fine. Same for materials. Any labor you put in yourself should be forfeited though unless you pay yourself and declare the income.

I think it is better to make the inclusion rate slightly lower and keep it simple though, and not blow all of the tax money on a complicated system of write-offs and deductions where loopholes are bound to appear.
————————————————-

#43 yvr_lurker on 01.16.21 at 6:02 pm
#4 Soggy

With your post, you clear show your bias against homeowners. My bias, is that I would like to see the loopholes completely closed on those high earners who shelter untaxed $$ in a “corporation” consisting of one or two people, where the fiction is that the spouse or progeny is doing “work” for the corporation.

***************************
I’m not sure that calling for equal treatment counts as bias, and it’s a tax on future me that I’m asking for since I’ll be inheriting less, so there’s that too.
As for income splitting with a spouse or kids, didn’t they already ban that a couple of years ago?

#52 Nonplused on 01.16.21 at 7:16 pm

#8 Don Guillermo on 01.16.21 at 2:11 pm

“ESG – Had to DuckDuck it. Seems like every other day the “woke” give us a new acronym.”

I just recently switched to DuckDuckGo and they automatically installed an ad blocker. Many websites now load twice as fast. I didn’t realize how much time I was wasting waiting for an ad server to decide which ad I was to see and send it along. Of course many sites complain about it and ask me to turn it off, but now way! This computer is at least 4 years old now and the Duck ad blocker has given it new life!

It is interesting to see the differences in search results between DDG and Google. The AI algorithms that Google uses are part of the machine to manipulate us.

RIP Parler and Dog speed Gab!

#53 SoggyShorts on 01.16.21 at 7:18 pm

#50 SoggyShorts on 01.16.21 at 7:11 pm
Edit:

So if you do $50,000 in upgrades which increases the sale price of your home by $60,000, then $25K 30k is added onto your income, taxed at your 30%(?) marginal rate.

#54 Chris Sky on 01.16.21 at 7:26 pm

DELETED

#55 Nonplused on 01.16.21 at 7:33 pm

#21 SoggyShorts on 01.16.21 at 3:17 pm

“Personally, I am eager to get both vaccinated and some sort of (digital?) stamp of proof.”

If the government is anywhere near as good at tracking vaccines as they are your income slips then nothing further is required. Last time I did my taxes I pressed a button and all my T3’s, 4’s 5’s, etc., populated themselves. I did a check and nothing was missing.

I had a TN visa to work in the states some years back and as part of the application process they took finger prints and an iris scan. I can never go there without them knowing who I am, if they want to. Pretty easy to add “vax status” to the database me thinks.

So there will be no “vax passport”. Your regular passport will suffice. Or your fingerprint. Or your eye. Or your face, the facial recognition technology is getting insane.

Big data is getting insanely Orwellian. If you have posted a public picture of yourself on Facebook, it now seems law enforcement can track you down if you were photographed inside the capital building by the security cameras.

We live in a different world than we thought we did.

#56 WTF on 01.16.21 at 7:34 pm

#7 Dogman

I simply PVR the “news” (local /national) Able to view the actual news portion in about 5 min thus avoiding being irritated by the prattling dimwitted anchors who refer to themselves as “Journalists” while subjecting the unwashed to their feckless banter, cat in a tree, fire, car accidents, commercials and SJW crap. Given there is so little substantive information disseminated no point wasting my time.

The media and their superficial pap are one of the reasons politicians get away with the crap they do. We really don’t have much in the way of independent reporting or aggressive journalism that we used to.

This article nails it.

http://harveyoberfeld.ca/blog/bcs-greatest-need-for-2021/

#57 yvr_lurker on 01.16.21 at 7:59 pm

#51 Soggy

I think you know what I was referring t:

https://www.canadianbusiness.com/economy/how-bill-morneau-found-himself-at-war-with-small-business/

Morneau backed off on substantially on what was initially proposed. Hopefully, if they need to raise COVID $$ to pay off the excess that they re-examine this, and not just raise the marginal rate up to 60% and the GST to 7.5% say (which would be the simplest solution).

