The key lesson

When Janet Yellen mused about rates going up the other day, she really stepped in it. Stock markets moaned and wavered for a few hours. Critics piled on saying a politician (she’s America’s finance minister equivalent) shouldn’t mess with central bank policy (she used to run the Fed). And it looks like President Joe told her to cork it.

So Janet walked it back. But, guess what? The market knows she was right. She knows she was correct. So do we.

Have you noticed what’s happened with preferred shares? They’re a hybrid between equity and bonds. Way more stable than stocks. They pay a dividend, rather than interest. Tax-efficient. And interest-rate sensitive. Especially the rate-reset variety (the only kind to own in an ETF).

As the vaccines flow and the virus inevitably ebbs, stimulus will be reduced and interest rates will rise. Janet spoke the truth – a reopening economy, mucho government spending, tons of new jobs, rising stocks and romping corporate profits – it’s all inflationary. CBs will respond by increasing their benchmark rates to cool price increases. It’s what they do.

The certainty of this happening has plumped prefs this year. The jump in values has been over 16% in 2021, and every day these things pay you to own them – the dividend is now about 4%, or more than twice what a brain-dead GIC yields. Total return YTD is a sunny 18%.

This is why you should have about half the fixed-income (safer) 40% hunk of your portfolio in preferreds. As interest rates rise, bond yields swell and bond prices drop. So in 2021 the value of bonds has decreased but the prefs have more than made up for it. In a way, then, the preferreds have more than paid for the insurance bonds give you in the event of an equity market correction. This is the essence of a B&D portfolio’s logic. Protect in a storm. Advance in calm.

Mostly, the big jump in preferreds says this: Mr. Market knows, expects and is pricing in higher rates. Look at BAX futures, where interest rate futures are bet on. They’re forecasting two hikes or more by the end of next year. And did you see RBC’s mortgage move? In the last few days a slew of home loan rates have been jacked up. The five-year ‘special’ is now back up to 2.69%.

Now gander at commodities. Oil is solidly in the mid-60-dollar US range (a year ago it was negative) because the global economy will expand, demand increase and prices inflate. Besides, it’s almost driving season again, and EVs suck. It all adds to the inflation narrative, along with billions and trillions in government stimulus spending. (Canada’s Parliamentary Budget Officer now says it will be 2055 – when your new baby is in her mid-thirties – before we get back to 2019 debt ratios. Hope she likes taxes.)

Higher inflation means rate hikes, which increase the value of preferreds as well as bond yields. And those bonds set mortgage costs. It shouldn’t be too tough to see where all this is headed.

Okay, now go back and review yesterday’s post. Higher mortgages when all of today’s buyers renew. Less WFH. No pandemic lockdowns. Higher taxes after the 2021 federal election and the 2022 federal budget. Less FOMO. Way more listings and (here’s betting) lower property prices.

After all, the current situation is unsustainable. Even with cheapo, virus-created mortgage rates it now takes the average family saving 10% of income more than five years to amass the down payment on the average home. But during that period of time, prices have ricocheted higher in a never-ending spiral of disappointment. (By the way, the time needed to save a down payment to buy in Toronto is 23 years. In Vancouver it’s 32 years, says National Bank.)

Another harbinger of change: condos. Specifically, downtown ones.

Sales in Toronto’s core have risen more than 110% since a certain pathetic blog flagged a potential buying opportunity there. The inventory of listings has plunged from a 5-month level to about 4-weeks. Multiple bids are flowing in again even for the 500-footers than were hard to give away in December. (You might want to read this brag piece by a Toronto realtor.)

Why?

Simple. The city, the centre, the downtown will blossom in 2022 as the lights start going out in Hicksville, Armpit and Bunnypatch. Offices will reopen – yes, on a limited and hybrid basis to start – and all the reasons it made sense to live close to work, to avoid commuting, to have a plethora of great restaurants, clubs, stores and amenities surrounding you, to not worry about three feet of snow in the laneway and be able to summon an Uber in four minutes, will return. Investors know this. They’re buying.

What did the slimy little pathogen teach us?

Yup. Nothing ever stays the same. Embrace that.

About the picture: “I am a faithful daily reader of your blog,” writes Paul from Alberta. “Thanks for providing this valuable service to your followers. Here are Paisley and Leva at the Calgary Westie Walk. They are such enthusiastic companions. They live life to the fullest! We should all live that way.”

156 comments ↓

#1 What did you win? on 05.06.21 at 1:22 pm

Instead of 1st, everyone should try to be 69th.

#2 Furst on 05.06.21 at 1:27 pm

I’m first yo!

#3 Ponzius Pilatus on 05.06.21 at 1:31 pm

Wow.
5 years fixed back up 2.69.
I renewed at 1.69, 2 months back.
Tummy rub.
Thanks Garth.

#4 TurnerNation on 05.06.21 at 1:33 pm

Hey Consp. Theorists take your nutty ideas and shove them where the sun rarely shines, yes in Newfoundland.
(I knew that mail in ballot thing there was being used a test zone…but for what)

Get over it – we are an Occupied nation and it ain’t coming back.

https://www.cbc.ca/news/canada/newfoundland-labrador/report-greene-recovery-1.6016005
‘Big reset’ called for debt-ridden N.L. with release of ground-shaking economic report

…..

Again it’s been said Kanada and Australia are the ‘test zones’ of the Globalists’ desire.
What’s going on Down Under and will see the same? Tourism Industry has been killed, both countries

Hint hint I bet the Bankers will swoop in and buy up our distressed assets on the cheap. Did GFC 2008 teach you anything? Learn how the game is played lads. Dovetailed with the New Green Deal – slowly banning free air travel. (We’re in training)

.Australia’s international borders are set to remain closed well into next year (dailymail.co.uk)

.Sydney just re-mandated masks and re-imposed restrictions on gathering after two cases in the entire state of New South Wales. (smh.com.au)

.New Zealand hits pause on quarantine-free travel bubble with NSW during investigations into latest cases (abc.net.au)

#5 The West on 05.06.21 at 1:36 pm

It’s been too good for too long.

https://www.theatlantic.com/health/archive/2021/05/back-to-office-pandemic-safety/618783/?utm_source=pocket-newtab

#6 tkid on 05.06.21 at 1:37 pm

I have all of the 40% in preferred as the bond rate of return is so low. Do you still recommend holding 20% in bonds?

Nobody holds bonds for yield. They are insurance. – Garth

#7 C V on 05.06.21 at 1:37 pm

Keep rates low= everyone incurs astronomical non repayable debt and prices continue to rise.
Rates rise a little = recession
Rates rise a lot= = depression we could never imagine

Only answer is find more excuses to print money until the house of cards collapses, could be 2 years, maybe 5, maybe 20.

It’s math

The economy has lots of room to absorb higher money costs, even if over-extended borrowers are squeezed and housing equity is lost. Don’t dramatize. – Garth

#8 Guy in Calgary on 05.06.21 at 1:42 pm

32 yo male here and vaccine is booked. The end of this strange blip of time is near.

Those that overbid on properties in Owen Sound are in trouble.

#9 Bibi on 05.06.21 at 1:43 pm

Grateful for the tip on preferred etf’s last year. Jumped in it worked out great, so very much thanks :).
Anyone has insight as to why choose rate reset prefs?
CPD is not a rate reset when compared with ZPR/RPF for example. Any reading materials into the matter would be appreciated. Thanks.

#10 T-Rev on 05.06.21 at 1:45 pm

Breaking news from the front line: The UHI (used Harley index) is down about 10-15pct in the last two weeks here in Alberta. I use this as a highly accurate, scientifically validated indicator of the amount of free spending money people have.

The UHI on a typical year rises rapidly March-July, stabilized until late August, then declines slowly at first then sharply until sometime in November, when it bottoms out until following spring.

This time of year, bikes should be selling quick and rising in price daily. However, the UHI fell sharply during the early pandemic of 2020, only to regain all lost ground by fall. Prices actually increased steadily over the winter, and shot up more sharply mid feb-mid April.

I’ve seen good bikes sitting unsold for a couple weeks, with price drops and lower asking prices in general. At first I thought it was an anecdotal aberration in the data, but the trend has continued and we’re at least 10-15 points lower than we were in late March. I checked with my peers over at the UAI (used ATV index) and they’re seeing the same trend.

The dumb money is now played out, FOMO is receding, and it looks like things are returning to normal. If we’ve passed the peak of the UHI, we’ve officially passed the peak of everything else as well. April 2021 will go down as the top.

And yes I picked up a low mile 2003 Dyna Wide Glide last Friday for peanuts. Amazing bike, great deal. I saw early 2000s sportster go higher in March.

#11 turnipnation on 05.06.21 at 1:47 pm

Give it a rest TurnerNation, go out for a walk, stop doomscrolling and get out of your negative feedback loop.

It’s tedious, it’s fake news. People in the UK are nearly back to normal.

Just

Stay

Calm

#12 crowdedelevatorfartz on 05.06.21 at 1:51 pm

Inflation….here we come.
Be interesting to see how the housing markets react to this.

#13 Ponzius Pilatus on 05.06.21 at 1:52 pm

My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.

#14 Joseph R. on 05.06.21 at 2:01 pm

#12 crowdedelevatorfartz on 05.06.21 at 1:51 pm
Inflation….here we come.
Be interesting to see how the housing markets react to this.

—————————————–

We will see the wisdom of OSFI’s mortgage stress test (B-20). BTW, it goes up 0.5% higher on June 1.

#15 willworkforpickles on 05.06.21 at 2:10 pm

….and those who locked in at 1.69% for 5 years 2 months ago will be renewing a 8.69% 5 years minus 2 months from now….(at the very least).

#16 the jaguar on 05.06.21 at 2:10 pm

Love those dogs! I think I was on a flight to Varadero with them a while ago! They were in the rear cabin

#17 Hey Kanada on 05.06.21 at 2:12 pm

How is that universal health care working for you now?

#18 willworkforpickles on 05.06.21 at 2:21 pm

They will tell you they are ending stimulus again and again and each time it will be yet another bigger lie than the former.
The point of no return for ending stimulus has come and stimulus will just keep coming and being resorted to.
The age of interest rates having to normalize over time will/is slowly gradually creeping upon us.

#19 Dolce Vita on 05.06.21 at 2:22 pm

“…lights start going out in Hicksville, Armpit and Bunnypatch”

You forgot:

Squat To Pee

It’s in one of the Prairie Provinces.

