Sad wolverine

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DOUG  By Guest Blogger Doug Rowat
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Let’s talk about our feelings.

Don’t bristle like Tony Soprano sitting across from his psychiatrist Jennifer Melfi. Feelings are important. But equally important is knowing when feelings can be trusted and when they can’t.

Feelings should be trusted when considering something as simple as pulling the chute on a Tinder date and should definitely be trusted when you’re considering popping the question to your girlfriend or boyfriend (or, if you’re the girlfriend or boyfriend, trusted when giving your answer). In these instances, feelings are useful guideposts. But feelings should never be trusted when it comes to investing. There’s no such thing as a reliable ‘gut feeling’ when it comes to your portfolio.

On my office wall is the following:

What’s your sentiment?

Source: Turner Investments

We can debate the literary merits and cultural value of comics another time (though ask yourself how many Marvel movies you may have watched in the past 20 years?), but I keep these comics on my wall so I can also point out to clients that, given the highest inflation in a generation, a war in Europe and the S&P 500 mired in an ugly bear market, most investors identify at the moment with the sad, despondent Wolverine sitting in the dark.

This is an enormously encouraging sign. Sad investors usually mean a bull market’s coming.

I’ve spoken before of the enormous contrarian value of the American Association of Individual Investors (AAII) Sentiment Survey (https://www.greaterfool.ca/2022/03/05/when-the-dust-settles/). As an update, it recently moved even further into ‘sad Wolverine’ territory with nearly 80% of investors describing themselves as either bearish or neutral on markets as of the end of June. But we see this miserable attitude reflected in consumer sentiment as well. Needless to say, consumers feel awful at the moment:

Consumer Sentiment Index and subsequent 12-month S&P 500 returns

Click to enlarge. Source: JP Morgan Asset Management

But the point is not to focus on how badly we feel or how far consumer sentiment has plunged this year, but to focus instead on how markets perform in the months following these depressive lows. Note how the S&P 500 returns an average of 24.9% one year after consumer sentiment troughs. In other words, ignoring your feelings, which are likely urging you to raise cash right now, is always the best strategy. Instead of ‘going with your gut’, stay the course with a fully invested, globally balanced and diversified portfolio.

And also remember that those investors who actually pay heed to their miserable feelings and make rash investment decisions like selling assets into a downturn almost always destroy their wealth:

20-year annualized returns by asset class (2002-2021)

Source: JP Morgan Asset Management

The message is simple: ignore sad Wolverine. Now’s the time to pop your claws.

$   $   $ 

Finally, a note on central banks. There are about 90 central banks globally that are working in a coordinated way to remove stimulus and raise interest rates. Even the powerful European Central Bank, which hadn’t raised rates in more than a decade, surprised markets this week with a 50 basis-point rate hike, doubling expectations. It’s important to remember why central banks are doing this: to reduce excess demand. High inflation isn’t good, of course, but an overheated global economy is certainly preferable to a languishing one.

And it’s worth remembering as well what has happened historically when central banks work together in a coordinated way to deal with a global crisis—the financial and Covid crises being the two most recent examples. Naturally, central banks are adopting an inverse strategy this time—instead of adding stimulus and lowering rates they’re withdrawing stimulus and raising rates—but the effort’s even more coordinated and uniform than in the past. Central banks are massive, imperfect beasts and, yes, it can get ugly at times, but the eventual results speak for themselves:

Annual global GDP growth (%): never underestimate the power of central banks to pull the world out of crisis

Source: World Bank

If you’re in cash right now and paralyzed by inflation fears, I wish I could tell you precisely when inflation will roll over, but I do know that you’re betting against the combined force of virtually every central bank in the world.

Eventually, it’s a bet that you’re going to lose.

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

 

107 comments ↓

#1 Stone on 07.23.22 at 9:46 am

#104 Boomer in Victoria on 07.23.22 at 7:14 am
Great article.
My daughter along with her husband are doing great. I find that the people who complain about Gen Y are the boomers who didn’t have any children. Most of our boomer friends who have kids are very proud of them.
As for the complainers, give them some gummy bears and tell them to chill out!

———

I’m eagerly awaiting the day when realistic parents post on here how their children are wastrel losers.

Don’t need the gummy bears. Just take off those rose tinted glasses and tell me what your kids are really like.

#2 Shawn on 07.23.22 at 9:56 am

Cash? Walk softly and carry a big stash.

But time to deploy it although no need to get in a rush if you are uncomfortable and do diversify. VBAL is not a bad choice at the moment even if it is a bit heavy on long bonds. May not be ideal like Turner Investments but it’s not a bad choice for most.

#3 RowatNation aka Prince Polo on 07.23.22 at 9:56 am

Don’t entirely write off gut feelings as they relate to investing. If one feels sick to one’s stomach when adding to equity positions, it usually means it’s a good time to be buying. Happy weekend, y’all!

#4 Flop… on 07.23.22 at 10:04 am

Morning, Robax.

Mrs Flop and I are still whacking money into our TFSA’s, even though we don’t know where all this is going.

She only did her yearly contribution the other day, she asked the question you probably get asked a lot “What about if things keep going down?”

To put her at ease, I chose a monthly income fund with a distribution yield of over 6.5%, that has been pummelled a bit this year.

If she complains, I will tell her what did she expect from a guy whose consultation fee is a bowl of Icecream…

M48BC

#5 Brian on 07.23.22 at 10:24 am

It’s official. Trudeau’s meeting with provincial agriculture ministers wrapped up yesterday. He is moving forward with a 30% fertilizer reduction. Farms will fail, land will he purchased by billionaires/the government, and people will starve. Farmers are rising up today.

#6 Kato on 07.23.22 at 10:25 am

Great article, Doug.

The movie “Logan” was a box office success, but I can’t help but think it would have done much better if they’d titled it “Sad Wolverine.”

#7 Søren Angst on 07.23.22 at 10:32 am

I loved that Sentiment Chart.

Post Aug 2011:

“We’ll get thru this, things will get better and yeah World!”

Feb 2020

“We’ll all be killed.”

Apr 2020

“Maybe not.”

Post Apr 2020

“Hot darn, we’ve got all this cash from not having to wear clothes and drive to work so let’s spend, spend, spend…yeah World!”

Jun 2022:

“We’ll all be killed.”

[Again]

———

DOUG.

Thanks for the Feelings stuff at the start. Now all have playing in my mind now is Morris Albert – it’s ALL your fault

https://www.youtube.com/watch?v=RrkVyXFsx6Y

and Tony Soprano’s wife.

Claw Boy, not so much.

———————–

UPBEAT Blog with factual history, a nice take on humanity and some of its foibles.

Really well done Doug.

Oh and that Oil Blog of yours, we’ll have to start calling you

Doug of Omaha *

https://www.google.com/finance/quote/ENB:TSE?comparison=TSE%3ATRP%2CTSE%3ASU%2CTSE%3APPL%2CTSE%3ACVE&window=YTD

[* now Trauma]

#8 TurnerNation on 07.23.22 at 10:55 am

Attn Boomers. The health care [sic] system was gutted under cover of Corvid. In the GVA, GTA take a taxi to the USA for care…or else.
Did ya think I was just joking around with this?

https://vancouversun.com/health/north-van-patient-dies-in-waiting-room-of-overcrowded-understaffed-hospital
…North Van patient dies after two days stuck in waiting room of overcrowded, understaffed hospital
Staffing shortages have led to emergency room closures across B.C. And last week, a Lions Gate patient died after lying in the waiting room for two days.

—-
—-
Life in the Former First World Countries. Our leaders all are on board. The dissenters? Were kicked out in Jan/2021 under the guise of ‘holiday travel’. Recall this soft coup?

https://vancouversun.com/news/local-news/about-2500-health-care-workers-lost-jobs-over-refusal-to-vaccinate
“COVID-19: About 2,500 B.C. health-care workers lost jobs over refusal to vaccinate”

https://www.kelownanow.com/watercooler/news/news/Provincial/Significant_and_solemn_day_Nearly_6_000_BC_healthcare_workers_fired_or_suspended_without_pay/
“Across the province, nearly 6,000 healthcare workers are being fired or suspended without pay for refusing to get vaccinated against COVID-19.”