It would certainly be punitive if a homeowner who is really handy and spends the time to do a substantial renovation by their own initiative is penalized in comparison to those who hired it out. I think the whole idea of a capital gains on principal residences will be fraught with all sorts of inconsistencies. Why should the tax due be tied to the income level of the homeowner and just slapped on at the top marginal rate… which for some people might be 54%….

#58 Faron on 01.16.21 at 8:27 pm

#35 Ryan Lewenza on 01.16.21 at 5:17 pm

Thanks for the response Ryan. I’d say your input is worth twice cost of admission, but that doesn’t do it justice :-)

#59 Sail Away on 01.16.21 at 8:37 pm

#45 Dolce Vita on 01.16.21 at 6:07 pm

Where are the errors?

All public domain numbers. Math clearly shown.

If you are referring to the FV Annuity calcs as the supposed past error alleged by people that do not understand it, nothing wrong with it other than annual rate for monthly rate used, to be conservative

—————–

Dolce,

You said $261 per month invested for 49 months at 4.89% compounded annually yields $50k.

I say how? If no error, it is a type of math I’ve not yet encountered.

Please note I am not insulting you. But I am saying I think you’re incorrect.

#60 Faron on 01.16.21 at 8:37 pm

#52 Nonplused on 01.16.21 at 7:16 pm

#8 Don Guillermo on 01.16.21 at 2:11 pm

if I block facebook in linux’s iptables (nut n bolts firewall) about half of web pages wont load including my discount broker, govt and uni and seemingly non commercial sites. I don’t have an account but I’m sure facebook has a very complete shadow profile on me.

Oh, and if you want to learn stuff and want to make an old laptop sing and you want real control of your digital privacy ditch windows and try linux. You can pick a distro that fits your paranoia. And it’s free. Installs are very painless these days.

#61 Sydneysider on 01.16.21 at 9:00 pm

In today’s news:

According to a new Ipsos poll conducted exclusively for Global News, 64 per cent of Canadians think the inoculations should be made compulsory.

“People realize that vaccines are going to be an important part of getting us back on track,” Darrell Bricker, CEO of Ipsos, told Global News.

“So fighting the disease, but also getting the world back to the way that it needs to be — vaccines are an important element of that.”

——-

One cannot help but marvel at the child-like faith in this vaccine. I zoomed with some friends in the UK last week, and they told me that people talk about nothing else.

I work on the assumption that Covid is here to stay. The young will acquire some immunity; some of the vulnerable will die in the first few waves. To save lives in the long term, discourage smoking and junk-food, and encourage real exercise with sweating. Finally spend money on hospitals dedicated to the treatment of respiratory diseases.

“Some will die…” So far, 18,000 Canadians. Try to sound like you care. – Garth

#62 Pete on 01.16.21 at 9:02 pm

Unfortunately, this time next year we will still have enough covid to annoy us. We will also have very high unemployment numbers lingering. Disconnected from covid, investments will still do ok compared to the bubble that is RE.

#63 Faron on 01.16.21 at 9:24 pm

#59 Sail Away on 01.16.21 at 8:37 pm

#45 Dolce Vita on 01.16.21 at 6:07 pm

DV quintupling down FTW.

It’s called grappa math SA. As tortuous and winding as the vines born of a tuscan hillside. Sturdy as golden strands of cappellini. Transparent as sliced, succulent prosciutto. Accuracy matters not in a land of gustatory delight.

#64 Ustabe on 01.16.21 at 10:00 pm

Those of you wanting some more online privacy yet still wanting to run Windows should get over to GitHub.

Install Firefox and download uBlock Origin first. At GitHub look for “remove cookies from this site” and “Bypass Paywalls”. Plug your nose and install both in Firefox.

No paywalls except for a very few, no ads, no cookies (although you do that manually…you can remove CBC cookies while keeping your PornHub and Rebel ones, eh?) Gotta preserve your cred.

#65 Buy Low Sell High on 01.16.21 at 10:24 pm

Blog dogs, let’s get some investment ideas going for 2021. Electric cars, battery technology companies, pharma companies, oil, bitcoin. Let’s kick it off with any opinions on Score, a TSE listed gaming company.

