Opportunities

Humans are weird. As this pathetic blog has documented, we crave things other people want and buy them at ascending prices. We run and hide when the same stuff is retreating. It’s as if individual reason is routinely surrendered to herd mentality. And that’s crazy.

We’ve documented this mightily with houses. It’s the same with financial assets. Look at the Reddit-Robinhood crowd, for example, piling into bloated junk like GameStop or vacuous crypto, just because everyone else was. And now the pendulum’s swung to the other side, timorous folk think a 20% correction from all-time record highs for the S&P 500 means the market is going to zero. They recoil.

We all understand the situation. Post-pandemic full-employment, with the airports jammed, food inflation, gas at two bucks, war, China zero-Covid and rising interest rates have changed the narrative. Maybe there’ll be a recession. Maybe just a spanking. CBs are aggressive now but may dove out. We just dunno.

What we do get is that things which cost a lot more in February are cheaper now. That includes real estate – but given the fact it takes up to six months for mortgage changes to really have an impact – we’re likely nowhere near the bottom. If you buy with cash and plan to live there for years, no matter. But with 20x leverage, it could be a wild and painful ride.

Financial assets are different beasts. The volatility of the last few days gives us a good clue, as markets vacillate between huge gains and withering losses. Says my trader buddy Ed Pennock: “It’s way too early to announce that we saw the bottom. But, a lot of people are doing just that. The 10Y yield broke support at 2.81%. It got down to a 2.7% handle. The yield has blown out by 40 bps in a matter of weeks. The Analyst from Pimco who said she was buying treasuries at 3.2% is a genius.”

So if bond yields are retreating noticeably (they are) and investors are lined up to buy stuff at 20% less than it cost ten weeks ago, what’s the message? Don’t we still have inflation-Putin-CBs-Xi-Mr-Supply-Chain to fret over?

Yes. But assets like ETFs are not the same as bungalows. You can always find a buyer. You can sell with the click of a mouse. There’s always liquidity. And so long as the economy is growing, people are employed and companies are making money, the direction will be up. Recall that 85% of the time since WW2 markets have gained ground. They have retreated only 15% during that period.

Here’s what that looks like, nicely charted by the econs at Scotiabank:

Looking at that chart, do you seriously believe an economy coming out of two years of pandemic with pent-up consumer demand and a record heap of household savings is in peril? That two or four or six or eight interest rate increases will be any more consequential than tightening cycles in the past? Or that after recovering from sell-offs and draw-downs 100% of the time historically, it will be different now?

If so, stop reading. Because we’re about to meet Melissa.

“Long-time reader, adore the blog,” she says, just to ensure that I like her. “Eternally grateful for the advice. I have a quick question. I remember you mentioned it once before in a post a while back but what are your thoughts on dollar cost averaging? Is it a stupid way to invest?

This is how I’ve been investing, every month when I get paid I put away a certain chunk of money into my TFSA to buy my ETF’s. But I have a 10k line of credit with Tangerine bank at I think 2.45% interest. Do you think it would be a wiser idea to borrow from this to invest right now? I’m thinking its a great time to buy some ETF’s on sale but I don’t have a chunk of my own cash to put in right now. And I’ve never done this before, until I saw you mention something about this in one of your posts. Is it generally a better idea?

Dollar-cost averaging is fine. Your set contributions buy more when prices decline and less when they swell. Over time you pretty much pace the market. But you also miss opportunities. And this may be one of them – if you have a long-term investing horizon.

If M uses the ten grand the orange guys are offering in the form of a LOC, she need pay only interest – twenty bucks a month. Then she can deduct 100% of these payments from her taxable income, dropping the effective cost to (probably – depending on her income) less than 2%. At a time when official inflation is close to 7%, this is free money.

More importantly, she will buy assets that may be 20% cheaper than weeks ago, with overwhelming statistical odds they will recover recent highs over the coming weeks/months. That would yield a capital gain which, if realized, is 50% tax-free.

But both tax-deductibility and the cap gains gift depend on her investing in a non-registered account, not a TFSA. Worth considering. In fact, most people would benefit in retirement from a non-reg account (and all married couples should maintain a joint version, for tax reduction and estate planning).

So you can moan and fold like the wusses below decks, or you can be a man like Melissa. (Did I just get into trouble?)

Career Opportunity

Over the past few years several blog dogs have ended up as colleagues at Turner Investments. Their contribution has helped this become one of the larger financial practices in the country, serving clients across the nation. So I am grateful. And here we are – hiring again. Wisely, I am coming here first in the search for another Administrative Assistant. It’s a permanent job with decent benefits like the privilege of working with a crusty blogger-advisor. Location is Toronto. Bay Street. You need to come to the office daily and wear pants. Start date is immediate. Having financial education is great (CSC, for example), but we train. If interested, send a note and your CV. Email me at [email protected]

_________________________________________

About the picture: “Hi Garth, meet Dixie,” writes Lori. “Your newest blog dog, ten week old bichon/poodle mix.  Fresh from her bath, should have called her dynamo!  Have loved reading the blog since forever, thanks!”

125 comments ↓

#1 Party on Garth on 05.24.22 at 3:40 pm

Sudbury, Ont., buyers say housing market pressure made them leap into bad purchase

https://www.cbc.ca/news/canada/sudbury/sudbury-josh-keyes-house-buyers-remorse-1.6461379

#2 Mr Fox on 05.24.22 at 3:51 pm

You need to come to the office daily and wear pants.

But but but… the world has changed! People work 2-3 days per week from home at least!! :)

Clients expect & deserve the full Monty (but with pants). – Garth

#3 Polozified on 05.24.22 at 3:53 pm

I’m a cat person, so I will have to politely decline the position. Thank you for your consideration, and good luck finding a candidate as awesome as me.

Sincerely,
P-lo

#4 The Regulator on 05.24.22 at 3:58 pm

According to J Michael Evans, president of Alibaba group : We’re developing, through technology, an ability for consumers (oh, lucky us) to measure their own carbon footprint! That’s where they’re travelling, how they are traveling, what they are eating, what they are consuming on the platform. “To encourage peoplekind to adopt low-carbon behaviors and be environmentally accountable”. While he took a private jet to Davos. Will he use the platform? Hypocrite!

#5 Sam on 05.24.22 at 4:00 pm

Wow! Contraction and expansion was pretty much equal until money was decoupled from the gold standard in 70s and the money printing started!

#6 Søren Angst on 05.24.22 at 4:01 pm

Firstly, when don’t you get yourself into trouble Garth?

You know, you could have said “man up” like Melissa…then again, on Bill C-16 second thought I like your “be a man” better.

Like Russell Peters “be a man, do the right thing”.

——————-

LOCs. Tax deduct. Cash account. Stats say buy the dip and -20% say buy even more in an unprecedented OPPORTUNITY.

What I’m doing (just started with the LOC to accelerate things along).

Feeling better.

Grazie Dottore Garth.

#7 TurnerNation on 05.24.22 at 4:04 pm

Little insight into the current new cycle.
Can you make $ off it? Dunno. PFE.US and SIGA.US are involved in it.

–Ahha so this is why were trained on ‘Contact tracing’ in 2020. I did state it was training.

.Experts hope ‘ring vaccination’ will contain monkeypox outbreaks An infectious disease expert believes monkeypox outbreaks can be contained by using a strategy called ‘ring vaccination’ – which means vaccinating all the close contacts of an infected person. (ctvnews.ca)

— Ho hum just another day at the office:

https://www.nti.org/wp-content/uploads/2021/11/NTI_Paper_BIO-TTX_Final.pdf
In March 2021, the Nuclear Threat Initiative (NTI) partnered with the Munich Security Conference (MSC)
to conduct a tabletop exercise on reducing high-consequence biological threats….
The exercise scenario portrayed a deadly, global pandemic involving an unusual strain of monkeypox virus
that emerged in the fictional nation of Brinia and spread globally over 18 months.


— Last month? Are these people psychic or what.

https://ottawasun.com/news/national/monkeypox-poses-low-risk-to-canada-public-health-agency-investigating-about-20-cases/wcm/f530828b-a273-4709-ab8b-67a8263538be
Public Services and Procurement Canada put out a tender last month to purchase 500,000 doses of the Imvamune smallpox vaccine on behalf of the Public Health Agency of Canada from 2023 to 2028.