#9 Mehling on 07.23.22 at 11:24 am

RBC – housing correction:

https://www.bnnbloomberg.ca/historic-correction-grips-canada-s-housing-market-rbc-says-1.1795747

#10 Earlybird on 07.23.22 at 11:27 am

Hmmm…interesting last paragraph…don’t fight the fed(s) I guess.
Thanks again…great post!

#11 TurnerNation on 07.23.22 at 11:29 am

ATTN Boomers. Beware where you retire. The Former First World Countries are a hellish scape, all under the guise of ‘public health’.
March 2020…never forget when the world fell.

.Toronto Western Hospital’s ER ‘covered’ for the weekend after risk of shutting down amid staff shortage (cp24.com)

——-A blog written by ‘GeroDoc – Parent and geriatrician’::

https://gerodoc.substack.com/p/working-at-my-nursing-home-used-to
Life In Long Term Care Land

These days? My residents can’t leave, visitations have been significantly restricted and controlled, volunteers and volunteer-led activities are largely absent, paid companion services are gone (and this is just for starters)…. and everything, daily living is and remains largely subservient to COVID mitigation and control…”

I was telling myself “this is temporary. Once everyone is vaccinated they’ll reopen again, they’ll start giving our residents freedoms back.”
Then the weeks stretched into months. Now it’s been literally years, and going on three. My nursing home residents – my patients – they have no advocates anymore.

#12 BCWally on 07.23.22 at 11:33 am

“Fortuna Eruditis Favet”. Fortune favors the prepared mind.
Perhaps the better Latin phrase for these times. It suggests that the prepared mind is the one to capture the opportunities when they come.
The mind that isn’t consumed by fear.

#13 Earlybird on 07.23.22 at 11:33 am

#4 Flop
Care to share the income fund purchase? Sitting with cash and have a spouse that’s not at ease! Lol…is a liter of ice cream a fair trade ?

#14 THE DANDADA on 07.23.22 at 11:34 am

Uh-OH…..Shut’er down again!

WHO declares monkeypox a public health emergency of international concern.

https://www.cnn.com/2022/07/23/health/monkeypox-who-intl/index.html

#15 Michael on 07.23.22 at 11:35 am

Great article. Thanks. Appreciate that you expanded on this in the weekly call. Perspective.

#16 Søren Angst on 07.23.22 at 11:38 am

Summer Time Blog (a.k.a., Garth thumbing thru his Rolodex for “volunteers” to write on his Blog whist he does a vacay).

GARTH
I really am immortal. To prove it I have a kilt, sword, rather large flag, tug boat and a mini-Pantheon in Caput Mundi Lunenburg.

None of you know how to do Math..duh. Let me show you how (whilst bracing his rippling abs). Ipso facto, you are all screwed until 2024.

2024
…I told you so. Mic drop.

——————–

My name is Ryan. Garth hired me by mistake thinking I was Ron Butler, the mortgage guy who he really likes. I am much younger. Let me RE-explain THE IMMORTAL ONES words less the expletives with all these handy charts I made up out of my head. And guess what? They’ve all been correct esp. about dividends. Mic drop.

——————–

Hi. My name is Doug. Whilst driving my expensive German sports car (pity) I was thumbing thru my comic books along the way to work and Eureka! I come up with these really kewl insights that actually bear fruit (Oil & Pipeline Oracle Doug of Trauma). I aspire to be the IMMORTAL ONE also and that’s why I read Wolverine and Richards of Earth 12665. Mic drop.

——————–

My name is Sinan. I deal in death. There is money to be made in death and let me show you how. Also how to save money in death and keep it out of the money grubbing hands of Gov Canada (and other ne’er do wells). I think of stuff that everyone should think of (and he is correct). Mic drop.

——————–

Tatiana here. I’m really upbeat and nice and all (you have to be working with THOR, the IMMORTAL ONE).

Almost forgot…

We’ll all be killed.

No you won’t. Like all the other gens it will get better and then yeah World! Mic drop.

——————–

Let the bullets fly IMMORTAL ONE.

I love this Blog not just for THE excellent free info and advice that it provides but for the personalities creating content for us Plebes, day in, day out.

VIVA The Greater Fool!
Mic drop.

#17 Damifino on 07.23.22 at 11:38 am

#86 Stone

“Work Smart. Not hard”.

Sounds wise, but actually, a meaningless cliche.

“Be ready to walk from your job at anytime and make sure your employer knows your worth”

Pretty much what I said. Except, walk when YOU are ready. Not when things come to a head. Try to keep money in reserve.

“Never bluff. Ensure every word you speak is truth.”

Of course. Be honest. Why would you need to say that?

“Do not jump at every whistle call from your employer.”

Determine the difference between a whistle call and a call to further goals in good alignment with the success of both you and your employer.

Do not sacrifice your personal time non-stop. Those are very big mistakes. They are a road that leads to bitterness.

Who said “non-stop”?

Well Stone, you sound exactly like the kind of person I’d recommend that HR not hire. And as a trusted employee producing consistent results they would seek my opinion. They get quite tired of replacing self-centered mavericks every six months when their trial period is over. I’d tell them you were probably an adversarial type, unlikely to be useful in the long term.

#18 Flop… on 07.23.22 at 11:40 am

Flop Drops.

Media likes to run its stories about how you need to earn over 200k a year to afford a place here, and by the way you won’t find anything livable under 2 million.

I think to myself, hey, if only there was some sort of way to check and confront this type of misinformation.

I know it’s Saturday.

When you get a caller from Uzbekistan who wants to know what’s going on in Abbotsford, you jump on it.

The details…

2947 Crossley Dr, Abbotsford.

Asking 899k

Assessment 1.05

Just sold for 850k

https://www.zealty.ca/mls-R2709967/2947-CROSSLEY-DRIVE-Abbotsford-BC/

So not 2 million dollars for a nice place with a little oasis in the backyard, still 850k is a chunk of money, still elevated from the 383k the seller paid in 2011, but I don’t know too many people who think things are going that far back in the way back machine.

Places like Abbotsford are the bargain bin of Greater Vancouver real estate, and I could show you more dramatic contrasts but since we’re doing this one I will show you the difference between now in the market and earlier this year.

Compared to the nice starter house above, someone decided in February this year to drop 1.15 on a mobile home in the same neck of the woods as my original example.

Same area, same square footage, similar vintage.

Yes, it’s tastefully renovated, but still, that’s 300k higher than the one on Crossley and one block is boring and blank, the other is alive and bustling.

Could also be used in a science experiment to describe the difference between my brain and the host of this blog…

M48BC

https://www.zealty.ca/mls-R2646463/2018-OAKRIDGE-CRESCENT-Abbotsford-BC/

#19 Joe Lalonde on 07.23.22 at 11:45 am

China has achieved reproduction in an absolutely astonishing way in a multitude of products.
Putting it behind plastic just makes it a bit more difficult to assess if it’s an actual original or reproduction.
Now each different country’s laws also make it legal or illegal.
Reproduction coins used to be our trade currency and China has taken its technologies to a whole new height of quality.
An American Coin collection from China could land you in jail…but in Canada, it’s legal.
Having an an absolutely astonishing coin collection that you can’t afford in the US individually, you can roll and admire in your hands in Canada.
You can’t tell if any are illegal because they too are created by non magnetic materials.
I truly enjoy a coin collection that I never have given a second thought before as the quality is that good.
This far surpasses starting stamp collecting as a kid.

#20 move over on 07.23.22 at 11:53 am

there were a multitude of technical and fundamental indicators at the end of 2021 to have you exit the majority of your positions and be sitting in cash now waiting for the market to bottom. there is no market bottom yet. so i’ll keep waiting.

I don’t like losses, sport. Nothing ruins my day more than losses.

#21 Love_The_Cottage on 07.23.22 at 12:00 pm

#4 Flop… on 07.23.22 at 10:04 am
I chose a monthly income fund with a distribution yield of over 6.5%, that has been pummelled a bit this year.
__________
I see posts in the comments constantly about how great dividends are. Can someone explain to me why? The stocks can go down just like others, no? Investors factor in the dividends. It’s not a bad thing to have stocks that pay dividends, but do they outperform? I assume not but look forward to being proven wrong.

#22 I don’t know on 07.23.22 at 12:02 pm

Indeed.