#66 Dave on 01.16.21 at 11:21 pm

I have a hard time taking this forecast seriously – you didn’t even so much as mention the Fed Stimulus!!!!

The absolute biggest force in the markets…

#67 SoggyShorts on 01.16.21 at 11:44 pm

#57 yvr_lurker on 01.16.21 at 7:59 pm
#51 Soggy

It would certainly be punitive if a homeowner who is really handy and spends the time to do a substantial renovation by their own initiative is penalized in comparison to those who hired it out.

**************************
If they did the work themselves they save the $$$ that they would have paid a pro.
If I do my own research and make my own investing decisions I don’t get to write off any advisor fees.

So turn it around: Am I being penalized for doing the work of investing myself instead of paying an FA? Should I be able to deduct the 3% that I would be paying [email protected] in MER?
——————————————-
#57 yvr_lurker on 01.16.21 at 7:59 pm
#51 Soggy

I think the whole idea of a capital gains on principal residences will be fraught with all sorts of inconsistencies. Why should the tax due be tied to the income level of the homeowner and just slapped on at the top marginal rate… which for some people might be 54%

******************************
The taxes I pay on capital gains are based on my income level which can also be 54%.
Where are you seeing an inconsistency?

#68 Dr V (not DV) on 01.16.21 at 11:55 pm

SA/DV – here is the cut and paste from comment 31 of “Cheap and cheaper” a few days back.

“For example, Dave finds some investment vehicle (ETF?) that he can contribute $261 to per month, yields a 4.89% rate of return (compounded annually), he will have accumulated this amount of money after 49 months:

$50,000”

SA appears spot on with the inputs.

I used the following investment calculator

https://www.canaccordgenuity.com/wealth-management-canada/calculators/millionaire/

I get 12 years of $261/mo at 4.89% pa to get $50k.

While I can certainly look up the formula and even had it programmed into my HP41C at one time, I also took a course in numerical analysis, which included some estimating. Good for blogs.

Now as interest rates drop, the compounding effect
becomes more linear, so we could say the first payment
receives approx. 20% appreciation (4 yrs X 4.89%).
The last payment receives almost zero. So on average, we can expect the total of the payments to appreciate about 10%.

$261 X 49 = $12789.

So only a little over $14k after that time.

The linked calculator does not allow a monthly rate or a yearly rate high enough to see whether DV entered 4.89% as the monthly rate, but compounding monthly
that gives about 77% pa or a factor of about 10 over the 49 months. While the compounding is no longer linear, we’ll still take a rough guess at about 5X the total invested, which gives about $60k. So that seems
the likely mistake.

Cam someone verify, perhaps more accurately?

#69 Diharv on 01.17.21 at 12:18 am

As much as I would like Turnernation to shut up, take his drivel and go away forever, I imagine Garth leaves him here for comic relief as long as he doesn’t break any rules.

#70 Nonplused on 01.17.21 at 12:26 am

#60 Faron on 01.16.21 at 8:37 pm
#52 Nonplused on 01.16.21 at 7:16 pm

#8 Don Guillermo on 01.16.21 at 2:11 pm

if I block facebook in linux’s iptables (nut n bolts firewall) about half of web pages wont load including my discount broker, govt and uni and seemingly non commercial sites. I don’t have an account but I’m sure facebook has a very complete shadow profile on me.

Oh, and if you want to learn stuff and want to make an old laptop sing and you want real control of your digital privacy ditch windows and try linux. You can pick a distro that fits your paranoia. And it’s free. Installs are very painless these days.

————————–

I am pretty sure that advice is correct, but I don’t know that they have pressed me hard enough to try Linux. Maybe one day. I recently upgraded this machine from windows 7 t0 10 and it was still free, although not advertised. Maybe even Microsoft smells something in the wind?

#71 Sail Away on 01.17.21 at 1:20 am

#63 Faron on 01.16.21 at 9:24 pm
#59 Sail Away on 01.16.21 at 8:37 pm
#45 Dolce Vita on 01.16.21 at 6:07 pm

DV quintupling down FTW.