#8 The Regulator on 05.24.22 at 4:07 pm

Meanwhile, Polish P.M. Mateusz Morawiecki urged Norway to share it’s GIGANTIC profits, made as a result of soaring natural gas/oil prices(Albertans take note). They should share these excess profits! It’s not normal!! It’s unjust!!!
Sounds like some commentators here.

#9 Emma Zaun - Greater Fool Unpaid Intern #007 on 05.24.22 at 4:08 pm

Re: Career Opportunity

Please note:

This will be a unionized position within the next weeks. We look forward to having you join us to fight for our rights to decent pay and working conditions. This includes participation in our work-to-rule campaign and anti-Deplorables Human Rights Complaint currently under way.

All applications will be screened by the Amazons and we will forward the suitable ones only to Garth.

Emma Zaun
Shop Steward

#10 willworkforpickles on 05.24.22 at 4:16 pm

DELETED

#11 The Regulator on 05.24.22 at 4:16 pm

Finally, everyone’s favorite Mormon, Mittons Romney suggested that the U.S. or N.A.T.O. “could engage” in Ukraine and “potentially obliverate Russia’s struggling military” if nuclear weapons are deployed. The real issue for the world today is a beer bottle shortage in Germany due to high energy costs/sanctions. Ruble is 57.1250/greenback.

#12 PeterfromCalgary on 05.24.22 at 4:17 pm

The best thing Canada can do to help the world during these emergencies (Covid, Ukraine) is to reduce regulation on oil and gas to a more reasonable level. Developing our oil, gas and LNG will help defund Putin’s war machine while at the same time creating good paying Canadian jobs.

To address climate we can continue to build up renewable energy, give cost effective nuclear some serious research, and build an LNG plant to supply the world with the cleanest fossil fuel.

#13 Bezengy on 05.24.22 at 4:18 pm

#1 Party on Garth on 05.24.22 at 3:40 pm
Sudbury, Ont., buyers say housing market pressure made them leap into bad purchase.

——————

I personally know of 5 deals where folks bought sight unseen, each coming with huge surprises, like the lot purchased for $135k not be accessible by anything less than a ATV. Sad, and a very expensive mistake.

#14 Brett in Calgary on 05.24.22 at 4:19 pm

Inflation in Turkey was at 70% as of the end of April. I am thankful to be Canadian.

#15 stroller on 05.24.22 at 4:19 pm

And the Melissa geniuses that did this back at the beginning of the year – how’s that genius move looking, now that they owe the bank $10,000 and the assets that they purchased are worth $8,000?

Not in a balanced B&D. And what did I say about long-term focus? You are why people fail. – Garth

#16 Schema on 05.24.22 at 4:25 pm

The inflation has already killed consumer demand, and their savings, just look at Target and Walmart.

The economy is not growing, but sputtering because the consumer is 70% of the economy.

All the good folks who stayed in ETFs are now down roughly 20% on the year, so they feel one heck of a lot poorer.

Borrowing to invest?

Why not, it will be a great lesson learned.

#17 Madcat on 05.24.22 at 4:27 pm

Bought a heap of Netflix today. Down 70% YTD. Great discount if you ask me.

#18 Stoph on 05.24.22 at 4:28 pm

Correct me if I’m wrong, but the dollar cost averaging that Garth has spoken against in the past is when people have a chunk of cash in hand and don’t invest it all at once, rather they slowly invest it bit by bit over to course of a relatively long time. In such cases people usually end up paying more for the delayed investment purchases as the market tends to go up.

Melissa’s case seems to be a bit different as she doesn’t have the money on hand and would need to borrow so there’s a bit of added risk. It goes without saying that the borrowed money would need to be invested in a non registered account to be able deduct the interest.

#19 Brian on 05.24.22 at 4:32 pm

Clients expect & deserve the full Monty (but with pants). – Garth

LOL, while I wipe the coffee off my shirt!!

Good one Garth!

#20 Greg on 05.24.22 at 4:37 pm

Garth if you’re hiring make sure you avoid people with public sector experience. As someone who worked in the private sector, hard work doesn’t pay off working for the government sector. Too many lazy and incompetence. Hire a patriot and private sector individual.

#21 Guy in Calgary on 05.24.22 at 4:39 pm

Been DCA’ing with my HELOC over the last few weeks and will continue for a little longer I think. Guess you can always do both.

#22 PeterfromCalgary on 05.24.22 at 4:39 pm

Good advice for Melissa although she might want to invest part of her line of credit and keep the rest for emergencies. My tenant was the victim of a hit and run on his parked car yesterday and only has liability insurance which does not cover hit and run property damage. So just be aware that stuff happens.

#23 Dogman01 on 05.24.22 at 4:45 pm

Already crying Uncle?

Interest in Rates: Almost half want BoC to take wait-and-see approach before raising interest rates further:

https://angusreid.org/bank-of-canada-inflation-interest-rates/

Now my guess is most have no idea that the Canadian Dollar would tank if they did not keep up with the U.S Fed.

So the pain of Inflation vs the Pain of higher Interest rates on their debt…..which is the priority?

Based on the history of the “war on savers”, TPTB would prefer inflation over high interest rates.
Based on the history of choosing asset holders over salary earners, TPTB would choose inflation over higher interest rates.

With an election in 2025, perhaps a point where the financial pain is most acute for Canadians, do you not think they will pull out some kind of “Over-extended Homeowners relief program” to garner the votes of the financially “victimized”.

#24 Armpit on 05.24.22 at 4:48 pm

A little confused in your explanation to Melissa.

If Melissa borrows the money to buy ETF’s in her TFSA… the interest payments ARE NOT deductible. It is only if it is to purchase into a non-registered account.

As stated. – Garth

#25 Søren Angst on 05.24.22 at 4:48 pm

Eschew growth stocks.

Eschew single stock picks (like TWTR).

Buy value instead, ETFs/ETNs. Balance of Maple & Uncle Sam.

+ a bit of me:

Don’t touch anything without a +7% dividend that pays monthly = plenty of them out there. I own at least 3. Inflation fighters, DRIP champs.

What Garth and Crew advised A WHILE AGO.

Still +10% for the year, more when this weeks “yeah oil” dividend comes in. +45% May dividend, annualized.

—————–

LOC a Cash Account for WebBroker, low rate, tax deduct my new twist which Garth anoints today. Recall, I am an AMATEUR compared to many that read this Blog w/my Threadbare Portfolio.

Garth is correct, it’s a buying OPPORTUNITY right now.

Mr. Market will recover as it has always done.

Fortune favors the bold and those that put into action this Blogs excellent advice, free to boot.

Kudos to you Garth et. al.

[and to the CBs for cheap LOC rates – couldn’t resist Garth]

#26 Jenn on 05.24.22 at 4:48 pm

How is her Tangerine LOC at 2.45%?
Tangerine’s prime is 3.20% currently and will certainly be rising.
Mine, for some unknown reason is prime +6% (why? I donno. I have a great credit score) So borrowing at 9.2% doesn’t make a lot of sense for me.

#27 The Original Jake on 05.24.22 at 4:55 pm

Says my trader buddy Ed Pennock: “It’s way too early to announce that we saw the bottom.”

This sounds contradictory to what he said back at the beginning of the month… “This market is much closer to a bottom. Likely hundreds of points. Not thousands.”

That was said 2500 pts higher than today.

https://www.greaterfool.ca/2022/05/02/the-same-but-different-2/

It’s rolling history, dude. Live with it. – Garth

#28 Paul on 05.24.22 at 5:04 pm

News flash CP24 says 45% of Canadians want the the Bank Of Canada to fold off on the rate hike! Who knew?

Big surprise. Thought it would be 85%. – Garth

#29 dave on 05.24.22 at 5:15 pm

Only thing we want to hear is that the real estate will have a 30%+ correction.

Everything else is small in comparison.

#30 yorkville renter on 05.24.22 at 5:17 pm

#20 Hire a patriot and private sector individual.

As soon as you say “patriot” I lose interest… usually people who toss that word around have very specific definitions around what that means and it’s usually ill-conceived

#31 Doug t on 05.24.22 at 5:21 pm

Garth can I WFH ?

#32 Dr V on 05.24.22 at 5:26 pm

“In fact, most people would benefit in retirement from a non-reg account (and all married couples should maintain a joint version, for tax reduction and estate planning).”

Done.

But no way am I moving to TO.