———————–

VAX passport for Italia & EU. Starts in Italia in 4 days time. EU mid June, pilot testing in high tourist countries now.

As of today you are not allowed into Italia Beavs. Gov Canada blunt, see yellow box:

https://travel.gc.ca/destinations/italy

But have a link to Gov Italia to give it a go anyway:

https://infocovid.viaggiaresicuri.it/index_en.html

Gov Italia asks a lot of questions and when you get to the end, you will need a lawyer to figure it all out.

I say hop a plane, see what happens.

————–

And Super Mario says:

“book your holidays in Italy, we can’t wait to welcome you again”

Speak for yourself Mario.

I personally have enjoyed the Peace and Quiet in Italia from tourists.

—————————-

Will be good to see some Americans and Canadians in Italia, despite my gripes above, I miss you all.

TIP:

When greeting us Italians do not say “Ciao” it is a familiar term reserved for close friends, family; rather, say “Buongiorno” in the daytime (morning too, ignore idiot American Google Translate) or “Buonasera” in the evening.

I know you can’t resist saying Ciao but avail yourselves or make a close friend, find a spouse in Italia.

#20 Joseph R. on 05.06.21 at 2:26 pm

#13 Ponzius Pilatus on 05.06.21 at 1:52 pm
My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.

———————————————

So that you will buy a new one. Also, if you trade-in, you’ll need to pay reconditioning costs (1-1.5k).

#21 Cottagers STAY THE HELL AWAY! on 05.06.21 at 2:29 pm

“The city, the centre, the downtown will blossom in 2022”

Yep. So no need to come up to cottage country, all you slimy little pathogens from the GTA!

Just.

Stay.

Home.

#22 TurnerNation on 05.06.21 at 2:32 pm

turnip nation you made my point.
So where’s our normal? This is an Economic Takedown.
Things have BARELY begun here. Buckle up.

Small town bring down. (that’s a Hip song too). Tourism kaput.

https://vancouversun.com/news/local-news/covid-19-roadside-travel-checks-to-start-in-b-c-on-thursday
COVID-19: Roadside travel checks to start in B.C. at midnight
Roadblocks on Highways 1, 3, 5 and 99 to ensure no non-essential travel between three regions

—–

Ontariowe. Some have asked who is getting those juicy contracts for provision of the Online Schooling? Children must never no normalcy in this New System it seems.

.Ontario government reveals virtual school option for 2021-22, funding plan (globalnews.ca)


-No surprise here Big Tech, Bankers, years ago outlined its plans for electronic control over education and young minds.

https://wrenchinthegears.com/?s=education&orderby=relevance&order=DESC
Blockchain Education, A Ticket To Digital Serfdom

Education: America’s Next Extractive Industry

Secretary of Education Dr. Miguel Cardona, Connecticut Hedge Funds, and Human Capital

#23 alexinvestor on 05.06.21 at 2:33 pm

The big question is whether inflation as measured will actually increase. Maybe, then again maybe not. Sure, iphones have gone up in price, but once hedonic adjustments are added in, these things are cheaper than ever. Housing costs, taxes keep going up but somehow the CPI hasn’t pick these up yet.

#24 Hey Murca on 05.06.21 at 2:37 pm

#17 Hey Kanada on 05.06.21 at 2:12 pm

How is that universal health care working for you now?

Not bad at all. COVID seems to still be killing a fraction of what it is in the US.

How’s the rise of the corrupt alt-right and white nationalism working out for you?

#25 Faron on 05.06.21 at 2:41 pm

ARKK has now drifted below it’s 2021 low. $50B AUM in ARK funds structured such that if people head for the doors in any size, the whole thing will collapse. Cathie has collapsed funds before…

Sail Away, take this as your buy signal. These are practically value ETFs now ;-)

#26 Silentmajority on 05.06.21 at 2:55 pm

I honestly have no idea why Turnernation is still allowed to post his daily drivel. So lost in his echo chamber he seems incapable of actual critical thinking – as opposed to the fake woke crap he’s based his entire identity on. Sad.

#27 Brian Ripley on 05.06.21 at 3:00 pm

My chart comparing Vancouver and Toronto housing is up with April data:
http://www.chpc.biz/compare-toronto–vancouver.html

Toronto detached house sellers need another $583,000 to catch up.

TOR has 1.1 x more Listings than VAN
TOR has 2.8 x more Sales than VAN

Inventory Sold Each Month: TOR = 117% VAN = 48%
Months of Inventory: TOR = 0.9 VAN = 2.1

VAN SFD is valued 42% higher than a TOR SFD
10 year inflation rate of SFDs VAN: 124% TOR: 134%

VAN T-House is valued 22% higher than a TOR T-House
VAN Condo is valued 6% higher than a TOR Condo

Average Annual Payroll Earnings (FEB Data 2 mo. report lag) ON: $61,791 and BC: $58,158

Annual Precipitation VAN:TOR = 2:1

#28 crowdedelevatorfartz on 05.06.21 at 3:04 pm

@#13 Ponzie’s Poormans Porsche
“My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.”

+++

Total scam.
They did the same thing to me with my 2014 Tacoma about 2 years after I bought it.
They will low ball you on the trade in and naturally sell into a new car or payments.
My 2014 is ticking along just fine with 79,000kms on it.

#29 ElGatoNerodeYVR on 05.06.21 at 3:06 pm

#104 Thuggish Ruggish Bone on 05.06.21 at 2:07 am
Can you believe there are 1646 detached listings for sale in the ghetto of BC known as Surrey?
========================
Yesterday’s most either biased,clueless or bait comment.
Clearly this person has not driven lately to South Surrey ,Cloverdale or Fleetwood.
If you don’t own a car you should rent one or get an Uber and do a tour, you just might realize that the same as Vancouver is not all Hastings at Cordova or East Vancouver, Surrey is not all Whalley (King George at 108) or Newton .
And maybe Google Surrey population and you will realize that it will overtake Vancouver within years and that 1.7 mil which is a teardown in Vancouver is likely in a great area and with brand new finishes…and it will only go up as Surrey is pretty much the only decent city left for the people who work for a living to live in at reasonable costs.
So in case you are not trolling now you know something different ,if you were ,well then: congratulations.

#30 Franco on 05.06.21 at 3:08 pm

This could be the moment in time that house prices in Canada have hit a peak and are unlikely to go up anytime soon, if ever, depending on population growth. Too much downward pressure on house prices, interest rates rising and not enough buyers. The days of 10% plus rise in a year are over.

#31 Cottagers STAY THE HELL AWAY! on 05.06.21 at 3:11 pm

The inlaws and I finished a fresh batch of turnip whisky!

Stop by and have a swallow or two while we sit on the porch and jaw fer a while.

#32 Dieselgate on 05.06.21 at 3:20 pm

#13 Ponzius Pilatus

My Audi dealer has called.
Wants my 2017 Audi Q5.

Q5? Is that your wife’s car? Is this chick mobile white? Of course it is!

Well, at least you can say that Audi did outscore KIA on the 2021 Brand Reliability Ratings.

Here is ranking of the major automotive brands, according to their reliability score, Audi beating Kia by 1 point out of 100!

Yikes – Mercedes! That explains why I keep seeing them on the side of the road.

Remember boys and girls – avoid Dieselgate cheating car brands (VW/Audi/Porsche/Mercedes) not only on principal but also on the fact that if they didn’t think it was important to look after humanity in general, you think they care if their product is reliable?

Hey – check out Tesla scraping the bottom of the list. I guess Garth is right on this one – EVs do SUCK!

Mazda (83)
Toyota (74)
Lexus (71)
Buick (70)
Honda (63)
Hyundai (62)
Ram (58)
Subaru (57)
Porsche (55)
Dodge (54)
Infiniti (54)
BMW (52)
Nissan (51)
Audi (46)
Kia (45)
GMC (43)
Chevrolet (42)
Volvo (41)
Jeep (41)
Mercedes-Benz (40)
Cadillac (38)
Ford (38)
Mini (37)
Volkswagen (36)
Tesla (29)
Lincoln (8)

#33 Where's My Money Going Greedeau? To Pay For Yoga Lessons! on 05.06.21 at 3:26 pm

Re: #104 Thuggish Ruggish Bone on 05.06.21 at 2:07 am
Can you believe there are 1646 detached listings for sale in the ghetto of BC known as Surrey?

A small 3600 sq. feet asking $1,699,000. This is truly outrageous Garth.
+++++++++++++++++++++
They include the basement in their square footage that is not included in provinces like Sask.
Such a scam.

#34 C V on 05.06.21 at 3:34 pm

The economy has lots of room to absorb higher money costs, even if over-extended borrowers are squeezed and housing equity is lost. Don’t dramatize. – Garth

If that were really true they wouldn’t have dropped rates in the first place now would they? Don’t trivialize our economic situation. People are buying up real estate for 2 reasons: Space away from people, and attempts to protect currency debasement in the most tax friendly thing they can find

Nobody – repeat, nobody – is buying residential real estate to stave off currency debasement. – Garth

#35 jess on 05.06.21 at 3:34 pm

shaking the tree

April 28, 2021
Department of the Treasury

https://home.treasury.gov/news/press-releases/jy0150

..”Investing in the IRS and Improving Tax Compliance
April 28, 2021
A well-functioning tax system requires that all taxpayers pay what they owe. An unfortunate characteristic of the current system, however, is an asymmetric adherence to tax law by the nature of income received. While roughly 99% of the taxes due on wages are remitted to the Internal Revenue Service, compliance across other forms of income is substantially less, as the IRS has difficulty verifying whether income from opaque sources is properly reported. Noncompliance is concentrated at the top of the distribution: A recent study found that the top 1 percent failed to report 20 percent of their income and failed to pay nearly $175 billion in taxes owed annually.

The Biden administration says that investing $80 billion to beef up IRS enforcement will pay for itself by recouping a projected $700 billion over the next decade….

For decades, rich people and corporations have aggressively lowered their share of the tax burden by constructing increasingly sophisticated means of avoidance and evasion. In a statement released Wednesday, the Treasury Department said that these schemes will cost the government more than $7 trillion in revenue over the next decade if left unchecked.
“This massive gap in revenue means policymakers must choose between higher taxes elsewhere in the tax system, lower spending on fiscal priorities, or rising budget deficits,” the IRS said in the statement. “A well-functioning tax system requires that all taxpayers pay what they owe.”