It’s called grappa math SA. As tortuous and winding as the vines born of a tuscan hillside. Sturdy as golden strands of cappellini. Transparent as sliced, succulent prosciutto. Accuracy matters not in a land of gustatory delight.

—————

Crushing elegant mathematical expressions into a slurry of desperate tortellini-fuelled obfuscation, the wizened gnome shrieks accusations:

‘Dolce! Vita! Linguini! Panini!’

#72 SoggyShorts on 01.17.21 at 1:39 am

#50 Nonplused on 01.16.21 at 7:01 pm
#4 SoggyShorts on 01.16.21 at 1:47 pm

“Even if some/most/all of my gains are just inflation, my purchasing ability is reduced due to tax.

The same seems fair for a homeowner.”

I’m no tax expert, but I thought that if you bought a “similar asset” within a year then capital gains taxes did not apply? Could be wrong about that.

************************
I’m afraid you are indeed mistaken, that’s not a thing.

Perhaps you are thinking about the rules around claiming a loss? You can’t sell a position and rebuy the same (or essentially the same) one within 30(?) days in order to try and get a tax deduction.
The moment you sell a winner though the gain is locked in.
————————————
#50 Nonplused on 01.16.21 at 7:01 pm
#4 SoggyShorts on 01.16.21 at 1:47 pm

In any case maybe that is what they could do with capital gains on houses too, not apply the tax until after a year so that people who are just moving for work purposes (or whatever reason) don’t get hit with it. Of course then you would have to keep track of the cumulative capital gains on all the houses owned but I think all you would need is the purchase and sale price of each home. That would automatically capture any houses that were sold at a loss as well.

***************************
That seems reasonable, but works against the sliding scale. If we assume that we want to reduce the gains inclusion so that those selling their PR after 10 or 20 years aren’t hit by taxes at all then combining that with the 1-year allowance you propose would just lead to flippers flipping until they are done, and then they sit on the last one until the clock runs out.

#73 Dr V (not DV) on 01.17.21 at 1:48 am

So who knew my new cheapo tablet had a calculator with an exponent function?! Pulled the old econ notes and confirmed the numbers. DV input the annual interest as monthly.

Faron – start a poll! To banish or not?

#74 Lemme Outs Here on 01.17.21 at 2:18 am

Serbia begins to innoculate1 million people, every citizen will get the vax. Trudeau gets nothing for Canadians.

Serbia !!!!!

#75 Delicious Chocolate on 01.17.21 at 4:21 am

Hi Ryan,

What do you think about investing in Industrials stocks as measured by XLI ETF? They are really the back bone of the world’s economy.

I like boring stocks like Cintas that has raised dividends for 25 consecutive years, and is up like 1000% in the last 10 years. They supply safety equipment and uniforms to over 1 million business. Boring I know, but makes $$.

I also like railroads like Norfolk Southern, Union Pacific or CSX as transporting by railroads is a lot cheaper than trucking or airlines.

According to this article https://dividendscholar.com/xli-industrials-dividend-stocks/, the XLI ETF is up 284% over the last decade, crushing the S&P 500 by almost 65% (S&P 500 has gained 221% during this period).

I am not even comparing it to the TSX since they don’t correlate.

What do you guys think?

#76 Gravy Train on 01.17.21 at 7:34 am

#59 Sail Away on 01.16.21 at 8:37 pm
“Dolce, you said $261 per month invested for 49 months at 4.89% compounded annually yields $50k.[…]” No, see the corrections in brackets: $261 per month [paid at the end of the month] invested for 49 months at 4.89% [per month] compounded [monthly] yields [50,036.06]. Here’s the math:
$261 x ((1 + 0.0489)^49) – 1) / 0.0489 = $50,036.06

Speaking of math, Sail Away, Donald Trump’s approval rating among ReTrumplicans has reportedly dropped from 85% to 60%. Does it follow logically that 25% of them didn’t know that he was a fascist?

