Inflation

It doesn’t stop.

One lonely 2×4 at Home Depot this week costs fourteen bucks, with HST. A sheet of plywood, three-quarter inch pine is (gulp) $77. Even lowly spruce is close to sixty bucks. My suspender-snapping fancy portfolio manager buddy Ryan says his basement reno bill went up a little because of material inflation – 53% more.

Today we got new house price stats. Up 2% in February, month/month. That’s 24% annually. It was double that in Vancouver. In 27 markets, prices roared ahead in 22 of them. As we showed here yesterday, resale house prices are now (says a big bank) ‘parabolic’ with prices moving as much every four weeks as we used to average each year.

Now, factor in the GreaterFool Puppy Index (goldens four grand, chows five, frenchies six), plus the sold-out nature of boats, RVs, Pelotons, quads and cottages, and you know Stats Canada’s latest tally of inflation – 1.1% – is, well, psycho. Let’s just hope the feds are incompetent instead of evil. Here in the real world the cost of living is out of control.

The bond market’s been smelling this for some time. So while central banks say everything’s under control, the recovery is unfolding, inflation expectations are reasonable and benchmark rates will stay on hold for a couple of years, look what bond yields have been doing…

In response bond prices fell further and tech stocks took a hit (those companies thrive on cheap debt). In the States, 10-year Treasuries went through 1.75% for the first time in a year after the Fed indicated there’s not enough inflation yet for its liking and the economy will be allowed to run hot, with lending rates staying suppressed.

Sane folks can see what’s exploding around us. The real estate/building materials/reno explosion is but one aspect of this phenom. Look at Ottawa, where our enlightened leaders just spent $400 billion we don’t have fighting the virus. In fact more than half that money was sent directly to people, who then plunked at least $100 billion into their bank accounts. The historic jump in personal savings is proof extreme stimulus was probably unneeded. But it was spent anyway. It added to the debt. It was newly-created cash. It devalues the money already existing. And that’s why my colleague’s basement is now sheathed in priceless drywall.

CBs and governments have clearly made the decision to risk steadily-rising prices rather than let the economy take a further Covid hit. They’ll keep benchmark rates low so cheap loans continue to flow. They will not stop buying bonds in an effort to suppress yields. Meanwhile politicians in Canada keep huge cities (like Toronto) locked down, allow the hardening of provincial borders, seriously hobble the entire retail sector and eviscerate the tourism and travel businesses.

As a result, we have stimulus billions and no place to spend it all, other than on booze and dogs (not so bad). There are also five million Canadians still doing the WFH thing, cutting daily overhead and adding to savings. The result is a big and growing pile of cash to be unleashed as the economy reopens. When all the stores, gyms, hair salons, arenas, clubs, bars and stadia get back on line, with the planes flying, the borders porous and workplaces repopulated, you can imagine the result.

Some worry central bankers could lose control. If the crazy costs of everything – especially accommodation – surge more it could lead to sizeable compensation demands and a wage-price spiral that would have CBs jumping on the brakes. Then rates would rise fast.

But for now, this is the reality:

  • Bond yields are driving mortgages up. Five-year terms that were 1.5% are now over 2%, and climbing. That 2.5% 10-year mortgage has jumped a full 1%. More to come.
  • Variable rates have been dropped by major lenders to keep loans volumes flowing. VRMs that were on par with five-year rates are now about 70 points less.
  • The March and April housing markets will be obscene. Rising rates guarantee that as the fence-sitters dive in.
  • Bonds and ETFs based on them will continue to lose capital value, which is why half the fixed-income in your portfolio should be in preferreds (they gain as rates increase and pay a dividend as well).
  • Stocks do okay in inflationary times since, in general, higher rates signal more economic growth and enhanced profits. As the vaccines defeat the virus, that’s exactly what you should expect. But be wary of the tech guys, or other leverage-sucking outfits. The more inflation there is in the world, the more you need growth.
  • GIC returns may eventually increase, but these are still brain-dead assets. You are better to buy a van full of OSB and sell it to guys like Ryan.
  • And remember that if inflation stays with us for a long time (it will) hat non-taxed, registered accounts become even more crucial to your financial future. Stuff that TFSA. Make max RRSP contribution. Get free money with your kids’ RESPs.
  • Buy a house? Sure. If you need one and can afford it without gutting your family’s finances. Just do it in a reasonable market. Like Wabush.

166 comments ↓

#1 Flop... on 03.18.21 at 2:29 pm

I am fluent in Australian.

Let me translate for you.

I will deep dive into my Australian/Canadian thesaurus in the back of my head.

Job Keeper = CERB.

The rest of the story they could be talking about Canada.

That low inventory causes problems no matter where it goes, not interest rates, or access to credit, among other factors, is the biggest challenge.

Damn you, low inventory…

M46BC

——————————————————————

“Low stock Australian housing market’s ‘biggest challenge’ amid rapid recovery: REA Group report.

Australia’s property market is bouncing back faster than experts predicted following the onset of COVID-19.

“We did see a big fall away in search volumes during lockdown, and in Victoria obviously there was two of them. But I think people came out of those lockdowns realising they wanted to buy a new place.”

Low interest rates, wage subsidies programs like JobKeeper and stimulus packages such as HomeBuilder, as well as the ban on international travel, meant more people were in a position to buy a home despite sweeping job losses, Mr Kusher said.

Many also found themselves in a position to spend more on a home than they could prior to COVID, he said.

“I think people are looking to spend and one of those ways they can spend is looking for a nicer house,” Mr Kusher said.

“With borrowing costs at historic lows, we would expect that transaction activity will remain strong over the coming weeks,” Mr Kusher said.

“I don’t think anyone could have predicted how strong the recovery has been.”

https://www.realestate.com.au/news/low-stock-australian-housing-markets-biggest-challenge-amid-rapid-recovery-rea-group-report/?rsf=syn:news:nca:hs:article

#2 Felix on 03.18.21 at 2:35 pm

Very instructive photo.

Inflating the global population of canines would be completely disastrous for humanity and the planet. You would all become stupid and die.

#3 TurnerNation on 03.18.21 at 2:38 pm

Permanent rolling economic Lockdowns are here. This is why the 2 downtown Toronto hotels, and many airport hotels have been converted into Homeless Camps and ‘quarrantine’ camps for new CV Criminal class of people.

–> GTA is stuck in GREY war-zone. What did I say here in mid-2020? That we are like Farm Animals to our rulers; to be fed outside on the porch or in the barn. No indoor eating allowed. What has changed in nearly one year’s time? Nothing.

— John Tory @JohnTory
Both Toronto and Peel are asking for modifications to the Province’s grey zone rather than transitioning to the red zone.
In our ongoing discussions, we’re focusing on: Outdoor dining, Outdoor fitness and exercise, And other areas

— Strict three-week lockdown needed to stop explosive COVID-19 variant growth, Ontario science table says (toronto.ctvnews.ca)

— Hey remember that crazy ‘leaked’ memo from October? This weblog touched on it. It’s nonsense had stated:
“- Enhanced lock down restrictions (referred to as Third Lock Down) will be implemented. Full travel restrictions will be imposed (including inter-province and inter-city). Expected Q2 2021.”

…..

But for how long, and if only we were given some kind of clue?

– February 4th: Toronto extends all covid bylaws until June 2021.

—-From NOVEMBER, regarding Toronto’s announcement:

“#74 Alphonse Kehaulic on 11.25.20 at 7:40 pm
28 days lockdown. Symbolism. Two 8s = 88 = double infinity. In other words: Endless, in perpetuity, no timeouts for your lockdowns. Put it to you this way: From now on there will never be a time of no lockdowns.”

#4 Dan in Nanaimo on 03.18.21 at 2:42 pm

Don’t expect FED/CB stimulus to end – know that M2 will increase substantially propelling this massive boom phase of asset inflation due to FOMO/YOLO speculation.

Sometime in the distant future this will all feedback into the real economy creating a broad based – or even unsustainable – inflation of everything.

In the meantime, exploit the asset inflation opportunities using the leverage tools the FED/CB’s/Commercial Banks are providing and, take whatever wealth you can out of the system relentlessly – embrace this new financial engineering paradigm for all it’s worth.

#5 Richard L on 03.18.21 at 2:44 pm

I have a scenario for consideration:

May/June 2021 – Trudeau call Federal election – wins majority

After election – Government introduces capital gains tax on all residential housing

Conservatives immediately promise to repeal this tax if elected

2025/26- Liberals lose election and cons elected. Said tax is not repealed due to bad financial situation left by Libs.

Sound familiar to late 80’s – early 90’s anyone?

#6 Millennial 1%er on 03.18.21 at 2:46 pm

I remember going on a rant about a year ago. The rates were lower than what my intuition told me inflation was. The banks pretty much put a gun to people’s head and told them “Take out this huge loan and you’ll get free money”. Below 2%! On a 20x leveraged loan. It’s literally free money. You’d be crazy to not take it

The only thing that would make people become more fervent for housing is a gun to their heads. Or.. rising rates. Uh oh.

#7 Fiendish Thingy on 03.18.21 at 2:54 pm

So, if govt. stimulus spending devalues our currency, why has the $CAD increased in value so much against the $USD.

Is it simply because the US stimulus spending has far outweighed the Canadian spending?

#8 Dolce Vita on 03.18.21 at 2:55 pm

…just one more bullet to add to your list:

• Beavers will have “Symptoms of mental health disorders”.

– Shrink StatCan says 20% of ALL of them.

– Sample size: 18,000 dwellings.

– 18-24 yr olds “most likely” to report symptoms.

– 40% of the financially stressed exhibit symptoms.

– Probably not Seasonally Adjusted.

https://www150.statcan.gc.ca/n1/daily-quotidien/210318/dq210318a-eng.htm?HPA=1

————————

Later this year or Early next year new Survey Symptom from Shrink StatCan:

• 100% of Beavers exhibited Dancing Mania ala 14th and 17th c.

…hey, every 3rd c., means we’re about due AND if dancing in the streets to exhaustion because IT’S FINALLY OVER is a symptom, count me in.

#9 Tripp on 03.18.21 at 3:02 pm

Ottawa going back to the red zone. New Brunswick monitoring more than 40 cases of unknown neurological disease. Housing bubble reaching paroxysmal levels.

Time to move my money in USD.

#10 And to think ... on 03.18.21 at 3:07 pm

my first house was made totally out of clear fir. Not a knot in the house anywhere … and it eventually ended up in a landfill. A bud took a full time course in guitar making many years ago. The course sold “kits” of wood to make the guitar which included clear Sitka spruce. He bought a few and sold them later and the profit was enough to pay for his course. Wonder what they would be worth now …

#11 Planetgoofy on 03.18.21 at 3:08 pm

As always good write up Garth. The powers that be have done a hellofa job…NOT..
Its like wile e coyote off the cliff just don’t look down and we will be OK.
Good thing I bought my drywall years ago and lots of it.

#12 Dragon on 03.18.21 at 3:11 pm

In the words of a wise Anishinaabe man…

“It doesn’t matterif the economy is good or bad, the rez always stays the same.”

#13 Dolce Vita on 03.18.21 at 3:13 pm

That Canada 5Y inching closer to that 2-3% threshold that over the past 10 years has:

Cooled RE off.

https://i.imgur.com/LLvQRsF.png

————————–

Overall I’d say the economy is still weak though Mr. Market will go gangbusters as you say Garth – Consumer Spending led boom.

When you take into account in the prior 15 years it took rates of 4.5-8% to cool RE off, you know there is growing weakness in the economy over time.

Most Cdns are savers, not investors: thus, not as much money of their own to throw around like in the heady high savings interest days of the 80’s, early 90’s.

Explains higher debt today (trying to maintain their lifestyle, need more borrowed money to buy RE) and low rate sensitivity.

Recall August 1981 when it took this rate:

21.46%

to cool RE off. How times have changed.