#33 THE DANDADA on 05.24.22 at 5:49 pm

DELETED

#34 crowdedelevatorfartz on 05.24.22 at 5:58 pm

Bay St?
The elevator rides would be epic!
Or have I just shot myself in the foot?

#35 NOSTRADAMUS on 05.24.22 at 5:58 pm

ECHO, CASH IS NOT TRASH!
Even in inflationary environments, cash is not trash. Together lets pull out our $1.99 calculators and do the math.
-Cash is down about 10 % this year to price inflation
(except VS assets).
Bitcoin is down about 56%
Luna is down about 100%
ARRK is down about 74%
The Nasdaq is down about 30 %
The S&P 500 is down about 20%
The Russell 2000 and their brothers are down about,
“Well, You get the drift.”
“Oh, I almost forgot to mention housing, MMM, OUCH”
The clear winner this year is cash. It will in most cases buy more of generally any risk asset even if it buys less food and gasoline. I’m watching the financial madness through my fingers. Steady Lads, hold the line.

#36 Inequity on 05.24.22 at 5:59 pm

#12 PeterfromCalgary

Canada doesn’t seem to be that interested in development outside of the two provinces with all the votes, or an indigenous group

#37 Quintilian on 05.24.22 at 6:01 pm

“CBs are aggressive now but may dove out. We just dunno.”

Wow Garth, that seems you are backing off the 6 to 8 increases that supposedly the market had priced in.

You should always look to the CB’s through a lens of incredulity.

From my perspective, the CB’s should be charged with moral malpractice for failing to normalize interest rates. There has been ample time since the GFC.

#38 Paul on 05.24.22 at 6:22 pm

#28 Paul on 05.24.22 at 5:04 pm
News flash CP24 says 45% of Canadians want the the Bank Of Canada to fold off on the rate hike! Who knew?

Big surprise. Thought it would be 85%. – Garth
————————————————————————————————
My bad 17% what’s it lowered!

#39 wallflowers on 05.24.22 at 6:26 pm

Keep watching those terminations!
In my southern Ontariowe city there are now more sales listings terminations daily than sales or listings!!!
Some of these terminations are happening less than 2 weeks in and this is a city where it was normal for listings to sit on MLS for 3 months 4 years ago.

#40 Broader Mind on 05.24.22 at 6:40 pm

Newsflash almost 100% of Canadians want our government to continue shoveling money off the back of a truck. Raise rates already !

#41 Reality Check on 05.24.22 at 6:44 pm

#15 stroller on 05.24.22 at 4:19 pm
And the Melissa geniuses that did this back at the beginning of the year – how’s that genius move looking, now that they owe the bank $10,000 and the assets that they purchased are worth $8,000?
——————
I have been dollar cost ave in since 2007 (yes saw a 40% drawdown in 2008/09). Even with current pullback I’m still up 4x.

DCA is a long-term strategy, not a trading/speculating strategy.

#42 Gruff403 on 05.24.22 at 6:50 pm

Hey Melissa, We regret the risks we don’t take and using your LOC to put 10K into the market is a smart risk. Systematically pay off the loan and repeat. The interest cost will be minimal. Using debt to purchase assets is smart.
Also compare the debt to other assets. If it’s a HELOC secured by a house with 500K equity the risk is 10/500 = 2% of your assets. I wouldn’t do it with 200K but 10K is small.

#43 Søren Angst on 05.24.22 at 6:51 pm

Off topic. Completely.

Did I forget to mention my team in Serie A

Milan AC

finished 1st, “Il Scudetto” champions!

If you have Instagram, here they are celebrating, 5th video, 6th continues. By Brahim Díaz (where they sing in English with an Italian accent):

https://www.instagram.com/stories/brahim/2845273208003773350/

and more than a few photos from David Calabria showing “Milano Impazzito”:

https://www.instagram.com/stories/davidecalabria2/2845105003981643872/

———————

Viva i Rossoneri. Viva L’Italia.

I will tell you, there is a lot of passion & heart in this pint sized country.

#44 Shawn on 05.24.22 at 6:51 pm

Cash is Trash?

#35 NOSTRADAMUS on 05.24.22 at 5:58 pm
ECHO, CASH IS NOT TRASH!
Even in inflationary environments, cash is not trash. Together lets pull out our $1.99 calculators and do the math.
-Cash is down about 10 % this year to price inflation
(except VS assets).
Bitcoin is down about 56%
Luna is down about 100%
ARRK is down about 74%
The Nasdaq is down about 30 %
The S&P 500 is down about 20%
The Russell 2000 and their brothers are down about,
“Well, You get the drift.”

*****************************
Well, if anyone is going to claim cash has lost 10% after inflation then they need to knock that same inflation 10% off every other investment. So the S&P 500 on that basis is down more like 30%.

Sorry but the B&D has to get the same treatment. We either measure in nominal returns or real returns. No mix and matching.

#45 Penny Henny on 05.24.22 at 6:53 pm

Location is Toronto. Bay Street. You need to come to the office daily and wear pants.-GT

What do you have against skirts?
HOM

#46 Sail Away on 05.24.22 at 7:13 pm

Well, the time may be approaching to re-crank the Heloc borrow-to-invest strategy.

Let’s see if we can get some good arterial blood first…

#47 TurnerNation on 05.24.22 at 7:18 pm

We remember the time Smoking Man almost applied.


Control over our feeding. War on meat continues. Any angle.

https://uk.news.yahoo.com/nhs-issues-warning-anyone-eats-163442613.html
“See NHS guidance on contamination of meat in endemic countries as UK monkeypox cases rise”


From the ‘Almost Back to Normal Dept. As noted in Q2 2020 you no longer have a right to be healthy.
You will be wearing Your Mask until 2025 — if not forever. Children…will know this as normal

.Berkeley public school system reinstates an indoor mask mandate for students and staff for the remainder of the school year (berkeleyschools.net)

.Mask requirement reinstated for all indoor spaces for University of Delaware (udel.edu)

.Providence schools reinstating mask mandate http://www.wpri.com (wpri.com)

.Philly schools going back to universal masking Monday (inquirer.com)


— Control over our Travel/Movement. It’s almost back to normal, any day now. So much science!

.CDC adds five new destinations to ‘high’ risk category for travel, including the Bahamas (erienewsnow.com)

https://www.afar.com/magazine/cdc-now-recommends-covid-testing-for-domestic-travel
With cases and hospitalizations back on the rise in the United States, the agency is now asking travelers to test for COVID-19, using either a PCR or antigen test, as close to the time of departure as possible and no more than three days prior to travel—regardless of vaccination status.

—- Control over our Breeding. Check. Lets turn men into women, hey at east they won’t rebel.

https://www.aol.com/news/clue-why-covid-deadlier-men-080833881.html
“New clue about why Covid is deadlier for men: Estrogen may play a protective role”

#48 Work and Tumble on 05.24.22 at 7:19 pm

So much for TWO official languages in Canada!
And not one word from the PMs office.. Quebec gets the Trudeau pass again.

#49 Inflation Time on 05.24.22 at 7:21 pm

No opportunities yet for anyone hoping to get a house in the GTA, finished checking the mls listings and the prices are still crazy, would need to drop between 30-40% to start making it affordable for the 30 and under crowd, when I was growing up in the GTA if you had one adult working, did not matter what type of job, you had a house, this was in the 80’s, can you imagine that general labourer could afford a house, 3 kids, an Olds in the driveway and a cottage up north, tell that to the youngsters now days and they think your crazy, it’s like a make believe fairy tale of some kind. For your new admin position, I’d like to nominate Nostradamus, a great story teller and very funny, who tells it like it is.

#50 Flop… on 05.24.22 at 7:32 pm

So I contacted Guns N’ Roses to see if they wanted to settle their plagiarism case out of court, and they said they’d pass.

I threatened them by way of telling them I was going to torture them with a photo of Doug Rowat’s hairy legs, as shown on this blog.

I guess I do the next best thing and whack another 5k into my TFSA later this week.

Not very good at this ambulance chasing stuff, do you think it’s because I’m not American…

M47BC

#51 jess on 05.24.22 at 7:37 pm

2040 opportunity?

https://gem.cbc.ca/media/2040/s01e01?cmp=GEM_cbc.ca_homepage_shelfnew

#52 ogdoad on 05.24.22 at 7:39 pm

Ummm…just asking for a friend but, is Melissa single?

