Fixed? Variable?

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RYAN   By Guest Blogger Ryan Lewenza
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As financial advisors looking after families across Canada, we field a number of common questions from our clients. How much do I need to retire? How can I save on taxes? When will the markets recover? And more recently, should I go with a variable or a fixed rate mortgage?

Over the last few years I’ve been ‘pounding the table’ on fixed rates as they hit all-time record lows, and inevitably, the Bank of Canada (BoC) would have to start hiking rates. This turned out to be a good call for some of our clients who were able to lock in at the low fixed rates. These were clients who were in the process of securing a mortgage (either a new buy or renewal) or clients who were on a variable rate and were considering locking in at the low fixed rates.

With the BoC aggressively hiking interest rates over the last six months we’ve seen mortgages rates rise appreciably, with the gap between the variable and fixed rate narrowing. Before it was a slam-dunk to go with the low fixed rates, but now, with the BoC hiking rates, the call is a bit trickier.

Today I’m going to review the process of how to make the decision between variable or fixed, provide an outlook for interest/mortgage rates and provide some suggestions on mortgages.

Let’s first review the outlook for rates.

Since the beginning of the year the BoC has hiked the overnight rate by 2.25% and currently sits at 2.5%. Prime rates, which are the rates charged to clients by Canadian banks, are currently 4.7%. The banks typically add 2-2.25% to the overnight rate to determine their prime rates.

Variable mortgage rates are then determined by subtracting a percentage from the prime rate, depending on the borrower and whether the mortgage is insured or not.

I reached out to our preferred mortgage specialist at Outline Financial, a Toronto-based mortgage firm, and Molly let us know that for uninsured mortgages the current discount is roughly 0.50% and a 1% discount for insured mortgages. So, for insured mortgages (what I’ll focus on for this blog), the current variable rate is 3.7%. But that’s the current rate.

To determine whether to go variable or fixed you need to estimate an average variable rate over a 5-year period and compare that to current 5-year fixed rates. This of course requires some projections for future interest rates.

I first looked at what the markets are pricing in for future rate hikes. The markets are pricing in another 75 bps hike at their September meeting, followed by another 50 bps hike in December. So the markets see another 125 bps of rate hikes, which would take the overnight rate up to a potential peak of 3.75% in this cycle.

Finally, the market then is pricing in a 25 bps rate cut next summer. While I don’t know when the BoC will reverse and begin cutting rates, I do believe this will happen over the few years so this is a consideration for whether to go variable or fixed.

This takes us to the end of next summer but what about the following four years? For that I looked at three different scenarios.

Scenario 1 is that the overnight rates stays fixed at 3.5% and therefore the prime rate stays fixed at 4.7% for the following 4 years. Scenario 2 is that rates average 1% higher over the next four years at 5.7%. Scenario 3 is that rates average 1% less at 3.7% over the next four years. In these three different scenarios the rate averaged 4.7% under scenario 1, 5.5% under scenario 2 and 3.9% under scenario 3.

Interest Rate Outlook for Canada

Source: Bloomberg, Turner Investments

Let’s then compare that to current fixed rates to determine which option could be the best.

5-year fixed mortgages rates are based off the Government of Canada (GoC) 5-year bond yield. The GoC 5-year yield has surged from a low of 0.35% in 2020 to roughly 3% today. Banks and mortgage lenders then add a spread over this rate. Currently, the lowest 5-year fixed mortgage rates are roughly 4.5% from credit unions and mortgage lenders (the big Canadian banks are charging over 5%), resulting in a current spread of 70 bps over variable rates. However, we need to compare this to those long-term average rates to make a final determination.

Under scenario 1 and 2, fixed rates would be better than going variable. Only if the BoC cuts rates materially over the next few years would the variable rate work out. Given this analysis I’m still leaning towards fixed interest rates.

GoC 5-Year Yield

Source: Bloomberg, Turner Investments

For those currently in a variable rate mortgage, given my view that the BoC could end up cutting rates over the next few years there could be an opportunity for variable to work out. Basically stay variable for now but if/when the BoC cuts rates then consider locking in at lower fixed rates.

Finally, here are a few other important considerations:

  • It’s important to note there are two types of variable rates. Most of the banks have set payments based on the prime rate when your deal closes. The payment doesn’t fluctuate with changes to prime. The proportion of your payment that services the interest obligation versus principal adjusts. That is until you reach a point where your payment is no longer enough to cover the interest. This can be a good option for owners who just need the lowest payment and can’t stomach the fluctuations of changes to prime. The downside is that your amortization is extended and therefore you are paying more interest in the long run. The other type is called an Adjustable Rate Mortgage. With an ARM your payment will fluctuate with changes to the prime rate to keep you on your original amortization schedule. You need to determine which is best for you but my preference is the ARM and not extending the amortization period.
  • Finally, I think it’s a safe bet that interest rates will be lower over the next five years so another option is to go with fixed rates but with two and three year maturities. If rates decline then you lock in again in a few years, potentially at a lower rate.