————–

– All in on your bullet list, Proviso: the Variants stay at bay.

#14 The West on 03.18.21 at 3:18 pm

Money

Money, get away
Get a (good job) with more pay and you’re O.K.
Money, it’s a gas
Grab that cash with both hands and make a stash

New car, caviar, four star daydream,
Think I’ll buy me a football team

Money, get back
I’m all right, Jack, keep your hands off of my stack.
Money, it’s a hit
Don’t give me that do goody good bullshit

I’m in the high-fidelity first-class traveling set
And I think I need a Learjet

Money, it’s a crime
Share it fairly but don’t take a slice of my pie
Money, so they say
Is the root of all evil today

But if you ask for a rise it’s no surprise that they’re giving none away….

(don’t tell me you can’t hear that riff in your head)

#15 Doug t on 03.18.21 at 3:21 pm

IT’S A MAD MAD WORLD

this is going end very badly indeed – get the popcorn ready cause this going full MAD MAX

#16 Rook on 03.18.21 at 3:23 pm

I was in an Uber last night, and my driver was giving me stock trading tips.

Apocryphally(?), if I were smart, I’d sell everything right now and take my gains. But we don’t live in normal times.

As they say over on WSB, “to the moon!” I think we’re going parabolic until some tail risk only Michael Burry can spot kicks the legs out from under this everything bubble.

They talk about once in a generation crises (of which I’ve lived through at least 5 by my count), well this is a once in a generation chance to get rich. I don’t think there’s been a better time in my life to get wealthy than the next 12-18 months. Even though businesses are closed and shuttered, the structures still exist. Those empty stores will be occupied in short order, and everybody’s got pent up government-funded demand like a horny middle-schooler.

If you have dry powder, roll it out and get it wet. If you haven’t re-balanced, do it. If you are thinking about taking profits, don’t. You should be buying ETFs (index etfs, don’t be a dummy) with both hands and feet and as much credit as you can stomach, and letting it ride. The ride up is going to be epic, and you’ll be kicking yourself for the rest of your life if you miss it. This will make the Roaring 20s look like a Presbyterian prayer meeting. And tulip mania runs wild.

Unfortunately, we all know what happened afterwards. It’ll be a shame when it happens again this time, but that will be a problem for another day, and likely another administration. In the meantime, as Jim Cramer is so fond of saying: “BUYBUYBUY!”

#17 alexinvestor on 03.18.21 at 3:23 pm

Tech giants are not leveraged. One could say that the FAANG stocks are overvalued, but their gross margin is so good they don’t really need to borrow much. Preferreds on the other hand … probably depends on the company and industry.

#18 Linda on 03.18.21 at 3:25 pm

That’s quite the pile of pups in todays photo:)

‘Let’s just hope the feds are incompetent instead of evil’. Any reason why they can’t be both? As for the published inflation figures, got to say that some serious editing of the ‘basket of goods’ must be taking place in order to produce such low inflation numbers. Optimistically I’d say actual inflation is likely double what the official figures are – at least, I’m hoping its ‘only’ double.

#19 Leftover on 03.18.21 at 3:25 pm

Things are moving so quickly.

It’s inevitable that there’ll be panic buying (and listings) in anticipation of rising interest rates and inflation.

We’ve seen it before. The FED funds rate was 0.99% in March 2004, rising to 5.27% in September 2006. Housing boomed.

Then, well, you know what happened. It was accompanied by rampant mortgage fraud, which is now showing up in Canada.

But it’s different this time, right?

#20 leebow on 03.18.21 at 3:30 pm

Some years ago I saw 2” copper pipe on clearance in Home Depot. So I bought whatever they had on hand – may be 10 or 12 pieces. Figured I could always recover the money by scrapping it. Sold over the next few months at 200% profit.

Wish I had foresight to squeeze the 2×4 market.

#21 Doug in London on 03.18.21 at 3:36 pm

So who were the geniuses who came up with a formula for inflation that has ABSOLUTELY NOTHING WHATSOEVER to do with inflation that ordinary, real world people experience everyday? It gives me a better understanding of why so many people distrust and resent the so called elites that are so out of touch with reality. Yes, that group that includes Trump supporters.

#22 Dolce Vita on 03.18.21 at 3:36 pm

AstraZeneca v. Bloodclot MSM Frenzy resolved by the European Medicines Agency, EMA (warp speed decision by them for the EU):

EU agency says AstraZeneca vaccine is ‘safe and effective’
https://www.bbc.com/news/world-europe-56440139

Italia’s Medicine Agency, AIFA (incl. me and My Liege), saying that all along and full speed ahead in Italia:

Italy to restart AstraZeneca vaccinations after EMA says jab is safe
https://www.euronews.com/2021/03/18/europe-anxiously-awaits-eu-regulator-verdict-on-astrazeneca-vaccine

———————-

My view is that EMA had to decide with the Germans making an about face after they had some bloodclot casualties – Italia’s AIFA never wavered (and Italia had some bloodclot casualties as well). Politics and Germany’s recent Covid wave the culprits I think for their reasoning.

And no, Health Canada did not get it right. The real data was in Europe. Health Canada no more than bystanders, followers (politically motivated by Dr. Trudeau, if AstraZeneca were bad, he would look stupid diverting AstraZeneca from Covax doses for the World’s Poor to Canada ala HELOC).

To wit, NOT all convinced and from the last nation I would expect this from SWEDEN:

Despite the green light: Sweden’s break continues
https://www.aftonbladet.se/nyheter/a/GaOGnV/trots-klartecknet-sveriges-paus-fortsatter

———-

Hope EMA and AIFA got it right.

To be truthful, if my family had a history of stroke I’d defer to another vax. Life is too precious.

#23 Dolce Vita on 03.18.21 at 3:44 pm

PS: AstraZeneca v. Bloodclot

One last thing.

All of this mess could have been avoided if the UK had said something. By far the most experience with AstraZeneca in Europe.

But no, they sat on what they knew and said NOTHING, including AstraZeneca themselves.

I applaud the UK for alerting the World quickly about the UK variant and commiserate with the huge caseload and many deaths they have had from their variant.

But on this, the UK (and AstraZeneca) acted stupidly.

There will be long term consequences for the use of AstraZeneca because of their silence. They could easily have diffused the Word MSM Frenzy by coming clean with their data and saying vax bloodclots no more prevalent than in the general population.

——————–

Yet another Covid-19 day on Planet Earth.

#24 Brian Ripley on 03.18.21 at 3:48 pm

My MILLIONAIRE METRIC chart of Vancouver, Calgary & Toronto Single Family Detached and a Millionaire all priced in $CAD Ounces of Gold is published with FEB data: http://www.chpc.biz/millionaire-metric.html

The chart attempts to look for breakouts or breakdowns in the hot Canadian real estate markets when valued in a globally traded “currency”. If you own gold, even with the outstanding real estate price growth, the plot downtrends are your friend in this chart.

The nominal price of gold dropped M/M 6% denominated in USD and down 7% in CAD. Over 10 years, the nominal price of gold has gone up 24% in USD and 59% in CAD.

For the crypto people I have a Bitcoin vs hot housing chart as well: http://www.chpc.biz/bitcoin-gold–re.html

The USD/CAD is ticking up, and at some point that is going to change the risk parameters… everywhere.

#25 X on 03.18.21 at 3:51 pm

Add groceries to the list of things going up. Not produce or seasonal items, but the basics. Can’t verify the actual %, but a regular grocery shopper notices some of the items that have been increased. It all adds up.

#26 Howard on 03.18.21 at 3:56 pm

Exodus to Atlantic Canada:

https://nationalpost.com/news/canada/exodus-to-atlantic-provinces-boosts-small-town-real-estate-and-buyers-well-being

#27 IHCTD9 on 03.18.21 at 3:57 pm

The BoC needs to follow the new and more accurate GFPI for inflation on things today’s folks actually buy, like:

RV’s
Quads
Building Materials
Hunting and Fishing Gear
Houses and Condos
Boats
Pets
Beer
Hard Liquor
Harleys
Pickup Trucks

#28 Ken R on 03.18.21 at 4:05 pm

@#10 And to think

Built a house in 1990, 80 bucks a square foot. No OSB, all plywood construction. Solid house. When we decided to downsize, my daughter and son in law purchased it from us. A dozen or so people called us, looking for a house in that neighborhood. I built it for my wife, her plan. Had to keep it in the family.

#29 IHCTD9 on 03.18.21 at 4:08 pm

#10 And to think … on 03.18.21 at 3:07 pm
my first house was made totally out of clear fir. Not a knot in the house anywhere … and it eventually ended up in a landfill. A bud took a full time course in guitar making many years ago. The course sold “kits” of wood to make the guitar which included clear Sitka spruce. He bought a few and sold them later and the profit was enough to pay for his course. Wonder what they would be worth now …
___

Tell your bud to check out international shipping skids built for heavy stuff like steel plate.

I burned a few big steel plate pallets in Jan/Feb. These have up to 6″x6″ stringers of kiln dried hardwood, and come from all over the world. Some strange wood in these.

One 6×6 I cut up, and started splitting. I’m 95% sure this hunk of wood was mahogany, looked like it, smelled like it, dense heavy stuff. Other woods I had no idea what they were, some of it was so hard and dense it would barely burn.

#30 IHCTD9 on 03.18.21 at 4:11 pm

#24 X on 03.18.21 at 3:51 pm
Add groceries to the list of things going up. Not produce or seasonal items, but the basics. Can’t verify the actual %, but a regular grocery shopper notices some of the items that have been increased. It all adds up.
___

Packages are weighing less now too. Bag of Doritos was 320g at one time, now down to 255g. Price is the same…

#31 Stan Brooks on 03.18.21 at 4:11 pm

BANNED

#32 Billy Buoy on 03.18.21 at 4:11 pm

What a GREAT day in the markets.

How long til Powell pukes and introduces YCC?

I’m saying 2 weeks top.

Who thinks more or less.

SP 3200? LOLOLOLOLOL.

Nice first time claims in USA today. What 750K PLUS freshly unemployed? The USA IS BOOMING.

LOOK OUT BELOW UNTIL GOD (POWELL) BARKS.

#33 Old Ron on 03.18.21 at 4:15 pm

Dolce Vita:

Actually Ottawa did get it correct. Upon first hearing the news about Astra Zen, the Feds pivot to under 65 years was seamless and accomplished in less than 48 hours.

Further, the Feds said “Watch this space” in other words, they trusted the Astra Vax. But they were being prudent.
Astra has been given to millions of 75+ year olds in the UK after-all, without an issue.

Sure enough, 2 weeks later, Canada said AZ is Good to Go. The Euros who have looked very bad on Vax compared the UK saw the light a few days later and got on board.

#34 Old gringo on 03.18.21 at 4:17 pm

Yup, it’s all going to hell in a hand cart.
Keep your investment balanced and if you’ve got any money sitting around, I’ve got some tulips I’ll sell at a super price!!!

#35 Billy Buoy on 03.18.21 at 4:19 pm

Nice juicy BUY opportunity ahead before Jerome is told by his masters to keep the ship afloat.

Be ready with dry ammo…

Remember there are NO MARKETS anymore, play the CB’ers not reality…it’s a CASINO and if you don’t know that YOU’RE the mark….

Head fake on interest rates, YCC and to the moon Alice before it all comes a tumblin down….place your BETS.

#36 JSS on 03.18.21 at 4:21 pm

Our grocery bill has gone through the roof over the last six weeks or so.
I don’t even feel like eating anymore.

#37 Sail Away on 03.18.21 at 4:26 pm

Inflation? Hadn’t noticed.

Big Macs are still the same price, as are Costco meals. Same with ammo. Really missing my weekly trap and skeet practice with the club closed. Saving $70/week right there.

Fine tourist octopus art is always expensive, of course. But it’s a store of value… as well as a fast track to high culture.