Og

#53 PeterfromCalgary on 05.24.22 at 7:40 pm

#36 Inequity on 05.24.22 at 5:59 pm

” Canada doesn’t seem to be that interested in development outside of the two provinces with all the votes, or an indigenous group”

I agree! However, some powerful people like Ken Griffen of Citadel Capital are saying we need a more “Thought through” energy transition which includes continue to develop fossil fuel sources. Trudeau may not listen to PeterfromCalgary but he may/should listen to powerful, smart people like Ken Griffen.

https://youtu.be/g7paIUrzpLs?t=1154

#54 Bits&Bytes on 05.24.22 at 7:44 pm

Like Mellisa, I implemented dollar cost averaging in my investment strategy. Based on this post and the current market, I am thinking of using my 15k LOC to invest in my Wealthsimple unregistered account (Growth ETFs). The LOC is 1.99% for three months and then Prime (currently 3.2%). My usual DCA biweekly investment of $600 would pay back my LOC instead of investing until the LOC is paid back (approximately 1 year). The market could be much lower within a year, however, i would still have entered the market at a discount from the top and the money is staying there for at least 15 years. Is anyone doing something similar in regard to paying back the LOC? Garth mentions that Mellissa just has to pay the interest of the loan each month. Should the strategy be to keep piling into investments and make the minimum payments to the loan for the foreseeable future?

#55 Quintilian on 05.24.22 at 7:45 pm

https://wolfstreet.com/2022/05/24/housing-bubble-getting-ready-to-pop-unsold-inventory-of-new-houses-spikes-by-most-ever-to-highest-since-2008-sales-collapse-below-400k/

“Housing Bubble Getting Ready to Pop: Unsold Inventory of New Houses Spikes by Most Ever, to Highest since 2008, with 9 Months’ Supply, Sales Collapse at Prices below $400k”

American story, but worth posting because the RE pumpers, were making the same arguments as the Canadian pumpers, ie immigration, they’re not making anymore land, high demand low supply.

But of course, with RE, the inventory swells after the bubble pops, not while the buying fever is at high pitch.

Tick Tock, Tick Tock

#56 Ponzius Pilatus on 05.24.22 at 7:50 pm

#129 Barb on 05.24.22 at 2:27 pm
Re: Food for thought.
Always talking about supply issues.
How about talking what YOU do to lower demand for oil products.
Real for food for thought.

#57 Ponzius Pilatus on 05.24.22 at 7:55 pm

All American officials are giving the usual response to the mass shooting in Texas:
Let’s pray for the victims and their families.
The time for prayers has long ago expired.
Time for real action.

#58 Ponzius Pilatus on 05.24.22 at 8:12 pm

Starting June, Germany is embarking on a massive program to wean the populace off cars and fossil fuels.
For €9.00! The Germans will be able the buy a MONTHLY ticket to use on all public transport (incl. regional trains) anywhere in Germany.
Putin is not happy.
And Dolce Vita will probably move to Germany.

#59 Flop… on 05.24.22 at 8:14 pm

Don’t know what these guys are talking about.

It’s easy to buy a home in Vancouver for under 200k.

If you want to live like a king, just spend 199k on a motor home and park it in a Walmart car park.

Dinner always at your fingertips…

M47BC

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

“Can you buy a home in Metro Vancouver for under $200,000?

If you’re looking to buy a home in the City of Vancouver for under $200,000, you are completely out of luck. 

But according to a new report, locals looking outside of city limits may have some options — but they will have to be a little flexible. 
Point2, an international real estate search portal, notes that only 10 per cent of all homes currently on the Canadian market are priced under $200,000.

The report also shows that 38 of Canada’s 50 largest, most expensive cities — which are all in Ontario and British Columbia — showcase zero listings for less than $200,000. 

Only one larger city, Kawartha Lakes in Ontario, has more than 1 per cent of all homes listed below $200,000.

On the other end of the spectrum, populous cities across the Prairies have the most homes that cost under $200,000, particularly Edmonton, with 1,300 homes, and Regina, with 400.

If you’re looking to find a dwelling for purchase in B.C. in a larger city, your best bet is Surrey. That said, the pickings are markedly slim, with only 0.46 per cent of the listings selling for under $200,000. The choices are fewer in Abbotsford, with only 0.26 per cent of listings asking for under $200,000. Richmond also has a few options — with an emphasis on few: a meagre 0.17 per cent of listings are asking for under $200,000.”

https://www.vancouverisawesome.com/real-estate/metro-vancouver-real-estate-cheap-canada-5402528??utm_source=twitter&utm_medium=organic&utm_campaign=snd

#60 jay (not that one) on 05.24.22 at 8:26 pm

As I wrote in the chapter on Economics in my book The Graysonian Ethic, there are two ways of looking at the world of economics: The big picture economists and the little picture economists. The big picture economists look at macro trends and generally have very accurate models right up until they don’t, and the little picture economists tend to look at the aggregate of individual decisions and tend to have models explaining why the very accurate models stop being accurate. Ideally, you need to have a combination of the two, because while the trends are important and if you ignore them you can miss huge opportunities, the details are also important and if you ignore them you can also miss huge risks.

This situation, where monetary inflation is combined with a self-inflicted gunshot wound on the economy, reminds me of the US recession in 1893. The Sherman Silver Purchase act remonetized silver, causing inflation which led to an easy supply of credit. Unlike other recessions, this one was caused by massive protective tarrifs of the McKinley tarrif act, which instead of causing an artificial bubble, instead collapsed the value of healthy markets by forcing a heavy tax burden on manufacturers and farms who relied on imported parts.

I think your look at the trend of average recession length is a big picture view, but in my eyes there’s a big problem: The huge amount of time between recessions in the 2000s and 2010s was paid for by breaking into our seed corn. Personal debt exploded, corporate debt exploded, government debt exploded, and now there isn’t much wiggle room. Economies around the world have massively increased their debt to GDP ratio so it’s becoming quite unlikely that they can just spend their way back to prosperity, and the central banks in partnership with the governments have caused inflation to kick up.

Unlike 1893, everyone’s basically used up all their trump cards, and I think if the world economy is going to stay healthy, there needs to be a real recession to get rid of the cancerous malinvestment sucking productive capacity out of everyone everywhere. People and material are getting sucked up by stuff that doesn’t do anyone any good, and we need to let those ventures fail so people can make better use of them.

#61 Faron on 05.24.22 at 8:34 pm

#57 Ponzius Pilatus on 05.24.22 at 7:55 pm

This is getting very sad and extremely old and is 95% preventable.

Cue the NRA calling for arming 5y.o. kids. Cue the GOP blaming it on “mental health” etc. Ignore the elephant in the room at all costs because who cares how many people are killed in these mass shootings or at-home accidents or suicides. Guns make a few people a lot of money. US politics is so broken. Strict gun control now. If you’re a “good guy” you shouldn’t care if the thing is registered.

#62 Dumb'ster fire! on 05.24.22 at 8:37 pm

This is for that guy on this blog who fancies himself the smartest guy in the room … or in this case, on the blog!

He knows who he is…he needs no further introduction. He can add yet another jewel to his family’s investment legacy!

https://ca.finance.yahoo.com/news/this-is-where-you-can-still-buy-homes-in-canada-for-under-200000-171717878.html

#63 Ponzi Challenge on 05.24.22 at 8:40 pm

#57 Ponzius Pilatus on 05.24.22 at 7:55 pm

All American officials are giving the usual response to the mass shooting in Texas:
Let’s pray for the victims and their families.
The time for prayers has long ago expired.
Time for real action.
____________

I love how people make comments like this without invoking a brain cell, if they even have one.
And specifically … what action would that be?

This I gotta hear …

#64 crowdedelevatorfartz on 05.24.22 at 8:53 pm

@#45 Penny Henny
“What do you have against skirts?
+++
Nothing.
But.
I believe Garth, Doug and Ryan refer to theirs as “kilts”.

#65 Playing Monopoly on 05.24.22 at 9:07 pm

“Pent Up Consumer Demand”
Who made up that line. I know a lot of people .
They all bought the same during all the restrictions (just more Amazon) and I don’t know anyone who now has savings just waiting to buy something.
My non humble opinion is the “Pent up demand” must be on some other planet.