#36 ts on 05.06.21 at 3:40 pm

# 11 turnipnation on 05.06.21 at 1:47 pm
#26 Silentmajority on 05.06.21 at 2:55 pm

I actually like reading Turner Nation. I think he has a lot to offer in way of truth and different perspective.

#37 Ostrich in Sand Out for a glance on 05.06.21 at 3:46 pm

“Freedom is the freedom to say that two plus two make four. If that is granted, all else follows.”

― George Orwell, 1984

https://nicholaswade.medium.com/origin-of-covid-following-the-clues-6f03564c038

#38 VladTor on 05.06.21 at 3:57 pm

Garth…. Nobody holds bonds for yield. They are insurance.

************
Bingo! Cheers ! I completely agree!

Garth, I was thinking same way.
First time, since I’m reading info about bonds in different sources I see right definition what does it mean bonds in reality.

Please finish sentence (it is not full): They are insurance…..for….

#39 S.Bby on 05.06.21 at 4:04 pm

Jagmeet wants the government to build houses:

https://www.citynews1130.com/2021/05/06/pandemic-build-housing/

He also wants everyone to have a pony.

#40 RJ out west on 05.06.21 at 4:05 pm

So the Green Bank bought back 200 of their rate reset series 12 preferred shares from me last week, they must know something…
It’s paid me well to own it but I was looking forward to higher rates.

#41 S.Bby on 05.06.21 at 4:11 pm

RL lumber up another 4% today to $1,607.50 this is nuts. And it will go higher.

#42 Tbone on 05.06.21 at 4:26 pm

My Audi dealer sent me a nice letter last week and a text this morning. They want my car so they can get me into a new one . The one in the showroom that was equivalent to mine was 95k .
Think I’ll keep mine for a while . It only has 22 k and still has the new car smell . Working from home and then retired doesn’t rack up the mileage much .

#43 Hot Take on 05.06.21 at 4:29 pm

#24 Hey Murca on 05.06.21 at 2:37 pm

#17 Hey Kanada on 05.06.21 at 2:12 pm

How is that universal health care working for you now?

Not bad at all. COVID seems to still be killing a fraction of what it is in the US.

How’s the rise of the corrupt alt-right and white nationalism working out for you?
——————————————————
Good, Gooood:
https://www.youtube.com/watch?v=rMNKwZTv1d0

#44 Linda on 05.06.21 at 4:29 pm

So the Millennials range in age from 25 to 40 (as per Google) yet it currently takes 23 (GTA) to 32 (YVR) years to save up for a downpayment. During the time of life when the desire to own is strong to say the least. Meanwhile the PBO is saying 2055 to return to 2019 debt ratios – 34 years of presumably ever increasing taxes. Even if Millennials purchase in less expensive locales & it only takes half the time it would take to scrape a downpayment together than purchasing in the GTA most of them would be well into middle age before they became homeowners.

#45 AM in MN on 05.06.21 at 4:33 pm

Nobody – repeat, nobody – is buying residential real estate to stave off currency debasement. – Garth

———————————————–

Nonsense!

They may not have a deep understanding of central banking and monetary theory, but they have a good feeling that something isn’t right with all the money printing.

Further to yesterday’s post, the worlds of monetary policy and fiscal policy collide when the central bank buys government bonds. It would be more honest to simply print the cash and hand it over, given that no one actually expects the CBs to get repaid by their govts, which would require a massive tightening of credit.

House buyers know that everyone needs a place to live. Van and TO are places where people from around the world want to live, and thus a house will always have some value. The cash value will vary upon many factors over time, but one of the big ones is currency debasement…or perhaps better explained as the CB “lending” the govt. money for which it will not repay.

It isn’t different this time, and isn’t different than every other country throughout history that has gone down the path. I would suggest some BTC for the long haul though, better upside and liquidity and asset protection.

Welcome to that 70’s show…

#46 HyperInflator on 05.06.21 at 4:45 pm

Not only BTC is hyperinflating. Those fence posts in your backyard could be worth a fortune!

https://www.vox.com/22410713/lumber-prices-shortage

#47 C V on 05.06.21 at 4:48 pm

Nobody – repeat, nobody – is buying residential real estate to stave off currency debasement. – Garth

Inadvertently they absolutely are. With the money supply increasing at the exponential rate it is a million dollar loan on a house doesn’t seem so bad when then house is worth 5 million 10-15 years later. It’s a risky attempt to outpace inflation, and it won’t stop until the printing stops, and the printing can’t stop

#48 morrey on 05.06.21 at 4:51 pm

no dousing this fire:

“Canada’s national housing agency is predicting home prices could rise as much as 14 per cent during the second year of the pandemic as low interest rates continue to stoke demand across the country.”

the correction is years off…

#49 happygolucky on 05.06.21 at 5:10 pm

#77 espressobob on 05.04.21 at 10:30 pm
Xenophobia exists in cottage country as it does globally. An incredible pool of ignorance that permeates from tribalism.
Most amusing mentality from the back woods while individuals engaging in this activity would be be better served getting an education.
Somehow that seems doughtful.
———————————————-

Agree, and you put this very eloquently.
Don’t we just call them Red Necks?
And did you mean those who would go after your RV, perceiving it inferior to their territory?

#50 VladTor on 05.06.21 at 5:24 pm

The current copper price is already at an all-time high of $10K per tone, nearly doubling from pre-COVID prices as it suddenly emerged that production of energy-intensive goods in the world as a whole is growing at a much slower rate than that of the global printing press. According to the IEA forecast, the copper deficit will grow, and not for months, but for years, and the price of copper may well double again, with all the consequences for a heap of industries.

https://oilprice.com/Metals/Commodities/Analysts-Copper-Prices-Could-Double-To-20000-Per-Ton.html

BUY COPPER NOW!
Keep it in backyard – copper don’t care about weather condition.

#51 Kurt on 05.06.21 at 5:32 pm

“EVs suck”

Uh, having had more than one Tesla accelerate away from me as though I was parked, I would say they have their place.

Still, ICE vehicles are not going extinct for a while and will always be the right choice for some applications.

#52 Don Guillermo on 05.06.21 at 5:37 pm

#39 S.Bby on 05.06.21 at 4:04 pm
Jagmeet wants the government to build houses:

https://www.citynews1130.com/2021/05/06/pandemic-build-housing/

He also wants everyone to have a pony
*************************************
Make sure you get the terminology right or you may be called out by Jag/T2 and their PC disciples.

“The label of “homeless” has unfortunate connotations. It implies that one is a failure, is “less than”, and it undermines self-esteem and progressive forward motion. The use of the term unhoused, instead of “homeless”, has a profound personal impact upon those in insecure housing situations.”

http://blog.oslserves.org/?p=38

#53 Leftover on 05.06.21 at 5:38 pm

#47 C V on 05.06.21 at 4:48 pm

Nobody – repeat, nobody – is buying residential real estate to stave off currency debasement. – Garth

Inadvertently they absolutely are. With the money supply increasing at the exponential rate it is a million dollar loan on a house doesn’t seem so bad when then house is worth 5 million 10-15 years later. It’s a risky attempt to outpace inflation, and it won’t stop until the printing stops, and the printing can’t stop
___________________________

Currency/inflation hedgers buy gold, not houses.

It’s called liquidity

#54 jenna on 05.06.21 at 5:48 pm

Interest rates will not go up. BoC will find another way. To much money has been borrowed and over leveraged including governments.

We have been down this road before…and nothing will happen. It’s always a fun past time trying to rationalize uncharted waters !

p.s. Think about Japan scenario

#55 espressobob on 05.06.21 at 5:48 pm

Thought I would share an interesting tidbit known as ‘old copper nose’. Not suggesting anything.

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

Seem to have nothing better to do, than sip bourbon and talk to a coconut.

#56 Turner Nation's Psychiatrist on 05.06.21 at 5:54 pm

#26 Silentmajority on 05.06.21 at 2:55 pm

“I honestly have no idea why Turnernation is still allowed to post his daily drivel. So lost in his echo chamber he seems incapable of actual critical thinking – as opposed to the fake woke crap he’s based his entire identity on. Sad.”
—————————————————————

You would actually have sympathy for Turner Nation if you saw his daily routine in the asylum. He leaves his rubber padded room for an hour a day and it is then that he spews out his dribble for this blog. Then its his daily dose of meds and back to the rubber room…

#57 tulip on 05.06.21 at 5:54 pm

What did the slimy little pathogen teach us?
Well it taught us that humans are a lot more like compliant sheep than rebellious monkeys!

#58 Faron on 05.06.21 at 5:55 pm

#53 Leftover on 05.06.21 at 5:38 pm

#47 C V on 05.06.21 at 4:48 pm

___________________________

Currency/inflation hedgers buy gold, not houses.

It’s called liquidity

Apparently a house with a long, transferrable mortgage taken at a low rate is a good duration play. The house appreciates with inflation (hopefully, maybe) and the higher rates of the future allow you to “sell” the mortgage adding a premium to the house price. I don’t think mortgages in Canada are long enough for this to work. But, maybe if there’s a big rate jump.

#59 tulip on 05.06.21 at 5:58 pm

# 11 turnipnation on 05.06.21 at 1:47 pm
#26 Silentmajority on 05.06.21 at 2:55 pm

I actually like reading Turner Nation. I think he has a lot to offer in way of truth and different perspective.

I concur!

#60 Phil on 05.06.21 at 6:02 pm

Since this is a financial blog (sometimes):
I received a letter in the mail yesterday (Ontario) that was purportedly from Service Canada. Looked very official and asked for personal info. plus name and SIN # of a deceased person.
It was fake.
It was followed up by 10 phone threatening phone calls spread throughout the day.
If you have older relatives perhaps warn them .

#61 Garth's Son Drake on 05.06.21 at 6:13 pm

Garth, do you remember my timeline of when this gas bad softens?

Right on cue. Just follow the money printer.

Add inflation and rate adjustment and that is ice water on the fire.

Runaway home-price growth in Canada’s largest housing market stalled last month amid signs prospective homebuyers could be tapped out.

Call me Wealthsimple Drake.

#62 BillinBC on 05.06.21 at 6:14 pm

#51 Kurt
“EVs suck”
——————————————————————-
Just filled up wife’s 2013 Mazda 3 for $78. My 2019 Telsa M3 costs $6 to charge from 20-90% at home. So, I guess “suck” is in the eye of the beholder, eh?

#63 Zoom Zoom on 05.06.21 at 6:16 pm

Ever own a Mazda Miata? Zoom, zoom.