You should see my tax bill from last year’s APT profits. Whoo-ee! It’s like I’m singlehandedly paying T2’s salary.

#38 Andy on 03.18.21 at 4:28 pm

“As a result, we have stimulus billions and no place to spend it all, other than on booze and dogs”

Typo, Garth. Should be “drugs”

#39 Armpit on 03.18.21 at 4:30 pm

“Bonds and ETFs based on them will continue to lose capital value, which is why half the fixed-income in your portfolio should be in preferreds (they gain as rates increase and pay a dividend as well).”

I understand why Bonds go down when Interest rates go up.

But – Could anyone explain why Preferreds stock price rise?? Wouldn’t that make their dividend payout less in cost/share?

#40 Stone on 03.18.21 at 4:37 pm

Rook on 03.18.21 at 3:23 pm
I was in an Uber last night, and my driver was giving me stock trading tips.

Apocryphally(?), if I were smart, I’d sell everything right now and take my gains. But we don’t live in normal times.

As they say over on WSB, “to the moon!” I think we’re going parabolic until some tail risk only Michael Burry can spot kicks the legs out from under this everything bubble.

They talk about once in a generation crises (of which I’ve lived through at least 5 by my count), well this is a once in a generation chance to get rich. I don’t think there’s been a better time in my life to get wealthy than the next 12-18 months. Even though businesses are closed and shuttered, the structures still exist. Those empty stores will be occupied in short order, and everybody’s got pent up government-funded demand like a horny middle-schooler.

If you have dry powder, roll it out and get it wet. If you haven’t re-balanced, do it. If you are thinking about taking profits, don’t. You should be buying ETFs (index etfs, don’t be a dummy) with both hands and feet and as much credit as you can stomach, and letting it ride. The ride up is going to be epic, and you’ll be kicking yourself for the rest of your life if you miss it. This will make the Roaring 20s look like a Presbyterian prayer meeting. And tulip mania runs wild.

Unfortunately, we all know what happened afterwards. It’ll be a shame when it happens again this time, but that will be a problem for another day, and likely another administration. In the meantime, as Jim Cramer is so fond of saying: “BUYBUYBUY!”

———

That was funny about the Uber driver. I wonder what he recommended. Balanced and diversified or was it WSB? I agree with the above except using credit. Using margin makes me queasy (maybe a little gassy too) so I’m not a big fan. B&D portfolio at 8.06% YTD. Down for the day but all that volatility in the markets got minimized because hey…B&D.

#41 Bob The Cat on 03.18.21 at 4:40 pm

Am I understanding it right that now is a crucial time to stay invested and trash the cash? I wonder how the balanced portfolios will weather this.
Do the central banks embrace inflation because they are afraid of stagflation or what’s the logic behind having an “fake” inflation calculator and telling themselves that “everything is allright”?

#42 Howard on 03.18.21 at 4:46 pm

Now, factor in the GreaterFool Puppy Index (goldens four grand, chows five, frenchies six), plus the sold-out nature of boats, RVs, Pelotons, quads and cottages, and you know Stats Canada’s latest tally of inflation – 1.1% – is, well, psycho. Let’s just hope the feds are incompetent instead of evil. Here in the real world the cost of living is out of control.

—————————————

Perhaps it’s due to my perch in Western Europe where deflationary forces are stronger than in Canada, but I haven’t witnessed much of this inflation thus far. Packaged food prices are up very slightly, but fresh fruit and vegetables are stable. Even oranges, which spiked last spring, have come back down. I don’t own a car so not impacted by gasoline prices. Rent is controlled at maximum 2.5% rise per year, which is more than offset by salary increases. Electricity costs up slightly, but percentage increase is no greater than prior years.

Restaurant and bakery prices have definitely increased. But if you like to cook, as I do, and didn’t eat out much to begin with, the impact is minimal.

#43 The Totally Unbiased, Highly Intelligent, Rational Observer on 03.18.21 at 4:50 pm

“Let’s just hope the feds are incompetent instead of evil.” — Garth

Bad news: They are both.

#44 thebarold on 03.18.21 at 4:51 pm

Agree with Millennial 1%er — rates were too low pre-crisis. No room to cut. The 50bp cut in 2015 was unnecessary and started us too low. Fast on the downside, sticky on the upside. Human behaviour mimicking panic selling.

#45 yorkville renter on 03.18.21 at 4:54 pm

#19 – I bought whatever they had on hand – may be 10 or 12 pieces.

seriously?

seems like a lot of work to make $100.

#46 S.Bby on 03.18.21 at 4:57 pm

So when will they raise the GST rate?

#47 S.Bby on 03.18.21 at 5:00 pm

I do think the CBs are overdoing things at this point. They should be putting on the brakes now, not full steam ahead. But with Tiff being willfully blind and saying no inflation we will be in a bad place sooner or later.

#48 V on 03.18.21 at 5:02 pm

1 bad apple is this one.. no trust…. thats why the experiment will fail. This is a combined play book from all the past acts
…suck and blow sitih ….they think everyone is stupid?. But at the end of the day..people would rather have $ in the bank and be safe , then take the pig to market. The perfect Trifector … if thats how you spell it. Bonds, mortgages ( let’s not forget commercial props) and of course our lovely( coming battle / BIS endeavors) Rates. Just a Bit thought… lol

#49 Jake the snake on 03.18.21 at 5:11 pm

“One lonely 2×4 at Home Depot this week costs fourteen bucks, with HST. A sheet of plywood, three-quarter inch pine is (gulp) $77. ”

Come on, Garth. No builder uses pine anymore. They opt for the more cost-efficient OSB, whose price is a lot lower than $77.

Let’s not get carried away with the rhetorical flair. Leave that for Rock-em, Sock-em Mr. Socks.

I also referenced Spruce. OSB prices have more than doubled. Posters with no manners are considerable cheaper. – Garth

#50 Heavy Metal on 03.18.21 at 5:11 pm

Can’t help but think when this Everything Bubble pops, Gold will be one of few survivors.

Not looking too promising, is it? – Garth

#51 Shirl Clarts on 03.18.21 at 5:14 pm

#26 IHCTD9 on 03.18.21 at 3:57 pm

^^^^^^^^^^^^^^^^^^^
You mean, a list of all the things you buy?

You’d be surprised how many households buy NONE of these things. It should be called “Top 9 wasteful purchases”.

But, it doesn’t surprise me that you drink both Beer AND hard Liquor.

#52 leebow on 03.18.21 at 5:16 pm

#44 yorkville renter

About $500. I had a truck, and a large garage. So it wasn’t much hassle. No more than 10 minutes per pipe altogether. Main reason – fun. It was clearly an arbitrage opportunity.

#53 Faron on 03.18.21 at 5:17 pm

#17 alexinvestor on 03.18.21 at 3:23 pm

Tech giants are not leveraged. One could say that the FAANG stocks are overvalued, but their gross margin is so good they don’t really need to borrow much. Preferreds on the other hand … probably depends on the company and industry.

Kinda. Netflix has a boat load of junk rated debt. It’s their only means of financing all that content. (ever notice that netflix kinda sucks lately…?) Amazon has a fair bit as well.

The others, while they may not be rate sensitive in their bottom lines, are subject to the TINA unwind that may take years to complete. Amazon has done ZILCH since summer, yields nothing, yet has a beta above one. Amazon will continue to earn a ton of money, but probably isn’t a great bet. Lots of vol, no return.

The more Netflix-like names in tech are going to get stung both by rates directly and TINA (indirect rates effect). That’s why Nasdaq ate it today. 10 basis points on the ten year. Financials and industrials were up. There’s a world of long term hurt from COVID that healthcare will profit from — prob a good safe bet unless Biden nationalizes the US system. TSX v SPX continues to play well although energy may be a short term drag. I see XEG hitting $6.90 or $6.80 (2 sigma below the 20 day) before regaining its senses.

per usual, Amazon will rally double digits tomorrow because I slandered it and oil will go to 100 in a week. :-)

#54 Faron on 03.18.21 at 5:29 pm

Look at Ottawa, where our enlightened leaders just spent $400 billion we don’t have fighting the virus. In fact more than half that money was sent directly to people, who then plunked at least $100 billion into their bank accounts. The historic jump in personal savings is proof extreme stimulus was probably unneeded.

Hi Garth. I would like to respectfully differ here and/or request that a more complex story be told. Your numbers are correct: $400B stimmies and $100B savings. But those stimulated are not the same as the ones who saved. Data show that the lower 1/4 net worth folks accumulated a tiny fraction of the additional savings while the upper crusties added the most to their savings. I bet a chunk of that was through mortgage deferrals, so the accounting shows more $ in savings accounts.

I take this to mean that the stimmie bux were spent and trickled up to the more wealthy where they are now anchored in savings making 0.05%.

Canada seems to be experiencing a stronger recovery than other (western) nations, so perhaps the added CERB bux will pay off in the end.

Your fave bleeding heart lib
–Faron

#55 Planetgoofy on 03.18.21 at 5:35 pm

And thats why you are programed to think “its the new normal”
If you have 1/2 a brain and have any ability think critically..its soooooo obvious.
Turnernations on board so are a ton of people i know north and south of the boarder.
https://youtu.be/zXUtsft0Z74

#56 Stone on 03.18.21 at 5:37 pm

Considering that today’s topic is INFLATION, I had a though.

Little Canadian Beavers have socked away something like $100 billion in the bank accounts.

Should we readjust that to $97 billion or so when inflation is factored in? Garth mentioned a debt clock that goes uppa uppa uppa. Should we start an inflation clock showing the value of a dollar going downa downa downa?

#57 [email protected] on 03.18.21 at 5:37 pm

How certain are we that these price rises aren’t temporary supply chain issues?

#58 Flop... on 03.18.21 at 5:43 pm

Can you tell I couldn’t afford any formal education?

I look forward to continuing my American studies, most likely at Xmas time, miraculously camping at summer time and watching people frolicking in Florida on TV this Spring Break…

M46BC
Charting 17 Years Of American Household Debt.
The coronavirus pandemic is changing consumer habits in a lot of ways. In fact, according to recent surveys, people say they will use additional government stimulus payments to pay off personal debt. This got us thinking about how total household debt has changed across the U.S. over the last several years.

Student loan debt has exploded over the last 17 years, growing some 546% from 2003 through 2020.
Auto loans have also increased substantially, growing by 114% as the average price of new cars and longer loan terms enable Americans to take on more debt than ever before.
Every category of consumer debt has increased in the last several years with the exception of other miscellaneous types of debt, which decreased 12% since 2003.
Many Americans say they intend to pay down their debts with a third round of direct government stimulus hitting bank accounts starting March 2021.
Mortgages are also higher as a relative share of household debt at 103% of 2003 levels.

We found the data for our visualization from the Federal Reserve Bank of New York. Starting with the first quarter of 2003, we plotted out the overall relative percentage change in household debt based on different categories. This allows you to easily and quickly see how the relative debt load for American households has changed over the last several years, and it provides a few clues as to where things are headed in the future.

The most obvious story our visualization tells is how student loans exploded as a portion of household debt. From 2003 through the end of 2020, student loans increased by some 546%. This means that as a relative share of total household debt, student loans increased by more than five times their original starting balance. And there are lots of things happening at the federal level in response to the rise of student loans. President Trump initially suspended student loan payments and the accumulation of interest, which President Biden continued until September 2021. Democrats recently made any future cancellation of student debt income tax free. All of this suggests President Biden may directly cancel some amount of student loan balances in the future.