So there you have it! I’m still leaning towards fixed rates but currently prefer two and three year maturities with interest rates well up from their lows and the potential for the BoC to cut rates over the next five years. If in variable, consider riding out the storm but then look to lock into fixed if/when the BoC cuts rates down the road.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

 

95 comments ↓

#1 Tarot CARD on 08.27.22 at 11:17 am

Thanks for the blog Garth
Thanks for the post Ryan.
Forecasting is very difficult.
I actually listen to this blog and locked in my mortgage for five years at 1.5 percent. I was very lucky I was renewing.

There is another option which many banks have and that is you can lock half the mortgage in variable and half in fixed rate.
That way you don’t need to guess.

Cheers have a great weekend

#2 Shawn on 08.27.22 at 11:31 am

Variable versus fixed electricity rate

Meanwhile in Alberta we have been able to go variable or fixed on the commodity portion of the electricity rate since deregulation back in 2001.

I have saved by going variable. But now with coal plants almost phased out and natural gas prices potentially going higher and for whatever reasons the variable spot rate averaged well into the teens lately and was 24 cents per kWh in the past 30 days. Not so cheap for the Tesla.

I am months late locking in but was able to get 8 cents per kWh locked in for the next three years. At that rate I believe it will be only about $6.00 to charge the Tesla Model Y from “empty” as the battery “capacity” is apparently 75 kWh.

Anyhow, it looks like Albertans on the spot electricity rate should lock in. I’m amazed that the 8 cent rate is still available. #AlbertaAdvantage.

#3 Arbeit Macht Frei on 08.27.22 at 11:35 am

Anyone who’s been to Auschwitz of course has seen the gate.

Arbeit Macht Frei – Work Makes One Free.

It’s a wonderful concept. Who is this “One” these freedom promoters who made the gate were speaking about?

Is it the same “One” today’s corporations and gig economy promoters make free?

#4 Dogman01 on 08.27.22 at 11:37 am

Re Work Ethic theme:

The Cult of Done Manifesto

1. There are three states of being. Not knowing, action and completion.

2. Accept that everything is a draft. It helps to get it done.

3. There is no editing stage.

4. Pretending you know what you’re doing is almost the same as knowing what you are doing, so just accept that you know what you’re doing even if you don’t and do it.

5. Banish procrastination. If you wait more than a week to get an idea done, abandon it.

6.The point of being done is not to finish but to get other things done.

7. Once you’re done you can throw it away.

8. Laugh at perfection. It’s boring and keeps you from being done.

9. People without dirty hands are wrong. Doing something makes you right.

10. Failure counts as done. So do mistakes.

11. Destruction is a variant of done.

12. Done is the engine of more.

#5 Shawn on 08.27.22 at 11:38 am

Tesla Charging costs

Actually it will be more than the $6.00 I mentioned because a portion of the delivery charges are variable. The total will be closer to 12 cents per kWh (The bills are so complex it’s a bit hard to tell). But at 12 cents the cost is about $9 for a full 75 kWh charge. This is for home charging which will be 95% of my needs. The cost will be considerably higher when traveling but still vastly cheaper than gasoline.

#6 Arbeit Macht Frei on 08.27.22 at 11:40 am

By the way…what’s the word today on Fascism and Capitalism? Which one is closer?

Fascism = Capitalism?

OR

Fascism ≠ Capitalism?

#7 IHCTD9 on 08.27.22 at 11:44 am

Local MLS shows multiple and quick price reductions beyond bunnypatch. Can’t see stopping the drop out here anytime soon. Folks that have to sell are dragging the anglers down. A big empty space between 600-700K is opening up separating serious sellers from those who think it’s still February. Some de-lists are back on with a 20% haircut too. Waiting around for the “market to recover” is proving costly to some.

Anything requiring a 4500.00 monthly is going to rot for a long while. That’s too much for the locals, and the GTA’ers are heading out of town, not in. Looks like it won’t be too much longer before we’re waiting on GTA retirees exclusively once again. Can’t wait.

#8 Kootenay Dave on 08.27.22 at 11:48 am

Garth, great post yesterday, but you’ve only provided more of the top layer of what’s happening re work ethic – but why do you think it’s happening?

-Is it the result of boomers with too much money coddling their kids?
-Is it the monster that the internet has created (perceived truth is a click away and polarization due to everyone having their own channel… of which there’s FIRE, quiet quit, etc)?
-Is it that we’re paying too much attention to these outlier fringe movements now because of the internet… maybe they’ve always existed but never had a platform?
-Is it that the American Dream marketing ploy is finally having its bluff called? Think the George Carlin skit…
-Is it that the wealth divide has reached a tipping point?
-Is it the cheap money that’s resulted from the unsustainable/greedy economy everyone has been working so hard for (this isn’t a Covid thing, look at bond yields over the last 35 years, that tells the reality of what’s been playing out)
-Is it the eroding purchasing power, cost of living, etc?
-Was Newton actually a generational sociologist in declaring that every action has an equal and opposite reaction?