Raising cash (junk) is always a losing proposition. This time is no different than all the others.

IDK

#23 Diamond Dog on 07.23.22 at 12:22 pm

#5 Brian on 07.23.22 at 10:24 am

Speaking as a farmer, the Trudeau government’s plans to reduce emissions “by 2030” haven’t moved the needle concerning price or cap limits for farmers. It’s a goal put forth to put plants on notice to come up with lower emissions at the plant level, not to lower production:

https://www.msn.com/en-ca/news/other/trudeau-pushes-ahead-on-fertilizer-reduction-as-provinces-and-farmers-cry-foul/ar-AAZSrBZ

Bibeau responded that the idea behind fertilizer emissions reduction wasn’t to reduce fertilizer use, and her aim is to achieve goals through “research and innovation.” The federal government is aiming to reduce fertilizer emissions by 30 per cent by 2030. – MSN

But you know, we can make stuff up if we want to. We can try to win elections over stuff that’s made up, distort the truth… who knows, we might even be able to sway the votes of simple minded people with this tact. But then, how will we govern, by making more stuff up? Are these the kinds of habits we want to form, is this our best play?

Back to the issue at hand, the thing about the use of nitrogen fertilizer specifically, is that it gasses off if rains don’t come. If it’s buried, there is less chance of gas off and it’s there for next year in part with Urea coatings that delay it’s release.

There is an argument to be made as well, that unused nitrogen will interrupt pulses going to seed sooner in the following year’s crop rotation. Essentially, it’s not in the industry’s best interest as a whole for Urea to go to waste but delaying it’s release may not be the answer either. From a farmer’s perspective, you want to time the use of Urea with rains, it’s that simple. This is where a clearer understanding of El Nino/La Nina effects and warming ocean surface temps come into play. We understand the cycles in general, but we don’t fully understand the nuances.

When we had a widespread drought last year, farmers definitely lost value with Urea, there’s no doubt in anyone’s mind about that. If farmers lose, make no mistake, lost dollars at the producer level hurts the industry as a whole. Fertilizer products are still an evolving space… emissions can and should be looked at at the plant level… adding to a crop rotation that jacks fiber for compost…. it’s the ever evolving space of farming but I digress, higher efficiencies are not a dumb idea by any stretch of the imagination here.

#24 Quintilian on 07.23.22 at 12:24 pm

“High inflation isn’t good, of course, but an overheated global economy is certainly preferable to a languishing one.”

Overheated global economy “feels” better (emotion), but the induced high, leads to a proportionally destructive after-effect.

When the economy is in contraction, it is child’s play to pull it out of the depression with massive injections of liquidity; it’s quite another to reduce inflation and maintain growth at the same time.

Doug you are saying don’t trust instincts, and I say don’t trust the experts-they are just guessing.

#25 2%-er on 07.23.22 at 12:29 pm

Great post Doug.

I am so happy I started collecting comics again during the pandemic after a nearly 30-year hiatus. They are a phenomenal form of literature, fun to read and collect, and in many ways similar to other equities.

I am envious of your gorgeous Claremont/Miller 9.8s. I would be proud to have those on my office wall.

#26 Stone on 07.23.22 at 12:37 pm

#17 Damifino on 07.23.22 at 11:38 am
#86 Stone

“Work Smart. Not hard”.

Sounds wise, but actually, a meaningless cliche.

“Be ready to walk from your job at anytime and make sure your employer knows your worth”

Pretty much what I said. Except, walk when YOU are ready. Not when things come to a head. Try to keep money in reserve.

“Never bluff. Ensure every word you speak is truth.”

Of course. Be honest. Why would you need to say that?

“Do not jump at every whistle call from your employer.”

Determine the difference between a whistle call and a call to further goals in good alignment with the success of both you and your employer.

Do not sacrifice your personal time non-stop. Those are very big mistakes. They are a road that leads to bitterness.

Who said “non-stop”?

Well Stone, you sound exactly like the kind of person I’d recommend that HR not hire. And as a trusted employee producing consistent results they would seek my opinion. They get quite tired of replacing self-centered mavericks every six months when their trial period is over. I’d tell them you were probably an adversarial type, unlikely to be useful in the long term.

———

Somebody didn’t like my feedback.

I orchestrated my layoff after 23 years with the same employer after many, many, many promotions all the way into the executive ranks. All done on my own terms. During that time, I ensured they respected me and I in turn gave them the respect they were due.

You in turn told the millennials to bend over and do whatever it takes…so they can get promoted. Wrong way of looking at things. Jumping to a dog whistle at work hoping to get ahead is stupid.

It’s strange you focused on my comment when several others also pretty much called out your backwards thinking.

No worries though. Have no need for a job. I’m happily retired.

#27 Sam on 07.23.22 at 12:42 pm

Didn’t QE and low rates start in 2002 after the dot.com crash? These returns seems skewed. Last 20 years has seen unprecedented negative rates and Trillions of QE.

#28 Joe on 07.23.22 at 12:44 pm

Officialdata.org states S&P 500 Total returns since 1999 is 4.23% adjusted for inflation.

#29 Dragonfly58 on 07.23.22 at 12:44 pm

Flop, I know people live in Abbotsford. But if you are talking about the residential suburbs I just have to shake my head. Wife and tried it for our first house back in 1990. A very charming , very good quality 1920’s house. Very much like the Kerrisdale house we rented in our student days. But at a small fraction of what Kerrisdale cost even back then. A pretty decent part of town, mostly equally charming heritage houses.
Took a few months for it to sink in that Abbotsford had a huge poverty , substance abuse problem. Not too much homelessness at that time but there sure is now.
The drugs and poverty have steadily grown sinse we gave up on Abbotsford. And in the Summer the air quality is very alarmingly poor.
Add in what is near commuter gridlock most week days and you have an extremely poor trade off of price vs living environment.
Hated to leave the house , but not a single regret about leaving the overall location of urban Abbotsford.
The rural North West of Abbotsford is very nice. Really no different than where I am in Langley. But $800,000 isn’t going to buy you anything. Like nothing period. More like 2.2 and up, really not more than 5% cheaper than Langley, apples to apples.

#30 Flop… on 07.23.22 at 12:50 pm

#13 Earlybird on 07.23.22 at 11:33 am
#4 Flop
Care to share the income fund purchase? Sitting with cash and have a spouse that’s not at ease! Lol…is a liter of ice cream a fair trade ?

////////////////////////////////////

Sure Earlybird, no problems.

CIB512.

It’s down double digits for the year, if it rebounds immediately, great, if not, no problems it will be a buy a hold proposition.

Mrs Flop only agreed to do her TFSA through CIBC, so I work with what I’ve got with limited options and limited brain power.

I only convinced her to start a TFSA about 5 years ago, now she has edged up to maximum contributions, after I gave her a starting gift to get it up and running.

She had more global tech, Reits and even gold miners, than my more boring one did, so it flew by my TFSA like it was standing still, so she was more of a Nervous Nelly at the start, but though even now she has given me a License To Thrill, I still try to respect the money and the labour and energy spent to produce it.

I sector buy with her TFSA, and just basically have most of mine in a global 70/30 all in one fund, I try to make decisions based on the whole pie outlook.

Limited option, hack managed TFSA, still beats the pants off the money just sitting in the bank.

She has her RRSP professionally managed.

She has her TFSA managed one bowl of Icecream at a time…

M48BC

https://marketsandresearch.td.com/tdwca/Public/MutualFundsProfile/Summary/ca/CIB512

#31 Dogman01 on 07.23.22 at 12:50 pm

Run on Chinese Banks?
https://www.youtube.com/watch?v=N57doBGQTNY

Always interesting what could be going on in that little slice of Dystopia that is the PRC.

#32 Sail Away on 07.23.22 at 12:51 pm

#17 Damifino on 07.23.22 at 11:38 am

Well Stone, you sound exactly like the kind of person I’d recommend that HR not hire. And as a trusted employee producing consistent results they would seek my opinion. They get quite tired of replacing self-centered mavericks every six months when their trial period is over. I’d tell them you were probably an adversarial type, unlikely to be useful in the long term.

———

Yep. Loyalty and dedication is rare and valuable. When paired with ability, these are the people who take companies to the next level.

