Family feud

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DOUG  By Guest Blogger Doug Rowat
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I need safety in retirement.

Pretty standard investor thinking. In fact, a recent Mackenzie Investments poll of more than 1,600 Canadians indicated that 71% of working Canadians think that retirement investments “should be safe, not grow.” Similarly, a recent Fidelity Investments retirement survey of more than 1,900 Canadians indicated that more retirees have their portfolios positioned in either “bonds” or in “cash/GICs and/or other very secure savings/investments” than have them positioned in a balanced mix of assets.

But this excessively conservative approach is entirely the wrong way to view a retirement portfolio. Too much safety represents no safety at all.

While interest rates are certainly going higher, likely by the middle of next year, from a long-term perspective, sustained bond yield rallies will probably forever be blunted by demographics. The expected higher demand from ageing investors will ultimately cap yield expansion. In all likelihood, we’ll never again see the double-digit yields of the 1980s and it’s improbable that we’ll even see 5% yields for most developed-market bond maturities, at least not for any sustained length of time. Even after the Federal Reserve raised interest rates NINE times last tightening cycle, the US 10-year Treasury yield only got as high as 3.25%.

In other words, returns from most bonds (and definitely the safest ones) will remain anemic long term. Here, for instance, are the returns that a basket of Canadian bonds have provided investors over the short, medium and long term:

Canada Bond Universe returns

Source: FTSE Canada Universe Bond Total Return Index, Bank of Canada, Turner Investments; returns annualized

How far are those returns going to get you?

If we assume a long-term inflation rate of 2.75% in Canada (and over the past century this is the exact average—you can check it out here) most bonds will likely never again provide a meaningful enough real rate of return to fund retirements. A substantial allocation of growth assets (e.g., equities) and more aggressive fixed income components (e.g., preferred shares) will almost certainly have to be included.
The safe stuff has enormous utility: it controls volatility and guards successfully against poor, emotional investment decisions. But as a dominant portfolio overweight? Never. More aggressive assets, even in retirement, are required.

The old, zero-risk retirement portfolio died long ago. It’s time to bury it.

$     $     $

Finally, here are a few recent examples of why we only invest in exchange traded funds.

CN Rail earlier this month sent this blunt letter to shareholders regarding UK-based hedge fund TCI and its growing stake in the railway:

We believe that as you come to learn more about TCI and its plans for CN, you will see that its motives are highly suspect and its approach to railroading is outdated, myopic and destructive to longer term value. We also think you will come to share our view that it would be a mistake to cede effective control of CN to a foreign hedge fund that is also the largest shareholder of our most direct competitor.

There is too much to say about all this to fit into one letter.

Apparently. But CN Rail already said a lot in that one paragraph. The letter went on to accuse TCI of making “false claims”, being “dangerous” and generally being the Thanos supervillain of the Canadian railroad industry. Naturally, this creates a headache for CN investors. CN Rail may be entirely accurate with its accusations, but TCI, no doubt, has an opposing view. So, what’s a CN investor to do? Clearly, they’re in the middle of a corporate soap opera and they’ll now have to conduct lengthy due diligence to sort out which side is truly operating in their best interests.

Rogers Communications shareholders are caught in a similar bind, but this one’s doubly difficult because it’s not just an executive conflict, it’s also a dysfunctional family drama. Here’s what Loretta Rogers, the widow of founder Ted Rogers, had to say about Edward Rogers’ attempts to establish control of the Rogers Communications board:

I believe this campaign waged by Edward was unconscionable; inconsistent with his duties and limited authority as control trust chair; inconsistent with Ted’s wishes; and inconsistent with Rogers’ well-established corporate governance practices.

Ouch. Double-ouch when you consider that Loretta Rogers is Edward Rogers’ mother. If you saw this nastiness going down at, say, a family barbecue, you’d probably politely move to another table. But Rogers investors, especially the long-term ones, don’t necessarily have this luxury. They’re stuck in the middle.

Individual stock analysis is already exceedingly difficult. Dissecting quarterly earnings reports, examining technical charts, considering broader industry fundamentals and weighing valuations are hard enough. Now imagine having to evaluate boardroom pissing contests or family squabbles on top of all this?

Invest in broad-based, low-cost ETFs instead. Yes, you’ll own a few dysfunctional companies along the way, but the diversification will neutralize any company-specific problems.

Life’s short. How much of your investing time do you really want to spend dissecting why rich and powerful mothers are disappointed in their rich and powerful sons?

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

 

105 comments ↓

#1 RowatNation aka Prince Polo on 11.27.21 at 9:36 am

LOL – good line about Thanos!

For the more adventurous 60/40 investors amongst the pathetic steerage section, would it be wise to tilt the “yield portion” by a few points via Canadian banks ETF?! I mean, how can you not love the diabolical ones (Thanos-lites) sopping up all of that mortgage & HELOC interest? I may be a loser renter, but I know it’s time to scoop up the deals when RY momentarily goes to 5% divvy.

#2 Roger on 11.27.21 at 9:38 am

Can actually make good money swing trading those “board room pissing contests / Family drama” though. Without spending more than 10 mins total: Got it on the dip in october at just over $56/share, set stop loss at $60 as soon as it crossed 60.50. Of course it ended up stopping out not long after, however 500 shares at $4 profit is $2000 for 10 mins of work.

#3 VicPaul on 11.27.21 at 9:45 am

Life’s short. How much of your investing time do you really want to spend dissecting why rich and powerful mothers are disappointed in their rich and powerful sons? – Doug
*********

None.
That’s why I’ve recently begun letting you do it for me. Thanks….I feel better already )

M57BC

#4 Andrewski on 11.27.21 at 9:47 am

Thanks Doug. You’re spit on, life’s short, so invest wisely and enjoy. Anyone else see Genesis in Toronto last night or Thursday? 14th time for me, first time was the Trick of the Tail show. Phil’s voice isn’t what it used to be, but the 2 men backing him up on vocals provided the fill ins. Nic Collins on the drums was super. Tony, Mike & Daryl were in perfect form. Final tour for Genesis.

#5 TurnerNation on 11.27.21 at 9:54 am

We pay high taxes – for all that stuff we get!
Toronto’s transit system is failing. Because the just fired a bunch of competent employees. Duhhh.
It’s commuter chaos for us tax slaves.

https://www.blogto.com/city/2021/11/transit-delays-ttc-vaccine-mandate/

— Rumor has it Canada Post is set to fire a bunch of people next week. Just in time for Christmas gift season eh? Chaos. Always the push to cancel Christmas – all the old culture must go, Comrades.

**As I noted here mid 2020, every system designed to protect us, has been turned against us. This is the New System.

https://www.zerohedge.com/political/new-york-er-closes-employees-refuse-comply-vaccine-mandate
“An emergency room in a hospital in New York ceased operation as staff walked out, refusing to go along with the COVID vaccine mandate.”


— We are SO close to back to normal guys! Any day now.
‘Freedom’ they say haha. Flip our rulers’ statements 180 degrees to make sense.

.NY Declares State of Emergency Ahead of Potential Spike (nbcnewyork.com)

.E.U. recommends new restrictions for unvaccinated residents traveling within Europe (washingtonpost.com)
“The commission also said travelers coming into the bloc should not be considered vaccinated if they received their doses more than nine months ago and have not yet received a booster.”
““We have to pull ourselves together,” he said. “These small daily constraints are the keys to our freedom.””

#6 Lisa on 11.27.21 at 10:10 am

“Myopic” LOL!!
I got this letter and was reading it with my husband. I might just tap out as I’m up 29% on it anyway. So much drama!

#7 bond vigilante on 11.27.21 at 10:14 am

there is no point in calculating inflation pre 1971 when we were on a (quasi) gold standard. different rules. post 1971 inflation averaged 3.9%

just like in Turkey, either rates will have to rise, or currencies will collapse. Canada isn’t immune. don’t expect real bond yields to stay negative forever. at some point, something will break.

Canada isn’t Turkey, but our dollar was known as the “Northern Peso” at one point. we shouldn’t be smug and think it won’t happen again.

#8 tbone on 11.27.21 at 10:49 am

Good advice as always , thank you .
As we age and accumulate wealth i was presented with an offer to purchase an insurance policy to pay out a tax free lump sum to my heirs when my wife and i expire.