#77 David Hawke on 01.17.21 at 8:05 am

#16 TurnerNation on 01.16.21 at 2:45 pm

The link provided seems like a racist scam to recruit farm labour while bypassing government protection for the workers, eh!

#78 millmech on 01.17.21 at 8:14 am

#65
GDNP.V

#79 Sky on 01.17.21 at 8:43 am

@ BillyBob #38

“Been saying this for some time, that we are racing away from science and rationality to huddle once again terrified by sounds and shadows, living by superstition and folklore. Entering another Dark Age, chanting around the Facebook cauldron.”

****************************************

Well put, BillyBob. A smooth & zeitgeisty description.

Sadly, the brilliant free thinkers of the Enlightenment, those who loved to explore the mysteries of mind & universe, are no longer.

These courageous & independent men were true visionaries who challenged the status quo. And gifted us something better. But who can even name one today?

The guys running the show these days are just one dimensional eggheads, more commonly known as ‘experts’. And the general population has been assimilated into the Borg. The hive mind.

https://www.youtube.com/watch?v=AyenRCJ_4Ww

Science is not immutable. Science is never completely settled and requires rigorous & continual questioning. This is an imperative of TRUE science.

When the questioning stops, the worship begins. The whole thing devolves into a cult who put their blind faith into scientific leaders with a PROVEN track record of wild & false claims.

Just look how far we’ve sunk. People believe that lockdowns are based on science… rather than realizing
that lockdowns are actually globally orchestrated political maneuvers — calculating, diabolical & with devastating consequences.

Despite being used in a medical capacity, the term ‘lockdown’ itself is NOT a medical term. Lockdowns are measures used in prisons when the inmates get too unruly. Red flag right there. One would think… But, no… it’s all too much for the hive mind to absorb.

So, prisoners we’ve indeed become. Indefinite solitary confinement. Sorry – make that ‘just 2 weeks’. As the Borg would say – Resistance is futile.

#80 Penny Henny on 01.17.21 at 8:51 am

#45 Dolce Vita on 01.16.21 at 6:07 pm

Where are the errors?

All public domain numbers. Math clearly shown.

If you are referring to the FV Annuity calcs as the supposed past error alleged by people that do not understand it, nothing wrong with it other than annual rate for monthly rate used, to be conservative – supposed “mixing” intended (lost on lesser minds). Do a calc of yearly compounding vs. daily, little difference.

/////////

Your numbers were not just wrong they were ‘you could spot that from a mile away’ wrong.
That is not really the issue though, every one makes mistakes. But when this was pointed out to you denied it. It was then made clear exactly how you erred and why your numbers were grossly off.
Instead of accepting that an error was made you doubled down and try to belittle the poster that pointed this out to you. Quite similar in fact how you took a statement of Flop’s then twisted it and try to belittle him.
Isn’t this type of behavior that got you BANNED from this blog for a period of time.
I judge a person on how they act and you sir are nothing but a weasel.

#81 Re-Cowtown on 01.17.21 at 9:45 am

We were driving through the Tim’s yesterday. A group of 4 kids, all between 10 and 13 were standing around, not social distancing and sharing their drinks.

The lady in the car in front of us started filming the kids standing around, masks down and not social distancing. When the kids realized what was going on they became quite upset.

My wife saw this, rolled down the window and told the kids to not worry. The kids were freaked out and said that they were siblings and did nothing wrong.

And now here we are. COVID Karens invading kids privacy and in probably posting or sharing video and clucking and shaming them on the web. No clue that the kids were just fine and enjoying an afternoon in the sun at Tim’s.

Disgusting behavior by a COVID Stasi. She should be ashamed of herself.

#82 Dharma Bum on 01.17.21 at 9:46 am

Well, I woke up this morning, and I got myself a beer
The future’s uncertain, and the end is always near…

-The Doors

#83 Gravy Train on 01.17.21 at 10:06 am

#67 Dr V (not DV) on 01.16.21 at 11:55 pm
“For example, Dave finds some investment vehicle (ETF?) that he can contribute $261 to per month, yields a 4.89% [annual] rate of return (compounded annually), [what amount of money will he have] accumulated after 49 months[?…] Can someone verify, perhaps more accurately?” As you wish. Annual compounding of 4.89% is equivalent to monthly compounding of 0.3986%.