#66 Stupid is as stupid does! on 05.24.22 at 9:36 pm

#1 Party on Garth on 05.24.22 at 3:40 pm

Sudbury, Ont., buyers say housing market pressure made them leap into bad purchase

https://www.cbc.ca/news/canada/sudbury/sudbury-josh-keyes-house-buyers-remorse-1.6461379

——–‘

Perhaps next weekend’s blog could highlight some of the losers who now have regrets. This couple would be at the top of the list. Let them make a guest appearance so we can all have a much needed good laugh!

Biggest mistake – Buying and living in Sudbury. The rest is just money.
Second biggest mistake – buying sight unseen because we didn’t want to fly a few hours to make the most major purchase of their life. I would drive 5 hours just for a car, let alone a house.

All I can say is that I hope he has had a vasectomy. For everyone’s sake!

#67 Wise guy on 05.24.22 at 9:44 pm

#17 Madcat on 05.24.22 at 4:27 pm

Bought a heap of Netflix today. Down 70% YTD. Great discount if you ask me.

*********

What if I don’t ask you?
Is Netflix still a great discount?

…and I didn’t, by the way.

#68 Ponzius Pilatus on 05.24.22 at 9:48 pm

#61 Ponzi Challenge on 05.24.22 at 8:40 pm
#57 Ponzius Pilatus on 05.24.22 at 7:55 pm

All American officials are giving the usual response to the mass shooting in Texas:
Let’s pray for the victims and their families.
The time for prayers has long ago expired.
Time for real action.
____________

I love how people make comments like this without invoking a brain cell, if they even have one.
And specifically … what action would that be?

This I gotta hear …
——————–
All I can say.
If the guy were still alive, he’d probably plead self defense.

#69 Shawn on 05.24.22 at 9:57 pm

MOVE TO ALBERTA!

Flop at 59 quoted:

“On the other end of the spectrum, populous cities across the Prairies have the most homes that cost under $200,000, particularly Edmonton, with 1,300 homes, and Regina, with 400.”

*******************************************
Move here already! Tonight! I’m leaving the porch light on again for the next five nights which should sop up those 1300 cheap homes in Edmonton. Hurry!

#70 Soros' Apprentice on 05.24.22 at 10:05 pm

So George Soros is pretty good at anticipating the future. Here’s what he said at Davis recently:

“Indeed, the Russian invasion may turn out to be the beginning of World War III, and our civilization may not survive it.“

What did he mean by this?
What’s a good portfolio for global nuclear combat? Has Ryan stress-tested your Balance & Diversified models in an environment of nuclear, biological and chemical threats?

#71 crowdedelevatorfartz on 05.24.22 at 10:08 pm

@#61 Faron
“US politics is so broken. Strict gun control now.”

+++
Total agreement.
The Canadian Firearm regulations are, while not perfect, extremely effective.
The paperwork that must be filled out and sent to the RCMP BEFORE applying for a firearm license would make an expired passport applicant weep.
From the MANDATORY safe firearm training courses for all new potential license holders.
To the MANDATORY police checks and interviews of the potential firearm owner, and interviews of the firearm applicants’ family, friends, etc.
Its not perfect but, it is a very good start.
Mass shootings in Canada are, thankfully, rare and usually done by illegally owned firearms, that no rules or regulations, would stop.

The US firearm Lobby will be dragged kicking and screaming into tougher regulations ONLY when financially punitive security bonds or lawsuits against manufacturers, sellers and owners….finally forces them to get tougher rules against ownership.

It will be very interesting to discover how an 18 year old acquired a handgun and rifle in this latest mass murder.

#72 crowdedelevatorfartz on 05.24.22 at 10:10 pm

@#63 Ponzi Challenge
“And specifically … what action would that be?

This I gotta hear …

++++

Please. Don’t encourage him.

#73 Barb on 05.24.22 at 10:20 pm

#56 Ponzius Pilatus, responding to my post #129 May 23

“Always talking about supply issues.
How about talking what YOU do to lower demand for oil products.
Real for food for thought.”

——————
Huh?
Instead of reading the FIRST line of a long post, perhaps read the LAST line if you’re “speed/comprending”.

Then you’d know my post had nothing to do with SUPPLY.
Rather, it concerned the environmental damage bringing oil from halfway around the globe…versus Canada’s oil.

#74 Summertime on 05.24.22 at 10:29 pm

Hm,

The longer expansions, the higher debt and real inflation.

Is is because expansions are driven by real growth or by monetary policies of central banks? I.e. central banks policies driving expansions as the underlying measure/money is deteriorating faster than before?

The wealth effect of markets is important, but is that resulting in fake vs. real wealth as valuations during expansions become excessive?

And I agree that if the indexes decline 20 % and that is measured in 10 % inflated money (how about 15 % +?) the real decline is 28 % (32 % for 15 % inflation)

So if housing declines 40-50 % as expected now from the top and that is measured in money that will decline by at least 50-60 % in this inflation cycle (3-5 years, 15 % + real inflation = 7 % CPI), maybe more, should we expect around 60-70 % decline of housing in terms of real values? And was this evaporating overvaluation (about to decline 3 times from the top, maybe more) fake and driven strictly by monetary policies?

#75 Satori on 05.24.22 at 10:35 pm

:( tooo bad I don’t live near Bay street! I’d apply!

Working on covid units as an AA in downtown Vancouver the past 3 years, supporting nurses, staff and ordering equipment, and hard to find ventilators…. total 6 years in mental health and addictions… I’m so happy to moved on to something less stressful, less depressing and less heavy. What a wonderful opportunity!!

Good luck in your search Garth :D What a great job!!

#76 Summertime on 05.24.22 at 10:39 pm

And further on the cumulative effect of declining valuations and underlying measures on real wealth:

Is it strange that on markets that are not excessively credit driven, but based on larger savings, house valuations actually do not decline but could even increase as the underlying measure/money deteriorates, so the underlying real value stays the same or even increases vs. decreasing as in the credit driven housing markets when credit dries up?

Is it the case then that credit expansions creates fake wealth that credit contraction destroys?

Just a thought on how important a proper credit management is for valuations and on what happens when central banks screw up big on it.

#77 Satori on 05.24.22 at 10:41 pm

@#61 Faron
“US politics is so broken.
——————————
US politics are broken??? oh please, have a look in your back yard. You think they are bad, Canada is in the same boat… same sheet, different pile.

Wish people would stop getting involved with the Americans and maybe ponder their own country’s issues, rather tan pointing fingers.

You don’t live there, you are not a citizen there, you don’t even vote there… so why the BIG worry??

#78 Flop… on 05.24.22 at 10:46 pm

#70 Shawn on 05.24.22 at 9:57 pm
MOVE TO ALBERTA!

Flop at 59 quoted:

“On the other end of the spectrum, populous cities across the Prairies have the most homes that cost under $200,000, particularly Edmonton, with 1,300 homes, and Regina, with 400.”

*******************************************
Move here already! Tonight! I’m leaving the porch light on again for the next five nights which should sop up those 1300 cheap homes in Edmonton. Hurry!

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

So Uncle Shawn, I looked out of curiosity, didn’t bother with the mobile homes or any of that, just something that’s decent, that most people could pay cash for on here, so I started at the 199k mark.

This place in my Vancouver neighborhood would probably go for around 1.7 million looking at the map this place is probably closer to downtown.

I see the value in Alberta and would look there before rural Ontario.

Alas.

It’s also closer to the North Pole…

M47BC

https://www.point2homes.com/CA/Home-For-Sale/AB/Edmonton/Alberta-Avenue/11730-89-ST-NW/120558877.html

#79 Ponzius Pilatus on 05.24.22 at 10:47 pm

#74 Barb on 05.24.22 at 10:20 pm
#56 Ponzius Pilatus, responding to my post #129 May 23

“Always talking about supply issues.
How about talking what YOU do to lower demand for oil products.
Real for food for thought.”

——————
Huh?
Instead of reading the FIRST line of a long post, perhaps read the LAST line if you’re “speed/comprending”.

Then you’d know my post had nothing to do with SUPPLY.
Rather, it concerned the environmental damage bringing oil from halfway around the globe…versus Canada’s oil.
——————————
Okay, let me make it simple.
If you and most Canadians would use less oil products, we would need less oil imported or Canadian oil.
So it’s a demand issue, not a supply issue.
Read my post #58 , what Germany is doing to lessen demand for oil.