#64 Sunny Daze on 05.06.21 at 6:29 pm

Feels like all I hear about is inflation in lumber and other building materials.

Doesn’t almost everyone already have a home?

Aren’t we barely replacing ourselves?

Will any office towers be built anytime soon?

Who really needs that much of it?

Ten year still on a knife edge. Feels like there is still a story to be told. Balance is always the key. No question about that.

#65 Ponzius Pilatus on 05.06.21 at 6:31 pm

#28 crowdedelevatorfartz on 05.06.21 at 3:04 pm
@#13 Ponzie’s Poormans Porsche
“My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.”

+++

Total scam.
They did the same thing to me with my 2014 Tacoma about 2 years after I bought it.
They will low ball you on the trade in and naturally sell into a new car or payments.
My 2014 is ticking along just fine with 79,000kms on it.
—————
All I said was that AUDI called me.
Nowhere did I say that I will take the offer.
Though I have to say that the idea of owning one of these nice mew AUDI EVs is enticing.
It’s a bucket list item that will be ticked off eventually.
But right now, I’m still waiting to see how the EV market shakes out.

#66 Dogman01 on 05.06.21 at 6:42 pm

Great Blog content always, good comment section often.

Two observations related:

“Even with cheapo, virus-created mortgage rates it now takes the average family saving 10% of income more than five years to amass the down payment on the average home. But during that period of time, prices have ricocheted higher in a never-ending spiral of disappointment.”

‘Big reset’ called for debt-ridden N.L. with release of ground-shaking economic report”
https://www.cbc.ca/news/canada/newfoundland-labrador/report-greene-recovery-1.6016005

Sometimes things won’t go on because they can’t continue. They are broken.

Anyone see the NFLD report as just a small scale report for Canada’s future. Too much debt, too big government, too much lethargy, too much bloat, not enough industry, no efficiency, no competitiveness…..pipe dream that “GREEN” will save the situation. A collusion course with financial disaster.

#67 Paul on 05.06.21 at 6:43 pm

#13 Ponzius Pilatus on 05.06.21 at 1:52 pm
My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.
————————————————————————————————
Let me guess he wants you to trade up.

I received a call last night from a Realtor says he had buyers desperate to get a home in my area.

#68 Dogman01 on 05.06.21 at 6:49 pm

#37 Ostrich in Sand Out for a glance on 05.06.21 at 3:46 pm
https://nicholaswade.medium.com/origin-of-covid-following-the-clues-6f03564c038

———————————–

Great Article – Thanks.
It is in everyone interests that the theory of Natural origin remains as the predominant perception.

“When it becomes serious, you have to lie,”- Jean-Claude Juncker

#69 Nonplused on 05.06.21 at 6:52 pm

With all the borrowing the Biden admin is planning, I can’t see how rates can do anything but go up. And what the US Fed does the BOC will mimic because Canada doesn’t really set its’ own rates. The BOC really only sets the differential, much as the Canadian dollar is expressed in terms of the US dollar everywhere in the world but in Canada.

When the US government steps out into the market to sell $6 trillion a year in bonds under Biden, who is going to buy it all? The Federal Reserve could, I suppose, but that could be highly inflationary because it involves printing up new money. They will be constrained by their inflation mandate. China and Russia maybe? I doubt they are in the mood and their ability to come up with US dollars is limited. They can’t just print them. I suppose they could issue their own bonds in US dollars and then use the proceeds to buy US bonds but then they would be in direct competition with the US government, so it really doesn’t get anywhere. And as I said, I doubt they are in the mood. I think they are both getting tired of the US floating their boats around their shorelines.

So that means it is going to have to be the banks and the public. The public doesn’t have any money and their taxes are going up so they will have even less. The banks always hold some as part of their reserves but they make their money selling mortgages and other lending, not buying bonds.

Therefore, I conclude that the Biden Treasury Department has taking policy making away from the Fed and for itself. Inflation will be allowed to rise and with it so will yields as necessary to attract such insane amounts of buyers. Yields could rise much higher and more rapidly than anyone is expecting. The only alternative would be for the Fed to buy all the bonds but that has implications for the value of the dollar and inflation.

Markets can stay distorted for a long time, especially when you have someone as big a the Fed leaning on them. It is like a rudder steering a boat. But as all boat captains know, when the winds get high enough, they determine which way the boat will go, not the rudder.

So ya, I’d say if you are borrowing, lock in. If you are lending (buying bonds), shorten your average duration. I don’t see how this can be anything but inflationary and yields will rise accordingly.

Of course there is another alternative called MMT (More Money Theory), in which case the Fed does buy up all the bonds and inflation is left unchecked. Sort of like the 70’s and 80’s. In that case buy all the things.

#70 AB on 05.06.21 at 6:52 pm

We were enjoying our campsite at Canada’s flagship National park. Around dinner time a Tesla pulled into the spot across from us and plugged in their car . They must have slept in their car while charging overnight. They were still there in the morning when we woke up. What a lousy way to travel.

#71 Nonplused on 05.06.21 at 6:57 pm

#1 What did you win? on 05.06.21 at 1:22 pm
Instead of 1st, everyone should try to be 69th.

————————————

I think I got close.

#72 ts on 05.06.21 at 6:57 pm

#54 jenna on 05.06.21 at 5:48 pm

We have been down this road before…and nothing will happen. It’s always a fun past time trying to rationalize uncharted waters !

p.s. Think about Japan scenario

———————————-

True enough, but never in the history of the U.S. (and Canada) has there ever been so much debt (both personal and government). Now that both governments are talking financial tapering , hot economies, and inflation, I would wager on the side of higher interest rates. When that will happen is anybody’s guess, but I think it may be sooner than most think possible.

#73 binky barnes on 05.06.21 at 6:58 pm

Do you think Janet Yellen and that old Berkshire Hathaway guy have more monetary talent than the PM PM (Mr. Justin Trudeau)?

BB

#74 Nonplused on 05.06.21 at 7:06 pm

#13 Ponzius Pilatus on 05.06.21 at 1:52 pm
My Audi dealer has called.
Wants my 2017 Audi Q5.
Apparently, used car inventory is very, very low.
Prices have increased about 30%.

—————————————-

You sure he doesn’t just want to sell you a new one? My Dodge dealer offers to buy my truck every year but why would I do that if I have to turn around and buy a new one? My truck was very expensive when I bought it but the new ones make my eyes bleed when I look at the prices.

#75 Nonplused on 05.06.21 at 7:08 pm

#71 Nonplused on 05.06.21 at 6:57 pm
#1 What did you win? on 05.06.21 at 1:22 pm
Instead of 1st, everyone should try to be 69th.

————————————

I think I got close.

————————-

Nope, nailed it. What did I win?

#76 crowdedelevatorfartz on 05.06.21 at 7:11 pm

@#73 Binky Bee
“Do you think Janet Yellen and that old Berkshire Hathaway guy have more monetary talent than the PM PM (Mr. Justin Trudeau)?”

+++++
sadly, a clipped toenail would have more monetary talent…..

#77 I'm Alright Jack on 05.06.21 at 7:14 pm

Yup, like you and your compatriots have been recommending, Garth, prefs have rocked this past year. Padded my preferred etfs last year and enjoyed the ride and the divs. Thanks.

And where exactly is Bunnypatch? Sounds like a good place to retire. Don’t like the sound of Armpit though, and I already live in Hicksville.

#78 Steve French on 05.06.21 at 7:16 pm

Sir Garth:

How did you get a 16% increase in preferred shares since January?

Down in ‘Straya, my preference share holding (as they are called here) is only up 4.25% YoY.

There is also not much of a selection of Australian preferreds. It seems new down here.

& unfortunately my online trading platform does not allow one to buy Canadian ETFs directly.

– Steve.

#79 espressobob on 05.06.21 at 7:23 pm

#49 happygolucky

Thanks for your vote. Actually it’s ‘doubtful’ not doughtful.

It seems my spell checker has anger management issues.

Cheers.

#80 It doesn't stop (more fees) on 05.06.21 at 7:26 pm

The Alberta government has announced a new “park fee” for Alberta parks and even the back country, similar in both concept and cost to the national park pass.

One of the cited reasons, last summer saw unprecedented usage, both as intended but also by “dry campers” (people pitching a tent wherever). Supposedly they left behind a huge amount of $hit, everything from actual $hit to beer cans, bacon packaging, masks, it all. Somebody’s got to clean it all up, they say.

In my day you were supposed to leave the campsite in as good or better condition as you found it, and pack your trash out. And people generally did. I am not sure if this is a sign of social decay, or just another example of “The Tragedy of the Commons”.

Why they can’t just fine people for littering I am not sure. I guess it is too hard to figure out who threw that beer can or used condom in the bush.

#81 mark on 05.06.21 at 7:31 pm

Dumped every preferred share I owned this morning said zipper zpr 11 and change cashed out everything.

#82 Rogerhomeinspector on 05.06.21 at 7:40 pm

#69 nonplussed.

I have this discussion with people frequently when they say that “BOC and the federal government will NEVER let rates go up?!” I always ask- “do you actually think we live in such an isolated bubble that foreign policy but specifically that of the US doesn’t affect directly our leader’s monitory policy choices? What do you would think of the US benchmark rate was set to 3.5 percent and we left ours at .5 percent??”

Crickets. No clue.

Your statement is well made- the BOC chooses the differential but not the base rate. As goes the US, so goes Canada. We’re like a dinghy pulled by a larger boat- we can veer from the leading vessels path, but only by a defined arc set by the radius of the tow rope.

Hardly freedom of choice.

#83 Nonplused on 05.06.21 at 7:47 pm

#119 Wrk.dover on 05.06.21 at 8:17 am
This out to throw NonPlussed into a spin!

Here is what my electric meter says after more than a year now of grid tie solar.

A weekday 7am-11,
B cheapy hours weekends and 11pm-7am
C winter peak mornings and evenings Dec-Feb.

A——–B——C
2442 1146 0355 delivered (3945)
1500 3057 0111 returned (4649)

All of the power directly consumed at time of production is not reflected on the meter.

Notice my total parasitic winter peak needs are only 244 kwhrs. with the help of hot water heater timers.

My biggest deficit is when the grid is idling in the middle of the night, with excess available. I’m doing the grid a favor buying those hours.

So much for the theory that home solar throws the balance the grid into a conundrum.