Personal Insured Asset Protection Strategy.
They positioned it as moving money in a non registered account from one column to another .
Pay into it for 10 years . Returns about 4.5 % per year.
When we both expire we would pay the capital gains on our portfolio and the policy would pay a tax free sum to the heirs .
Would appreciate if you would comment .

#9 THE DANDADA on 11.27.21 at 11:02 am

We have a defined benefit pension at my work. Many of my co-workers are talking about leaving at 54 because they get the lump sum accumulated value.

They have also stated that this is the best time to take it because interest rates are so low. Can you explain why low interest rates would increase the accumulated value?

#10 Don Guillermo on 11.27.21 at 11:12 am

#7 bond vigilante on 11.27.21 at 10:14 am
there is no point in calculating inflation pre 1971 when we were on a (quasi) gold standard. different rules. post 1971 inflation averaged 3.9%

just like in Turkey, either rates will have to rise, or currencies will collapse. Canada isn’t immune. don’t expect real bond yields to stay negative forever. at some point, something will break.

Canada isn’t Turkey, but our dollar was known as the “Northern Peso” at one point. we shouldn’t be smug and think it won’t happen again.
************************************
I had a Citi Bank account in Turkey in 1997. I recall the exchange rate to be over 170,000 TRL to 1 USD. I probably had less than $10,000 USD worth but pulling ATM cash and reading the TRL balance was a rush. Made many great Turkish friends and it was a awesome experience.

#11 Shawn Allen on 11.27.21 at 11:27 am

Carbon emissions from burning wood?

My thanks for the following thoughtful knowledgeable comments on carbon from burning wood. So, it looks like burning wood can be carbon neutral if done efficiently. Good to know.

IHCDT said:

But the big difference is that the wood burning releases only the carbon living within the active cycle which was predestined to mostly go right back in no matter what, vs. fossil fuels that reintroduces carbon long removed from the active cycle back into the system. Sequestering carbon via natural processes takes millions of years, and once they’re 100 feet underground, they’re out of the cycle until a volcano (or a drill rig) brings them back up to the surface.

and he said:

When you burn wood, you expel only the carbon the tree absorbed from the environment while it lived. If you let the tree live a full life and die a natural death, 99% of the carbon absorbed is still released back into the environment as a product of organic decomposition.

But admitted: Inefficient wood burners do pump particulates, and other junk into the atmosphere. That’s why outdoor wood boilers are being legislated into oblivion. Too many hours idling and pumping carbon monoxide and other garbage into the air.

#94 Wrk.dover on 11.26.21 at 8:46 pm responded:

#74 Shawn Allen on 11.26.21 at 6:17 pm
Environmentalists Don’t Burn Wood
___________________________

So, if a dead tree is rotting in the back forty, and I burn half of it now, twenty years from now how much carbon is still stored in the other half?

#12 AlMac on 11.27.21 at 11:38 am

Thanks for the good post Doug. Now that inflation is here at 4-5% levels, although for how long who knows, investors will need to raise their target earnings level above the 5-7% range. Will the current 60/40 portfolio do that, or will investors need to rebalance to, say, 65/35?

Also, the recent analysis below questions the standard investment advice of a 60/40 portfolio because gains are lost at the expense of reduced volatility. I will watch for responses from the community of investment advisors.

https://www.academia.edu/50833426/Pension_Funds_Should_Never_Rely_on_Correlation

#13 Shawn Allen on 11.27.21 at 11:39 am

Investment Risks in Retirement

I totally agree it is best to have exposure to equities.

Someone here a few years ago suggested owning the companies that own “the means of production for what the masses consume”. Good advice.

That’s not too far off the advice of Peter Lynch in his famous “One Up on Wall Street” book. He said to own the companies that produce popular products. Look at people’s wallets or bank accounts. Where do they spend? Buy those companies. Banks, grocers, drugstores, insurers, Netflix, Costco. We don’t exactly spend money on Google and Amazon but we spend time there and we hear these are very profitable.

Warren Buffett says “own your share of corporate America” (Buy the S&P 500.)

Someone else said simply: I want my money invested in the economy. (The economy grows and so will your money over time)

All of these things are somewhat similar and yes a lower risk approach is to use ETFs and be sure there is a reasonably high exposure to equities.

All power to those who did well with massive savings and GICs but it its not the most efficient approach especially going forward from now or in the recent past.

#14 Ponzius Pilatus on 11.27.21 at 11:54 am

Family Feud Canada.
Actually, I enjoy the show on CBC.
Good relaxing entertainment before bed time.
Good hosting and genuine Canadian families duking it out.
Waiting for the Rogers to be featured.
That would be the real thing.

#15 Dr V on 11.27.21 at 11:56 am

Sorry – carry over from yesterday

wood burning vs nat gas

https://www.bioenergy-news.com/news/burning-wood-slightly-more-climate-friendly-than-natural-gas-new-research-shows/

Video re forest carbon sequestration and wood products. At 29 minutes, speaker compares wood construction to concrete and steel. Interesting.

https://www.youtube.com/watch?v=GC54Y8zXXl4&ab_channel=ForestConnect

I find this most interesting as I regularly see the wood waste piles in the clearcuts. These are later burned on site. I just think of the heat that is wasted.

#16 Doug Rowat on 11.27.21 at 12:08 pm

#2 Roger on 11.27.21 at 9:38 am
Can actually make good money swing trading those “board room pissing contests / Family drama” though. Without spending more than 10 mins total: Got it on the dip in october at just over $56/share…

—-

Any examples of when your painstaking and exhaustive 10 minutes of analysis didn’t work out for you?

—Doug

#17 Sail Away on 11.27.21 at 12:19 pm

#11 Shawn Allen on 11.27.21

So, if a dead tree is rotting in the back forty, and I burn half of it now, twenty years from now how much carbon is still stored in the other half?

——-

673.29

#18 statsfreak on 11.27.21 at 12:21 pm

Great post, Doug!
Appreciate all you and Ryan and Garth do for us.

#19 millmech on 11.27.21 at 12:42 pm

#15 DR V
In Europe you will not see those piles, the tree tops and unmillable or low grade trees are taken for use as a pulp source, basically nothing left behind except for small branches as the large branches(above 2 inches is used for pulp)
Tolko takes hog fuel and gasifies it for heating their boilers.
https://forestnet.com/LSJissues/Oct_06/mill_energy.htm#:~:text=A%20new%20energy%20system%20that%20produces%20synthetic%20gas,company%20about%20%241.5%20million%20in%20annual%20fuel%20costs.
More and more companies are finding ways to recoup more money from waste
https://www.youtube.com/watch?v=b9Tn8MnT8ik

#20 earthboundmisfit on 11.27.21 at 12:52 pm

Andrewski …. Re: Genesis. First time for me was fall of 1973 at Queen’s University, for the princely sum of $2.00. That’s not a typo – Two Dollars. “Selling England by the Pound”, when Phil Collins was just a drummer. Prog-rock was pretty new, and about 2000 students packed into the Bartlett Gym were absolutely blown away.

#21 Shawn Allen on 11.27.21 at 12:55 pm

Commute the Pension?

#9 THE DANDADA on 11.27.21 at 11:02 am
We have a defined benefit pension at my work. Many of my co-workers are talking about leaving at 54 because they get the lump sum accumulated value.

They have also stated that this is the best time to take it because interest rates are so low. Can you explain why low interest rates would increase the accumulated value?

******************************
The commuted value is higher becasue they calculate how much money to generate the same dollars as the pension assuming the money was all in bonds.

The lower the interest rate on bonds the higher the commuted value pot of money has to be to replicate the pension if invested solely in bonds. It is crazy generous to give these high commuted values and worth thinking about taking it. I believe some pension plans have made these formulas less generous.

BUT if these are people that saved little in RRSP are they now prepared to look after their own money or have someone trustworthy to do it? If they have large RRSPs and/or TFSA etc and have done well then maybe…

These guys (and I bet they are mostly or all men) need to talk to their wives who will quickly say, no way!

I talked to a guy on the golf course this summer. Him and I were both retired early and collecting pensions. His sister still working at 70 because the sister’s late husband had taken the commuted value and spent most of it on vacations and home improvement and such.