I don’t understand the motivation to drop out of the workforce. My goal is to be chairman at 90 like Warren B, spending 80% of the time reading, but with a competent team ready to act. Staying connected greatly simplifies life- give favours when requested, ask favours only when critically important, and maintain that professional connection to exactly the right person for the situation. Never accept no from a person who can’t say yes. It takes time to establish connections, and effort to maintain them. But so rewarding.

Money is secondary. If you build the proper connections, you’ll have more of it than you can use, and it’s just a tool.

#33 wallflower on 07.23.22 at 1:11 pm

#21 Love_The_Cottage on 07.23.22 at 12:00 pm

You are spending too much time at the cottage.
Get a book about basics in investing. BASICS.
Garth may have one or two…

#34 Doug Rowat on 07.23.22 at 1:13 pm

#22 I don’t know on 07.23.22 at 12:02 pm
Indeed.

Raising cash (junk) is always a losing proposition. This time is no different than all the others.

—-

Perhaps worse, with 8% inflation.

—Doug

#35 tbone on 07.23.22 at 1:27 pm

#21 LTC

I started collecting bank stocks about 10 years ago .
TD and RY are both over 10 % ( 10 yr ) returns while their dividend pay around 4 % at todays stock price.
(I also have ENB that pays an even higher dividend.)

My yield is higher as i bought at a lower price , and now
as i am retired they generate a healthy cash flow , so everything is free. I charge everything on my credit card
and pay it off every month with the dividends.
I dont even dip into my portfolio .
It seems to work for me .

#36 Catalyst on 07.23.22 at 1:33 pm

There is no way that EM equity has outperformed S&P 500 in the last 20 yrs!

#37 Paddy on 07.23.22 at 1:38 pm

Soooooo, max out my LOC and buy some equity ETFs cause we will most likely be up 24%ish 1 year from now??

#38 Paddy on 07.23.22 at 1:56 pm

“Even the powerful ECB has raised rates”

Yes, Doug they have raised rates….by a paltry 50bps…and powerful they are not…your girl Christine Lagarde is also implementing another stimulus package for the EU…this is about the tenth stimulus package in as many years….up shits creek with a turd for a paddle is what the EU is. Should be some interesting months ahead for them…prob some opportunities for investors too.

#39 Shawn on 07.23.22 at 2:21 pm

When was Quantitative Easing invented?

#27 Sam on 07.23.22 at 12:42 pm
Didn’t QE and low rates start in 2002 after the dot.com crash? These returns seems skewed. Last 20 years has seen unprecedented negative rates and Trillions of QE.

****************************
QE may have been around for long time such as in the 1940’s. Rates were incredibly low circa 1942. (Not as low as 2020)

I think rates fell after 1982 more based on market forces.

I’ve been following the markets since 1989 and even somewhat before. I don’t recall hearing the term QE until about 2008.

The Dot com bust was a stock market bust. There was little or no recession to battle. No need for QE. No talk of Fed Put either in those days to my recollection. But I don’t claim a perfect memory. Fed Put idea has indeed been around a long time. I always studiously ignored it and avoided it with great prejudice and that served me well.

#40 Doug Rowat on 07.23.22 at 2:30 pm

#24 Quintilian on 07.23.22 at 12:24 pm

When the economy is in contraction, it is child’s play to pull it out of the depression with massive injections of liquidity; it’s quite another to reduce inflation and maintain growth at the same time.

—-

Diminishing the risk of one crisis to the point of absurdity to emphasize the risk of the present crisis falls into the category of an ‘exaggerated tilt’. It makes for a poor counter-argument.

No one views the eventual recovery from the financial crisis as easily obtained. It certainly wasn’t “child’s play”.

—Doug

#41 Shawn on 07.23.22 at 2:32 pm

S&P 500 returns since 1999

#28 Joe on 07.23.22 at 12:44 pm

Officialdata.org states S&P 500 Total returns since 1999 is 4.23% adjusted for inflation.

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

1999 was a sharp peak in the markets. People don’t invest a lump sum one year so this is not a hugely useful figure.

BUT in any case 4.23% per year for 22 years turns $100k into $250k.

You put away enough to buy one cake and 22 years later you can eat that cake and still have 1.5 cakes left. Not so horrible.

Pick any other year plus or minus 10 from 1999 and that 4.23% to 2022 is likely higher.

As Buffett would say, how can owning your share of “corporate America” for decades not work out well? He calls it the American tailwind. The free enterprise U.S system works well.

Most people (being uneducated) believe that corporations are always gouging us and there is no good profit in owning them. Both can’t be true.

Save this comment. It’s one of my best. You’re welcome.

#42 Summertime on 07.23.22 at 2:42 pm

Anybody of the ‘experts’ here noticing that inflation is actually accelerating?

Month after month. Constantly.

‘Official’ CPI close to double digits. Real inflation of necessities aka ‘cost of living’ double that.

Rents, food, energy all over 20 % on YOY bases.

The joke of the year?

Central bankers, i.e. the arsonist are going to distinguish the fire they started by adding more fuel into it in the shape of deeply negative real interest rates that are not supposed to fight but rather fuel further inflation.

Somebody please enlighten me how you fight actual inflation of double digits with 2.5 % rates?

All this circus with ‘rate increases at the next Fed’s meeting’, the Fed being the ‘bad guys’ with their token increases is becoming increasingly pathetic, like a cheap adult movie.

Inflation does not sleep, does not wait for the next fed’s meeting and accelerates faster than rate increases.

Why are not rates above 12-15 % already?

It is also very enlightening to see North American’s drawn in debt – public and private discussing the debt situation in Europe. I said it countless times – total debt in Canada is higher when compared to GDP than that of Greece – the highest indebted nation in EU.

Yes, EU is later to the party in increasing rates, but will follow suit. Yes, the EU central bank’s boss is very incompetent political figure that is not pleasant to the eyes either but the EU assets bubbles are degrees lighter than the Canadian housing and stock market bubbles for example.

If BoC is serious in fighting inflation we will sees declines of 50-60 % from the top for the housing market, as a minimum and potentially double digit rates.

If they prove once again to be the real measurement of cheap talk and fraud, as in the past, god help us.

#43 Brian on 07.23.22 at 2:43 pm

#23 Diamond Dog

As the son of a family of farmers, I understand the problem of NO2. The problem I have is the unilateral reduction imposed by this Liberal government. There was no consultation with the provinces or farmer groups on the best practices for reduction!

Fertilizer emissions reduction was not even a topic on the agenda of the annual meeting of Federal-Provincial-Territorial ministers of agriculture, who just finished 3 days of meetings in Saskatchewan. Provinces pushed the federal government to discuss this important topic, but were disappointed to learn that the target is already set. The commitment to future consultations are only to determine how to meet the target that Prime Minister Trudeau and Minister Bibeau have already unilaterally imposed on this industry, not to consult on what is achievable or attainable.

https://www.saskatchewan.ca/government/news-and-media/2022/july/22/governments-of-saskatchewan-and-alberta-disappointed-in-federal-target-for-fertilizer-emissions-redu

#44 Summertime on 07.23.22 at 2:49 pm

In an environment of falling markets cash represents unique opportunity to jump in at close to the bottom valuations.

I.e. inflation of 10% with market declines faster than that is actually ‘winning’ in short terms as you lose less being in cash than being on the market (how does 25 % loss of equity for a few months fit in your retirement plan?)

If markets cycles are working, why not sit on this cash and buy at reduced by 40-50 % valuations from the top a year from now?

#45 Summertime on 07.23.22 at 3:11 pm

41 Shawn on 07.23.22 at 2:32 pm

If being stupid was a criminal offence, some people would have been stuck in jail for life with no parole options.

Your example of 100 k becoming 250 k in 22 years is pathetic. Considering the real inflation this could be some significant loss of purchasing power, not a gain.
Is somebody, besides you, actually believing the official inflation numbers propaganda?

#46 Love_The_Cottage on 07.23.22 at 3:13 pm

#33 wallflower on 07.23.22 at 1:11 pm
#21 Love_The_Cottage on 07.23.22 at 12:00 pm

Get a book about basics in investing. BASICS.
________
In other words you can’t answer the question. If you are seeking income then dividends make sense. I’m trying to get the best possible return so why do dividend stocks matter? It’s a simple question. BASIC.