The 12 month consumption portion of the bill was around minus $30.00.
Previously $1300. (= 10% of the cost of the installation)

——————————-

No spin, these results are achievable, but only if the grid is still on standby. As more and more people do what you have done, eventually there will have to be charges for standby power (you pay for that gas fired plant even though it is not running). The alternative is a massive deployment of batteries and overbuilding the solar and wind (so you can charge the batteries), which will cost a lot more than keeping the gas fired plants on standby.

I am not against solar and wind, but we need to keep perspective. It is interruptible and therefore not a standalone solution. But every bit helps.

#84 DMW on 05.06.21 at 7:47 pm

Love the dogs in todays blog photo !

#85 Ian on 05.06.21 at 7:51 pm

I read that brag post by the realtor from the link provided. Crazy!! Horrible!! But a regular feature of today it seems. I would love to start a social petition to the appropriate regulatory bodies to stop allowing blind biding, but just don’t think I could push it would wide enough. I would love to see you use this platform to do something like this. Your readers could all use their social platforms to push it out across the country. We could really make a difference if it worked. I think its worth a try. Come on Garth, let’s do it!

#86 kommykim on 05.06.21 at 7:52 pm

Here’s one for the dogs. Buyer disappears and Realtor still wants $70K in commission:
https://www.cbc.ca/news/canada/british-columbia/bc-commission-real-estate-lawsuit-1.6015748

#87 Stone on 05.06.21 at 7:53 pm

#81 mark on 05.06.21 at 7:31 pm
Dumped every preferred share I owned this morning said zipper zpr 11 and change cashed out everything.

———

Will this be the most stupid move for 2021?

#88 Don on 05.06.21 at 8:02 pm

By looking at the length of some of these comments, I wonder whether they have anything else at all going on in their lives. Everyone is trying to show off either their pseudo-financial astuteness or sheer stupidity, unabashedly.

#89 Happy Renter on 05.06.21 at 8:02 pm

If one had a million dollar liquid portfolio and suddenly needed to find new accommodation, what price range of a home makes sense to ensure balance? We have no debt currently.

#90 kommykim on 05.06.21 at 8:05 pm

#9 Bibi on 05.06.21 at 1:43 pm
Anyone has insight as to why choose rate reset prefs?

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

Perpetual preferred behave like long duration bonds in regards to interest rate changes. ie: If rates rise what they pay remains the same but it’s share price drops.

Rate reset preferreds reset every 5 years to pay a dividend based on the 5yr gov bond rate plus a spread. So if rates go up, they’ll increase what they will be paying on that 5yr anniversary. This make their prices more stable over the long term, even though they can fluctuate quite a bit in the short term depending how far you are from that anniversary.
But if the spread is too generous, the issuer may call them and pay you out at $25 per share no matter what you paid. This doesn’t happen that often though.

In other words, resets are great in a rising interest rate environment whereas the perpetuals rule in a falling rate world.

#91 Keep It Simple Stupid on 05.06.21 at 8:11 pm

You really don’t like GIC’s. I guess if we had a real GIC rate in Canada to reflect even the low misleading, manipulating inflation rate+1.5% to 3% for locking in money from 1 to 10 years, so 3.5% to 5.25% real, true GIC rates, real interest rates

It would be more real and more true than what we have today but the socialist, Liberal, NDP mindset from Trudeau to McGunity, Wynne, Bernake, Yellen, Powell now and for many years this massive fake, money printing diluting money, central bank manipulation of all our money, savings, property etc.

This is more true and the bigger the real loss, cost of this especially with GIC’s, term deposits in RESP’s, RRSP’s, RDSP’s, TFSA’s that are all compounded interest and tax deferred, tax sheltered, tax free.

How else are they going to make having, keeping money from simple to complicated with many different investments options, tax consequences and fee structures that make investing a big ordeal and drain all of our financial resources.

#92 Don Monneta on 05.06.21 at 8:36 pm

If bonds are not bought for their yield then get rid of inflation and taxes of all types. This way, no interest, 0% interest is paid, accrued and my capital, principal is worth the same today in purchasing power, purchasing value today as it will be worth the same in the future, 5, 10, 20, 30 years from now.

If you don’t like this central banks, money buyers, sellers, governments, financial institutions,financial stakeholders etc. then pay me 10% a year interest and don’t complain.

#93 Cdn Mom on 05.06.21 at 8:45 pm

Ah, yes, Hicksville…

Hicksville which has provided us a single, blue collar income large enough to stay home to raise my own kids, instead of a daycare.

Hicksville where I watch the sunset through my windows three months of the year, over our largest freshwater lake…and listen to the loons.

Hicksville, where we are only $200,000 in for a 3000+ sq ft waterfront house, with attached garage, detached workshop, 58’ x 28’ tropical greenhouse, and still have an acre left over.

Hicksville, where the work commute is 20 minutes, and 15 of that is no traffic.

Having lived downtown in Toronto, the Van burbs, I’ll stick with Hicksville. Not a damned thing wrong with it.

#94 Frank Diganni on 05.06.21 at 8:47 pm

Hey Keep It Simple Stupid and low interest rate debt junkies, don’t worry, EQBanks’s current 2.4% 10 GIC rate will be 3.4% within 2 years, 4.4% within 3 years, 5.4% within 4 years, 6.4% within 5 years, 7.4% within 6 years.

#95 Phylis on 05.06.21 at 8:47 pm

#56 Turner Nation’s Psychiatrist on 05.06.21 at 5:54 pm
Hey, longtime no post. How’s Stan doing? Is he cured?

#96 GAV on 05.06.21 at 8:55 pm

#62 BillinBC on 05.06.21 at 6:14 pm
#51 Kurt
“EVs suck”
——————————————————————-
“Just filled up wife’s 2013 Mazda 3 for $78. My 2019 Telsa M3 costs $6 to charge from 20-90% at home. So, I guess “suck” is in the eye of the beholder, eh?”

A good used 2013 Mazda 3 is worth about $10,000. A used 2019 Tesla M3 about $40,000.

Someone who knows something about cost/benefit analysis would sell the Tesla, buy the Mazda and invest the $30,000 in one of those balanced and diversified funds paying 6% per annum I keep hearing about on this blog. I wont even mention depreciation.

And at least you can get to Kelowna from Vancouver in 5 hours versus a few days in the Tesla.

By the way, someone taking the consensus financial advisors advice in 2014 and bought reset preferreds on the basis of of anticipated interest rate increases would be down about 25% right now.

Trust me, I know.

You forgot seven years of dividends. – Garth

#97 R on 05.06.21 at 8:57 pm

I received in my e-mail. It sounds about right .What do you think ?

Israel herd immunity
Israel has once again shown countries how clever leaders think in the 2nd and 3rd order (thinking beyond the obvious).
Last week Israel became the first country to inoculate its entire adult population over age 18. Yesterday, all schools and colleges were opened and mask requirements were removed all across the country (barring a few congested public places).
Here’s how this remarkable country did it.
Israel’s leaders are all well educated and many of them have advanced degrees in science and medicine. Their PM graduated at the top of his class at MIT, and started (but didn’t finish) a PhD at Harvard.
They realized at the onset of the pandemic last year that the only way to beat a virus was through herd immunity, and that vaccination was key to expediting this process. They immediately zeroed in the two companies that were ahead of the pack in vaccine development–Pfizer and Moderna. The Israeli PM immediately developed a personal friendship with the CEOs of these companies (using his Harvard and MIT connections).
As soon as Pfizer announced successful Phase 3 trials Israel made a deal with Pfizer to pick up their first 8 million doses for twice the price ($30 per dose) of what Pfizer was eventually aiming to sell the vaccine. Israel also agreed to provide Pfizer with data on the efficacy of the vaccine on its population. By November 2020, Israel had already acquired the vaccines it required to immunize its people.
The Israeli PM was asked two weeks ago why they agreed to pay $15 per dose extra, and his response was classic 2nd order thinking. He said that, just in pure economic numbers, the total amount they overpaid was a miniscule fraction of what it costs to lockdown the country. This is not counting the extra medical costs of Covid and the incalculable price of losing a loved one. The economic loss from just three days of lockdown was more than the overpayment for all the vaccines they bought.
This is how smart people think.
Its obvious our PM was not in the same class at MIT.

#98 Dr V on 05.06.21 at 8:59 pm

89 HR – see Garth’s rule of 90 (no 6 below)

https://www.greaterfool.ca/2020/01/01/be-it-resolved/

#99 mike from mtl on 05.06.21 at 9:07 pm

#87 Stone on 05.06.21 at 7:53 pm
#81 mark on 05.06.21 at 7:31 pm
Dumped every preferred share I owned this morning said zipper zpr 11 and change cashed out everything.

———

Will this be the most stupid move for 2021?
/////////////////////////////////////////////////////////////

Maybe not, check total return going back years. Perfs have a history of rapid sudden loss, even more than their common share counterparts. At best 5+ years of ZPR it is nothing to get excited about, worse considering I pay div taxes today. Very close to selling mine off as well, don’t trust them.

Never blindly chase yield.

Every day it becomes more obvious DIY investors do not understand the role and function of the FI portion of a balanced portfolio nor the relationship with interest rates. – Garth

#100 much higher interest rates coming on 05.06.21 at 9:08 pm

I personally think within the next 7 to 10 years, we will see 8% variable mortgage rates and 9% to 10% fixed rate mortgage rates.

We will also see a 45% total slow, tortuous, continuing decline in housing prices Canada wide over the next 7 to 10 years. It will probably be worse in the 52% to 55% total slow, torturous decline in Toronto, GTA, Vancouver, Victoria, Montreal, Ottawa over the next 7 to 10 years. All this by the latest by 2031.

As for that poster about GIC rates, I would not be surprised too see 6.5% to 8% GIC rates between 2028 to 2031. This wlll all happen big time by 2023 to 2024. You will all see.

#101 Armpit on 05.06.21 at 9:09 pm

“Simple. The city, the centre, the downtown will blossom in 2022 as the lights start going out in Hicksville, Armpit and Bunnypatch.”

————————————————————-

Geez….Garth

Never…Never… place me in between Hicksville and Bunnypatch!!
(Unless they are from the Playboy’s Centre Page)

#102 VladTor on 05.06.21 at 9:09 pm

Leftover on 05.06.21 at 5:38 pm
Currency/inflation hedgers buy gold, not houses.
It’s called liquidity
************************
Gold is liquidity. It easy to tell but hard to use as liquidity when you talking about big amount gold. You operating only with value. Let’s have a look at big picture.