#80 Melissa on 05.24.22 at 10:55 pm

Ah! To be featured on the God of finances blog! I feel like a king.
Thanks for answering my question Garth, you rock!

——–
#52 ogdoad on 05.24.22 at 7:39 pm

Ummm…just asking for a friend but, is Melissa single?

Og

——–

I’m hitched..but I do have a brother who is :)

#81 Sail Away on 05.24.22 at 11:17 pm

#59 Flop… on 05.24.22 at 8:14 pm

On the other end of the spectrum, populous cities across the Prairies have the most homes that cost under $200,000, particularly Edmonton, with 1,300 homes, and Regina, with 400.

——-

Or, if you really need a house under $200,000 and don’t want to live in Edmonton, you could go to the States, which has 67 million houses like that.

And a four year military enlistment gets you citizenship. Win win.

#82 Ustabe on 05.24.22 at 11:50 pm

#77 Satori on 05.24.22 at 10:41 pm

@#61 Faron
“US politics is so broken.
——————————
US politics are broken??? oh please, have a look in your back yard. You think they are bad, Canada is in the same boat… same sheet, different pile.

Wish people would stop getting involved with the Americans and maybe ponder their own country’s issues, rather tan pointing fingers.

You don’t live there, you are not a citizen there, you don’t even vote there… so why the BIG worry??

Someone going to tell her or should I?

Satori, Faron is a US American. Unlike your other fav, Sail Away who also is a US American and who has publicly stated that he is fully prepared to vamoose from Canada at a moments notice Faron actually tries to better not only Canada but the world. Also unlike Sail Away, Faron doesn’t need fangirlz to rush to his defense….if you know what I mean.

And I think you do, eh?

In summation, while I don’t care for either of their presentations, Faron is a giver while Sail Away is a taker.

#83 Ponzius Pilatus on 05.24.22 at 11:54 pm

#81 Sail Away on 05.24.22 at 11:17 pm
#59 Flop… on 05.24.22 at 8:14 pm

On the other end of the spectrum, populous cities across the Prairies have the most homes that cost under $200,000, particularly Edmonton, with 1,300 homes, and Regina, with 400.

——-

Or, if you really need a house under $200,000 and don’t want to live in Edmonton, you could go to the States, which has 67 million houses like that.

And a four year military enlistment gets you citizenship. Win win.
—————————
Today is not the day to extoll the virtues of The United States of America.

#84 Tom from Mississauga on 05.24.22 at 11:55 pm

Airbnb the latest to leave and Cisco blows up on China’s absurd yet unstoppable zero Covid. Next issue is fertility, women of child bearing age 20-35 are only 4% of the population, a terminal demography. There’s no consumer, infrastructure is the only game in town. Is zero Covid the setup for A Handmaid’s Tale? A country that, cracked skulls in HK, enslaved in Xinjiang, censors everyone, forced quarantine in Shanghai, threatens Taiwan invasion, jailed Jack Ma and the 2 Michaels, assume the worst and prepare to be terrifyingly surprised. China and every company producing there is at risk of being uninvestible.

#85 stage1dave on 05.25.22 at 12:07 am

Hockey weird too…

Zadorav just scored on Mike Smith from the parking lot…

Tie game!

#86 Bannerman on 05.25.22 at 12:50 am

Since no one knows where a bottom is found it only makes sense to stay the course, buy the best stocks with solid growing dividends, and assume the sun will rise tomorrow.

The majority of the sell off has been panic driven, individuals and institution desks rushing to pay margin notes. This is not unusual. People are mostly bags of emotional chemicals that bypass the brain. If you have a solid plan , including steady cash flow and a decent cash position, you’ve got nothing to worry about.

Last night Trudeau was at it again in Surrey when a large group of anti Trudeau protestors were called racists while only expressing anger directed at “His Majesty”.

There were no racists, the same as there being no Nazis at the truckers rally. The Trudeau handlers banned reporters from the room and decided to issue a “press release”, calling the anti Trudeau calls into ‘racists’. That always works right. I wasn’t aware Trudeau and his Liberal Party were a seperate race ? Aren’t we deserving of truth?

#87 Faron on 05.25.22 at 1:06 am

#77 Satori on 05.24.22 at 10:41 pm

I’m a dual citizen you idiot. And, maybe you have noticed that much of what befalls the US, hits Canada 5 to 10 years later. i.e. this PP nonsense.

#88 Wealthtokcanada on 05.25.22 at 1:22 am

Garth, your clients don’t care if your associates work from home. In fact, those associates are more efficient and likely more productive at home. Think of how much time and energy they have to waste engaging and listening to repetitive ramblings and useless small talk from grizzled advisors.
This ain’t an old boys club anymore.
Pants or no pants, your boomer is showing.

Nothing to do with generation, but thanks for the gratuitous ageism. I said this is a ‘career’ opportunity in wealth management. Where better to learn and advance than in the heartbeat of the nation’s financial core? You do not create a career in your jammies, nor would I want to hire anyone too self-absorbed to see that. Please refrain from applying. I also don’t hire people who openly display prejudice. – Garth

#89 Philco on 05.25.22 at 1:32 am

#66 Stupid is as stupid does! on 05.24.22 at 9:36 pm

My god so dumb. I do spend more time looking for a used car than people do a house. I inspect everthing myself. Foundation to the roof and all electrical / plumbing.
I was just discussing with the buddy running my sawmill that house sales should all be contingent to a final inspection. Most have no clue to what they are doing.

#90 Faron on 05.25.22 at 1:51 am

#46 Sail Away on 05.24.22 at 7:13 pm
Well, the time may be approaching to re-crank the Heloc borrow-to-invest strategy.

Let’s see if we can get some good arterial blood first…

God, I love this. Yesterday’s post predicting that the bottom isn’t in. Today’s looking for more blood. The stitching holding the ragdoll addict together is fraying. Composure dissolving to compost as the market shows, as is its wont, that everyone is a genius in a bull market. In a bear, the cowboys get sent to Ram Ranch.

#91 Mr3Putt on 05.25.22 at 3:07 am

What’s wrong with the TFSA if she has room available? Sure she misses out on the interest deduction and cap-gain reduced tax rate, but zero tax on profits will likely be a greater saving, no?

#92 Diamond Dog on 05.25.22 at 4:56 am

The problem with the “market has dropped 20% so everything is on sale” argument and “ETF’s are the safe play” is that it dismisses the effects of high inflation. The Fed will keep raising rates monthly another half point. And again in July. And August. And September. By September, we are around 2.75 or neutral and teetering toward recession.

If the Fed keeps raising rates beyond neutral to 3.25… 3.5%, there is little doubt that they are causing a recession on purpose to fight inflation like the Fed has “every other time” high inflation has occurred. At 3.5, they might get their wish. When we do the math, a recession starts in Q4, 2023 Q1 at the latest but mostly likely Q4. Seasoned investors should not be surprised by this.

The worst case scenario is we head for recession by Q4 with still high inflation and growing unemployment and bankruptcy numbers with no end of high inflation in sight for a full year following. If Putin ended the war tomorrow, bear in mind, this scenario is still likely because inflation can’t be ignored and will persist.

PPI inflation is running at 11% and still finding it’s peak, a leading indicator of CPI. If we were to look at CPI in 70’s standards, CPI would be running around 10.5%. That’s high! That’s further perspective. That’s an economic wrecking ball with an 18 month to 2 year lag “after” the Fed begins to address it if the teachings of Dr. Milton Friedman have any salt (they do). I will remind, the Fed was still buying bonds in March. Still stimulating a mere 2 months ago, how soon we forget.

It’s my belief now that the Fed slow rolled it’s rate hike reaction to high inflation because the Fed knows that there is somewhere between an 18 month to 2 year delay from the time they suck money out of the supply (lighten their balance sheet, tighten credit, raise rates) to reducing inflation. They stalled to buy some time because they know that it will take time to see the effects of raising rates and reducing their balance sheet. The Fed also knows what the effects of raising rates will have on the economy and mid term elections 6 months from now. The political angle here should not be dismissed:

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

This is, of course, a bear’s argument. But then, it was basically the same bear argument 5 or 6 months ago with a few tweaks concerning the Fed (can’t help it, it’s a work in progress). Fast forward and its now a bear market.