#47 Shawn on 07.23.22 at 3:20 pm

Breaking News – Inflation is higher

#42 Summertime on 07.23.22 at 2:42 pm

Anybody of the ‘experts’ here noticing that inflation is actually accelerating?

****************************
Sarcasm on: “No, that’s not been in the news at all especially the Main Stream Media. Thanks for blowing the lid off this story”

#48 KLNR on 07.23.22 at 3:23 pm

@#17 Damifino on 07.23.22 at 11:38 am
#86 Stone

“Work Smart. Not hard”.

Sounds wise, but actually, a meaningless cliche.

“Be ready to walk from your job at anytime and make sure your employer knows your worth”

Pretty much what I said. Except, walk when YOU are ready. Not when things come to a head. Try to keep money in reserve.

“Never bluff. Ensure every word you speak is truth.”

Of course. Be honest. Why would you need to say that?

“Do not jump at every whistle call from your employer.”

Determine the difference between a whistle call and a call to further goals in good alignment with the success of both you and your employer.

Do not sacrifice your personal time non-stop. Those are very big mistakes. They are a road that leads to bitterness.

Who said “non-stop”?

Well Stone, you sound exactly like the kind of person I’d recommend that HR not hire. And as a trusted employee producing consistent results they would seek my opinion. They get quite tired of replacing self-centered mavericks every six months when their trial period is over. I’d tell them you were probably an adversarial type, unlikely to be useful in the long term.

nah, stone was actually right on the money for once.

#49 Sail Away on 07.23.22 at 3:23 pm

#41 Shawn on 07.23.22 at 2:32 pm

Most people (being uneducated) believe that corporations are always gouging us and there is no good profit in owning them. Both can’t be true.

Save this comment. It’s one of my best. You’re welcome.

———

Thank you, Shawn. I, for one, am saving this comment. I feel it’s one of your best.

#50 PeterfromCalgary on 07.23.22 at 3:26 pm

It hot in much of the world so keep your dogs water bowl full. Also keep your toilet clean in case you forget to fill up the water bowl.

#51 The General on 07.23.22 at 3:28 pm

Now “they” are coming after the farmers. Inflation is baked in with diesel at $ 2.00/ litre or higher. Next, put caps on all petroleum development. It’s almost like they are trying to out-do the Germans’ utterly disastrous policies. The lunatics are running the asylum.

#52 Doug Rowat on 07.23.22 at 3:33 pm

#25 2%-er on 07.23.22 at 12:29 pm
Great post Doug.

I am so happy I started collecting comics again during the pandemic after a nearly 30-year hiatus. They are a phenomenal form of literature, fun to read and collect, and in many ways similar to other equities.

I am envious of your gorgeous Claremont/Miller 9.8s. I would be proud to have those on my office wall.

—-

Partly written while driving along a California highway together, apparently. I doubt either realized how important that road trip would be.

—Doug

#53 Quntilian on 07.23.22 at 3:56 pm

“No one views the eventual recovery from the financial crisis as easily obtained. It certainly wasn’t “child’s play”.—Doug

If not “child’s play” then what would you call, (just one example, as in our case), CMHC buys MBS junk bonds from banks, and through securitization turns them into government backed low, low, low yield bonds?

#54 Elon Fanboy on 07.23.22 at 3:56 pm

#13 Earlybird

There are plenty of high yield monthly income funds out there. When your priority is monthly income and not growth you don’t really care about the share price….within reason. Some funds like split share companies will temporarily cease payments if their NAV drops below a threshold.

I like the regular monthly income and not being forced to sell equity in a market crash to live off.

Here’s some of my 24 holdings….

QYLD, XYLD, RYLD, ENS, LBS, RS, DFN, HHL, HDIV,
TXF, ZWU, GOV, RIV.

#55 NoName on 07.23.22 at 4:13 pm

You don’t have to read whole paper just reading a summary is enough.
Filix the cat what say you?

https://www.mdpi.com/2076-2615/10/6/1007

#56 Doing my Part on 07.23.22 at 4:26 pm

Victoria Real Estate Update!
Down she goes. Listings building, fewer sales, lot’s of 10% asking price drops.
It’s not different this time.

#57 Doing my Part on 07.23.22 at 4:34 pm

Here in Victoria BC we are reaping the benefits of left wing provincial and federal governments and their virtue signalling wokeness.
No family doctors.
No ambulance if you need one.
Closing emergency rooms.
Disrupted ferry schedules and unreliable service.
Criminals and addicts roaming the streets.
Law enforcement being defunded.
Highest fuel prices in North America.
High food prices.
Unaffordable real estate.
And the best part, things are getting worse, hope you idealists got what you wanted when you voted.

#58 Burnaby Boy on 07.23.22 at 4:38 pm

Turner Nation: You forgot to mention the number of nurses tied up at the door asking the walk-ins if they have any covid symptoms.
On the bright side nobody asked if I have any communicable diseases. And I didn’t ask the staff for proof that they had no communicable diseases.
Its now more politics than medical to visit a hospital.
And the value of a house on my street is going down

#59 move over on 07.23.22 at 4:45 pm

#25 2%-er on 07.23.22 at 12:29 pm
I am envious of your gorgeous Claremont/Miller 9.8s. I would be proud to have those on my office wall.
______________________________________

people seem to be impressed with the most common crap out there these days.

#60 ogdoad on 07.23.22 at 4:54 pm

Doug, I bet you have a sweet man cave.

Og

#61 Doug Rowat on 07.23.22 at 4:55 pm

#53 Quntilian on 07.23.22 at 3:56 pm
“No one views the eventual recovery from the financial crisis as easily obtained. It certainly wasn’t “child’s play”.—Doug

If not “child’s play” then what would you call…

—-

I just hit a free throw in my back yard. Now I’m Michael Jordan.

—Doug

#62 Doug t on 07.23.22 at 5:08 pm

#11 TURNERNATION

Yup – the very near future is playing out like an episode of Black Mirror

#63 Stone on 07.23.22 at 5:14 pm

#32 Sail Away on 07.23.22 at 12:51 pm
#17 Damifino on 07.23.22 at 11:38 am

Well Stone, you sound exactly like the kind of person I’d recommend that HR not hire. And as a trusted employee producing consistent results they would seek my opinion. They get quite tired of replacing self-centered mavericks every six months when their trial period is over. I’d tell them you were probably an adversarial type, unlikely to be useful in the long term.

———

Yep. Loyalty and dedication is rare and valuable. When paired with ability, these are the people who take companies to the next level.

I don’t understand the motivation to drop out of the workforce. My goal is to be chairman at 90 like Warren B, spending 80% of the time reading, but with a competent team ready to act. Staying connected greatly simplifies life- give favours when requested, ask favours only when critically important, and maintain that professional connection to exactly the right person for the situation. Never accept no from a person who can’t say yes. It takes time to establish connections, and effort to maintain them. But so rewarding.

Money is secondary. If you build the proper connections, you’ll have more of it than you can use, and it’s just a tool.

———

Your goal at 90 is to copy what others have already accomplished? A lifetime of being a copycat.

Bravo!

A life well lived.

#64 Sail Away on 07.23.22 at 5:58 pm

#63 Stone on 07.23.22 at 5:14 pm

Your goal at 90 is to copy what others have already accomplished? A lifetime of being a copycat.

Bravo!

A life well lived.

———

Definitely. All the best things in my life come from copying others. There are some savvy folks out there!