For today 1 oz. TD Gold Bar has a price $2310

1000 bars will cost just $2310000 – this is price for good house not in Tor/Van. of course.

But what is the size this bar?
Size is – 29mm x 50 x 1.1mm.

Go ahead. Let’s put this bars on top each other. We have total bar tall as 1.1 meter. Actually will be taller, b’s bars wrapped in plastic and will be tiny gap between all of them. Let’s take 1.4 meters. I’m not talking about other sizes. TD don’t give us total size. That is enough to understand problem. You will keep this bars not at home for sure, b’s you for sure care about personal safety. Of course you need to keep its in banks deposit boxes. You can check by yourself how many deposit boxes you need to rent and how much it will cost per month. I absolutely sure that monthly rent price will be much more than monthly property tax for $2310000 house.

So, in term in big money – house is better.

Buying paper gold obligation is very bad idea. Banks already sold such obligations for gold which not existing in reality (I read about this – if I’m not right – good luck). Other problem with paper gold – in case hyperinflation banks for sure put limit for converting paper gold to physical. Like in grocery store – 4 pack for 1 customer in 2 weeks and not more than 20 per year – for instance. I’m not sure that you will be agree to receive money equivalent b’s in hyperinflation banks not give you what you expect to have.

Gold bars is real liquidity b’s they have a bank number and certificate . You can sell it very easy in any bank branches or to somebody. Problem is only one – where you going to keep them.

You can buy gold coins. In term of liquidity it is worse, b’s coins don’t have a bank number. Selling can be not easy.

In addition – when you selling gold bars in bank you have to pay capital gain. I’m not sure about this in case of gold coins.

#103 Don Guillermo on 05.06.21 at 9:28 pm

#97 R on 05.06.21 at 8:57 pm
I received in my e-mail. It sounds about right .What do you think ?

Israel herd immunity
Israel has once again shown countries how clever leaders think in the 2nd and 3rd order (thinking beyond the obvious).
Last week Israel became the first country to inoculate its entire adult population over age 18. Yesterday, all schools and colleges were opened and mask requirements were removed all across the country (barring a few congested public places).
Here’s how this remarkable country did it.
Israel’s leaders are all well educated and many of them have advanced degrees in science and medicine. Their PM graduated at the top of his class at MIT, and started (but didn’t finish) a PhD at Harvard.
They realized at the onset of the pandemic last year that the only way to beat a virus was through herd immunity, and that vaccination was key to expediting this process. They immediately zeroed in the two companies that were ahead of the pack in vaccine development–Pfizer and Moderna. The Israeli PM immediately developed a personal friendship with the CEOs of these companies (using his Harvard and MIT connections).
As soon as Pfizer announced successful Phase 3 trials Israel made a deal with Pfizer to pick up their first 8 million doses for twice the price ($30 per dose) of what Pfizer was eventually aiming to sell the vaccine. Israel also agreed to provide Pfizer with data on the efficacy of the vaccine on its population. By November 2020, Israel had already acquired the vaccines it required to immunize its people.
The Israeli PM was asked two weeks ago why they agreed to pay $15 per dose extra, and his response was classic 2nd order thinking. He said that, just in pure economic numbers, the total amount they overpaid was a miniscule fraction of what it costs to lockdown the country. This is not counting the extra medical costs of Covid and the incalculable price of losing a loved one. The economic loss from just three days of lockdown was more than the overpayment for all the vaccines they bought.
This is how smart people think.
Its obvious our PM was not in the same class at MIT
**************************************

Trudeau could have done that too you know if he wanted to. He was just busy in the sock drawer that day. Next time he’ll be ready. Blinky knows.

#104 Ponzius Pilatus on 05.06.21 at 9:28 pm

#97 R
———–
Bibi, the one you call a MIT genius, appears to be finally on the rope, and he and his right wing Likud party will be sent into the dessert.
And our drama teacher will get another 4 years as PM.
So, who’s the genius now?

#105 Marc Roger on 05.06.21 at 9:30 pm

ZPR has been great.
ZUP not so much.

#106 VladTor on 05.06.21 at 9:31 pm

Garth to mike from mtl on 05.06.21 at 9:07 pm
….Every day it becomes more obvious DIY investors do not understand the role and function of the FI portion of a balanced portfolio nor the relationship with interest rates.

***********

Garth, yours 15th book about behavioral finance and how our hard-wired psychology influences our financial
decisions will have details about problems like this too ?

#107 mike from mtl on 05.06.21 at 9:33 pm

Every day it becomes more obvious DIY investors do not understand the role and function of the FI portion of a balanced portfolio nor the relationship with interest rates. – Garth
///////////////////////////////////////////////////////

Last I checked the only thing that matters when growing the pile is saving and total return, which for going on two decades is capital gains.

Clipping coupons and divs is for retired folks that need income not money. Even then they still have one foot in the market to have a chance at 6% target.

Just what I said. – Garth

#108 The Woosh on 05.06.21 at 9:35 pm

#50 VladTor on 05.06.21 at 5:24 pm
The current copper price is already at an all-time high of $10K per tone, nearly doubling from pre-COVID prices as it suddenly emerged that production of energy-intensive goods in the world as a whole is growing at a much slower rate than that of the global printing press. According to the IEA forecast, the copper deficit will grow, and not for months, but for years, and the price of copper may well double again, with all the consequences for a heap of industries.

https://oilprice.com/Metals/Commodities/Analysts-Copper-Prices-Could-Double-To-20000-Per-Ton.html

BUY COPPER NOW!
Keep it in backyard – copper don’t care about weather condition.

——————————————————

No can do. The back yard is already full of lumber. That’s where the real money is! That…and used Audis. Lol
And let’s not forget…Sigh

Everything’s going up in price and according to the deplorables is the expectation that housing will miraculously stagnate or decrease in price since we’ve reached peak house price. “2017” sent a lawyer’s letter staring copyright infringement. Stop saying we’ve reached peak house prices. “2017” is one of those feisty “I’ll take you to court” kind of years. 2021, 2022, 2023…don’t mess with “2017”. Only 2031 has the real cajones to really take on “2021”. Tread lightly all other years or “we’ll see you in court!”

#109 The Woosh on 05.06.21 at 9:41 pm

#57 tulip on 05.06.21 at 5:54 pm
What did the slimy little pathogen teach us?
Well it taught us that humans are a lot more like compliant sheep than rebellious monkeys!

———————————————

With the exception of sh*t flinging.

Hey, who stole my bourbon and coconut?

#110 Wrk.dover on 05.06.21 at 9:41 pm

We drove through all of the car stealerships in Yarmouth. What a bunch of gross crap, this model year, again. There is a Mazda that looks like the side got creamed by a runaway truck tire, Buicks are from China, every last SUV looks like a designer sports sneaker. Pickup trucks are taller than my house, and worth more too.

CVT is a ‘consumable’ (wears out like brakes and tires) transmission in many/most smaller models!

This decision has nothing to do with the purpose saved in hand money, but we are not replacing our newest car, the bought new used all year one, even though it is tatty at 19 years old.

A domestic 40 grand highway specific driver would have been nice. No such thing.

Glad I hoarded a top shape but low value late 70’s and early 90’s assortment. Could well be our last cars.

Eventually everything is an investment.

#111 VladTor on 05.06.21 at 9:56 pm

The Woosh on 05.06.21 at 9:35 pm
…. The back yard is already full of lumber.

************
Ha-ha-ha. I’m laughing. Thank you. You sharply improve my mood before I go to bed.

#112 Preferential treatment on 05.06.21 at 9:59 pm

#40 RJ out west on 05.06.21 at 4:05 pm
So the Green Bank bought back 200 of their rate reset series 12 preferred shares from me last week, they must know something…
It’s paid me well to own it but I was looking forward to higher rates.

___________________________________

Sounds like the blog dog himself neglected to tell you about one of the many nasty options that lenders have on their side when you buy prefs. In fact, they were “callable” …. meaning, if it doesn’t suit them, they will buy them back from you. You will now be stuck trying to invest your money in something similar.(same rate as you thought you were going to get.) i.e. reinvestment risk

Next time, I suggest you read the fine print. BTW, there’s other tricks they can play on you as well.

#113 happygolucky on 05.06.21 at 9:59 pm

#37 Lee on 05.04.21 at 4:50 pm
Virtual sucks. Virtual meetings. Virtual court. Virtual school. Everything virtual sucks. Can’t wait to get back to normal.
———————————————————-

Virtual sucks indeed.
“can’t wait to get to normal”
Normal? “new normal” is in the cards…
My neighbours, and yours made a choice already: “illusion of safety” over Reason and personal freedom (to remote for average gal or bloke next door ), their medieval black masks obscure their clear thinking, and their paranoia and lack of courage and ability to THINK separates us all…
And don’t believe the hype: “we are all in this together”
Yesterday, I cut tru elementary school playground, three children (7 or 8 years old?) emerged from school, all wearing masks and plastic face shields.
I looked with disbelief, it was more like some sci. fic. episode…
And I asked myself: why Teachers, who supposed to be Inspiration and Guide to our children become so coerced and permeating this “cruelty”
TOGETHER APART, what a travesty !

#114 slick on 05.06.21 at 10:01 pm

#10 T Rev;
Breaking news from the front line: The UHI (used Harley index) is down about 10-15pct in the last two weeks here in Alberta
————————————
Just an observation;

There is quite a difference in availability in Harleys here in ON. I compare a Goldwing and an Ultra Classic and the prices are very comparable, however the kijiji ads are flooded with Hogs, but goldwings are scarce as hell.
Perhaps it is all the boomers catching their second wind, and prefer the wings.
I bought my 2009 goldwing 6 years ago, and it is still worth about the same. I looked at ultra classics then, and very closely priced. there are things about the Harley i liked, but Hondas have been pretty good to me over the years.

#115 Chappy on 05.06.21 at 10:28 pm

“What did the slimy little pathogen teach us?” I’m so confused….Are you referring to Covid or the Toronto Real Estate agent whose blog you had linked?

#116 prussian blue on 05.06.21 at 10:32 pm

Canadian mom….where are you? Sounds awesome. I am thinking of moving there…..Good internet connection?

#117 DON on 05.06.21 at 10:34 pm

#103 Ponzius Pilatus on 05.06.21 at 9:28 pm
#97 R
———–
Bibi, the one you call a MIT genius, appears to be finally on the rope, and he and his right wing Likud party will be sent into the dessert.
And our drama teacher will get another 4 years as PM.
So, who’s the genius now

***********

Light at the end of the tunnel…took years to get rid of him.