Unfortunately, everything has worsened since then. Inflation is higher in a bad way, there’s war in Europe with a mad Russian king greedy for land again (eye roll), China’s property bubble has worsened in conjunction with Covid restrictions, supply shocks from the pandemic have worsened, commodities are on a tear also in a bad way, human behavior i.e. price fixing and gouging is alive and well, EM’s are a mess and headed for some ugly bond market disruption and here at home and values have dropped across the board as the everything bubble deflates draining cash from our pockets without the help of high inflation. What could go wrong?

There’s talk of a global food shortage as Putin uses commodities as weapons of war (while normalizing the use of nukes on Russian state TV). The world has a global recessionary feel to it. It’s hard to find much that’s positive out there right now, you know?

Domestically, we’re still coming off an everything bubble in North America. Real estate valuations will continue to unwind with Fed rate hikes which should surprise no one. One might think that if a severe recession hits and the Fed reduces rates, real estate will recover, but it really comes down to where employment and bankruptcy levels will be when this happens. The next real estate bottom is likely not to be measured in months, but years. 2024 perhaps, if we’re lucky.

Stock markets are nowhere near bottoms and likely won’t find their bottom until real estate does. Stock markets are behaving like the Fed is bluffing and it’s a game of chicken, but the markets will blink because the Fed will raise rates. The Fed hasn’t got much choice at this point, welcome to the wrecking ball of high inflation. Bond markets are signaling recession but with the Fed still intent on raising rates, they will have to react to the Fed rate as well. 40bps, it’ll take all of a month or 2 at the most to hit new yield highs again.

It was easy to say sell when S/P 500 earnings were at 40x. Buy low sell high right? Lots of indicators why one should, not just the historical value precedent or heavy insider trading and bubble mania irrational behavior, but inflation back in Nov/Dec was high even then.

Regardless of everything we see or hear, the strongest bear argument of them all is high inflation. Couple high inflation with still high valuations, (S/P 500 is still at 31x earnings, real estate values still parked at the moon, $111 oil, $9 nat gas etc.) what could go wrong, right?

Anyway, we were told.

#93 Geoff H on 05.25.22 at 6:59 am

Good advice, Garth. This is the worst start to the year for a 60% stocks, 40% bonds portfolio in market history. For those with money to put to work (Canadians have waaaay too much cash on their personal balance sheets), you have a rare moment to earn 4%+ yield in investment-grade credit and the probabilities are in your favour (short, medium and long-term) for equity returns. Sadly, most people will want to wait until things look really good and there is little fear (like they did in December 2021) before they take the plunge. If every market participant behaved rationally, there wouldn’t be much opportunity out there.

#94 ogdoad on 05.25.22 at 7:44 am

#80 Melissa on 05.24.22 at 10:55 pm

Hey, I’m open….and exceedingly good at snuggling.

Og

#95 The government direction is perfect boomers on 05.25.22 at 8:03 am

DELETED

#96 X on 05.25.22 at 8:49 am

Some of these articles coming out that 45% of Canadians, want rates to stop rising. LOL. The same 45% probably also want the cost of gas and food to stop rising too.

Can’t have it both ways.

#97 crowdedelevatorfartz on 05.25.22 at 9:38 am

@#95 The government direction is perfect boomers

++++

Zo?
Ven dit you realize you hate your Fahza and Mutta?

#98 Sail Away on 05.25.22 at 9:42 am

#82 Ustabe on 05.24.22 at 11:50 pm

Sail Away who also is a US American and who has publicly stated that he is fully prepared to vamoose from Canada at a moments notice…

——–

True. I’m always ready to vamoose from any locale and embrace another.

For dual citizens, Canada and the US are pretty much one and the same, so it’s sort of like moving from one street to another. We’ll probably eventually live in a warm state during winter and Vancouver Island during summer, choosing whichever tax residency is more beneficial.

We like Texas and have lots of friends there, and also Hawaii and San Diego. And Savannah, and Key West… so many options. An embarassment of riches.

#99 THE DANDADA on 05.25.22 at 9:53 am

DELETED

#100 Sail Away on 05.25.22 at 9:58 am

#90 Faron on 05.25.22 at 1:51 am
#46 Sail Away on 05.24.22 at 7:13 pm

Well, the time may be approaching to re-crank the Heloc borrow-to-invest strategy.

Let’s see if we can get some good arterial blood first…

———-

God, I love this. Yesterday’s post predicting that the bottom isn’t in. Today’s looking for more blood. The stitching holding the ragdoll addict together is fraying. Composure dissolving to compost as the market shows, as is its wont, that everyone is a genius in a bull market. In a bear, the cowboys get sent to Ram Ranch.

———-

Strange comment. Valuations are reaching levels that may warrant again borrowing to invest in the same B&D as done last year. And if momentum brings it lower… even better.

#101 crowdedelevatorfartz on 05.25.22 at 9:59 am

@#90 Faron.
“everyone is a genius in a bull market. In a bear, the cowboys get sent to Ram Ranch.”

+++

Ever since Brokeback Mtn….
The Duke has been spinning in his grave.

#102 millmech on 05.25.22 at 10:03 am

Powell wants at least two more 50 point hikes, so we shall raise 50 basis points as well.

#103 Faron on 05.25.22 at 10:22 am

#82 Ustabe on 05.24.22 at 11:50 pm

On the topic of giving, I just gave away half of my morels. Sure, I could have bartered for something, but I don’t do transactional relationships. Why add an interfering layer of materialism by specifying a price? I love my friends. I want them to enjoy some morels. That’s as far as it needs to go.

#104 Shawn on 05.25.22 at 10:29 am

Businesses are Borrowing!!

BNN reports that Bank of Nova Scotia has Canadian commercial loans up 19% year over year.

That’s close to a one fifth gain in one year. That is epic loan growth from a mega bank.

I would have thought savings deposits were now flowing from consumers to businesses and many businesses would be paying down loans. Some must be. But many businesses are apparently borrowing and investing and growing like stink.

As an owner, I watch Canadian Western Bank closely and they should have a strong report on Friday.

#105 What Everyone Wants to Know on 05.25.22 at 10:40 am

Does the new hire get to bring their dog to the office?

#106 Sail Away on 05.25.22 at 10:41 am

#103 Faron on 05.25.22 at 10:22 am
#82 Ustabe on 05.24.22 at 11:50 pm

On the topic of giving, I just gave away half of my morels. Sure, I could have bartered for something, but I don’t do transactional relationships. Why add an interfering layer of materialism by specifying a price? I love my friends. I want them to enjoy some morels. That’s as far as it needs to go.

———

Oh, thanks for the example extolling your own virtues. So heartwarming. You’re a prince among men. Sheesh.

It’s like you’re becoming Ustabe.

#107 Philco on 05.25.22 at 10:46 am

From BT Global
And I agree. Ho hum off the the saw mill for fun.

Many technology names with a questionable future are still trading at multi‐billion valuations. In our view, the real
problem is that tech stocks make up far too large a weighting in the Dow, S&P and NASDAQ. With the retail sector now
coming down and a large component of the Dow and S&P, how are these indices supposed to deliver returns? The sad
reality is they will not. So we are likely going into a bear market. Expect further downside. The good news is that it is
happening rather quickly and markets will very likely bottom later this year.
We are quite bullish on three industries, which should not come as a big surprise to anyone following us over the past
year or so. We like energy, healthcare and agriculture. All three are doing fine in a declining market and this will likely
continue for the rest of the year. Our energy thesis is simple, energy prices will stay high until Europe can adjust to find
non‐Russian suppliers which will take years and energy stocks are the best values in the markets and they represent a
very low 4% of the S&P. That percentage was as high as 13‐15% years ago, so plenty of investors are likely still very
underweight the space. Healthcare will do well in an inflationary environment and the aging population is an enormous
unstoppable tailwind. Finally, a food crisis is coming, as the Ukraine is the breadbasket to Europe and the Middle East.
Get ready for that next inflationary hit to the global economy.
Another concern we cannot overlook is the approaching summertime period where Canadian equities seem to have a
particularly noticeable slowdown in activity, new issues, and trading volumes. After two years of COVID, this summer
might be noticeably more subdued on Bay Street. Thus, we are raising cash now, particularly in some small cap names,
only to reinvest in late August and early September.

#108 JC aka J Charest on 05.25.22 at 11:08 am

Can’t wait to see if Pepe will have the same amount of support tonight in the French debate…

Will be a good test to see how he reacts when the crowd is not behind him.