#65 Gravy Train on 07.23.22 at 6:16 pm

Doug, I thought your readers might enjoy this article:
https://www.cnbc.com/2022/07/23/self-made-millionaire-simple-money-habits-i-used-to-save-1-million-and-retire-early-at-35.html

#66 Earlybird on 07.23.22 at 6:27 pm

#30 Flop
Excellent, thank you VM!
Looks beat up enough to buy at this point in time. Sounds like she could use some boring to balance that pie out!
It takes more thought to organize over multiple accounts….and gain trust…took alot of time and dam hard work for us, so respecting the labor I get!
Lol…licence to thrill…
No ice cream for me, but paid in the sleep well at night factor.
Thanks again for the idea…

#67 Penny Henny on 07.23.22 at 6:34 pm

#21 Love_The_Cottage on 07.23.22 at 12:00 pm
#4 Flop… on 07.23.22 at 10:04 am
I chose a monthly income fund with a distribution yield of over 6.5%, that has been pummelled a bit this year.
__________
I see posts in the comments constantly about how great dividends are. Can someone explain to me why? The stocks can go down just like others, no? Investors factor in the dividends. It’s not a bad thing to have stocks that pay dividends, but do they outperform? I assume not but look forward to being proven wrong.
////////////////////

For me it’s like this.
The dividends generated are easily enough to live off of so that means I am not so concerned by the up and downs of the market.
My portfolios consists of mainly blue chip stocks which have a history of increasing dividends equal to or more than the rate of inflation (adjusted over time of course).
Not all portfolios are down for the year, mine by example is up just over 5% YTD (including dividends).
I will agree that holding rate reset preferreds are a dog’s breakfast, my holdings in this is less than 1% and I bought them just so I would follow them.
Any further questions and I will try to answer.
Oh lastly since this is the main source of my income (retired) the dividend tax credit makes this income tax free for me.

#68 Penny Henny on 07.23.22 at 6:41 pm

I forgot to add.
Since the dividends tend to equal inflation over time so do the stock prices.

#69 Earlybird on 07.23.22 at 6:48 pm

#54 Elon Fanboy
I hold a couple of those…won’t do split shares though. Income is the higher priority mostly and really smoothes things over when chaos hits, so we never sell much.
Not liking the loss of purchasing power more than adding to the account….that is the conundrum…
I see a few there that are unfamiliar…..will DD them!
Thanks for the ideas….I have found some gems down here a few time!

#70 Ed on 07.23.22 at 7:24 pm

Dividends are the gift that keeps on giving…

#71 Warren-the-lagging_indicator on 07.23.22 at 7:48 pm

I had all those as I was collecting the set. I lost them all to a storage locker in Vancouver because I was in a pickle a while back. Those, along with X-men in the early 100’s and Toom of Dracula #1 and many others I do not want to remember right now. Bummer. See, emotions and money usually intersect or rather, intertwine.

#72 crowdedelevatorfartz on 07.23.22 at 7:53 pm

@#57 Victoria
“And the best part, things are getting worse, hope you idealists got what you wanted when you voted.”
+++

One wonders when the voting Mills will realize Trudeau is an utter disaster at everything he touches…

When their friends’ OD’ed because the 911 Operators are on strike, ER Rooms are full, the ambulances aren’t coming and the doctors have all quit?

Or their new “tats” have become infected and the Walk in Clinics are full and its a 24 hour wait.

#73 willworkforpickles on 07.23.22 at 8:08 pm

BANNED (Abusive)

#74 Shawn on 07.23.22 at 8:11 pm

Dingdong! It’s not Avon calling just Dingdong Summertime

#45 Summertime on 07.23.22 at 3:11 pm said, rudely:

41 Shawn on 07.23.22 at 2:32 pm

If being stupid was a criminal offence, some people would have been stuck in jail for life with no parole options.

Your example of 100 k becoming 250 k in 22 years is pathetic. Considering the real inflation this could be some significant loss of purchasing power, not a gain.
Is somebody, besides you, actually believing the official inflation numbers propaganda?

********************************
Well dingdong, the post I was responding to was accepting that the S&P grew that amount AFTER ADJUSTING FOR INFLATION

The comment said:

#28 Joe on 07.23.22 at 12:44 pm

Officialdata.org states S&P 500 Total returns since 1999 is 4.23% adjusted for inflation.

Maybe try moving your lips when you read, that might help your comprehension.

#75 Shawn on 07.23.22 at 8:14 pm

The gift that keeps on giving

#70 Ed on 07.23.22 at 7:24 pm
Dividends are the gift that keeps on giving…

*******************************
Yes and so is good physical fitness especially after 50. So worth the effort.

Work hard and Build wealth till about 60 and then if you have neglected it you must focus on fitness. Ideal if you can do it in your working years but crucial past 60. And never too late. Use it or lose it is real (I am told).

#76 DON on 07.23.22 at 8:25 pm

#57 Doing my Part on 07.23.22 at 4:34 pm
Here in Victoria BC we are reaping the benefits of left wing provincial and federal governments and their virtue signalling wokeness.
No family doctors.
No ambulance if you need one.
Closing emergency rooms.
Disrupted ferry schedules and unreliable service.
Criminals and addicts roaming the streets.
Law enforcement being defunded.
Highest fuel prices in North America.
High food prices.
Unaffordable real estate.
And the best part, things are getting worse, hope you idealists got what you wanted when you voted.

*******
The same factors are happening in other jurisdictions regardless of the political stripes. Why does everything have to be poltical. I didn’t have a family doctor under the last corrupt/shameless/incompetent BC liberal/nutty right wing conservatives.

#77 willworkforpickles on 07.23.22 at 8:54 pm

BANNED (Abusive)

#78 Summertime on 07.23.22 at 8:55 pm

#74 Shawn on 07.23.22 at 8:11 pm

Of course what I meant is that this is the return adjusted after the FAKE inflation which CLEARLY was not the 1-2 % yearly CPI reported as ‘inflation’ at the time.

You are expanding the boundaries of stupidity and my apologies, but there is not anymore a polite way to state that, it is indeed that bad.

#79 Summertime on 07.23.22 at 9:06 pm

#47 Shawn on 07.23.22 at 3:20 pm

****************************
Sarcasm on: “No, that’s not been in the news at all especially the Main Stream Media. Thanks for blowing the lid off this story”

——————————

Sarcasm normally does not work for intellectually limited individuals aka ‘the village ‘folks”.

You were rejecting the very notion of inflation all the way until the very obvious end, coming with outright idiotic excuses and ‘clever tricks’ academia style.

The farthest from any manifestation of critical thinking and extremely narrow outlook while pretending the opposite, the worse I have ever seen, and I have seen a lot.

#80 The General on 07.23.22 at 9:17 pm

Our beloved, taxpayer bailed-out media preaches hate, when they’re not busy virtue shaming Canadians, or fear mongering. Cold war: hate U.S.S.R.; 911: hate Muslims, hate Taliban; 1990’s: hate Serbians, hate France; covid: hate the unvaccinated, hate anyone who disagrees with your sacred opinions. They and Greta need anger management Pronto! Luckily, Canadians can choose to ignore them, but unfortunately we still have to subsidize their existence. Meanwhile, the p.m. has started a bowl cut fad among his admirers.

#81 No interest on 07.23.22 at 9:45 pm

Finally, a note on central banks. There are about 90 central banks globally that are working in a coordinated way to remove stimulus and raise interest rates. Even the powerful European Central Bank, which hadn’t raised rates in more than a decade, surprised markets this week with a 50 basis-point rate hike, doubling expectations. It’s important to remember why central banks are doing this: to reduce excess demand. High inflation isn’t good, of course, but an overheated global economy is certainly preferable to a languishing one.

_____________

So …. why does Canada CB feel like it needs to follow suit of other central banks? As I’ve suggested numerous times here, perhaps they dont need to.

Raising Canadian interest rates will do little to change inflation but will impact our economy as a whole and not necessarily in a positive manner. Canada is but a microcosm in the world of commerce.

Leave interest rates where they are today and wait till others have achieved their endgame and reap the rewards of a thoughtful and measured response.

The Canadian dollar will either fall or stay where it is, possibly offset by our natural resources/energy sector strength. This will make Canadian exports cheaper and stimulate growth.

Allow the real estate market and the economy as a whole to absorb the new rates fully and stabilize before making so many increases. Seriously, who does this type of tweaking so abruptly? The CB lowers rates over a period of several years … but when they realize they are slow out of the gate, they resort to increasing them over the course of a few months.

#82 crowdedelevatorfartz on 07.23.22 at 9:55 pm

@#70 Don
“I didn’t have a family doctor under the last corrupt/shameless/incompetent BC liberal/nutty right wing conservatives.”

+++
Let us not forget Trudeaus’ announcement of tax changes soon after he was first elected PM.

https://www.cbc.ca/news/politics/trudeau-angry-doctors-kelowna-1.4278453

It p!ssed off a lot of doctors.
Now?
We dont have a lot of doctors.