Peak corruption, peak debt and peak head in sand – current state of affairs.

I heard that used cars are going to the US. ??

#118 Doug in London on 05.06.21 at 10:39 pm

For years there’s been a lot of complaining here in the steerage section about the “poor” performance of those preferred share ETFs, even though they’ve been reliably paying out dividends for years. It looks like their day to shine has come, as happens with all assets at one time or another. I’m reminded of a sign I saw years ago at a tire sales and repair shop in Timmins. It said: Patience is not just a virtue, it’s a bloody necessity!

On a different note, Garth, did you miss Adele’s birthday yesterday? I know you’re a loyal fan of her.

#119 Dieselgate on 05.06.21 at 10:42 pm

#62 BillinBC

#51 Kurt
“EVs suck”
——————————————————————-
Just filled up wife’s 2013 Mazda 3 for $78. My 2019 Telsa M3 costs $6 to charge from 20-90% at home. So, I guess “suck” is in the eye of the beholder, eh?
——————————————————————-

Hey, will that Tesla 3 need a $14,000 new battery replacement in 6 years? Mazda didn’t. By the way, what is the carbon footprint of making those batteries?

I recall reading that Volvo did an audit and concluded that Polestar needs to be driven to 110,000 km before the carbon footprint “cost” crossed over into benefit over a XC40 petrol car. Of course by that milage soon a new battery pack will be needed for a large dollar amount that sets the carbon footprint back again.

EVs have a lot of work to do. Even in California recent report said 20% of EV owners have gone back to ICE for their next car. OUCH! Not good…for EVs.

EVs won’t work until the battery capacity doubles and recharge cycles at least quadruple. We have the battery technology. For some reason EV makers aren’t deploying it.

#120 What did you win? on 05.06.21 at 10:45 pm

#71 Nonplused on 05.06.21 at 6:57 pm

#1 What did you win? on 05.06.21 at 1:22 pm
Instead of 1st, everyone should try to be 69th.

————————————

I think I got close.

————————————

NAILED IT!

Your eye candy prize?

https://qph.fs.quoracdn.net/main-qimg-848cbfb16cc67e791e79b4c117da4838

#121 Stealth on 05.06.21 at 10:51 pm

During the 2020 market drop pref etfs lost value along with equity etfs, likely even more so. (So did bonds briefly during March 13th week.)

When that happens bonds are really the only reasonable insurance. (Nothing is 100%, but still…)

That is quite a bit more risk and volatility in the “fixed” side that people may not know or be aware of.
Therefore keeping prefs in fixed portion does not look like 60/40 portfolio when the market falls.

Question is are people aware of this and how freaked out they were last year, what do you tell them.

Thanks

#122 the Jaguar on 05.06.21 at 11:09 pm

@#97 R on 05.06.21 at 8:57 pm

I think they call this the ‘Master Class” . Israel is always ahead of every challenge. So much to admire on so many levels.

#123 Nonplused on 05.06.21 at 11:18 pm

#88 Don on 05.06.21 at 8:02 pm
By looking at the length of some of these comments, I wonder whether they have anything else at all going on in their lives. Everyone is trying to show off either their pseudo-financial astuteness or sheer stupidity, unabashedly.

——————————–

Um, what are you doing with your lockdown? Facebook? That is certainly more stupid.

I think Faron took the night off though.

#124 Don Guillermo on 05.06.21 at 11:35 pm

#103 Ponzius Pilatus on 05.06.21 at 9:28 pm
#97 R
———–
Bibi, the one you call a MIT genius, appears to be finally on the rope, and he and his right wing Likud party will be sent into the dessert.
And our drama teacher will get another 4 years as PM.
So, who’s the genius now?
*********************************
Obviously not Canadian voters.

#125 The Totally Unbiased, Highly Intelligent, Rational Observer on 05.06.21 at 11:51 pm

Remember Justin Trudeau’s openly announced policies back when he was running against Stephen Harper in a previous federal election.

From legalizing marijuana and promoting dopeheadedness, to supporting many shameful and unmentionable abominations, to letting the budget deficit take care of itself, it was all about promoting irresponsible behaviour.

Instead of trying to learn by reading dry, dull, boring, dusty, old, history books, people will now be able to learn firsthand and personally about the consequences of irresponsible behaviour. This will make the lessons more meaningful and real. Of course, the learning will come at greater personal cost. Maybe reading an old history book and learning from other people’s mistakes in the past would have been better. Newer history books full of revisionist history probably won’t help.

#126 Al on 05.07.21 at 12:36 am

“And at least you can get to Kelowna from Vancouver in 5 hours versus a few days in the Tesla”

It’s 390 km to Kelowna. Speaking of money and apples and oranges, 2010 Mazda 3 sucks, you must hate money. Early millennium Prius will destroy that Mazda and Tesla.

#127 Avo on 05.07.21 at 1:05 am

Don’t discount LRCNs taking out a number of bank prefs. Leaving the ETFs to use the redeemed proceeds to buy up less credit worthy prefs. I’m blown away to see cve.pr.a pushing past 14 today, let alone different life insurance issues past 25 with spreads at less than 200bps.

#128 The joy of steerage on 05.07.21 at 3:28 am

Train rides for old dogs…
What’s not to love!

https://twitter.com/FeelGoodPage11/status/1390135993915822081?s=19

#129 BillyBob on 05.07.21 at 6:13 am

#51 Kurt on 05.06.21 at 5:32 pm
“EVs suck”

Uh, having had more than one Tesla accelerate away from me as though I was parked, I would say they have their place.

Still, ICE vehicles are not going extinct for a while and will always be the right choice for some applications.

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

True. Replacing all the ICE vehicles with electric ones to replicate the same system except with fossil fuels displaced once to make the electricity. Should work. What are renewables up to now globally, 3% of energy production?

(Electric trams, the original EV’s. Not all EV’s suck.)

Transiting through Frankfurt I was checking out the massive tank farm with full of Jet A. Those aren’t batteries in there. Airport is slower than I remember, but way, way busier than a few months ago.

#130 Happy Renter on 05.07.21 at 6:53 am

Re:Rule of 90. Is the percentage based on the full purchase price of the home or the initial equity in the home (down payment)?

#131 Steven Rowlandson on 05.07.21 at 7:04 am

High interest rates might be called for but the super debtors aka government and real estate cannot afford the luxury of that unless government revvs up the printing presses without issuing bonds and pays for its deficits that way. Once mortgage refinancing kicks in home owners will be SOL. I would imagine the auto industry will be titters also. Prices are way out of wack with wage rates for most if not all big ticket items. Imagine 10 to 20+ percent on mortgages and auto loans. Big incentive to low ball offers on big ticket items. Result ? Deflation and businesses gong away for awhile. Dead dreams and dreamers also.
Then again sooner or later the monopoly game has to end and be put back in the box.

#132 IHCTD9 on 05.07.21 at 8:27 am

#119 Dieselgate on 05.06.21 at 10:42 pm
#62 BillinBC

#51 Kurt
“EVs suck”
——————————————————————-
Just filled up wife’s 2013 Mazda 3 for $78. My 2019 Telsa M3 costs $6 to charge from 20-90% at home. So, I guess “suck” is in the eye of the beholder, eh?
——————————————————————-

Hey, will that Tesla 3 need a $14,000 new battery replacement in 6 years? Mazda didn’t. By the way, what is the carbon footprint of making those batteries?

I recall reading that Volvo did an audit and concluded that Polestar needs to be driven to 110,000 km before the carbon footprint “cost” crossed over into benefit over a XC40 petrol car. Of course by that milage soon a new battery pack will be needed for a large dollar amount that sets the carbon footprint back again.

EVs have a lot of work to do. Even in California recent report said 20% of EV owners have gone back to ICE for their next car. OUCH! Not good…for EVs.

EVs won’t work until the battery capacity doubles and recharge cycles at least quadruple. We have the battery technology. For some reason EV makers aren’t deploying it.
___

Not to mention you could probably get 3 Mazda’s for the real world sticker on the Tesla. You could put the savings in the gas tank and likely drive the Maz for damn near the life of the vehicle.

There are reasons to drive an electric, but clean cheap driving ain’t on the list.

#133 the Jaguar on 05.07.21 at 8:32 am

Don’t pay those high lumber prices just yet…..DR ( Garth’s favourite Economist (not) ) says this:

“I find myself in United States Federal Reserve chair Jay Powell’s camp that because the pandemic caused a temporary deflationary condition, due to the initial shock hitting demand greater than supply, the combination of the fiscal juice and reopenings are creating the exact opposite condition, where demand is outstripping supply. But it’s a tad disingenuous to believe that supply won’t catch up, and when it does, demand growth will subside since so much of it is artificial in nature and the conditions for disinflation will come back into vogue.”

whew!

#134 Joe Kahn on 05.07.21 at 8:40 am

Jobs report is awful. Interest rates could go up eventually in the next couple of weeks.

#135 Armpit on 05.07.21 at 8:55 am

This Pandemic has caused people to think it is the end of the world. People are forced to stay home and languish about the future.

Companies have stopped producing, and selling their stockpiles at artificially inflated prices.

A new FOMO in lumber, and other products Consumers are wanting to buy.

People are spending like there is no tomorrow!!!

Well… guess what??? Tomorrow is here… and so are the bills.

Now What???

#136 Dominoes Lining Up on 05.07.21 at 9:14 am

297,000 jobs lost in April.

That almost wipes out the 303,000 recovered in March.

https://globalnews.ca/news/7842060/april-jobs-data-statistics-canada/

Plus the numbers working half their regular hours increased by 27%.

And we are just at the start of a new wave of business closures.

How can the housing market not cool down now?

#137 Dominoes Lining Up on 05.07.21 at 9:29 am

oops, meant to say job losses were 207,000.

But the overall impact is the same, an awful downturn for Canada.

#138 Dharma Bum on 05.07.21 at 9:36 am

#10 T-Rev

And yes I picked up a low mile 2003 Dyna Wide Glide last Friday for peanuts. Amazing bike, great deal. I saw early 2000s sportster go higher in March.
—————————————————————————

I have a 2000 Heritage Softail. Bought it new.

33,000 kms.

Shotgun cigarette Vance Hines pipes. Engine guard.

Whaddaya figure I can get for it?

It’s very shiny.