Student loan debt has shot up over the last several years, and other types of household debt have also seen increases. Auto loans make up the second highest growth in relative household debt, topping 114% of their relative share compared to 2003 levels. There are a few reasons why car loans are going up. The average price of a new vehicle now often tops $40,000, and some lenders are willing to write loans for up to 8 years. Mortgages are also higher as a relative share of household debt at 103% of 2003 levels. Home equity loans accelerated in the run up to the housing crisis until 2009, when they started a long downward trend. Credit card debt meanwhile has remained relatively flat, rising slightly in the lead up to the Great Recession before declining and rising again. And other types of loans, such as unsecured personal loans or payday advances, are likewise down about 12% from their 2003 baseline.”

https://howmuch.net/articles/change-in-the-us-household-debt

#59 Sail Away on 03.18.21 at 5:46 pm

#52 Faron on 03.18.21 at 5:17 pm

per usual, Amazon will rally double digits tomorrow because I slandered it and oil will go to 100 in a week. :-)

———–

In general, I consider technical analysis as falling firmly in the same realm as astrology, black magic and feng shui, but have recently and profitably begun using your predictions as a solid contrarian indicator.

You say bad, markets rocket. You say good, markets tank.

Thanks!

#60 DON on 03.18.21 at 5:47 pm

#5 Richard L on 03.18.21 at 2:44 pm
I have a scenario for consideration:

May/June 2021 – Trudeau call Federal election – wins majority

After election – Government introduces capital gains tax on all residential housing

Conservatives immediately promise to repeal this tax if elected

2025/26- Liberals lose election and cons elected. Said tax is not repealed due to bad financial situation left by Libs.

Sound familiar to late 80’s – early 90’s anyone?

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

I agtee….once (if) Trudeau gets a majority…he does not have to worry. So he can do what he wants.

#61 Alberta Nomad on 03.18.21 at 5:48 pm

Up here in the Yukon my wife’s office (Stantec) are asking which employees prefer to WFH so they can reduce leased office space. Definitely no talk of forcing anyone back into the office (again, in the Yukon, not downtown Toronto). Word from a friend in Calgary is that his company will not allow employees back in the office until 2022 (he hates working from home). The REITs I purchased during the pandemic lows are treating me well, but keeping an eye on this trend. Also, I rotated out of my tech heavy ETFs (and some Tesla) the day it was disclosed that the Technoking decided that $1.5B of BTC would look great on the balance sheet. So far this seems to have been a wise choice — riding a river of green into the reopening.

P.S. Vaccinated last week

#62 Faron on 03.18.21 at 5:50 pm

#143 IHCTD9 on 03.18.21 at 1:04 pm

#135 Faron on 03.18.21 at 11:53 am
#132 IHCTD9 on 03.18.21 at 11:09 am

What do you think broheim

As a weather guy, when I go outside, sometimes I check my Bro-rometer to see if I’ll need to wear shades. I’ll leave the “inches of mercury” joke to the pilots out there.

#63 Drinking on 03.18.21 at 5:53 pm

#2 Felix

Those good looking Canines are doing you and Felines a favor by telling you to sit back and relax until this is all done for. History always repeats itself. You Felines never learn; sigh!!!

#64 Rainman on 03.18.21 at 5:56 pm

doesn’t inflation actually help with you debt? it’s worth less then. So why not borrow cheap?

#65 under the radar on 03.18.21 at 5:57 pm

Nice Country properties in Mono with acreage , 3 million is the new 2 million.

#66 Faron on 03.18.21 at 5:57 pm

SPX Gamma dropped today, DIX (dark pool buy vs sell index) up. Low gamma means slippery market movements. Tick up in DIX suggests bullishness in the SPX dark pools. NASDAQ gamma is negative, so amplified slipperiness.

#67 IHCTD9 on 03.18.21 at 5:58 pm

#50 Shirl Clarts on 03.18.21 at 5:14 pm
#26 IHCTD9 on 03.18.21 at 3:57 pm

^^^^^^^^^^^^^^^^^^^
You mean, a list of all the things you buy?

You’d be surprised how many households buy NONE of these things. It should be called “Top 9 wasteful purchases”.

But, it doesn’t surprise me that you drink both Beer AND hard Liquor.
—- —

No buying trucks, quads, fishing gear, and beer? I would not wish that life on my worst enemy.

#68 Kiril Peev on 03.18.21 at 6:06 pm

Too much cheap/printed money swishing around in the system. Official inflation numbers have been under-reported for a long time. How long until inflation charts start resembling housing appreciation charts?

At the end of rhe day money is just the tracker. Printing or canceling it does not change anything in the real economy. As long as resources are allocated to producing real things we need we’ll be alright.

#69 Damifino on 03.18.21 at 6:08 pm

#10 And to think …

my first house was made totally out of clear fir. Not a knot in the house anywhere … and it eventually ended up in a landfill.
——————————-

I used to work in home renovation in Vancouver’s Dunbar area in the early 80’s. The bottom had fallen out of the new home market and everyone was borrowing money against their homes to renovate.

You would not believe the wood we threw away. Perfectly straight knot-less 2 x 4’s, by the hundreds, ripped out of homes built in 1910 or 1920.

The thing was though, they were hard as iron. You couldn’t pull nails out of them. The heads just popped off. You couldn’t drive nails in them either without drilling a pilot hole first. Some people did just that.

But those two by fours actually did measure 2″ x 4″. Not like the 1.5″ x 3.5″ dimensions of today.

#70 Penny Henny on 03.18.21 at 6:20 pm

Anyone else notice that the prices on produce are actually pretty good. Maybe it’s because less is going to the restaurants?

#71 Dr V on 03.18.21 at 6:21 pm

52 Faron

“per usual, Amazon will rally double digits tomorrow
because I slandered it and oil will go to 100 in a week”

We need a name for this effect.

“The Faron headfake”

I like it.

#72 Steven Rowlandson on 03.18.21 at 6:22 pm

I’ve thought 7/16ths OSB would be a great speculation if one could buy low from the factory and store it for months or years until something like the current situation
occurs. Would the storage costs kill the profit potential?
That is the big question otherwise it would seem to be good business.

#73 Ustabe on 03.18.21 at 6:23 pm

But, it doesn’t surprise me that you drink both Beer AND hard Liquor.

I drink both beer and hard liquor and both at the same time.

You see I use a gulp of beer to get the taste of the brandy out of my mouth but I really don’t care for beer so I have another gulp of brandy to mask the taste of the beer. Repeat as needed.

When I drink wine, however, I do that one glass at a time. From a bottle, not squeezed out of a bag in box like I imagine some on here do.

#74 S.Bby on 03.18.21 at 6:25 pm

#48

Come on, Garth. No builder uses pine anymore.

Actually, Southern Yellow Pine (SYP) is quite popular with builders.

#75 Drinking on 03.18.21 at 6:41 pm

Oh, sigh, ok, this one is for you Felix and canine lovers. Actually very much enjoy them in my neighborhood, keeps the squirrel and rabbit population to a manageable level. Cats, no way, they kill too many of my favorite energetic, although loud, birds in my neighborhood.

https://www.cbc.ca/news/canada/calgary/photos-bobcat-calgary-1.5953225

#76 Planetgoofy on 03.18.21 at 6:44 pm

I had to re-read Garth. Their evil. My wife can collect CRB…..She doesn’t but that’s just wrong as we are wealthy with ZERO debt and piles of RE. I feel sad as my cash hord is being inflated away. I feel paniced to spend it…almost.
Well its working for us but I never dream they could be that bat shit crazy…..Its WRONG and will not lead to good things for the average bear. I guess they can collect CRB and afford to live under a bridge…?

#77 WTF on 03.18.21 at 6:48 pm

juuust a little more gasoline on the fire……….

https://www.bnnbloomberg.ca/canada-s-hot-housing-market-a-trade-off-to-stave-off-a-bad-recession-poloz-1.1579136

#78 IHCTD9 on 03.18.21 at 6:51 pm

#72 Ustabe on 03.18.21 at 6:23 pm
But, it doesn’t surprise me that you drink both Beer AND hard Liquor.

I drink both beer and hard liquor and both at the same time.

You see I use a gulp of beer to get the taste of the brandy out of my mouth but I really don’t care for beer so I have another gulp of brandy to mask the taste of the beer. Repeat as needed.

When I drink wine, however, I do that one glass at a time. From a bottle, not squeezed out of a bag in box like I imagine some on here do.
— – ——

Despite our political differences, I think you and I would get along just peachy in real life. You bbq dinner, I’ll supply the overpriced hooch from the LCBO. We’ll talk chainsaws and wood splitting and stacking.

If I ever visit BC, we could invite Ponzie over too so I can listen to his Arnold impersonations. But, I’d have to invite Sail and Fartz over too just in case the conversation inadvertently strays into politics :).

#79 Sail Away on 03.18.21 at 6:53 pm

We usually make our own yellow plum wine. It’s never the greatest, but not bad, and I’ve yet to find a place to buy 140 bottles of plonk for $40. If you know me, you get a bottle of wine for xmas! Pairs well with Costco lasagna and whale art.

The upgrade is having our moonshiner neighbour distill a couple carboys for homemade slivovitz.

I find the whole alcohol-creation process magical.

#80 Sheesh on 03.18.21 at 6:53 pm

#54 Planetgoofy on 03.18.21 at 5:35 pm
And thats why you are programed to think “its the new normal”
If you have 1/2 a brain and have any ability think critically..its soooooo obvious.
Turnernations on board so are a ton of people i know north and south of the boarder.

….
Those of us with whole brains have thought critically about it, and have concluded that it’s obviously nonsense.

#81 polecat on 03.18.21 at 6:55 pm

Well, pulling the plug here in Ottawa. Can’t resist cashing out on the house, big time, then rent for 1/2. Just 2 of us so a downsize will be nice. Jam the investments and TFSA and set up a RESP for the baby granddaughter.

#82 Wrk.dover on 03.18.21 at 7:01 pm

#68 Damifino on 03.18.21 at 6:08 pm

The thing was though, they were hard as iron. You couldn’t pull nails out of them. The heads just popped off. You couldn’t drive nails in them either without drilling a pilot hole first. Some people did just that.

————————————————

You sticker them out in the ‘weather’ it turns the clock back to as delivered in 1910, after a while.

#83 S.Bby on 03.18.21 at 7:03 pm

#71
I’ve thought 7/16ths OSB would be a great speculation

No one would realistically want to do this. It is a volatile commodity and demand differs by region and the time of year. There is no point to it. You’d make more money by just brokering it.

#84 crowdedelevatorfartz on 03.18.21 at 7:03 pm

@#72 Ustabe
“I drink both beer and hard liquor and both at the same time.”

++++

I worked with a geologist who had spent time in Russia in the early 90’s when it opened up.
Wild West.
He became quite fond of shots of vodka sipped and cold beer. back and forth he’d go.
I tried it one night.
It wasnt too gross, but my goodness…. the hangover.

#85 Paul on 03.18.21 at 7:03 pm

#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

#86 Cheese on 03.18.21 at 7:05 pm

Day 6 of a fast, no food at all, saves a tremendous amount of money that is used to invest.

Losing body fat is a nice side effect, gotta be fit for the apocalypse.

#87 Planetgoofy on 03.18.21 at 7:06 pm

PS speaking of lumber…again. We logged 2 acres of cream puff fir peelers this week (for top grade fir plywood) I’m getting a hell of a price from the timber buyer but the man taxes the hell out of ya on the wood sale. Then I gotta go pay ungodly prices at the lumber yard..
So we will cut beams, 2×4, 2×6 for our building at the wholesale level and some on my mill. It works out to a $4 2-be-4 that will stop a bullet. A win win. Gotta think out of the box these days.
Welcome to PanetGOOFY.

#88 Nonplused on 03.18.21 at 7:09 pm

#23 Brian Ripley on 03.18.21 at 3:48 pm

Interesting chart.

#89 mark on 03.18.21 at 7:10 pm

How much can bonds drop 1-3year average to maturity and 15+year average to maturity when the government stops buying bonds?? 20 percent?!

Who has their crystal ball polished?