#83 Love_The_Cottage on 07.23.22 at 10:17 pm

#67 Penny Henny on 07.23.22 at 6:34 pm
#21 Love_The_Cottage on 07.23.22 at 12:00 pm
////////
The dividends generated are easily enough to live off of so that means I am not so concerned by the up and downs of the market.
__________
Thanks, but logically this makes no sense. If you held ETF’s and sold 4.5% each year it would be exactly the same thing. The underlying value of what you are holding would be exactly the same. Unless stocks paying dividends performed better overall than those that didn’t. But of course this can’t be true. If it was then the market would adjust the values to reflect this.

Your point about the dividend tax credit is a good one, but the point I’m making is the underlying investment otherwise is the same. When people say they are getting paid to hold an investment they are kidding themselves. It’s built in.

#84 The One and Only Elon on 07.23.22 at 10:52 pm

#64 Sail Away on 07.23.22 at 5:58 pm
#63 Stone on 07.23.22 at 5:14 pm

Your goal at 90 is to copy what others have already accomplished? A lifetime of being a copycat.

Bravo!

A life well lived.

———

Definitely. All the best things in my life come from copying others. There are some savvy folks out there!

————————————

Correct. There is only one Elon. All others are simply a very pale and feeble imitation! You can now change your handle from “Sail Away” to “Pale Imitation”.

#85 KaleyCat on 07.23.22 at 11:51 pm

#83 Love-the-cottage

Rate of growth of dividends is the key. As they grow, so does the stock price. And for those of us not retired, reinvesting dividends creates excellent compounding. To quote Albert Einstein “compounding is the 8th wonder of the world”. Do the math.

#86 Love_The_Cottage on 07.24.22 at 8:12 am

#85 KaleyCat on 07.23.22 at 11:51 pm
#83 Love-the-cottage
…reinvesting dividends creates excellent compounding. _______
Thanks everyone, I promise this is my last post on this topic as I am really heading up to the cottage now. Sunday morning is the best time to leave the GTA for Muskoka, an hour less drive time than Friday afternoons.

A lot of people seem to believe stocks paying dividends outperform other stocks on average over time. Please ask yourself if your belief in dividends comes back to this. If it does then check to see if the facts back this up.

Cheers everyone.

#87 Shawn on 07.24.22 at 8:15 am

Are Dividends Crucial to compounded returns?

#85 KaleyCat on 07.23.22 at 11:51 pm
#83 Love-the-cottage

Rate of growth of dividends is the key. As they grow, so does the stock price. And for those of us not retired, reinvesting dividends creates excellent compounding. To quote Albert Einstein “compounding is the 8th wonder of the world”. Do the math.

****************************
The presence of dividends are “neither a necessary nor a sufficient condition” for great compounded returns.

Consider Berkshire Hathaway. No dividend. Extreme compounding.

Having said that, the presence of a strong and growing dividend is highly correlated with strong earnings and strong compounded returns.

Nothing wrong with chasing great dividend stocks like the banks and Fortis Inc. Enbridge. CN rail. All have given dividend growth but retain enough earnings and are in profitable lines of business and so they grow and their stock prices rise.

Shall I dare push Garth’s buttons and claim ETFs are for wimps? Actually I am a believer in different strokes for different folks.

#88 Concerned Citizen on 07.24.22 at 9:05 am

So Doug, are you saying that the central bankers will once again rescue the bubble and its speculator participants while stiffing the poor, middle class (what’s left of it), and the young with indefinite crippling inflation?

I have an idea. How about we let the people that HELOC’d their home into 5 additional properties at bubble valuations fall flat on their face. How about we let folks that borrowed heavily on margin to buy stocks at the most overvalued levels since 1929 fall flat on their face.

I even have a name for it: capitalism.

#89 Concerned Citizen on 07.24.22 at 9:18 am

I watched an interview with former Fed governor Lacker where he said historically, the policy rate needs to exceed the near term inflation expectations rate for inflation to return to target. I agree, and have been making this point for ages. So let’s assume inflation moderates to 5% or 6% by year-end, which is optimistic IMO. That means the BoC would need to raise rates potentially above 6% to fulfill its mandate.

Contrast that with the mainstream media’s take – and many takes below decks in this comment section – that the central banks are already overdoing it and moving too quickly. It’s comical that some people think that with the inflation over 8% and the policy rate ~600 basis points lower, the central banks almost have inflation licked.

Polievre recently called out the BoC bonuses paid out, and although I’m no big Polievre fan, he’s right on the mark to do so. The Tiffster and co. are either not independent or outright incompetent, and the idea of getting bonuses when they’ve missed the fulfillment of their mandate by so much is absurd and insulting to Canadians. These people evidently have no shame.

#90 Sail Away on 07.24.22 at 9:46 am

Some Sunday Sun Tzu:

“A military force has no constant formation, water has no constant shape: the ability to gain victory by changing and adapting according to the opponent is called genius.”

#91 KaleyCat on 07.24.22 at 9:58 am

#87 Shawn:
the presence of a strong and growing dividend is highly correlated with strong earnings and strong compounded returns.

Very well said.

As for long term rates of return, #86 Love-the-cottage could check out the BTSX model:

https://dividendstrategy.ca/superior-returns/

#92 Sail Away on 07.24.22 at 10:12 am

#87 Shawn on 07.24.22 at 8:15 am

Nothing wrong with chasing great dividend stocks like the banks and Fortis Inc. Enbridge. CN rail. All have given dividend growth but retain enough earnings and are in profitable lines of business and so they grow and their stock prices rise.

Shall I dare push Garth’s buttons and claim ETFs are for wimps? Actually I am a believer in different strokes for different folks.

———-

A fun exercise is creating portfolios sufficient for financial independence in each of several areas:

ETFs
Individual stocks
Staples of life
Boom or Bust
Dividend Aristocrats
Berkshire

Gotta keep things interesting! Step one: build a business that floods you with cash, or… the means of investing.. The opposite of Lake Mead.

#93 crowdedelevatorfartz on 07.24.22 at 10:15 am

@#89 Concerned Citizen
“The Tiffster and co. are either not independent or outright incompetent, and the idea of getting bonuses when they’ve missed the fulfillment of their mandate by so much is absurd and insulting to Canadians. These people evidently have no shame.”

+++
Yep.
The trough is wide and deep in all levels of govt.

BC Ferries CEO was fired.
His severance package has yet to be announced.
One can assume his $500k+ salary and perks will set the tone for a $1.5 million dollar, 1.5 year severance package.
If not….. his lawyers will gladly show the BC Ferries Board of Deflectors the error of their ways.

And the CEO will be replaced by an equally unnecessary, obscenely paid CEO with political connections.

https://www.cbc.ca/news/canada/british-columbia/bc-ferries-ceo-mark-collins-terminated-1.6529021

A CEO that will spew the usual politically correct platitudes to the masses while ignoring the continuing disastrous meltdown of morale, staff and furious customers.

Here’s a radical idea…

Perhaps these rich, highly educated scions of corporate trough snuffling and endless political correctness should be paid at the END of a successful 2 year, 4 year contract.

If only to focus their attention on the actual,( nitty gritty, day to day running of a business) job at hand.

#94 Rhyming with timing on 07.24.22 at 10:28 am

#20 move over on 07.23.22 at 11:53 am
there were a multitude of technical and fundamental indicators at the end of 2021 to have you exit the majority of your positions and be sitting in cash now waiting for the market to bottom. there is no market bottom yet. so i’ll keep waiting.

I don’t like losses, sport. Nothing ruins my day more than losses.

____________

And as soon as I am confident that we’ve reached the bottom, I’ll jump in at the same spot that I got out at ….only to forfeit all of the income/
dividends/distributions that I would have otherwise collected.

That’s why my friends consider me to be a genius … both of them.

#95 Dharma Bum on 07.24.22 at 10:37 am

#89 Concerned Citizen

The Tiffster and co. are either not independent or outright incompetent, and the idea of getting bonuses when they’ve missed the fulfillment of their mandate by so much is absurd and insulting to Canadians. These people evidently have no shame.
——————————————————————————————————–

Welcome to the world of Government and Finance workers.

They get paid no matter what the end result.

Winner winner chicken dinner.