Comme on dit: Bonne chance…

#109 Satori on 05.25.22 at 11:10 am

82 Ustabe on 05.24.22 at 11:50 pm
#77 Satori on 05.24.22 at 10:41 pm

Thank you Ustabe. _/\_

As for you Faron, you remind me of PP and Trump with your constant insults in every comment you make. Perhaps taking an etiquette class, or watch a you tube on ‘how to debate’ cause you’re projecting onto others what you think of yourself and your language reveals you are a tiny, powerless, classless, ugly little shrimp of a man.

You could also try eating some makeup, maybe you get pretty on the inside. Flush.

#110 Krista on 05.25.22 at 11:31 am

Garth – you are really showing your age. Which typically bodes well for you in this blog. Experience matters. However, your comment “be a man like Melissa” is offside. Offensive to Melissa and everyone quite frankly. Be better Garth. This isn’t 1980 anymore.

Apparently not. We used to have a sense of humour before we all got woke. – Garth

#111 Faron on 05.25.22 at 11:41 am

#109 Satori on 05.25.22 at 11:10 am

Nice to have a new type king/queen. The crown was starting to est away at my already receding hairline.

You are not immune to projection BTW.

#112 Faron on 05.25.22 at 11:42 am

*typo* LOL perfect

#113 Faron on 05.25.22 at 11:46 am

#106 Sail Away on 05.25.22 at 10:41 am

You’re a prince among men

Thanks! I don’t always feel that way, so it’s nice to hear it from one of steerage’s most frequent commenters. Such stature. Much wow.

#114 Faron on 05.25.22 at 12:21 pm

#103 Sail Away on 05.24.22 at 10:33 am

Who called the bottom last week? News flash: it wasn’t

Hey Sailo, can you swing by and pick my bottom too? You seem good at it.

3810.32 on SPX is my reference.

#115 Yukon Elvis on 05.25.22 at 12:25 pm

#104 Shawn on 05.25.22 at 10:29 am

Businesses are Borrowing!!

BNN reports that Bank of Nova Scotia has Canadian commercial loans up 19% year over year.

That’s close to a one fifth gain in one year. That is epic loan growth from a mega bank.
++++++++++
And BNS has raised their dividend by 12% over last year.

#116 KLNR on 05.25.22 at 12:36 pm

@#13 Bezengy on 05.24.22 at 4:18 pm
#1 Party on Garth on 05.24.22 at 3:40 pm
Sudbury, Ont., buyers say housing market pressure made them leap into bad purchase.

——————

I personally know of 5 deals where folks bought sight unseen, each coming with huge surprises, like the lot purchased for $135k not be accessible by anything less than a ATV. Sad, and a very expensive mistake.

bowing to market pressure is a euphemism for straight up stupidity.

#117 Bdwy on 05.25.22 at 12:50 pm

In a bear, the cowboys get sent to Ram Ranch.

……

This cowboy went 25% in zeo.to about a year ago because of the green insanity and its idiotic throttling of energy producers in much of the world. 32 to 69 nice and steady. More room to run until ru is shipping again(not soon).

About 50% Brk getting hit but not too bad. Warren is doing the bargain hunting for me :)

12% into costco yesterday

Maybe 5% off highs
Best ytd and ttm since ’98-99.

#118 Sail Away on 05.25.22 at 12:56 pm

#113 Faron on 05.25.22 at 11:46 am
#106 Sail Away on 05.25.22 at 10:41 am

You’re a prince among men

——–

Thanks! I don’t always feel that way, so it’s nice to hear it from one of steerage’s most frequent commenters. Such stature. Much wow.

——–

You’re welcome. Credit where credit is due.

#119 WTF on 05.25.22 at 1:05 pm

Down about 7% in the BD portfolio. Steady as she goes and ignore the noise.

Did do DCA for shares in a Co I worked for, probably 15 years, worked well for me, buy more when price down less when up. No Regrets at all.

More Listings popping up in DT van the last few days, RE sandwich boards on just about every block

In Other news. The NRA banning guns during defeated, ex President, Drumph’s tirade….err speech.

You cant make this up, Blatant Hypocrisy on full display

https://www.newsweek.com/nra-bans-firearms-during-donald-trumps-speech-texas-event-1709957

#120 KLNR on 05.25.22 at 1:18 pm

@#110 Krista on 05.25.22 at 11:31 am
Garth – you are really showing your age. Which typically bodes well for you in this blog. Experience matters. However, your comment “be a man like Melissa” is offside. Offensive to Melissa and everyone quite frankly. Be better Garth. This isn’t 1980 anymore.

Apparently not. We used to have a sense of humour before we all got woke. – Garth

Hey Krista, are you sure your name isn’t Karen?

#121 KLNR on 05.25.22 at 1:20 pm

@#109 Satori on 05.25.22 at 11:10 am
82 Ustabe on 05.24.22 at 11:50 pm
#77 Satori on 05.24.22 at 10:41 pm

Thank you Ustabe. _/\_

As for you Faron, you remind me of PP and Trump with your constant insults in every comment you make. Perhaps taking an etiquette class, or watch a you tube on ‘how to debate’ cause you’re projecting onto others what you think of yourself and your language reveals you are a tiny, powerless, classless, ugly little shrimp of a man.

You could also try eating some makeup, maybe you get pretty on the inside. Flush.

lmao, that’s pretty rich come from you.
throwing stones in glass houses applies here.

#122 TheDood on 05.25.22 at 2:17 pm

#110 Krista on 05.25.22 at 11:31 am
Garth – you are really showing your age. Which typically bodes well for you in this blog. Experience matters. However, your comment “be a man like Melissa” is offside. Offensive to Melissa and everyone quite frankly. Be better Garth. This isn’t 1980 anymore.

Apparently not. We used to have a sense of humour before we all got woke. – Garth
__________________________

I don’t think its for one person to say what is offensive to Melissa. I think you are ‘offside’ for making the assumption that you speak for the majority. You can certainly express an opinion, but don’t assume your opinion is shared by the majority.

#123 crowdedelevatorfartz on 05.25.22 at 2:25 pm

@#110 Karen
“…..your comment “be a man like Melissa” is offside. Offensive to Melissa and everyone quite frankly. Be better Garth. This isn’t 1980 anymore.”

++++

Sadly you are correct.
2022 : People are whinier, angrier, lazier and “more educated”.
Where DID we go wrong?

#124 jess on 05.25.22 at 3:04 pm

… those 50 senators who refuse to sign hr8- sitting for two years so they can hold onto power

Marjorie Taylor Greene takes pro-gun stance following Texas school shooting: ‘We don’t need more gun control. We need to return to God.’

Ted Cruz says more guns.

Greene has consistently been pro-gun and anti-gun control. She has been known to hold gun raffles and was seen in a video that emerged in January 2021 harassing a survivor of the 2018 Parkland school shooting.

“We don’t have any more mental illness than any other country in the world. You cannot explain this through a prism of mental illness because we’re not an outlier on mental illness,” Murphy added, per the outlet.”We’re an outlier when it comes to access to firearms and the ability of criminals and very sick people to get their arms on firearms. That’s what makes America different.”
https://www.motherjones.com/politics/2012/09/mass-shootings-investigation/

…” before driving to Robb Elementary to carry out to attack, per DPS.Soon after, police got a 911 call about a vehicle that had crashed near the school and someone armed with a rifle heading inside, Olivarez told CNN in an interview Wednesday morning. The man was wearing a “tactical vest carrier with no ballistic panels,” Olivarez said.

Police responded and engaged the shooter BEFORE
he got into the building, Olivarez said. Officers met the gunman’s fire, he said; two were shot and expected to live.
attempts by armed civilians to stop shooting rampages are RARE (see data )
https://www.motherjones.com/politics/2012/09/mass-shootings-investigation/

US Mass Shootings, 1982–2022: Data From Mother Jones’ Investigation
The full data set from our in-depth investigation into mass shootings.

87% of Americans supported preventing people with mental illnesses from buying guns, while 81% backed making private gun sales and sales at gun shows subject to background checks. Two-thirds of Americans supported a national gun database and banning high-capacity ammunition magazines.

#125 Chimingin on 05.25.22 at 3:07 pm

#110 Krista, in the words of the Fonz, who was responsible for a chunk of my education/entertainment in the afterschool hours of the early 80’s, “sit on it.”