#90 Nonplused on 03.18.21 at 7:14 pm

#26 IHCTD9 on 03.18.21 at 3:57 pm
The BoC needs to follow the new and more accurate GFPI for inflation on things today’s folks actually buy, like:

RV’s
Quads
Building Materials
Hunting and Fishing Gear
Houses and Condos
Boats
Pets
Beer
Hard Liquor
Harleys
Pickup Trucks

—————————

RV’s might be a good benchmark all by themselves as it takes a wide range of materials and lots of labor to build one. Also they are a good indicator of discretionary spending power. Be tough to keep track of the myriad of models though.

#91 crowdedelevatorfartz on 03.18.21 at 7:21 pm

@#72 Ustabe
” From a bottle, not squeezed out of a bag in box like I imagine some on here do.”

++++

Dont knock “Cardbordeaux” until you’ve squeezed the last drop……..

#92 BC Renovator on 03.18.21 at 7:31 pm

Horizons has a new Inflationary ETF. Symbol INFL

https://horizonkinetics.com/products/etf/infl/#holdings

#93 S.Bby on 03.18.21 at 7:50 pm

Inflation is coming? I think it’s already here.

https://nationalpost.com/news/canada/inflation-is-coming-signs-that-everything-is-about-to-get-much-more-expensive

#94 Cici on 03.18.21 at 7:51 pm

#5 Richard L

Yup. Sounds just like that “temporary” GST they introduced backin the day.

#95 Derek Hull on 03.18.21 at 7:56 pm

I am retiring in the maritimes next week and sold my house, banked $900,000 in net proceeds in just 12 years. Low interest rates made my house worth alot. All the interest I lost on my savings, RRSP’s, TFSA’s got it back plus way much more. I have my CPP, OAS, RRSP which provides me with $3,000 a month. I have no mortgage, no debts and will never again.

I currently live on $12,000 a year and my budget will not change much. My inflation rate or cost of living can go up 100% tomorrow, so it does not matter to me. My life mission is to be the cheapest and spend as little as possible.

#96 The Woosh on 03.18.21 at 7:56 pm

#91 crowdedelevatorfartz on 03.18.21 at 7:21 pm
@#72 Ustabe
” From a bottle, not squeezed out of a bag in box like I imagine some on here do.”

++++

Dont knock “Cardbordeaux” until you’ve squeezed the last drop……..

————————————

…with a mellow tanic and a slight hint of acidity, or is that methane?

#97 ogdoad on 03.18.21 at 7:58 pm

Oh, Garth, let’s not forget, one year (and counting) of probably eating fast food and rising stress levels. I could very well imagine that a juicy ETF representing some of the major pharms could benefit….or just a pot stock

Og

#98 Drinking on 03.18.21 at 8:00 pm

#86 Cheese

Hell, you got it all wrong, grab that cheeseburger, drink a few beers, next day, go out for that walk, cycle, run and dream of the new vision and let all of us know on this blog; after all, we are all one big family trying to get through all this.

I do not say it enough, maybe I do, thank you Garth!

#99 Faron on 03.18.21 at 8:06 pm

#59 Sail Away on 03.18.21 at 5:46 pm

#52 Faron on 03.18.21 at 5:17 pm

You say bad, markets rocket. You say good, markets tank.

Cool. I’ve been calling banks, industrials, value and equal weight for months now and they have killed. Glad you didn’t partake. For the record, YTD:

+25%, +11%, +17% and +10% respectively

TSX lately too: 8%

Need I note that those are all accessible from through ETFs and thereby minimize volatility and single-name risk? Toodles.

Actually not toodles: entertaining video of recent testing of beta FSD from Fraud Karen’s motor co.:

https://www.motorbiscuit.com/tesla-full-self-driving-beta-is-surprisingly-sketchy-driving-across-this-city/

Also interesting: https://www.tesladeaths.com/

Still boggles my mind that Sail Away thinks Elon is a genius. I’ve come to hope that you root for him because your bet has filled your coffers not because you actually think he’s anything but a snake oiler.

#100 Faron on 03.18.21 at 8:07 pm

#84 crowdedelevatorfartz on 03.18.21 at 7:03 pm

@#72 Ustabe
“I drink both beer and hard liquor and both at the same time.”

++++

I worked with a geologist who had spent time in Russia in the early 90’s when it opened up.
Wild West.
He became quite fond of shots of vodka sipped and cold beer.

Drunkest years of my life were when I got my Geology degree.

#101 IHCTD9 on 03.18.21 at 8:14 pm

#68 Damifino on 03.18.21 at 6:08 pm
#10 And to think …

my first house was made totally out of clear fir. Not a knot in the house anywhere … and it eventually ended up in a landfill.
——————————-

I used to work in home renovation in Vancouver’s Dunbar area in the early 80’s. The bottom had fallen out of the new home market and everyone was borrowing money against their homes to renovate.

You would not believe the wood we threw away. Perfectly straight knot-less 2 x 4’s, by the hundreds, ripped out of homes built in 1910 or 1920.

The thing was though, they were hard as iron. You couldn’t pull nails out of them. The heads just popped off. You couldn’t drive nails in them either without drilling a pilot hole first. Some people did just that.

But those two by fours actually did measure 2″ x 4″. Not like the 1.5″ x 3.5″ dimensions of today.
— – — –

It’s a trip back in engineering time, eh? As engineering got better, costs could be reduced by making things just as strong as they needed to be, and no more, thereby saving materials.

My old ‘52 track loader has a 2300cc, 30 hp engine, and it weighs almost 600lbs. My new mower has an 810cc, 28 hp engine, and it weighs 90 lbs. Consequently, the old, F140 with almost 6000 hours on it still runs great burning minimal oil. I’d expect maybe 2500 hrs out of the aluminum mower engine.

My old house is super overbuilt. Engineering work non-existent. Timber frame construction almost entirely out of 10×10 and 8×8’s. 30”+ thick fieldstone and lime foundation – if you stay on top of the repointing, it’ll last as long as the pyramids, maybe longer as in my case we’re talking about granite as opposed to the limestone used in Egypt. The original siding is 1” thick solid wood, no glue or finger joints. It’s incredible to think how much this house would cost today if it were built with the same materials, and in the same manner (ie 100% by hand) as it was back in 1870.

Although I have been instructed that it is wise to “Say not thou, What is the cause that the former days were better than these?”, I have to say (ironically), that the lack of knowledge and understanding in the past, actually produced better things in some cases, than the “well engineered” products of today.

#102 Ustabe on 03.18.21 at 8:14 pm

#91 crowdedelevatorfartz on 03.18.21 at 7:21 pm

@#72 Ustabe
” From a bottle, not squeezed out of a bag in box like I imagine some on here do.”

++++

Dont knock “Cardbordeaux” until you’ve squeezed the last drop…….

There actually are decent wines in bag in box presentations. Been a while since I was involved in buying the stuff for a restaurant but the Australians bagged up some real good stuff.

My accountant’s wife is to finding cheap but excellent wine as you are to olfactory wisps in elevators. That is to say real good at it.

#103 Thank You Frontline Realtors®! on 03.18.21 at 8:36 pm

Thank you frontline Realtors®!

You are the true heroes, holding together the only meaningful part of Canada’s economy in these challenging times!

Bless you!

You are worth far more than 5%!

#104 Ustabe on 03.18.21 at 8:37 pm

#78 IHCTD9 on 03.18.21 at 6:51 pm

Despite our political differences, I think you and I would get along just peachy in real life. You bbq dinner, I’ll supply the overpriced hooch from the LCBO. We’ll talk chainsaws and wood splitting and stacking.

There is wet firewood and dry firewood. There is seasoned firewood and also unseasoned firewood.

Seasoned firewood can be wet as well as unseasoned firewood being dry.

If we can get to agreement on that I’ll fire up the smoker anytime. Matter of fact I have two full packer briskets that, over a couple of weeks, I have turned into my version of Montreal Smoked Meat or pastrami.

I slice up a mix of fat (point) and lean (flat), package it and walk around to all the close neighbours, give them a couple of pounds each, sort of a peace offering to avoid complaints when I run the smokers.

I run my catalytic converter equipped wood stove with just a heat shimmer out the chimney but smokers…well they have to smoke. Seems a lot of folks have breathing problems these days, the free smoked meat dispels the fire dept being called on me. Mostly.

Last: When my town kowtowed to the screamers and banned any/all back yard open fires (they are working on wood stoves/fireplaces as we sit) I am the one who made certain that wording was placed in the bylaw that allowed open charcoal, smokers, etc used in the production of food to be specifically allowed.

#105 Stone on 03.18.21 at 8:47 pm

#85 Paul on 03.18.21 at 7:03 pm
#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

———

Don’t worry. There are no losses with a B&D portfolio. Only happy endings.

Also, those who say they don’t regularly look at their portfolios obsessively are liars (let’s be honest here) or…they have really interesting lives and I want to get to know them.

Lastly, I’m far more concerned with those people on here and elsewhere who obsessively talk about drinking, drinking heavily, drinking to a drunken stupor, discussing hangovers, same for pot, same for non-stop home repairs because otherwise they don’t know what to do with themselves, excessive wood chopping…

Did I just offend 99% of the peanut gallery? Oops.

#106 Matt on 03.18.21 at 8:49 pm

2×4 @ Home Depot $7.98. Still pricey but not the crazy $14 you are referencing.

2x4x10 = $12.25+HST. Eight-footers are for girls. – Garth

#107 Mattl on 03.18.21 at 9:01 pm

#105 Stone on 03.18.21 at 8:47 pm
#85 Paul on 03.18.21 at 7:03 pm
#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

———

Don’t worry. There are no losses with a B&D portfolio. Only happy endings.

———————————————————–

This is good context. You are a newish investor if you think a balanced portfolio will never take losses.

This also explains your excitement about 8% returns -SP500 returned 30% and 17% in 2018 and 2019 respectively.

So great work on the 8%, we are all very impressed with your strategy, it is clearly better then a GIC at the local CU.

#108 waltersafety on 03.18.21 at 9:06 pm

# 45 “seems like a lot of work for 100bucks”

You’re missing the point -maybe.
It’s not always about the money sometimes working for free is worth it.
If your average hourly rate is $50 a few hours at $ 0 doesn’t effect the average much .

#109 Drinking on 03.18.21 at 9:09 pm

#105 Stone

Obsessively talk about drinking; oh get a grip!! It is not about that at all, it is about balance in life, your post actually disappointed me, I thought you knew better, guess not!

#110 crowdedelevatorfartz on 03.18.21 at 9:15 pm

@#103 Thank you Realtors

Good one.

#111 crowdedelevatorfartz on 03.18.21 at 9:20 pm

@#105 Let ye without sin throw the first Stone

Please educate us on your healthy, amazing lifestyle… which obviously involves charity work with lepers, the shunning of all things capitalistic, washing oil from baby ducks, and giving away all your worldly possessions ….
Then destroy your polluting computer to finally complete your purging of humanity’s filth…

#112 DON on 03.18.21 at 9:37 pm

@ Ustabe
Last: When my town kowtowed to the screamers and banned any/all back yard open fires (they are working on wood stoves/fireplaces as we sit) I am the one who made certain that wording was placed in the bylaw that allowed open charcoal, smokers, etc used in the production of food to be specifically allowed.

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

Build a smoker outside and funnel the heat inside the house. Make it a brick hut.

#113 Sail Away on 03.18.21 at 9:46 pm

Faron, of course Elon is a genius. You knock him for the full self driving beta? Who else has done that? Oh.

IH- when in doubt, make it stout.

#114 Phylis on 03.18.21 at 9:48 pm

So when rate reset prefs reset higher, can we expect more of them to be recalled? And subsequently, as banks turn to issue LRCNs, how does this affect the pref ETFs? Are prefs still on sale or mainly providing the balance now?

#115 crowdedelevatorfartz on 03.18.21 at 9:54 pm

2x4x10 = $12.25+HST. Eight-footers are for girls. – Garth

+++++

Careful Garth, lest you wish to feel the wrath of Sara….no more disparaging the female gender…..