You indicate these people have to retire at 54. They would be retiring from good jobs with pensions and benefits. Can they replicate that? Are they in a position to live off their pensions which will be smaller versus keeping on working? (Unless they started at 20 and have 35 years in the plan in which case retire and consider taking the pension not the commuted).

My friend a savvy investor in stocks and real estate took the commuted at 53 10 years ago because he thought rates would rise. He regrets it. He sees me with a good combination of pension plus my own large RRSP and regrets he did not work a few more years.

I retired on my 55th birthday as I was in a position to do it although with only 26 years in the DB pension plan. I could have taken the commuted if I retired literally one day earlier. I felt it was a better balance to have the secured pension and plus my own sizable investments rather than put 100% in my own hands. I felt my wife was better protected that way. I chose the option where she gets two thirds on my death. I gave no consideration to inheritance of my pension because I have other funds for that purpose and because my two kids will never need it in any case.

If I was a smoker or otherwise in poor health with a short life expectancy that would tip the balance more in favor of taking commuted value.

In summary, think hard, and be careful. Different strokes for different folks.

#22 It's OMICRON time .... on 11.27.21 at 1:03 pm

Hey Doug…… is your middle initial W….. it ain’t over…

https://www.dailymail.co.uk/news/article-10248551/Dozens-passengers-arrived-Holland-South-Africa-test-positive-Covid.html

#23 TurnerNation on 11.27.21 at 1:05 pm

– Posted here mid-2020, every system designed to protect you has been turned against you. Every social and economic contract you lived your life by was violated with the New System – as of March 2020.

Everything old is new again: Comrade if you just comply and sign your confession things will be much easier for your family.

We pay high taxes for our social safety net! All those decades of work, slaving away, knowing you had a backstop. Gone. Yep CV can do this too.

https://www.canada.ca/en/employment-social-development/programs/ei/ei-list/ei-roe/notice-covid-19.html

“When the employee doesn’t report to work because they refuse to comply with your mandatory COVID-19 vaccination policy, use code E (quit) or code N (leave of absence).
When you suspend or terminate an employee for not complying with your mandatory COVID-19 vaccination policy, use code M (Dismissal or Suspension).”



— What else can CV do?
Back in early April 2020 the WEF came up with this helpful chart. Nice of them. Proving it is a global reset: https://tinyurl.com/3dfzy5n8

#24 Shawn Allen on 11.27.21 at 1:07 pm

5 year and 10 year inflation

Doug’s figures indicate the 5 year official inflation averaged 2.2% annually and the ten year average has been just 1.8%.

That’s the official inflation average and I know a lot of people think it was higher, but I will accept that Stats Can does its best estimate. EVERYONE’s person inflation is different because we spend differently. Retired in a paid for house is vastly different than young family with kids and mortgage. Retired snowbird / luxury vacation taker is vastly different than retired on old age pension and supplement with no travel and few meals out.

No matter how you estimate it, this low inflation of the past decade was NOTHING compared to what happened in the 1970’s.

We now have fairly high inflation. Whether a blip or a new reality, time will tell. Pass the popcorn…

#25 Roger on 11.27.21 at 1:12 pm

Any examples of when your painstaking and exhaustive 10 minutes of analysis didn’t work out for you?

—Doug

——————————————–
Hi Doug, Many examples where it doesnt go my way (about 30-40% of the time), DIS LSPD EVO to name a couple of recent plays. however goes without saying I put a stop at .25 to .50 below the purchase price to minimize losses. so in the Rogers trade for example I was risking $500 * .40 cents. turned out to be a 1:10 risk reward ratio on that trade, but 2:1 is more than adequate in most cases

#26 Sail Away on 11.27.21 at 1:15 pm

The railroad squabble is good entertainment.

CN is also offended that private equity, UK-based TCI (and biggest CP Rail shareholder) punted them from the Kansas City Rail acquisition in favour of CP earlier this year.

Consider Warren Buffett’s comment, ‘When a manager with a reputation for brilliance tackles a business with a reputation for bad economics, the reputation of the business remains intact.’

Extrapolating, CN Rail has a reputation for good business, and TCI has a reputation for good business. Does this mean good business will prevail? I think so. Especially since TCI seems to be making a play for control of CP including KSU plus CN, getting pretty dern close to Canada/US rail direct to Mexico monopoly.

Fun facts: CN + CP + KSU together have about the same distance of track as Berkshire’s fully-owned BNSF, which itself is the second largest N. American railway after Union Pacific.

My long and strong railway holdings remain firm, accepting, of course, that a railway’s high fixed costs can be an economic drag in an inflationary environment.

#27 YOLO on 11.27.21 at 1:36 pm

No guarantees of tomorrow.

Live for today.
Plan some fun for tomorrow.
Don’t worry so much about next week.

Maybe new variant will take us all out.

#28 mark on 11.27.21 at 1:44 pm

How about a suggestion on a alternative to bonds or preferred shares for a better return then?

#29 Quintilian on 11.27.21 at 1:50 pm

I can’t believe this.
Lous Tully lives among us on this blog.

https://www.youtube.com/watch?v=e7NI7-c9s8s&ab_channel=Voyage

#30 db on 11.27.21 at 2:22 pm

#9 THE DANDADA on 11.27.21 at 11:02 am
“We have a defined benefit pension at my work. Many of my co-workers are talking about leaving at 54 because they get the lump sum accumulated value.”
**************
Get a complete understanding of your situation (i.e. pay a pension/tax expert to give you a full analysis of all your options) before thinking this is a good idea. It may be your best option, it probably won’t be.

It will depend on a lot of factors and what you plan to do upon separation. There is a lot of information to unpack before you decide one way or another so leave yourself plenty of time to understand all the implications.

Shawn Allen’s example of individuals who chomped through their commuted value is fairly common. Many were surprised (i.e. uninformed) by the taxes because they assumed (incorrectly) that the entire lump sum would be tax deferred and didn’t understand the relationship between accumulated RRSP contribution room and pension contributions.

Your DB plan administrator will often have pension advisors to walk you through all the options and review with you a detailed written pension statement that outlines all your options. They may also provide access to tax advisors but usually you’re on your own for this.

Many employers who offer DB plans also offer a retirement planning course. It’s a good idea to do the course well before your retirement date but frankly it’s never too late! The course I did had a rep from CPP and a rep from the plan administrator who gave each attendee a detailed breakdown of 5-6 different retirement scenarios (they even calculated scenarios involving spousal: income/pensions/RRSPs/age etc.). It also included a lawyer who discussed estate-planning, the health plan administrator who went over what was and wasn’t covered in retirement, and a fin. planning fellow who went over budgeting/expenses in retirement.

Good luck!

#31 willworkforpickles on 11.27.21 at 2:24 pm

#102 …45north (from yesterday)
“We have a massive debt burden that will trigger a deflationary bust if we normalize interest rates, so what we’re trying to do is let inflation run hot while keeping interest rates suppressed for a prolonged period of time in order to lower the debt to GDP ratio. We’re doing our best to make sure interest rates do not reflect current inflationary conditions.”

…………………………………………………………………………………………………………..

They will never lower the debt to GDP ratio continuing to spend like drunken sailors as they will continue to do, austerity notwithstanding. (so rates must/will rise)

Another reason they need to keep inflation at bay somehow is for the health of the markets. The market doesn’t function worth a damn with high inflation for long. The market thrives under dis-inflationary times which is why the Fed & BoC skew the the real inflation numbers lower than where they should be set at and really are. (so rates must/will rise)

Then there’s the looming bond market dilemma where foreign holders of US debt begin to loose confidence in the countries ability to pay its debts indefinitely as runaway high spending will not ever or cannot cease. (so rates must/will rise)

Canada gets hit head on and always will joined at the hip economically with the US.

#32 Triplenet on 11.27.21 at 2:33 pm

#20 earthboundmisfit
In 1980 while at LSE studying urban land economics, I was having a pint at the Shepperton Studios as my girlfriend worked at the studio, on the first Superman movie.
I was alone in the pub with the ‘gov and Phil Collins came in and sat next to me. We talked about Canada. I didn’t have a clue who he was, although i had listened to his band – as i called it.
He thought that was hilarious. We had a nice chat over a couple pints.
He was a really nice guy.
I’m sure he took care of the tab.