#139 Dharma Bum on 05.07.21 at 9:44 am

#124 Don Guillermo

Bibi, the one you call a MIT genius, appears to be finally on the rope, and he and his right wing Likud party will be sent into the dessert.
————————————————————————–

Which “dessert”?

Baked Alaska?

Peaches flambe?

Creme Brulle?

Strawberry shortcake?

Tapioca pudding?

Tartufo?

#140 IHCTD9 on 05.07.21 at 9:49 am

#93 Cdn Mom on 05.06.21 at 8:45 pm

Having lived downtown in Toronto, the Van burbs, I’ll stick with Hicksville. Not a damned thing wrong with it.

______

Before 2015, A great quality of life that virtually anyone could afford could be had, and without having to move where you might have a family of Arctic-Yeti for neighbours.

Post Trudeau however, much of it is gone – at least in southern Ontario. Trudeau and the Liberals had a shot at doing something about it before the inevitable happened, but they sat on their hands instead. What a surprise. Many Canuck sheep subsequently lost their way, and became lost – they now live down the road from me.

Back when Trudeau was still a young playboy attending blackface parties, we bought a 4 acre ex-farm for 1.37X income, paid it off in 14 years with ease, built a decent nest egg, raised 2 kids, and live the stereotypical “Canadian dream” life in our little backwater Podunk. That Canada is gone. Now in post-Trudeau Canada, you need a HHI of 400K **MINIMUM** to do what we did.

I feel bad for the kids today. Most Boomers and Gen X’ers whose net worth went parabolic under Trudeau probably won’t want the party to end, and could combine forces with Canadian youths and Women to vote him in again with another majority.

From there the carnage will continue. I guess until the kids figure out they’ve been taking it straight up the wazoo for a decade or more.

Oh well, glad we hit our goals before Trudeau took power.

#141 pPrasseur on 05.07.21 at 9:53 am

Went for a second round of capital gains collecting before T2 and his woke buddy Joe lay down the hammer.

Now I’m prepared either way, comfortably. That’s what the stock market does for you when you give it (the most important ingredient): time.

If you’re less than 40 don’t waste you time with bonds of cash, put everything in stocks, preferably good carefully picked solid companies (mostly in the US because that’s where most are). Then be patient, ignore the turbulences, the pundits and market drama queens, the future will be yours.

Bad advice, once again. Nobody should be 100% equities, and age is a non-factor. – Garth

#142 Yukon Elvis on 05.07.21 at 10:36 am

#129 BillyBob on 05.07.21 at 6:13 am
#51 Kurt on 05.06.21 at 5:32 pm
“EVs suck”

Uh, having had more than one Tesla accelerate away from me as though I was parked, I would say they have their place.
……………………….

Did you stick around to see if it caught fire or drove off by itself ?

#143 IHCTD9 on 05.07.21 at 10:39 am

#110 Wrk.dover on 05.06.21 at 9:41 pm
We drove through all of the car stealerships in Yarmouth. What a bunch of gross crap, this model year, again. There is a Mazda that looks like the side got creamed by a runaway truck tire, Buicks are from China, every last SUV looks like a designer sports sneaker. Pickup trucks are taller than my house, and worth more too.
___

IMHO, there is nothing to even look at in the new car market outside of full sized trucks. They can be spec’d out to do it all: Haul the toys, family and whatever else, tow the backhoe or the boat, get the groceries and do road trips in comfort and luxury, many have near corrosion-proof aluminum/composite bodies now, and the small diesel models get 30+ mpg (USG) on the highway. No sector of the automotive business is more competitive or innovate (and probably lucrative) than full sized trucks.

Yes they cost a mint – even used, but you’re buying 7000+ lbs of alloy, technology, leather, electronics, and drivetrain. Plus everyone and their dog wants one.

That said, I’d rather swap an IHI DT360, CAT 3126 or Cummins 4BT/6BT into an 80-90’s truck with a 7-9 speed manual trans – than dump 80-90K on one of those sweet new GM trucks.

#144 Ponzius Pilatus on 05.07.21 at 10:40 am

#122 the Jaguar on 05.06.21 at 11:09 pm
@#97 R on 05.06.21 at 8:57 pm

I think they call this the ‘Master Class” . Israel is always ahead of every challenge. So much to admire on so many levels.
———————-
Be careful using the term “Master”.
Especially when talking about Israel.

#145 Even the fake stats are awful on 05.07.21 at 10:58 am

US adds another 500,000 weekly jobless claims yesterday and adds only 260,000 crappy jobs for all of April when over 1.1 million were expected. Canada loses 207,000 jobs and hours are slashed for 10’s of thousands that are lucky to have one.

If you believe anything that central banks and economists have to say, you’ll also believe that there is only 2% inflation and it’s all “transitory”. Criminals, all of them. An economy so robust and red hot that if anyone at treasury even whispers tapering obscene money printing and interest rates higher than 0, everything tanks minutes later.

Laughable.

#146 JustaCuriousReader on 05.07.21 at 11:02 am

In the current context, with expected inflation and interest rate increase, does it make sense to renew right now your mortgage with a ten-year fixed term?

#147 Dominoes Lining Up on 05.07.21 at 11:05 am

So with 207,000 lost jobs, plus 288,000 more losing half their hours, a rough equivalent of about 350,000 lost full time jobs was just reported. A full reversal and more of what happened the month before.

At this time of year, one normally expects an upsurge through the spring and summer.

But in lockdown, where will we be June 1? July 1? Better or worse?

Lockdown fatigue aside, vaccine rollout is going well but not well enough yet to restore summer businesses, travel, camps, dining etc…jmho. Many of these people have to make decisions right now about whether they will be open in summer.

Lots of businesses in Ontario complaining also about delays in getting Covid money.

Things could be ripe for more shutdowns and more unemployment, just not sure. This feels like a bad start to the second half of 2021 and time may fly quickly to September before there is more positive energy.

#148 Wrk.dover on 05.07.21 at 11:50 am

#143 IHCTD9 on 05.07.21 at 10:39 am

All I want or need is a NEW 3.8 Impala or LeSabre. NLA.

But I do have a 170,000 km ’94 version of one.

#149 G on 05.07.21 at 12:01 pm

9min from a 5.5hrs meeting, from the 2021 annual Berkshire Hathaway shareholders meeting…

Warren Buffet Issue’s Dire 2021Inflation WARNING
https://www.youtube.com/watch?v=rtlTZL3Q5ts

#150 Dr V on 05.07.21 at 12:13 pm

130 HR – it’s on the full price of the house. I believe the rule is over simplified as it does not take into account present income or future earnings.

I think you’ll find the recent rise in prices also eliminates buying in many Canadian centres.

#151 Philanthropist on 05.07.21 at 12:22 pm

Is Woof$ the new tu-lip MAYnia,

or will it “go to the mune” tomorrow night at SNL?

#152 BillinBC on 05.07.21 at 12:24 pm

#119 Dieselgate on 05.06.21 at 10:42 pm
#62 BillinBC

#51 Kurt
“EVs suck”
——————————————————————-
Just filled up wife’s 2013 Mazda 3 for $78. My 2019 Telsa M3 costs $6 to charge from 20-90% at home. So, I guess “suck” is in the eye of the beholder, eh?
——————————————————————-

Hey, will that Tesla 3 need a $14,000 new battery replacement in 6 years? Mazda didn’t. By the way, what is the carbon footprint of making those batteries?

I recall reading that Volvo did an audit and concluded that Polestar needs to be driven to 110,000 km before the carbon footprint “cost” crossed over into benefit over a XC40 petrol car. Of course by that milage soon a new battery pack will be needed for a large dollar amount that sets the carbon footprint back again.

EVs have a lot of work to do. Even in California recent report said 20% of EV owners have gone back to ICE for their next car. OUCH! Not good…for EVs.

EVs won’t work until the battery capacity doubles and recharge cycles at least quadruple. We have the battery technology. For some reason EV makers aren’t deploying it.
___

Not to mention you could probably get 3 Mazda’s for the real world sticker on the Tesla. You could put the savings in the gas tank and likely drive the Maz for damn near the life of the vehicle.

There are reasons to drive an electric, but clean cheap driving ain’t on the list.
——————————————————————
Yeah… I get it! Should have left the Tesla on the lot and invested the $55K. After driving small, fuel efficient cars all my life and now at 82 with a mid-seven figure diversified/balanced portfolio I decided to indulge myself (sort of like the Harley guys) and have some fun. Driving the Tesla has saved my sanity over the past two years and added a ton of spice to my otherwise boring life.

#153 Don Guillermo on 05.07.21 at 12:47 pm

#152 BillinBC on 05.07.21 at 12:24 pm
——————————————————————
Yeah… I get it! Should have left the Tesla on the lot and invested the $55K. After driving small, fuel efficient cars all my life and now at 82 with a mid-seven figure diversified/balanced portfolio I decided to indulge myself (sort of like the Harley guys) and have some fun. Driving the Tesla has saved my sanity over the past two years and added a ton of spice to my otherwise boring life.
**************************************
Good for you Billin. I’m not quite your age but it’s the same reason I have my car. I admire you – motor on!!

#154 BillinBC on 05.07.21 at 1:22 pm

#153 Don Guillermo
#152 BillinBC on 05.07.21 at 12:24 pm
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Yeah… I get it! Should have left the Tesla on the lot and invested the $55K. After driving small, fuel efficient cars all my life and now at 82 with a mid-seven figure diversified/balanced portfolio I decided to indulge myself (sort of like the Harley guys) and have some fun. Driving the Tesla has saved my sanity over the past two years and added a ton of spice to my otherwise boring life.
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Good for you Billin. I’m not quite your age but it’s the same reason I have my car. I admire you – motor on!!
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Thanks Don, Gotta have SOME fun, eh?

#155 T-Rev on 05.07.21 at 1:55 pm

#138 Dharma Bum

Heritage Softails are great, I own an ‘04. It’s my prettiest bike- Pearl White, chromed right out. Whitewalls. Sale price on them is relatively low though. A 2000 with 33km, in Alberta would list at $7.5-$8.5, sell for $6-$8 depending on condition and extras. Not sure about your market.

#156 Rita Dionne on 05.07.21 at 7:54 pm

I don’t know about 8% to 9% mortgage rates like a poster here stated but I would not be surprised by 5.5% to 6.5% mortgage rates by 2026. GIC and government bond rates will be 4% to 5% like back in 2008 to 2009 levels.