#116 Out Of Work CEO, Will Travel on 03.18.21 at 9:55 pm

Canada put together by leftover French patriots without a dime from the bankrupt France and British on the run from the Americans. Just a little over a century as a free standing country and the bricks and mortar are crumbling. The Atlantic Bubble is all cranked up for Covid 102 keeping out Upper Canada germs. Quebec is organized for success with Trudeau not taking any chances in the next election. Put Ontario and Quebec in a bi-lateral federation and the West being uppidy and independent on their own footing and Canada is now three separate entities. The West is full of assertive and confident folks divorced from the never ending button gazing woke religion that rules Upper Canada.

#117 DON on 03.18.21 at 9:58 pm

#87 Planetgoofy on 03.18.21 at 7:06 pm
PS speaking of lumber…again. We logged 2 acres of cream puff fir peelers this week (for top grade fir plywood) I’m getting a hell of a price from the timber buyer but the man taxes the hell out of ya on the wood sale. Then I gotta go pay ungodly prices at the lumber yard..
So we will cut beams, 2×4, 2×6 for our building at the wholesale level and some on my mill. It works out to a $4 2-be-4 that will stop a bullet. A win win. Gotta think out of the box these days.
Welcome to PanetGOOFY.

*******

if you have the space beam it all and take it to the reman when you need it sawed up. Cheap per thousand board feet.

I will be buliding my next house outta rough cut beams and fir planks.

#118 crowdedelevatorfartz on 03.18.21 at 10:01 pm

Sail Away!
I see a potential for your “bridging” engineering skills.
North Van wants a “Land Bridge” over Lonsdale…..

https://www.nsnews.com/local-news/north-van-mayor-floats-idea-of-park-over-highway-1-3553855

#119 IHCTD9 on 03.18.21 at 10:02 pm

#104 Ustabe on 03.18.21 at 8:37 pm
#78 IHCTD9 on 03.18.21 at 6:51 pm

Despite our political differences, I think you and I would get along just peachy in real life. You bbq dinner, I’ll supply the overpriced hooch from the LCBO. We’ll talk chainsaws and wood splitting and stacking.
———

There is wet firewood and dry firewood. There is seasoned firewood and also unseasoned firewood.

Seasoned firewood can be wet as well as unseasoned firewood being dry.

If we can get to agreement on that I’ll fire up the smoker anytime. Matter of fact I have two full packer briskets that, over a couple of weeks, I have turned into my version of Montreal Smoked Meat or pastrami.

I slice up a mix of fat (point) and lean (flat), package it and walk around to all the close neighbours, give them a couple of pounds each, sort of a peace offering to avoid complaints when I run the smokers.

I run my catalytic converter equipped wood stove with just a heat shimmer out the chimney but smokers…well they have to smoke. Seems a lot of folks have breathing problems these days, the free smoked meat dispels the fire dept being called on me. Mostly.

Last: When my town kowtowed to the screamers and banned any/all back yard open fires (they are working on wood stoves/fireplaces as we sit) I am the one who made certain that wording was placed in the bylaw that allowed open charcoal, smokers, etc used in the production of food to be specifically allowed
———-

Heh, funny you mention Montreal smoked meat, it’s a favourite here at the IH bunker complex. There is a place in Montreal called Schwartz’s deli that makes a mean MSM sandwich, and it put me on to that stuff probably for life. I envy your neighbours!

I burned a little 2 year old sopping wet wood just this year, so I think we are in agreement. I burn in a freshly built “rocket stove”, and it also emits just steam and a heat signature. Mods will happen this summer to hopefully allow 6-8 hour burn times. It uses wood “chunks” about the size of your fist, primarily skid wood, but would be equally happy with a diet of “chunked” limb wood 1-6” diameter. I don’t have a woodlot, and buying cordwood is super expensive out here – the RS makes wood burning cheap again.

Good job on the bylaw input. In my area, you can open burn up to 10×10’, but you need a permit to do so. If you are burning an open fire to roast hot dogs or burgs, that is legal with no permit. In practice, you can do whatever your neighbours will tolerate. All my neighbours’ laundry is dirtier than mine, so I’m good :D

#120 Stone on 03.18.21 at 10:30 pm

#107 Mattl on 03.18.21 at 9:01 pm
#105 Stone on 03.18.21 at 8:47 pm
#85 Paul on 03.18.21 at 7:03 pm
#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

———

Don’t worry. There are no losses with a B&D portfolio. Only happy endings.

———————————————————–

This is good context. You are a newish investor if you think a balanced portfolio will never take losses.

This also explains your excitement about 8% returns -SP500 returned 30% and 17% in 2018 and 2019 respectively.

So great work on the 8%, we are all very impressed with your strategy, it is clearly better then a GIC at the local CU.

———

Of course there are no losses. It’s called rebalancing. That’s why a typical B&D portfolio averages a return of about 7% per our host.

Now, if it averaged negative returns, you’d be absolutely right. Does it?

Perspective.

#121 Nobody on 03.18.21 at 10:37 pm

What a million dollars will get you now. Small bungalow in the armpit of the edge of the burbs.

https://www.realtor.ca/real-estate/22882505/99-cherrywood-dr-newmarket-bristol-london

#122 Nasty Nate on 03.18.21 at 10:42 pm

A lot of people have a hard time understanding that if you have mortgage debt, inflation is actually a very good thing.

#123 willworkforpickles on 03.18.21 at 10:55 pm

As i said here many months/posts ago…production is and will continue to slide with the pandemic and consumer inflation will steadily rise as manufacturers and suppliers of goods and products see looming shortages grow and push up prices in lock step.
The systemic breakdown in production won’t right itself with more lock downs and short-list (skeleton crew) production workers being used attempting to keep up.
An increase in interest rates to stem resultant inflation has started…paying the cost of so much purchase power from WFH and support savings in step/out of step with diminished production a result of high unemployment (too many dollars chasing fewer and fewer products)

Print money they did…distribute the support they did. And to continue the support – print or die! … they will have to.

A likeness to a broken record going over the same beat with talk of pent-up demand and savers itching to get out and spend like mad. And they will soon – hangs heavy. A spending orgy far greater than in 2020 with many product supplies already diminished is the perfect storm coming for crazy price escalation and inflation.

As for the FED…I have been/will be the first, am today and always will be the one to say not to hold much faith in what they say from one qtr to the next…(definitely not beyond). They have no credibility to grab hold of with their make belief projections.

A growth spurt as a result of savers going out on a spending spree over the next 6 months won’t culminate in real sustained growth rates.

Runaway debt creation will not end. The debt monster won’t stop growing…it pays the interest on the debt with nearly every new dollar created now.
Print or die!…support that with increasing interest rates to do it.
Full employment will not happen in the foreseeable future. Former production levels wont be seen again soon either. Support payments are becoming a monster of their own. Print or die! … Keep them coming raising rates afterward.

Growth from a giant spending spurt chasing fast diminishing supplies will drive mad inflation levels…
Counter mad inflation levels with more rate increases…(and this is where the fed really makes me laugh talking a slight inflationary increase)…what a bunch of jokers.
But nothing here comes near the future peril the runaway debt monster poses when EVERY new dollar created goes to service (feed) the debt monster that will ultimately consume us all….least of all (believe it or not) historically normalized interest rates to appease national debt holders in order to continue to… Print or Die!

#124 KNOW IT ALL on 03.18.21 at 11:00 pm

The traditional finance system is going to be overtaken by Cryptocurrencies, Defi, and Blockchain.

Sorry but nothing lasts forever – the best technology always wins.

Get prepared.

#125 Doug t on 03.18.21 at 11:07 pm

#105 Stoned

I raise a drink in your honour- cheers

#126 TurnerNation on 03.18.21 at 11:48 pm

Keep an eye on the food supply and keep in mind, Famines are man-made (Government made).
Seen elsewhere. Yep Kanada has been taken over. Ignore at your risk:

“9 hours ago
I live in Norfolk County, a huge farming area. They rely on a lot of foreign workers here. The Health Minister in our area has, it seems, gone out of his way to make things almost impossible to get foreign labour to the farms. It’s outright stupidity. These workers arrive on the same plane, but the Health Minister is saying each person has to be picked up individually and taken to their quarantine place. How on earth is a farmer who relies on 20-30 foreign farm workers supposed to do that. I’ve never heard anything so stupid in my life.”

—How to force the need for a UBI – 101. Seen elsewhere:

“10 hours ago
I’m a bartender, and my area has stayed in red. We can’t open because we’re only allowed 10 people and my employers can’t afford to pay staff with only 10 people in an establishment that’s licensed for 350 people.”

……………….

– What of our empty Sports Stadiums and Convention Centre in Toronto?
Possible, or maybe as jails for CV Criminals?

https://www.thestar.com/news/world/us/2021/03/17/dallas-convention-centre-readies-to-house-immigrant-teens.html
“DALLAS – Texas Gov. Greg Abbott said Wednesday that a surge of migration to the U.S. from Mexico resulted in federal officials “scrambling” to find housing for unaccompanied children in a late-night email to his staff over the weekend.
He relayed the story near Dallas’ downtown convention centre, which is getting ready to house up to 3,000 migrant teenagers. More facilities for migrant children are quickly opening elsewhere, including in Midland, where Abbott claimed there were no assurances about the conditions of the facility.”

—————–

How long will the economic lockdowns be lasting? Right here. The bankers.
From April 2020 the IMF plan. Page 6. Financial aid is planned until March 2025!

http://documents1.worldbank.org/curated/en/993371585947965984/pdf/World-COVID-19-Strategic-Preparedness-and-Response-Project.pdf

Country(ies)
World

Project Name
COVID-19 Strategic Preparedness and Response Program (SPRP)

Expected Project Approval
Date
02-Apr-2020

Expected Project Closing
Date
31-Mar-2025

#127 Kat on 03.18.21 at 11:54 pm

#115
Girls may get offended, women will not.

#128 Sara on 03.18.21 at 11:57 pm

#115 crowdedelevatorfartz on 03.18.21 at 9:54 pm
2x4x10 = $12.25+HST. Eight-footers are for girls. – Garth

+++++

Careful Garth, lest you wish to feel the wrath of Sara….no more disparaging the female gender…..

————–
@Stinkie

Are you 12? No wonder you are single – by choice, my rear.

#129 Regjeg on 03.19.21 at 12:09 am

Storms are brewing! Afterward, the skies will clear.

#130 Faron on 03.19.21 at 12:10 am

#113 Sail Away on 03.18.21 at 9:46 pm

Faron, of course Elon is a genius

#131 morrey on 03.19.21 at 12:36 am

@DAMIFINO
“But those two by fours actually did measure 2″ x 4″. Not like the 1.5″ x 3.5″ dimensions of today.”

Those are Nominal wood sizes. They disappeared in the 80s

Dimensional Lumber:
Nominal Size Two-by-four or 2 x 4
vs.
Actual Size 1 1/2 inches x 3 1/2 inches

#132 I Truly Suck on 03.19.21 at 12:47 am

-US corporate debt a record $12 trillion
-Nearly 800,000 new US job losses each and every week for over a year
-Housing starts crater
-Markets that can’t handle 2% interest rates
-February retail sales a disaster
-US trade deficit catastrophic
-The Fed and Yellen lying through their rotten teeth about inflation and everything for that matter
-US government debt at nearly $29 trillion
-20% of all US corporations in the S&P zombie outfits
-Interest rates that cannot go lower without going negative
-55-60% of all small business in danger of never coming back
-Consumers drowning in debt
-New Corona variants shutting down Europe, again
-Central Bank and Government overreach out of control
-Trillions being printed out of thin air with no end in sight
-Bitcoin at $60,000
-A US President who cannot read a teleprompter
-Canada on par with Greece in terms of total debt
-back breaking new taxes a virtual certainty
-no free markets or price discovery
-manipulation everywhere
-wealth divide now as wide as the Grand Canyon
-commodity prices that make no sense
-Vaccine outcome totally uncertain to be realistic

All markets are pricing an absolute flawless utopia by this fall.
Somebody please honestly tell me that all will be peachy in 5 or 6 months. March is almost over and things look kinda bleak.