#33 Joe on 11.27.21 at 3:11 pm

“A fifth wave, if it happens, would be unpleasant, but Covid’s ability to meaningfully affect economies and markets at this point has been almost completely hobbled.”

#34 Nonplused on 11.27.21 at 3:15 pm

#11 Shawn Allen on 11.27.21 at 11:27 am

Carbon emissions from burning wood?

—————————————-

I think you folks are missing the point. There aren’t enough trees for them to be a meaningful solution to our energy predicament. There are more trees now in the northern hemisphere than there were 100 years ago and that is because we stopped burning trees in favor of coal. Deforestation is not the answer.

If you live rurally and have enough of your own trees to farm them for firewood, that’s great, carry on. But as soon as you venture onto crown land to start cutting trees you are doing more harm than good. Other than deadwood. I don’t see any harm in taking deadwood.

#35 Wrk.dover on 11.27.21 at 3:17 pm

#11 Shawn Allen on 11.27.21 at 11:27 am
Carbon emissions from burning wood?
_________________________

There is more to the wood smoke than just carbon.
Emissions are not suitable where air emersions occur.
I wouldn’t use wood as primary heat in a built up area.
But I let ‘er rip here in SWNS

#36 Wrk.dover on 11.27.21 at 3:24 pm

#20 earthboundmisfit on 11.27.21 at 12:52 pm
Andrewski …. Re: Genesis.
______________________________

The night Phil won his 8th Grammy in a row, for his acceptance blurb, by then out of things to say, he said “to my children watching from home, your Dad just might be cool after all, right?”

Somewhere in England and here in my house everyone synchro-screamed “WRONG”.

#37 Doug Rowat on 11.27.21 at 3:36 pm

#28 mark on 11.27.21 at 1:44 pm
How about a suggestion on a alternative to bonds or preferred shares for a better return then?

—-

Preferreds were a suggestion. But I nevertheless appreciate your entitlement (or laziness).

—Doug

#38 SP on 11.27.21 at 3:43 pm

Too much safety represents no safety at all. – Doug

That’s what our health authorities need to remind themselves every morning…

#39 Nonplused on 11.27.21 at 3:44 pm

#15 Dr V on 11.27.21 at 11:56 am

Sorry – carry over from yesterday

wood burning vs nat gas

https://www.bioenergy-news.com/news/burning-wood-slightly-more-climate-friendly-than-natural-gas-new-research-shows/

————————————

I don’t think this argument holds up when all things are considered.

A living forest is a carbon sink. Yes, much of the C02 that trees absorb will return to the carbon cycle eventually, but not for 100 years. For now the net effect of a forest is to absorb CO2.

But the real problem is that the idea, like wind and solar, just doesn’t scale. If one or two rural folks heat with wood it doesn’t make much difference, but if we try and heat a meaningful number of homes that way we will quickly run out of trees. This was already a problem before the industrial revolution with a much smaller population. Since we switched to coal the forests have partially recovered, but it took a long time.

Using trees as a building material is probably carbon neutral, because the wood stays wood for a long time. Steel and concrete are both very carbon intensive, but also long lasting. Except if you use them to build pinwheels. Then they only last 20 years.

#40 SP on 11.27.21 at 3:49 pm

Individual stock analysis is already exceedingly difficult

I think there is a simple way to do this analysis: if the stock in question is in the top 10 (or top 20) of the index ETF holdings, then there is no problem buying it directly. Assuming it doesn’t represent more than 2-5% of the total portfolio value.

#41 Debtslavecreator on 11.27.21 at 3:55 pm

Having most or all of your long term savings in GICs and bonds is high risk. The irony is that pensioners / fixed income savers are the worst off as the system continues to collapse. The most dangerous “investments” are the ones rated “low risk”. As the currency steadily devalues these low risk investors will see their standard of living evaporate.

#42 Quintilian on 11.27.21 at 4:13 pm

#31 willworkforpickles:

“(so rates must/will rise)”

I’m inclined to think NOT

Governments are now the biggest debtors. And they have the power to choose the rates they will be charged.

The idea that mr market determines the bond yield is a myth.

(10 yr range stuck- while inflation is cruising at a high clip).

There might have been a correlation between inflation and bond yields in the past, but bond yields and inflation decoupled a long time ago, just as housing, cap rates, and local incomes have decoupled.

But has the artificial suppression of interest rates caused distortions and bubbles?
Yes.

And do bubbles eventually burst?
Yes

#43 R on 11.27.21 at 4:17 pm

Cathie Wood of Ark Invest believes strongly that normal established companies of the S&P500 will be disrupted by innovateive companies. She says these innovative companies are reducing costs due to “S curves feeding S curves”of innovative cost declines. Ms Woods is so convinced , she is experimenting with a new fund that is shorting the established companies. ( Ford,GM, Railways,Insurance Companies,Banks ,Health Care etc).Ms Wood believes everything will be different in five years. We as a society have never been in a more technologically disruptive time. Just something to think about.
https://youtu.be/NvngY_xfpUw

#44 Dr V on 11.27.21 at 4:19 pm

19 millmech – thank you for those links.
A couple of comments.

The article states it is Mill waste that is used, not harvesting waste, so nothing new here. Biofuels in BC is about 15 percent of All energy thanks to the forest sector.

I am not sure what percent of felled wood is wasted, but I bet it is not much, and appears much worse than what it is. I have read, and the video also remarks that there is little or no economy in processing it. The on site pellet production may be an option.

The local forestry company does issue firewood permits. By the number of wood stoves in the area I would think that would use a good portion of the waste, but the visuals tell me know.

Any bloggers have a pellet stove? Can someone share the estimated cost and volume in typical useage?

#45 Sail Away on 11.27.21 at 4:20 pm

#34 Nonplused on 11.27.21 at 3:15 pm

If you live rurally and have enough of your own trees to farm them for firewood, that’s great, carry on. But as soon as you venture onto crown land to start cutting trees you are doing more harm than good. Other than deadwood. I don’t see any harm in taking deadwood.

———-

The multitudes of wildlife species making use of these trees may not agree with your assessment.

Subsurface hydrocarbons are not integral to ecosystem health. Use that.

#46 Bob Dog on 11.27.21 at 4:24 pm

DELETED

#47 Nonplused on 11.27.21 at 4:26 pm

Nope, don’t want one.

https://www.zerohedge.com/markets/pa-home-total-loss-after-charging-tesla-driveway-spontaneously-combusts

I wonder if the “Power Walls” are subject to the same risks? I think they have the same batteries.

So why do lithium-ion batteries present what seems like a larger fire risk than say a tank of gasoline in your car? The secret is that the oxidizing and reduction agent are both in the same container, so if the battery breaks down due to overheating there is nothing to prevent a runaway reaction. The gasoline in your tank on the other hand is in contact with very little if any oxygen, so as long as it stays in the tank it cannot burn.

Now, let’s imagine for a moment a whole parkade full of electric cars charging away underneath a high-rise apartment building. How long until something truly tragic happens? Will electric cars be banned from underground parkades much like propane cars?

#48 Shawn Allen on 11.27.21 at 4:34 pm

Who is Living on A Fixed Income

#41 Debtslavecreator on 11.27.21 at 3:55 pm

Having most or all of your long term savings in GICs and bonds is high risk. The irony is that pensioners / fixed income savers are the worst off as the system continues to collapse.

**************************
Another irony is that with old age pensions, the supplement, CPP and federal public service pensions FULLY indexed to all-items CPI (albeit with a lag) many pensioners most certainly are not on a fixed (nominal) income. Well, okay, fixed in real dollars. What do they want a real raise every year? Get a job then. A lot of them have time on their hands.

Meanwhile a lot of workers are being offered very small to no nominal increase. A real wage decrease. In Alberta several groups of government workers were offered wage cuts followed by a three year freeze. A variable income in the wrong direction.

As far as the system continuing to collapse, no such collapse has happened. Standards of living have never been higher. Predicting collapse is one thing. Claiming a collapse is here when it is not is simply delusional.

#49 Phylis on 11.27.21 at 4:36 pm

#17 Sail Away on 11.27.21 at 12:19 pm
#11 Shawn Allen on 11.27.21

So, if a dead tree is rotting in the back forty, and I burn half of it now, twenty years from now how much carbon is still stored in the other half?
——-
673.29
Xxxxxx
Sure, but did it make a sound?