#96 Chris L. on 07.24.22 at 10:38 am

DELETED (Go away. Your conspiracy nuts are a disease of your own. – Garth)

#97 Summertime on 07.24.22 at 10:52 am

#89 Concerned Citizen on 07.24.22 at 9:18 am

I think BoC deserves their bonusses.

After all they were very good at producing record bank profits and in buying huge volumes of bankrupt government bonds (called ‘diversification in holdings’) – their true mandate.

It is not easy to lie to the public with a straight face that you are fighting the very inflation your actions caused with close to zero nominal rates and increasingly deeply negative real interest rates.

Even with slogans like ‘trusted, dynamic, engaged’ at their press conferences and the whole media support, it is not an easy job.

Now they are portraited as the ‘bad guys’ for increasing the rates with 1 % instead of the ‘expected’ 0.75 % and very few people notice that actually inflation is increasing faster than their token increases.

It is all bluff, smoke and mirrors.

The middle class is dead and buried, on their tombstone we should write: ‘They trusted the central banks’.

The amateurs’ housing speculants are the geniuses of today thanks to BoC, they will be protected as far as not to jeopardize bank profits.

As for the poor folks destroyed the inflation: Too bad for them, suck it up and move on.

#98 move over on 07.24.22 at 10:53 am

#88 Concerned Citizen on 07.24.22 at 9:05 am
I even have a name for it: capitalism.
____________________________________

heaven help us if governments stopped printing money to subsidize wealthy individuals like Elon Musk and Airline boards.

the current system is better .. tax and take from the poor to give to the rich and even richer.

#99 Dr V on 07.24.22 at 12:01 pm

89 Concerned

“I watched an interview with former Fed governor Lacker where he said historically, the policy rate needs to exceed the near term inflation expectations rate for inflation to return to target.”
——————————————–

I found lots of vids with Lacker. Do you have a link for this particular one?

I note the use of the term “historically”, which of course only means this is what happened in the past, and while
it makes intuitive sense, I cannot yet draw this
conclusion in all circumstances. Beyond the basic conditions required, inflation has other factors influencing it, including human perceptions and expectations.

#100 Philco on 07.24.22 at 12:05 pm

#83 Shawn on 07.22.22 at 11:20 am
Philco

Actually I see Philco is worth 8 digits so over $10 million. He can afford to miss the bottom of stocks or just ignore the stock market forever.
————————-
Thanks for the reply Shawn. Just catching up.
Sad day Fri jumped outa my backhoe slipped landed crushed my phone. That slows life down lol.
Yes Im always building at the wholesale level RE that is.
I couldn’t repeat my last 7 years performance that’s fir sure.
Stuff is insanely expensive. $40 for 4in PVC sewer pipe. Use to be 22 a few years ago. Being the General contractor and owner on my new project and doing a lot of the ground work. Having the property for 30 years.
And all the great buddies that are builders is GREAT. Having to buy land and hire everyone would cost me 3 fold to create this property.
Cost dynamics make it impossible for people to start up a commercial RE biz like I have. Because I have a pile rolling in from other operations I can easily fund this with near zero risk. Its bat shit crazy what it costs to develop these days.
All the gov and city permitting/ engineering is insane.
I’m lucky as my 4 acres is on the edge of the this city and we have no code in the regional. It is the only place of its kind and that alone saves tons. I have no one to answer to.
I dont need engineered lumber and I’ve got my own from my mill.Aa 16ft 2×6 was about $40 but mine cost me about $5 to mill. I gotta pay BC Hydro $16,000 to upgrade the pole and transformer to handle my 600volt 3 Phase!! They pay for jack sh1t now. $65,000 to get the service in alone.
I got the transformers from a blown up grow show So $9k rather than $20k

The worlds changed. Its hard or impossible to break into a profitable biz. My kid can’t.
Once up I should have about $400k cash flow with very low op cost as I have my own well and sewer and a low tax base. Unlike my Courtenay Prop. sewer and water alone is $10,000. The city is dreadful.
Op cost there $70,000!

And Yes I would be buying the market but Im concentrating on the project for now.
ALWAYs buy on sale!
Cheers

#101 millmech on 07.24.22 at 12:25 pm

#82 CEF
Do not forget that around 3000 nurses are gone or soon to be gone for not getting vaxxed, and another 400 doctors, physiotherapists and other specialists who are in the same boat will soon be gone as well in BC.

#102 Keith on 07.24.22 at 12:33 pm

@ #89 Concerned Citizen

“the idea of getting bonuses when they’ve missed the fulfillment of their mandate by so much is absurd and insulting to Canadians. These people evidently have no shame.”

Oh dear. Please research golden parachutes, repriced share options, compensation committees, directors fees and read Warren Buffett’s letters to the shareholders about CEO and BOD compensation in the private sector.

#103 DON on 07.24.22 at 12:49 pm

The experts got inflation wrong and now they are tripping over their collective feet trying to control the run away train.

Every week we hear of peak inflation…sooner or later it will peak for sure, but it is a waiting game, it will happen when it happens. So far there hasn’t been a quick fix. Other than the last 15 years when the govs have applied quick fixes for our economic wobbles in the form of QE, so folks have become accustomed to quick fix expectations. Sentiment has been slow to change for this reason in my opinion.

I am still amazed that some thought the Russian invasion would be over within a month.

The experts seemingly are moving the goal posts down the road.

I’ll get the tab for another round of recency bias unless there is a magic elixir to fix this whole situation next month?

How often does hope beat reality?

#104 crowdedelevatorfartz on 07.24.22 at 12:57 pm

God bless the imagined ravings of a spendthrift Socialist

https://nationalpost.com/opinion/satire-dear-diary-jagmeet-singh

#105 DON on 07.24.22 at 12:59 pm

#93 crowdedelevatorfartz on 07.24.22 at 10:15 am
@#89 Concerned Citizen
“The Tiffster and co. are either not independent or outright incompetent, and the idea of getting bonuses when they’ve missed the fulfillment of their mandate by so much is absurd and insulting to Canadians. These people evidently have no shame.”

+++
Yep.
The trough is wide and deep in all levels of govt.

BC Ferries CEO was fired.
His severance package has yet to be announced.
One can assume his $500k+ salary and perks will set the tone for a $1.5 million dollar, 1.5 year severance package.
If not….. his lawyers will gladly show the BC Ferries Board of Deflectors the error of their ways.

And the CEO will be replaced by an equally unnecessary, obscenely paid CEO with political connections.

https://www.cbc.ca/news/canada/british-columbia/bc-ferries-ceo-mark-collins-terminated-1.6529021

A CEO that will spew the usual politically correct platitudes to the masses while ignoring the continuing disastrous meltdown of morale, staff and furious customers.

Here’s a radical idea…

Perhaps these rich, highly educated scions of corporate trough snuffling and endless political correctness should be paid at the END of a successful 2 year, 4 year contract.

If only to focus their attention on the actual,( nitty gritty, day to day running of a business) job at hand.

********
Mark Collins was getting paid 563k a year to mismanage operations and hiring. They are getting resumes, why the lack of hiring. If training is a problem…train them. Maybe the Ferries should go back to their core practice of getting people to their destinations and stop trying to be a cruise ship line.

The CEO of Washington ferries is paid much much less to fo the same job. Hmmm Collins started with BC Ferries in 2004 around the same time Gordon Scampbell turn the essential service into a corporation.

#106 Tony on 07.24.22 at 3:17 pm

Re: #42 Summertime on 07.23.22 at 2:42 pm

Debt levels come into play so an easy bet would be inflation will keep on increasing in Europe as it falls in Canada. The lower the levels of debt the higher interest rates need to be to kill inflation. So in Canada it wouldn’t take much in the way of interest rate hikes to kill inflation. A different story in most of Europe where debt levels are low. They’ll never get rid of inflation in some of those European cities because of the low levels of debt. Much, much higher interest rates would be needed.

#107 Concerned Citizen on 07.25.22 at 12:25 pm

#99 Dr V on 07.24.22 at 12:01 pm

I found lots of vids with Lacker. Do you have a link for this particular one?

*****

It’s one with Bloomberg available on Youtube:

https://www.youtube.com/watch?v=76APd5avAkw

I always find the former central bankers far more forthright – and dare I say honest – than the ones currently in power.