But hey the Leafs are doing OK against 6 other teams, so that’s something.

#133 Jeenie Murphy on 03.19.21 at 1:33 am

DELETED

#134 Longterm on 03.19.21 at 2:37 am

‘In fact more than half that money was sent directly to people, who then plunked at least $100 billion into their bank accounts. The historic jump in personal savings is proof extreme stimulus was probably unneeded.’

Sure, in hindsight this might be true as are most things in hindsight. But it sure didn’t look like that a year ago. In our business the supply chain started to lock up in April 2020 and we did an emergency budget reforecast at a fully plausible 50% drop in sales, which looked extremely grime. And sales did start to tumble and we applied for CERB employee wage support of 10% and laid off nobody and missed not payments to anyone.

After a few months as the first wave subsided and public health for a better handle on the situation and our industry got itself sorted out our sales took off and 2020 was our best year in a decade, though this wasn’t the case for everyone in our industry.

So looking at my t4 the other day while doing my taxes I can see the CERB income support to my salary. Sure we probably would have been fine without it lookign back from March 2021 but as I said, it didn’t look remotely like that in March 2020. At the time the money was a lifeline when it looked like the entire ship was going down and going to take us, a forty year old company down with it.

At the end of the day the CERB money is going to find it’s way back to spending and govt coffers eventually and the bonuses we get for a great 2020 will be spent on 2x4s, plywood, and RESPs. And our company lives on to employee people, pay suppliers [largely Canadian], and create wealth and pay taxes.

So an over reaction in govt spending? Maybe in the rear view mirror in March 2021, but not looking through the windscreen in March 2020 as we drove towards a cliff.

#135 Nonplused on 03.19.21 at 2:41 am

#106 Matt on 03.18.21 at 8:49 pm
2×4 @ Home Depot $7.98. Still pricey but not the crazy $14 you are referencing.

2x4x10 = $12.25+HST. Eight-footers are for girls. – Garth

—————————

Truth be told 2×4’s are only really used for basement finishing and maybe trusses now. Or maybe fencing and decking. You need 2×6’s to meet insulation rules for external walls and have for a long time. And yes, those are even more expensive. The current rules want R20 in the walls, impossible with 2×4’s unless you use spray foam, and R40 for the attic which is just more inches of cellulite which is no big deal.

If you don’t have R30-R40 in the attic, getting that sprayed in there is about the cheapest “green” modification you can make. Existing walls are really expensive to upgrade, and so are windows. Depending on your furnace upgrading that might make sense.

#136 Nonplused on 03.19.21 at 2:56 am

#101 IHCTD9 on 03.18.21 at 8:14 pm

“My old ‘52 track loader has a 2300cc, 30 hp engine, and it weighs almost 600lbs. My new mower has an 810cc, 28 hp engine, and it weighs 90 lbs. Consequently, the old, F140 with almost 6000 hours on it still runs great burning minimal oil. I’d expect maybe 2500 hrs out of the aluminum mower engine.”

It’s all about the RPM’s. Modern lawn tractors (and mowers) run about 3000 rpm, them old units more like 600. So ya, they last 5 times longer.

But the math isn’t all bad. Given that I use my garden tractor maybe 3-4 hours a week during spring and not much at all during the winter, it is 12 years old now and has about 250 hours on it. If it goes to your estimate of 2500 hours, my grandchildren will still be driving it.

Over-design is not always a good thing. A tractor that is going to work all day at the coal mine for 20 years has to be big and it has to be diesel. A weed snipper that costs $100 bucks? Not so much. It needs to be light.

Incidentally diesels last so long for 2 reasons: Yes, lower RPM due to huge torque, but also because diesel itself is a lubricant, whereas gasoline is a solvent.

#137 Faron on 03.19.21 at 3:55 am

#59 Sail Away on 03.18.21 at 5:46 pm

#52 Faron on 03.18.21 at 5:17 pm

You say bad, markets rocket. You say good, markets tank.

Working late and it just occurred to me to check that EEM:EWZ spread I pointed SnowOwl to back on the 3rd. Yep, differential is almost as great as Stone’s YTD gains in favour of EWZ. Cool, huh? I don’t get everything right by any stretch, but do okay.

Of course I knock Elon for claiming Tesla’s assisted cruise control tech is “Full Self Driving”. I do this because he’s selling it to his sycophants for mucho $$$ while endangering innocent drivers who are at greater risk of being impaled by a Tesla because of it (or, in a recent Michigan accident, your beloved cops). It’s utterly irresponsible for Tesla to release lethal garbage into the wild. Watch the video and tell me otherwise.

#138 Expat on 03.19.21 at 7:06 am

The Canadian government is way behind Russia. Canadians should support Russia instead:

https://tradingeconomics.com/russia/interest-rate

#139 Do we have all the facts on 03.19.21 at 7:50 am

In theory the underlying value of stock issued by a public company is linked to corporate earnings divided by the total number of shares issued. Recent history established that the average price of shares issued by companies within the S&P 500 was 13 to 15 times average earnings.

In 2020 the average price/earnings ratio of companies within the S & P 500 increased to more than 35 times earnings as M2 money supply increased by trillions of dollars.

The current price of stocks within the S & P 500 would seem to indicate one of two scenarios.

1) future earnings are anticipated to increase by more than 200% in the foreseeable future.

2) the current prices of stocks within the S & P 500 are overvalued and do not accurately represent the average inherent value of the companies.

These two diametrically opposed scenarios are linked to the confidence of investors. At present investor confidence in the prospect of future economic growth is quite high. However this confidence may begin to wane if the projected 200% increase in corporate earnings does not materialize.

Since the current average P/E ratio within the S & P 500 is well over two times the historical average the more likely result will see the average price of stocks within the S & P 500 adjust towards intrinsic values once the
central banks stop topping up the punch bowl.

The S&P P/E ratio has not been 15 for almost a decade. – Garth

#140 Guelph Guru on 03.19.21 at 7:51 am

My inflation index is very simple, “net essential expense per month”. Grocery, rent, utility bills. Grocery bill is up. Rent is up. Utility bills are up. Around 10-15% more from last year.
That’s why I think the real interest in the bond market should be 10+.
How many folks can afford a 10% mtg rate?

#141 crowdedelevatorfartz on 03.19.21 at 8:17 am

Gee a 2 hour trial.

https://www.citynews1130.com/2021/03/18/michael-spavor-trial-ends-china/

Perhaps the Communist legal system could teach the Canadian legal system how to speed things up.

#142 crowdedelevatorfartz on 03.19.21 at 8:38 am

I’m shocked and disappointed Sara.
Personal insults when there’s so much more at stake here.
Apparently you’ve been busy while all the pc wars have been raging.
The Work From Home Covid crowd are bored and ready to leap on the tiniest infraction.

Garth’s harmless but obviously gender disparaging statement was a reminder of how far we have to go….in “the struggle” to change minds.

I’m amazed the wrath of the national equality movement hasn’t filed a class action suit by now.

If you wont join the fight for equality .
Ok. I understand.
You’re intimidated by the power of the blog master
( apologies “master” is a biased, sexist term…would “ruler” suffice?).
I reluctantly have to fight the cause in the name of justice and equality for all if you won’t.

Because…… its 2021.

#143 Dharma Bum on 03.19.21 at 8:47 am

#27 IHCTD9

The BoC needs to follow the new and more accurate GFPI for inflation on things today’s folks actually buy, like:

RV’s
Quads
Building Materials
Hunting and Fishing Gear
Houses and Condos
Boats
Pets
Beer
Hard Liquor
Harleys
Pickup Trucks
————————————————————————–

Hey!

How did you manage to plagiarize my shopping list for this weekend?

The only thing you missed is the Alberta ranch I have my eye on.

#144 Sara on 03.19.21 at 9:46 am

@CEF #142

What the…?

When you walked down the street (PRE-COVID), did you often notice people crossing to the other side?

#145 Looking Up on 03.19.21 at 9:50 am

#37 Sail Away on 03.18.21 at 4:26 pm
Inflation? Hadn’t noticed.

You should see my tax bill from last year’s APT profits. Whoo-ee! It’s like I’m singlehandedly paying T2’s salary.

———–

Yayyyy think of all the Hawaiian tourist whale art you can buy!

#146 IHCTD9 on 03.19.21 at 10:25 am

#143 Dharma Bum on 03.19.21 at 8:47 am
#27 IHCTD9

The BoC needs to follow the new and more accurate GFPI for inflation on things today’s folks actually buy, like:

RV’s
Quads
Building Materials
Hunting and Fishing Gear
Houses and Condos
Boats
Pets
Beer
Hard Liquor
Harleys
Pickup Trucks
————————————————————————–

Hey!

How did you manage to plagiarize my shopping list for this weekend?

The only thing you missed is the Alberta ranch I have my eye on.
___

That shopping list and an Alberta ranch are a match made in Heaven :)

#147 crowdedelevatorfartz on 03.19.21 at 10:34 am

@#144 Sara

“When you walked down the street (PRE-COVID), did you often notice people crossing to the other side?”

+++

Only when the wind was blowing in their direction and I was in a particularly flatulent “frame of mind”.
If you “catch my drift”.

#148 IHCTD9 on 03.19.21 at 11:04 am

#136 Nonplused on 03.19.21 at 2:56 am

It’s all about the RPM’s. Modern lawn tractors (and mowers) run about 3000 rpm, them old units more like 600. So ya, they last 5 times longer.

But the math isn’t all bad. Given that I use my garden tractor maybe 3-4 hours a week during spring and not much at all during the winter, it is 12 years old now and has about 250 hours on it. If it goes to your estimate of 2500 hours, my grandchildren will still be driving it.

Over-design is not always a good thing. A tractor that is going to work all day at the coal mine for 20 years has to be big and it has to be diesel. A weed snipper that costs $100 bucks? Not so much. It needs to be light.

Incidentally diesels last so long for 2 reasons: Yes, lower RPM due to huge torque, but also because diesel itself is a lubricant, whereas gasoline is a solvent.
____

The F140 in my little dozer is actually a 4 cyl flathead gas engine – but you are still right. It is a highly under-square engine with a 3.188″ bore, and a 4.375″ stroke – so it’s a slow runner just like a diesel. Max torque is 240 ft-lbs at only 1100 rpm, redline is 1800. It also lasts long due to their tolerance for overheating, and the stable cast iron (and copious quantities thereof) it’s made from.

Yeah, mowers don’t need to last 100 years – but the point was more about how well things were built when we had no clue what we were doing :). Some of these old Fairbanks Morse hot bulb diesel boat engines and oil well NG engines racked up 10’s of thousands of hours and 60+ years of near continuous operation – amazing! It seems like just about everything was built like a 5.9 Cummins back then.

I’m a little biased too, I just love the simple old heavy iron that was prevalent in pre-60’s era machines. Performance is not all that good – but reliability and longevity is off the charts, and so simple to repair and maintain. Love ’em.

#149 Wrk.dover on 03.19.21 at 11:24 am

IHCTD9, I totally ‘get’ that Yammy-Hah, but I’d ‘settle’ for an old Samurai wrong hand drive from a JDM importer, for 1/5 the price. Then I could get parts from RockAuto and not be captive to proprietary parts.

There is more to life than showering gravel on your followers.

#150 crowdedelevatorfartz on 03.19.21 at 11:30 am

A proxy war with China in 2-5 years over Taiwan?

https://www.reuters.com/world/us/us-china-set-broach-icy-relations-alaska-talks-2021-03-18/

It’s all about “saving face”.