#50 Shawn Allen on 11.27.21 at 4:42 pm

R at 43 claimed:

We as a society have never been in a more technologically disruptive time.

*****************************
That is hilarious considering that people born circa 1885 went from a world of basically zero cars to ending their days traveling on a jet airplane and saw man land on the moon. The saw the introduction of telephones, electricity, radio, black and white and then color television into their homes. In some cases they also saw running water (including toilets) and central heat come in where it did not exist before.

The pace of change today is an absolute crawl versus what happened from about 1850 to 1950.

#51 mark on 11.27.21 at 4:42 pm

#28 mark on 11.27.21 at 1:44 pm
How about a suggestion on a alternative to bonds or preferred shares for a better return then?

—-

Preferreds were a suggestion. But I nevertheless appreciate your entitlement (or laziness).

—Doug

You don’t even understand the question? Hmm.

#52 crowdedelevatorfartz on 11.27.21 at 4:52 pm

@#29 Quintillians of acting gigs
“I can’t believe this.
Lous Tully lives among us on this blog.”

+++

Yes.
Embarrassing but true.
Before Ponzie became the curmudgeon he is today …
He moonlighted as an actor in the early 80’s while going to accounting school…
He forgot all about it when he fell into the drinking scene at the Jolly Taxpayer

#53 Phylis on 11.27.21 at 5:12 pm

#43 R on 11.27.21 at 4:17 pm
Xxxx
Cathy needs new ideas because her current ones are fully baked.

#54 the Jaguar on 11.27.21 at 5:13 pm

Hi Doug. What a great post!

This interview might also be of interest:

This is about 10 months old now, but it’s sometimes interesting to look back on previous thoughts and how they reflect the current status quo. Interesting interview with Kevin Warsh and Danielle DiMartino.

About 40 minutes. Is this what is driving the T2 Liberals agenda as well?

” What we have across the end of the Trump administration and likely the beginning of the Biden administration is a view that so long as you can cover your interest expenses you can spend your money as much as you want, and in some sense what you spend it on doesn’t matter because you are going to goose aggregate demand”.

“As I see it what they’re really doing is taking an economy that on the other side of this pandemic will be booming. When this pandemic is over what it looks like to me as though we’re going to have the strongest economic growth, perhaps in a century. ”
-Kevin Warsh

https://www.youtube.com/watch?v=7CJadEDXqk4

*Zombies are companies that earn just enough money to continue operating and service debt but are unable to pay off their debt.

#55 Ponzius Pilatus on 11.27.21 at 5:18 pm

#19 millmech on 11.27.21 at 12:42 pm
#15 DR V
In Europe you will not see those piles, the tree tops and unmillable or low grade trees are taken for use as a pulp source, basically nothing left behind except for small branches as the large branches(above 2 inches is used for pulp)
Tolko takes hog fuel and gasifies it for heating their boilers.
https://forestnet.com/LSJissues/Oct_06/mill_energy.htm#:~:text=A%20new%20energy%20system%20that%20produces%20synthetic%20gas,company%20about%20%241.5%20million%20in%20annual%20fuel%20costs.
More and more companies are finding ways to recoup more money from waste
https://www.youtube.com/watch?v=b9Tn8MnT8ik
—————————
I like watching the show “Big Timber” on History Channel.
Just showcasing the natural beauty of Vancouver Island.
Filmed near Sooke.
What bothers me though, is seeing the mess they leave behind after clear cutting their claims.
Hope you’re right, and things are improving.

#56 Ponzius Pilatus on 11.27.21 at 5:32 pm

Re:Picture
I get it.
Most of us, in our care free youth, wanted to become Rock Stars.
But, when you’re in your Seventies now, I think it’s time to let go.
That means you, too, Rolling Stones.
Even though Keith Richards still looks like he’s 20.

#57 crowdedelevatorfartz on 11.27.21 at 6:02 pm

My goodness.
Torrential rains out here in the Lower Brainland.
Stay tuned for more mudslides.

Even a mild earthquake at this particular point in time would turn Richmond into porridge.

#58 Dr V on 11.27.21 at 6:06 pm

39 Nonplused

“I don’t think this argument holds up when all things are considered …… if we try and heat a meaningful number of homes that way we will quickly run out of trees.”

I dont think anyone here is advocating using otherwise commercially viable trees for firewood. The only species I know that goes directly to firewood is red alder, which is basically a fast-growing weed. The discussion was as
to wood waste – from either harvesting or milling –
forming a good portion of the 15% share of BCs total
energy sources.

“B.C. is the largest biofuels consumer in Canada – primarily because of its large forestry sector that generates electricity from waste wood.”

https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/provincial-territorial-energy-profiles/provincial-territorial-energy-profiles-british-columbia.html

And remember, harvesting does not halt the carbon sequestration, it re-starts it. What I dont know, is at what point a growing forest sees a reduction in the increase (ie a deflection point) of the carbon sequestration. Harvesting rotations are as soon as 50 years on the coast, but I believe this is based solely on the economics of it.

However, the economics should be based on volume, in
that the forest yields more volume over say 4 50 year
cycles than 1 200 year cycle. As volume equals sequestration, the shorter rotations would mean more
carbon is captured over the same time period.

#59 JSS on 11.27.21 at 6:14 pm

#48 Shawn Allen

“ In Alberta several groups of government workers were offered wage cuts followed by a three year freeze. A variable income in the wrong direction.”

If you’re in the union, then yes as per collective bargaining, there is a raise.
If you’re in management, it is up to the discretion of the employer if they want to provide a raise. In many organizations, union employees do make more than management.
In the case of government managers (and non union staff), if they don’t like what they make, they can leave and try their luck with another employer. Chances are, they won’t leave. DB pension, vacation will keep them there. Golden handcuffs.

#60 IHCTD9 on 11.27.21 at 6:18 pm

#34 Nonplused on 11.27.21 at 3:15 pm
#11 Shawn Allen on 11.27.21 at 11:27 am

Carbon emissions from burning wood?

—————————————-

I think you folks are missing the point. There aren’t enough trees for them to be a meaningful solution to our energy predicament. There are more trees now in the northern hemisphere than there were 100 years ago and that is because we stopped burning trees in favor of coal. Deforestation is not the answer.

If you live rurally and have enough of your own trees to farm them for firewood, that’s great, carry on. But as soon as you venture onto crown land to start cutting trees you are doing more harm than good. Other than deadwood. I don’t see any harm in taking deadwood.
—- –

No one was suggesting that we try to power modern civilization with wood. As you essentially said, only fossil fuels can do that, and this will remain the case until some new technology not only replaces ff’s but also significantly increases the energy potential we have at our disposal. Any progress technologically 100% depends on it. I’m hoping they get nuclear fusion sorted soon.

But on the home front, wood fuel is a cheap, flexible option. I’m burning skid wood that would end up in a dump, or burnt in a pile. It is kiln dried barkless hard and softwood mix. I can heat with it, I could power my vehicle and produce electricity with it too. Right now, only heating makes financial sense.

Wood has it’s place on the home front, but it just isn’t energy dense enough, clean burning enough, nor is the supply sufficient to be used for anything more in modern times.

#61 Do we have all the facts on 11.27.21 at 6:28 pm

When a financial advisor suggests that an investor could expect to receive a 6 or 7 % return on the purchase price of each share of an ETF what are they actually basing this projection on?

The reason I am asking is that over the last 21 months the market capitalization of all US based corporations increased from $33.9 trillion to $48.6 trillion, an increase of 43.4%. The M2 money supply in the US over the same period increased by 33% and the overnight interest rate remained at a historical low of 0.25%. This environment may never be repeated.

If you buy when ETF share prices at a peak your future rate of return on capital invested might be negative but the percentage gain on dividends paid per ETF share will increase. How are potential net rates of return projected into a future that looks anything but predictable.

Based on what I have read it looks to me like the much quoted 6 to 7% annual rate of return is based on historical increases in an index such as the S&P 500 not on a detailed analysis of what the future might have in store for investors.

One wouldn’t try to drive by looking in the rear view mirror so why are investors so focussed on rates of return based on past circumstances that may never be repeated in the future.

Are traditional metrics actually being used to arrive at future projections of anticipated rates of return.

Just curious.

#62 Emily Smith on 11.27.21 at 6:42 pm

Rogers Communications is a great company. You are hateful.