Here’s the math: (1 + 0.003986)^12 = (1 + 0.0489).

So the solution to the problem is $14,093.87. Here’s the math:
$261 x ((1 + 0.00399)^49) – 1) / 0.00399 = $14,093.87

#84 Sara on 01.17.21 at 10:11 am

#71 SoggyShorts

“… assume that we want to reduce the gains inclusion so that those selling their PR after 10 or 20 years aren’t hit by taxes at all…”

So to be fair, should the life-time renter who owns stocks for 10 or 20 years not be hit by taxes upon selling either?

#85 Ryan Lewenza on 01.17.21 at 10:24 am

Zoommmba “Hi Ryan, I can see that the COVID-19 clouds should disappear soon. But we were already heading into a recession before COVID struck us. Why is nobody talking about it? Why should these pre-COVID recessionary conditions disappear with COVID?”

Because we’re currently in a recession and with time and low interest rates/stimulus we’ll come out of the recession. I think it’s less important what caused the recession and instead focus on what happens during a recession (jobs are lost, economy contracts, markets drop) and the inevitable recovery. Recessions are a process and we’re going through the same healing process that we went through during the 2000 tech crash and the 2008 housing crisis. I believe we’ll see a recovery just like we always do, but this recovery needs to start with us reaching herd immunity and putting an end to this pandemic. – Ryan L

#86 Ryan Lewenza on 01.17.21 at 10:27 am

Delicious Chocolate “Hi Ryan, What do you think about investing in Industrials stocks as measured by XLI ETF? They are really the back bone of the world’s economy.”

Yeah I like industrials and they would do well with a recovering economy. We have a decent industrial exposure in our value ETF. – Ryan L

#87 Bezengy on 01.17.21 at 10:29 am

Tax principal residence?

I don’t think so. I’ve claimed the PR three times in the last ten years. Lots of paperwork claiming partial years lived in as a PR, deferring capital gain taxes in the process, etc. The thing here is how can we expect the CRA to audit this stuff? Have you tried calling them lately?, good luck. It’s got to be an absolute mess within the CRA with all the gov programs like CERB, even my online CRA account hasn’t been updated and has had obvious errors, and if they did put in all the time and found you cheated and owed them millions, you simply go to court and the kind judge would reverse the order, or certainly reduce the amount owed.

https://financialpost.com/personal-finance/taxes/cra-cracking-down-on-abuse-of-principal-residence-exemptions-but-their-assessments-arent-written-in-stone

#88 No Left Turn on 01.17.21 at 10:55 am

#79 Penny Henny

Easy now. You are approaching this from a North American/Northern Europe point of view. DV has been in Italy for so long some of the failures of the Italian culture have worn off on him. Don’t get me wrong. Love the Italians. Even have a few in the family. but good Lord, never tell one they are wrong.

#89 crowdedelevatorfartz on 01.17.21 at 11:43 am

Yo wall tiger.

Some “joyous and glorious” workers had to resort to self immolation……. to get paid…

https://apnews.com/article/technology-hong-kong-coronavirus-pandemic-e-commerce-fires-f4cd68ecf971263229343ab49f5f440d

#90 Damifino on 01.17.21 at 11:44 am

#75 Gravy Train

Donald Trump’s approval rating among ReTrumplicans has reportedly dropped from 85% to 60%. Does it follow logically that 25% of them didn’t know that he was a fascist?
———————————

No… it’s that they didn’t know he was a loser.

#91 Sail Away on 01.17.21 at 11:45 am

Dean to the physics department:

“Why do I always have to give you guys so much money for laboratories and expensive equipment and stuff. Why couldn’t you be like the math. department – all they need is money for pencils, paper and waste-paper baskets…

…or even better, like the philosophy department. All they need are pencils and paper.”

#92 Dr V (not DV) on 01.17.21 at 11:50 am

Re cap gains on PRs.

So is the solution to canadians treating their home like an investment taxing it like an investment?

Seems counter intuitive.