#151 Phil on 03.19.21 at 11:37 am

If no one has mentioned it before; the reason the government stats. on inflation vary from reality is because government pensions are indexed to inflation. It is in their interest to manipulate the “basket” of items considered, to indicate the lowest rate possible.

#152 Sail Away on 03.19.21 at 11:39 am

#137 Faron on 03.19.21 at 3:55 am
#59 Sail Away on 03.18.21 at 5:46 pm

#52 Faron on 03.18.21 at 5:17 pm

You say bad, markets rocket. You say good, markets tank.

———–

I don’t get everything right by any stretch…

———–

True. I can attest to your prowess as a reliable contrarian indicator.

And… proof: AMZN and oil are both up today after you gloomed them yesterday. Thanks!

#153 Sail Away on 03.19.21 at 12:11 pm

Re: they don’t make ’em like they used to

My 1972 sailboat is a solid 1/2″ of hand-laid fiberglass from the early days of grp construction. None of this chopped fiber production spray stuff.

I have it on good authority that the keel can be run into coral at 3 knots and emerge structurally sound. :-)

#154 Mattl on 03.19.21 at 12:17 pm

#120 Stone on 03.18.21 at 10:30 pm
#107 Mattl on 03.18.21 at 9:01 pm
#105 Stone on 03.18.21 at 8:47 pm
#85 Paul on 03.18.21 at 7:03 pm
#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

———

Don’t worry. There are no losses with a B&D portfolio. Only happy endings.

———————————————————–

This is good context. You are a newish investor if you think a balanced portfolio will never take losses.

This also explains your excitement about 8% returns -SP500 returned 30% and 17% in 2018 and 2019 respectively.

So great work on the 8%, we are all very impressed with your strategy, it is clearly better then a GIC at the local CU.

———

Of course there are no losses. It’s called rebalancing. That’s why a typical B&D portfolio averages a return of about 7% per our host.

Now, if it averaged negative returns, you’d be absolutely right. Does it?

Perspective.

——————————————————-

You missed the point. All portfolio’s will suffer losses. A balanced approach didn’t return 8% in 2008. You can’t rebalance your way out of a market crash.

The SP 500 has averaged 13% over the past 10 and historically over 9%. If you only held TD, over the past 10 years you would have returned over 10%.

I believe in balance but it’s not a good look to be bragging about returns that are pretty easy to achieve as long as you stay invested. I’m balanced as well but the reality is we are giving up potential return for piece of mind. The returns themselves are not that impressive, and definitely not worthy of a daily update. It would be like bragging about owning a Honda Civic – great reliable car, a good choice, but no one is going to be that impressed with your ride.

#155 JB on 03.19.21 at 12:22 pm

#141 crowdedelevatorfartz on 03.19.21 at 8:17 am

Gee a 2 hour trial.

https://www.citynews1130.com/2021/03/18/michael-spavor-trial-ends-china/

Perhaps the Communist legal system could teach the Canadian legal system how to speed things up.
……………………………………………………………………….
Sure we could learn quite a lot from the Chinese Democratic System and their extremely fair, clear and balanced approach to handing out judgments based on only real facts.
Then I woke up and said holy $hit I can;t believe I just said that.
You can not trust China ever, ever, ever. They lie, manipulate, steal and purloin technology for their own goals. They want to rule the world plain and simple. They do not have a legal system over there and don’t want the rest of the world to have one either.

#156 Do we have all the facts on 03.19.21 at 12:39 pm

When I reduced the timeframe for calculating average P/E of the S&P 500 to the last 15 years the average ratio increased to 19. Sorry for the confusion.

My point was that QE by the central banks definitely increased the ratio in 2020 to the point where the ability of companies to meet projected earnings has been exceeded.

The current average P/E of the S&P 500 is over 40 and corporate earnings do not appear to support the current level of investor confidence in future price increases.

Is 40 a reasonable average P/E ratio all things considered?

If earnings this year are neutral the P/E is forecast to be about 27. But earnings will likely explode, dropping the measure. Reasonable investors should maintain exposure to the US equity market. Fearful ones can write blog posts about historically-high ratios in unusual times. – Garth

#157 IHCTD9 on 03.19.21 at 12:47 pm

#149 Wrk.dover on 03.19.21 at 11:24 am
IHCTD9, I totally ‘get’ that Yammy-Hah, but I’d ‘settle’ for an old Samurai wrong hand drive from a JDM importer, for 1/5 the price. Then I could get parts from RockAuto and not be captive to proprietary parts.

There is more to life than showering gravel on your followers.
_________

I like those little Samurai’s too. Out my way they are not cheap! They have a cult following and are very popular with the “Jeep” set. Not sure what the JDM prices are like on RHD machines – I doubt there are many great deals. Cheaper than a good SXS yes, but not a lot of value for the $ as a strictly off road machine.

Ultimately, there is nothing that can touch an ATV/UTV on the muddy rock/root strewn trails around here, and I’d likely be doing a lot more winching if I were out there with a Samurai.

The chances are slim I’d plunk down 25-30K for a brand new RMax, I’m more of a “used but like new” kinda guy. I’d likely get 12K selling the two quads I have now, so maybe another 6K on top would put a near mint used RMax in the garage in 2-3 years. That’s within my annual Trudeau-bucks toy allowance.

#158 Faron on 03.19.21 at 12:48 pm

#136 Nonplused on 03.19.21 at 2:56 am

diesel itself is a lubricant, whereas gasoline is a solvent.

The chemist in me has to inform you that they are both solvents. i.e. when I rebuild the winches on my boat, I use diesel to clean the parts. Solvent. I think you are getting confused by viscosity here.

#159 IHCTD9 on 03.19.21 at 12:54 pm

#141 crowdedelevatorfartz on 03.19.21 at 8:17 am
Gee a 2 hour trial.

https://www.citynews1130.com/2021/03/18/michael-spavor-trial-ends-china/

Perhaps the Communist legal system could teach the Canadian legal system how to speed things up.
____

I think their trick to a fast trial is to decide what the outcome will be before you head on into the courtroom.

#160 Faron on 03.19.21 at 12:55 pm

#152 Sail Away on 03.19.21 at 11:39 am

Cute. We are long term investors here.

But while I have you:

https://patch.com/new-jersey/redbank/monmouth-co-mom-toddler-nearly-hit-self-driving-tesla

You do seem to be into population control. Maybe that’s why you like Elon Musk so much?

#161 crowdedelevatorfartz on 03.19.21 at 1:32 pm

@#155 JB

“Sure we could learn quite a lot from the Chinese Democratic System and their extremely fair, clear and balanced approach to handing out judgments based on only real facts.”

+++

Apparently they have a 100% conviction rate !
Amazing!
2 hour trials and 100% success rate.
Canadian drug dealers in China take note.

https://www.cbc.ca/news/world/canadian-death-sentence-china-1.5677675

Dont waste your money on Lawyers….you’re already guilty.

#162 Stone on 03.19.21 at 1:55 pm

#154 Mattl on 03.19.21 at 12:17 pm
#120 Stone on 03.18.21 at 10:30 pm
#107 Mattl on 03.18.21 at 9:01 pm
#105 Stone on 03.18.21 at 8:47 pm
#85 Paul on 03.18.21 at 7:03 pm
#39 Stone on 03.18.21 at 4:37 pm

Daily obsession with your gains (and eventual losses) is not at all healthy.

———

Don’t worry. There are no losses with a B&D portfolio. Only happy endings.

———————————————————–

This is good context. You are a newish investor if you think a balanced portfolio will never take losses.

This also explains your excitement about 8% returns -SP500 returned 30% and 17% in 2018 and 2019 respectively.

So great work on the 8%, we are all very impressed with your strategy, it is clearly better then a GIC at the local CU.

———

Of course there are no losses. It’s called rebalancing. That’s why a typical B&D portfolio averages a return of about 7% per our host.

Now, if it averaged negative returns, you’d be absolutely right. Does it?

Perspective.

——————————————————-

You missed the point. All portfolio’s will suffer losses. A balanced approach didn’t return 8% in 2008. You can’t rebalance your way out of a market crash.

The SP 500 has averaged 13% over the past 10 and historically over 9%. If you only held TD, over the past 10 years you would have returned over 10%.

I believe in balance but it’s not a good look to be bragging about returns that are pretty easy to achieve as long as you stay invested. I’m balanced as well but the reality is we are giving up potential return for piece of mind. The returns themselves are not that impressive, and definitely not worthy of a daily update. It would be like bragging about owning a Honda Civic – great reliable car, a good choice, but no one is going to be that impressed with your ride.

———

I didn’t miss your point. We just have a difference of opinion. And timeframe in mind. And what a profitable portfolio actually represents.

You can’t rebalance out of a market crash? Of course you can. Uhmmm…2020. Actually, even 2008.

Also, I drive a Corolla. What’s the obsession with everyone here on the Honda Civic? Both get you from point A to B.

Lastly, what’s worthy for you may not worthy to me and vice versa. From what I’m seeing, being over 8% ytd is actually pretty impressive for a balanced and globally diversified portfolio. You’re welcome to scroll on though.

#163 Sail Away on 03.19.21 at 2:11 pm

#160 Faron on 03.19.21 at 12:55 pm
#152 Sail Away on 03.19.21 at 11:39 am

But while I have you:

https://patch.com/new-jersey/redbank/monmouth-co-mom-toddler-nearly-hit-self-driving-tesla

————

Nearly hit, huh? But they weren’t, like, hit. Or hurt in any way. Thanks for traveling to New Jersey to bring us that story.

In return, I offer you our hero’s next gigantic, never before attempted, astoundingly successful, satellite internet venture:

https://www.google.com/amp/s/www.cbc.ca/amp/1.5831765

#164 I doubt it on 03.19.21 at 7:51 pm

My father bought TD at almost $80 in September-2018 and it just hit mid $82 at $82.42 today. Their dividend is not that high either, 3.81% currently.

It hit a low in the $53.52 in 2020 in March-2020 a low of April-2016. I doubt TD will make a 10% return going forward. Thy will be lucky to make 6% to 6.5% going forward for years.

#165 Happy Boomer on 03.19.21 at 8:24 pm

“Remember this too, Ab. Your parents once made wise and protective decisions, despite what you may have wanted. Now it’s your turn.”

As I read this advice again, it reminds of a movie I just saw – I recommend it. A lot!

https://www.primevideo.com/detail/amzn1.dv.gti.f2bbb29a-c25a-2a94-3a0f-edd8b2e23574?ref_=dvm_pds_tit_ca_dc_s_g|m_eeaXrQNtc_c496664229777

As a 75 year old living in an owned home, I don’t see any of my millenial relatives as qualified to advise me. The other way around, I am the one that doles out the wisdom. I see them taking out 84-month car leases, refinancing their mortgages to pay credit card debt, and taking exotic vacations because “they just need a break”.

During the past 5 years, I have seen two seniors, a widow and a widower get picked clean and stripped of their assets because they took this kind of advice from children. Once the assets were liquid, the kids found all kinds of ways to get their hands on it: as an “advance on the inheritance”, for “family emergencies”, to co-sign for car-loans, and to help with their mortgages, etc. etc.

Parents of Abdullah, smile benignly on your son but don’t abandon your own wisdom lol.

#166 Enlightened on 03.20.21 at 9:27 am

Garth….back to preferreds…having difficulty understanding why they should be in the fixed portion of the portfolio? I see the fixed portion of a 60/40 portfolio as the buffer for equity volatility. The portion that helps stabilizes the portfolio when equities are on a bouncy ride. Looking at the returns on Preferreds over the last decade (one of Ryans older posts) I see a large swing over the years with an average return of 3.8%. They are quite volatile within them selves and I believe they act more like an equity asset. is an average of 3.8% ( newer data may show higher?) really worth the risk aspect within the fixed portion? Maybe my view is off track a bit..enlighten me…..thanks