#63 IHCTD9 on 11.27.21 at 6:55 pm

#44 Dr V on 11.27.21 at 4:19 pm

Any bloggers have a pellet stove? Can someone share the estimated cost and volume in typical useage?
——

I am on my 17th winter with a pellet stove as primary heat. The stove I have costs about 6k today, I use about 12,000 lbs worth per typical winter, and that costs about 2100.00 all in, taxes and delivery included. It’s not the cheap heat it used to be (hence my rocket stove experimentations starting last year).

The stoves are complicated and high maintenance. You want to be able to fix and clean them yourself if it is your primary source of heat. The industry likes to talk up the waste to fuel benefits, but at the same time are marketing the stoves today as a luxury item. Most of the pellets I get come from hardwood flooring manufacturers, and there are pellet mills out there that grind up fresh timber the same as a paper mill would. Biomass heating overall is not really a good option compared to NG/LPG overall. Too much work for no savings anymore.

I’m in the process of moving on from pellet heat. It had its day, but the industry has “matured”, and it’s no longer a good primary heat option. All that said, there is a lot to like about pellet heat in an old leaky house, but it’s nothing regular old wood can’t do for a whole lot less $$, and only a little more work. At least in my case.

#64 Nonplused on 11.27.21 at 6:56 pm

#45 Sail Away on 11.27.21 at 4:20 pm
#34 Nonplused on 11.27.21 at 3:15 pm

If you live rurally and have enough of your own trees to farm them for firewood, that’s great, carry on. But as soon as you venture onto crown land to start cutting trees you are doing more harm than good. Other than deadwood. I don’t see any harm in taking deadwood.

———-

The multitudes of wildlife species making use of these trees may not agree with your assessment.

Subsurface hydrocarbons are not integral to ecosystem health. Use that.

———————————————

Fair point. I was only considering carbon, not wildlife. Another reason not to cut down all the trees.

#65 Timmy on 11.27.21 at 6:58 pm

Bill Gates is CN’s largest shareholder and his fund manager supports this. I think old Bill can get the best in the business for money management. I’m a CN shareholder and I just wish I bought more.

#66 Tom Jones on 11.27.21 at 7:04 pm

Doug, with bonds dead, and being a real drag on portfolios, do you think a small allocation to Bitcoin is prudent? Even just as a diversification hedge. It seems quite mainstream now with a Futures ETF approved in the US.

Thanks for your thoughts.

#67 espressobob on 11.27.21 at 7:19 pm

Opportunistic investors lay in wait. Patience…

#68 Omega or bust... on 11.27.21 at 7:20 pm

Hey what happened to Xi variant?…hmmm skipped that one… Pi is next…..

It’s not over Doug….

#69 Wrk.dover on 11.27.21 at 7:59 pm

#40 SP on 11.27.21 at 3:49 pm
____________________________

Excellent thought. (Don’t tell Garth I said so)

#70 THE DANDADA on 11.27.21 at 8:05 pm

TO: Shawn Allen & db
————————————

Thanks for the feedback.
I’ll have to take this one to an excel spreadsheet.

#71 willworkforpickles on 11.27.21 at 8:19 pm

#42 Quintilian …..

#31 willworkforpickles:

“(so rates must/will rise)”

“I’m inclined to think NOT”
“Governments are now the biggest debtors. And they have the power to choose the rates they will be charged.”
The idea that mr market determines the bond yield is a myth.

(10 yr range stuck- while inflation is cruising at a high clip).

“There might have been a correlation between inflation and bond yields in the past, but bond yields and inflation decoupled a long time ago, just as housing, cap rates, and local incomes have decoupled.”

………………………………………………………………………………………………………….

You don’t spend much time researching real differences between set interest rate policy in where its been and why. What changes have been made over the the years and why. Where it is today and where its headed and what must change in accordance with the drastic differences now than what’s gone before…or why interest rate policy will move accordingly.

First you say – governments have the power to chose rates –
…No. Governments spend money they don’t have ballooning the national debt… the Fed/BoC set the rates and now endless and ongoing exploding unsustainable debt to GDP ratios have foreign holders of US debt worried more than ever over actually being re-paid indefinitely. So rates will eventually rise in this single regard as this condition is new and a game changer of vital importance down to the very survival of nation itself.

You then say – The idea that mr market determines the bond yield is a myth –
…If you think you got this from anything i have ever said then you clearly mis-read or misunderstood. The Fed uses external guidelines to keep inflation levels much lower than what they actually are to keep the market moving upward. The market hates steady increasing inflation and when the Fed can no longer completely sugarcoat this growing inflation turd, a sign from the Fed is sought that they will act to cool it down and will come with another smoke and mirrors fix.
Raise rates…and they will, sooner than they knowingly deceivingly presently admit to acting accordingly as the market begins to suffer.

You don’t say…but you did say this – There might have been a correlation between inflation and bond yields in the past, but bond yields and inflation decoupled a long time ago-
…Not quite the whole picture by a long shot. We haven’t gone through what has created today’s economic condition ever before with these debt levels and the circumstances as to how they came about. You’re argument in support of past measures has become moot.
The changing times bringing us to the present calls for a total rewrite of policy to keep the economy buoyed under the vastly changed reality of the times we are in now in opposition of what went as the norm previously….and leading to the current malaise.
Rates will be rising to counter current negative market and economic effects previously non existent before today and looking forward.

You can be inclined to think not as is your right…this is merely a free speech comment site to be taken with a grain of salt at the best of times…but by your comments here, I see you don’t have near the thousands of hours over a couple of decades of research under your belt on the subject as i do.

#72 Stealth on 11.27.21 at 8:28 pm

Good evening Doug and Garth,
Thank you for taking the time to write a post.

Over the last little while everyone is fairly certain interest rates will increase whereby median consensus is around mid 2022 with X number of increases etc. ok. Fine.

What happens if interest rates stay the same or even decrease, could you perhaps write a future blog on that scenario please?
For instance this new variant throws a surprise.

Thank you.

#73 Another Deckchair on 11.27.21 at 8:30 pm

Looks like Carol Kaye in the pic. What an icon she is!

Don’t know who the guy is though.

Anyone??

#74 chalkie on 11.27.21 at 9:18 pm

So Garth, with all the googly gabby, you still never gave any advise for us Pensioners, you only discussed what not to do, but Zero on what to do for a better income??
With Jagmeet Singh now kissing up to Justin Trudeau, for sure they will attack and tax the last safe haven for good investing, ( Private Reit) hang on folks, the ride has just begun.

#75 willworkforpickles on 11.27.21 at 9:18 pm

If the Fed doesn’t let interest rates rise gradually, they will be forced to later down the road resulting in much higher overall rates come then than otherwise if they had just started lifting rates gradually.
Believe it.

#76 Popeye the Sailor Man on 11.27.21 at 9:43 pm

#9 THE DANDADA on 11.27.21 at 11:02 am
We have a defined benefit pension at my work. Many of my co-workers are talking about leaving at 54 because they get the lump sum accumulated value.

They have also stated that this is the best time to take it because interest rates are so low. Can you explain why low interest rates would increase the accumulated value?
______________________________________

I This in 2015 at age 47 deadline was 50 for me. Example; To Pay out $10K at 5% you would need $200K, to pay out $10K at 4% you would need $250K, to pay out $10K at 3% you will need $333K, to pay out $10K at 2% you would need $500K. As you can see the lower the rate the larger the amount of money needed to generate the fix benefit of 10K. For me the Transfer value or the commuted value was made of two parts the “in limit” that went tax free to a LIRA and the “out limit” amount in case (taxable!) but you can hide it in RRSP if you have room. For me a .25% drop added over 100K to the amount, could not wait till age 49 because the risk of interest rates rising. An actuary in the plan will do the calculation monthly and it really is based on economic assumptions and the int rate plays a big part but not the only part. Value fluctuated by 10-30K a month and I missed the peak amount by one month missed out on over 30K. Another note if your buying back time that will have to be paid in full first, so find out what you buyout of that is.

Good luck, I’m happy I did it 6 years ago, and I am even paying into a new DBP and will get another monthly top up when I do retire (when I want).

#77 Doug Rowat on 11.27.21 at 10:21 pm

#62 Emily Smith on 11.27.21 at 6:42 pm
Rogers Communications is a great company. You are hateful.

—-

I expect my phone to get cut off shortly.

—Doug

#78 Doug Rowat on 11.27.21 at 10:51 pm

#63 Gentlemen prefer b(l)onds on 11.27.21 at 6:46 pm
Funny things is … as pathetic as the 10 year track record is for Canadian bonds, they are still better than Canadian preferred shares, based on one of the benchmark iShares S&P/TSX Canadian Preferred Share Index ETF.

The return was 2.87% … and that’s only after a monumental and extremely rare 28% return over the past year. Without that, bonds would have returned significantly more than preferred shares over the last decade.

—-

Preferred share structures have evolved significantly in the past decade, far more so than, say, GoC or provincial bonds. This is why the 3- and 5-year performances for preferreds are so superior.

Preferred shares weren’t that compelling in 2011. They are now.

—Doug

#79 Zen Investor on 11.27.21 at 11:47 pm

“Individual stock analysis is already exceedingly difficult”. Wow ! Just Wow. I’m in tears. If “ Old Mama Rogers” snit has turned you into an investment troglodyte there’s no hope. In fact , fundamental analysis” of stock values anywhere in the western world is easier than its ever been. Because our exchanges are transparent and essentially trustworthy it’s all spelled out.

1) learn to read a balance sheet.

2) only invest in companies that have a history of paying dividends.

3) invest only in companies that display margin expansion ie: the profitable ones.

4) don’t speculate on market media darlings, like tech, BTC etc.

Personally I prefer to invest evenly over economic sectors in the 5 Pillars Approach. I weight towards “ Growthy Value” as I age. 60+ doesn’t allow cycle recovery but “ Garp” companies recover faster and ensure you won’t out live your money or get sucked into cycle selling at the wrong time. Keep cash on hand, lots of cash . Don’t incur new debt after 50, or you’ll never retire early.

#80 Doug Rowat on 11.28.21 at 12:02 am

#22 It’s OMICRON time …. on 11.27.21 at 1:03 pm
Hey Doug…… is your middle initial W….. it ain’t over…

#70 Omega or bust… on 11.27.21 at 7:20 pm
Hey what happened to Xi variant?…hmmm skipped that one… Pi is next…..

It’s not over Doug….

—-

Little available information, two days of newsflow and one bad day for markets probably makes you right.

—Doug

#81 crowdedelevatorfartz on 11.28.21 at 12:32 am

@Emily Rodgers
“Rogers Communications is a great company.”

++++

So laughable, on so many ways.
Just ask the Board of Directors that were fired recently.

https://www.bloomberg.com/opinion/articles/2021-10-25/rogers-chairman-fires-board-for-firing-him-for-firing-ceo

“You cant fire me! I fired YOU!”

#82 Alex on 11.28.21 at 12:35 am

By indexing, the lions share of capital is automatically allocated to the largest, most overvalued companies who don’t need the capital.

The movement for everyone to make equal wages proved to have a bad outcome. Why should the movement for everyone to make equal returns indexing, prove to have a good outcome?

#83 Towing the lyin' on 11.28.21 at 1:03 am

Preferred share structures have evolved significantly in the past decade, far more so than, say, GoC or provincial bonds. This is why the 3- and 5-year performances for preferreds are so superior.

Preferred shares weren’t that compelling in 2011. They are now.

—Doug

________________________________________

So NOT true. As I’ve mentioned in my comment, the only reason Prefs are anywhere comparable to bonds is because of the past year. This past year’s 28% return SIGNIFICANTLY increased the 3 and 5 year returns to make them appear much better than they are. And we both know that there were reasons for the increase this year that won’t be repeated again. Why not do your calculations and take out the most recent year? You would be looking at 1.84% ten year track record.

#84 Zack Benson on 11.28.21 at 2:18 am

Here’s the end result of liberalism and why no one should ever invest in anything.

On the back of David Suzuki’s insane threat to blow up pipelines if his cronies don’t get their way, his emboldened cronies issued more threats. Did we hear a peep out of our “ law and order” PM? No?

Extinction Rebellion Canada now states that not only will pipes be blown but that politicians and businessmen of all stripes will be murdered if David and Friends don’t get their way. So why invest at all knowing that at any second sanctioned terrorists know that the Prime Minister won’t lift a finger to protect any business in Canada.

We have officially entered the 10th century when marauders ruled and peasants feared the daylight.

#85 Jane24 on 11.28.21 at 2:28 am

RULES FOR A FINANCIALLY SECURE RETIREMENT

1. Grit your teeth and stay married no matter how much he annoys you. So much easier to live on one big pot then two small ones.
2. Get rid of adult kids or make them pay and do their fair share.
3. Live in a sensible sized modern house with sensible sized running costs that is fully paid off with no big repairs. Do not get tempted to trade up and start a new mortgage, ignore what your friends are doing.
4. Have no debts. Pay cash for modern cars as they are cheaper to run. Pay cash for everything.
5. Claim all pensions on the first day that you can as who knows what ill health will be in your future.
6. Buy a holiday home and then put it on a home exchange site so that all holidays in your future have free accommodation. AirBnb it the rest of the time for extra income.
7. Live in place with a temperate climate so you have neither big heating bills in the winter or big air con bills in the summer.
8. Lose the pride and be happy to buy items that are second hand as as soon as you get a new purchase home and use it once, it is then second hand anyway.
9. Have fun. I used to be in the funeral business and no-one ever regretted having fun. They regretted going to work. Fun doesn’t even have to cost any money.
10. Start to lose stuff. Over this year empty your basements, garages and lofts. Sell it. Stuff weighs you down. I pay for Christmas every year selling items I no longer use or need.

If you follow these rules you will be amazed at how wonderful and cheap a retirement can be. Stay safe

#86 Faron on 11.28.21 at 3:55 am

#83 Sail Away on 11.26.21 at 7:26 pm

#75 Faron on 11.26.21 at 6:36 pm

My bad, Icahn appears to have sold Feb expiring puts at the 3800 strike on S&P500 futures.

https://twitter.com/jam_croissant/status/1464270725221478402

Essentially selling volatility at a very high price to the willing masses all a-shudder in the face of the new variant.

#87 Wrk.dover on 11.28.21 at 6:25 am

Late to the joke, but…

Survey says? Virus not over.

Or was that a different family feud show Doug?

#88 Wrk.dover on 11.28.21 at 8:45 am

https://www.flickr.com/photos/tranbc/albums/72157720143417483

Faron’s flood link has been updated with many big equipment photos.

This compelled me to look at the Finning stock.

Down for the week and month, basically daily.

I don’t get it, Ab/BC area is supposed to be the biggest outlet.

#89 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 11.28.21 at 8:50 am

Doug, EMERGENCY, shut down this blog!

SNOW FALLING IN TORONTHOLE!

Snowflakes falling on snowflakes – OMG!

How will those poor depressed 55 year loser fans of the Make Believes cope with this!? This weather will just remind them that this is the season that other, actually liveable cities have had championship hockey teams in their lifetimes. Oh, the distress!

We need to shut down all the hospitals and send those health care staff with shovels to the 6!

Please send Garth and all the amazons to the GTA with shovels, right away! Sweep away all the snow and the GTAHoles can pretend its still summer and hockey season is still far away.

This is the centre of the Canadian universe – it demands our attention! None of the rest of you matter, Canada!

#90 Do we have all the facts on 11.28.21 at 8:59 am

In the four years that preceded the Covid 19 crisis Real GDP of the US economy grew at an average of 2.28% per year.

In 2020 Real GDP in the US declined by 3.41% and the Conference Board has projected that Real GDP in the US will increase by 5.5% in 2021.

GDP growth in the US in 2020 and 2021 will average 1.05% per year. The Conference Board projection for Real GDP growth in the US has been adjusted to 3.5% for 2022 and to 2.9% for 2023

Average annual growth of Real GDP in the US for 2020, 2021, 2022 and 2023 is projected at 2.1%.

I am having great difficulty trying to determine the relationship between the growth of productivity within the US economy and the true value of US based corporations providing the goods and services that contribute to GDP growth.

Logic would dictate that a $7 trillion increase in M2 money supply over the last 21 months should stimulate economic growth and yet the average annual rate of Real GDP growth in the US seems to be declining.

I just don’t see how the gradual removal of economic stimuli in the US after 2022 and an increase in interest rates will support continued escalation in the market value of corporate shares.

Where is my assessment going wrong?

#91 Ponzius Pilatus on 11.28.21 at 9:52 am

#75 Another Deckchair on 11.27.21 at 8:30 pm
Looks like Carol Kaye in the pic. What an icon she is!

Don’t know who the guy is though.

Anyone??
——————-
That’s Yukon Elvis doing his best Elvis Impersonation.

#92 Dharma Bum on 11.28.21 at 10:06 am

The Rogers situation reminds me of the HBO show Succession.

If you haven’t been watching it, you should check it out.

It’s a tasty cringe fest.

Representative of the uber wealthy psychopathic slime and their intrafamily strife.

Sweet.

#93 Observer on 11.28.21 at 10:08 am

#87 Jane24 on 11.28.21 at 2:28 am
RULES FOR A FINANCIALLY SECURE RETIREMENT

1. Grit your teeth and stay married no matter how much he annoys you. So much easier to live on one big pot then two small ones.

9. Have fun….Fun doesn’t even have to cost any money.

If you follow these rules you will be amazed at how wonderful and cheap a retirement can be.

^^^^^^^^^^^^^^^^^^^^^^^^

How does one have a “Fun, wonderful” retirement living the rest of their days with someone who annoys the crap out of them?

#94 Doug Rowat on 11.28.21 at 10:09 am

#85 Towing the lyin’ on 11.28.21 at 1:03 am
Preferred share structures have evolved significantly in the past decade, far more so than, say, GoC or provincial bonds. This is why the 3- and 5-year performances for preferreds are so superior.

Preferred shares weren’t that compelling in 2011. They are now.

—Doug

________________________________________

So NOT true. As I’ve mentioned in my comment, the only reason Prefs are anywhere comparable to bonds is because of the past year. This past year’s 28% return SIGNIFICANTLY increased the 3 and 5 year returns to make them appear much better than they are.

—-

Preferred share structures have definitely evolved. Educate yourself. With respect to performance, did the past year not happen? And the rally has, in fact, been closer to two years.

Further, preferreds, as I’ve clearly outlined in previous posts, are riskier. Weightings need to be adjusted more frequently. At no point have I said that you can ‘set it and forget it’ with preferred shares.

—Doug

#95 crowdedelevatorfartz on 11.28.21 at 10:10 am

@#86 ZeeBee
“We have officially entered the 10th century when marauders ruled and peasants feared the daylight.”

+++

The 10th century….where the majority of silent, angry villagers eventually took the Law into their own hands and dealt with unruly people with, torches, pitchforks and a nearby pigpen.

#96 crowdedelevatorfartz on 11.28.21 at 10:40 am

@#91 50 Years…..

All is now well in my World.
50 years is back from his sabbatical.
:)

#97 Shawn Allen on 11.28.21 at 11:32 am

Follow the Cash

#84 Alex on 11.28.21 at 12:35 am

By indexing, the lions share of capital is automatically allocated to the largest, most overvalued companies who don’t need the capital.

*******************************
The first part of the sentence is absolutely true and a great point. But as to those companies getting the capital, that’s generally not true.

Investors bidding up stock prices trade cash with one another and the company receives nada. Only if the company issues new shares does it get money.

So SOMETIMES the second part of the sentence is true – those cases where they are issuing new shares.

My point is simply that when you buy shares on the stock market your money almost never goes to the company. It flows to whoever sold the shares.

#98 Sail Away on 11.28.21 at 11:36 am

#94 Dharma Bum on 11.28.21 at 10:06 am

The Rogers situation reminds me of the HBO show Succession.

If you haven’t been watching it, you should check it out.

It’s a tasty cringe fest.

Representative of the uber wealthy psychopathic slime and their intrafamily strife.

———-

Don’t fall into the trap of thinking the rich automatically have all these issues. In general, I find comfortably wealthy people to be pretty well adjusted. All economic stratas have dysfunction, though.

That said, from the show’s perspective, who would watch a show about a bunch of messed up poor people making bad decisions? That’s just sad.

#99 Shawn Allen on 11.28.21 at 11:39 am

#85 Towing the lyin’ on 11.28.21 at 1:03 am

Preferred shares weren’t that compelling in 2011. They are now.

—Doug

________________________________________

So NOT true. As I’ve mentioned in my comment, the only reason Prefs are anywhere comparable to bonds is because of the past year. This past year’s 28% return SIGNIFICANTLY increased the 3 and 5 year returns to make them appear much better than they are. And we both know that there were reasons for the increase this year that won’t be repeated again. Why not do your calculations and take out the most recent year? You would be looking at 1.84% ten year track record.

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

You just proved Doug’s point that preferred were not that compelling in 2011 given your 1.84% number excluding this latest year.

Not that Doug needs any help defending himself but it was an ironic argument.

Actually a ton of people THOUGHT rate resets would be great in 2011. And they would have been if interest rates fell as expected. Instead they repeatedly plumbed new lows.

#100 Sail Away on 11.28.21 at 11:50 am

#88 Faron on 11.28.21 at 3:55 am

Icahn appears to have sold Feb expiring puts at the 3800 strike on S&P500 futures.

Essentially selling volatility at a very high price to the willing masses all a-shudder in the face of the new variant.

———

Makes sense. Taking advantage to profit from a blip that may not last. Could be taken as a sign he doesn’t think markets will decline further but equally likely it’s just a good one-day profit.

#101 Sail Away on 11.28.21 at 11:57 am

#85 Towing the lyin’ on 11.28.21 at 1:03 am

…the only reason Prefs are anywhere comparable to bonds is because of the past year. This past year’s 28% return SIGNIFICANTLY increased the 3 and 5 year returns to make them appear much better than they are. And we both know that there were reasons for the increase this year that won’t be repeated again. Why not do your calculations and take out the most recent year? You would be looking at 1.84% ten year track record.

———-

How is that relevant? For everything, there is a season.

You can try fishing for Sockeye in February but it’s a fool’s errand. June is the time.

Use logic instead of bitching the fish weren’t there in Feb.

#102 Dr V on 11.28.21 at 12:36 pm

64 IHCTD9 – Yikes! 12000 lbs. At 40 lb a cubic foot (I
googled it) that 300 ft3. At 128ft3 per cord, that’s almost 3 cords, easily 4 when comparing to cut and split wood.

CT sells 40lb bags for $7, but you would have to add the tax and delivery. I found local firewood, claiming an “honest” cord, split and delivered for $300, so $1200 or so for the firewood equivalent. Not sure how the pellets compare for energy yield to the raw wood.

I use a propane f/p, but mostly as backup in the odd outage. Otherwise all electric. That’s heating and cooling (heat pump), stove, fridge, freezer, hot water, lighting, entertainment, tech and all yard tools (mower, weeder, blower/vac, trimmer, saw) all on one bill.

$170/mo. Actually a little under as lily is always turning things off.

It’s rainy today, but 10C, so there are advantages to the wet coast.

#103 millmech on 11.28.21 at 2:02 pm

Seen my dream house on the Fifth Estate, the house that was an easy money maker according to the real estate agent, house was priced at $599,000 for a quick sale, just fix and flip and roll in the dough.
I was told to never buy on flood plains because you never know, realtor at that time was pushing hard, that it never floods and now two months later here we are.
https://www.youtube.com/watch?v=o6ktS3Ex4TU
You will see the property at 30:27

#104 Shawn Allen on 11.28.21 at 2:23 pm

Canadian national Railway Company Ltd?

I’ve been following and often owning this stock since August 27, 1999 when it traded at $8.08 (split-adjusted). The increase since then is 1902%. Not counting dividends. The dividend is now $2.46 per year.

Of course we can’t go back in time to buy and hold…

Someone here about 4 years ago or more suggested a three stock portfolio. I believe it was CN, Fortis and Royal Bank. would have worked out well.

#105 Sail Away on 11.28.21 at 3:02 pm

#104 Shawn Allen on 11.28.21 at 2:23 pm

Re: Railroads returns

——–

Yes, railroads are consistent. CN, CP, KSU, UNP, CSX, BRK (why not?). Buy them all for diversification within the sector. When the time is right, of course. CP lowish right now.