As a 40 something, I’m somewhat caught in the middle, and can actually see both sides as to why there’s this cultural war between the 20s/30s and the boomers. But give us something more as to why this is happening – as perhaps it’s the result of the very culture that you’re trying to defend… because perhaps you have to be asleep to believe it.

#9 crowdedelevatorfartz on 08.27.22 at 11:49 am

Fixed interest vs Variable interest.
Sounds like my day to day interest in anything Trudeau has to say….

#10 Linda on 08.27.22 at 11:52 am

Ryan, as always a good analysis of the possible risks/outcomes. Myself, I think in the end it boils down to comfort levels. Some folks have no issues with financial risk, or if they do have they sure hide it well. Others, not so much. The risk takers would likely be the ones who’d be the best fit for variable mortgages. Those who find financial risk stressful might not want the higher cost of a fixed rate mortgage, but the fact they would know exactly what their payments would be & what they would owe come renewal would likely be worth it to them.

#11 Dogman01 on 08.27.22 at 11:52 am

Mortgage advice: this worked for us:

https://youtu.be/XqcAXWeU-qw

If you are a certain personality (Ant not a Grasshopper) look into the psychology of this for a mortgage.
One big LOC, your paychecks go into it directly the day you are paid. You use it to pay all credit cards in full every month. You have no need for car loans, you just negotiate cash.

On Jan 1 when you place $5500 in you and your spouse’s TFSA you just move the money from one account to the other.

When your spouse asks you how much “extra” money you have, at a glance you can see and say you still owe $223,563.

When you have the urge to buy something stupid, you see your actual balance sheet without hiding your reality of debt-slavery in a different container.

Your mortgage will be paid off really fast and you can move onto the non-registered B&D portion of your portfolio.

#12 MDQ on 08.27.22 at 12:17 pm

You lost me at:

“Finally, I think it’s a safe bet that interest rates will be lower over the next five years so another option is to go with fixed rates but with two and three year maturities”

No one has any clue as to what rates would be in 5 years, the best advice one can give is to not get over extended with the mortgage and be comfortable even if it doubles.

This is the problem in western societies, we are debt addicts.

Good luck to all of you fake millionaires, with millions in debt.

#13 Philco on 08.27.22 at 12:24 pm

A buddy trying to buy a small RV park said bank quoted 7.5%!
I grabbed a quick $300k and got a smoking deal on my commercial at 4.25%.

I suggest folk listen to this for 25min.
As I’ve stated here I despise our Elite gov knuckled heads.
Its criminal behavior. The statement “pigs at the trough” rings true.
I have had people drive to my site asking if Im building some RV stalls to live.
They cant afford to live in house and eat also. Sad…More of this to come.
https://mikesmoneytalks.ca/category/mikes-content/complete-show/

#14 Philco on 08.27.22 at 12:36 pm

Better listen to it twice. This is the kind of stuff that leads to revolutions.

#15 crowdedelevatorfartz on 08.27.22 at 12:52 pm

@#13 Philco.
I used to listen to Money Talks.
But the Ozzie Jurock “Its always a good time to buy property …..somewhere!”…..Used to grate.

And then there is the disturbing factor that Michael Campbells brother Gordon was the ex Premier of BC.
The Premier that was arrested in Hawaii for drunk driving and refused to resign.
The same Premier that eventually resigned and left office before a Court case on the back room maneuverings of govt and it’s staffers was about to start….
The case was settled out of Court but the Premier was long gone.
Christy Clark became the appointed (annointed?) Preem.
But not to worry.
The feds immediately gave Gordo a cushy job in London England as High Commissioner for Canada.
Out of sight. Out of country. Out of mind.
Nothing to see….move along.
Focus on Christy
Nauseating doesnt even begin to describe BC politics.

#16 epic bear on 08.27.22 at 1:07 pm

now that the “a market making a 50% retracement level of the drop = bear market is over” has been proven false … catching the inexperienced in a classic bear market /short covering rally.. we should now make lower lows in the coming months in stocks, ultimately returning to where this bubble began, at the March 2020 lows some time in the next 18-24 months

be prepared
its going to be an epic bear

#17 the Jaguar on 08.27.22 at 1:07 pm

@#12 MDQ on 08.27.22 at 12:17 pm
You lost me at:

“Finally, I think it’s a safe bet that interest rates will be lower over the next five years so another option is to go with fixed rates but with two and three year maturities”+++

I think he alludes to higher rates to wrestle the inflation dragon to the floor are likely to result in a possible recession, which means afterward it might be necessary to lower rates to stimulate the economy back to life.

History would support that approach, except for the recent burning of bridges and new alliances being formed in emerging markets. If recent history has taught us anything it is ‘where precious commodities are located and whose control they are under….”. The usual tactics won’t work this time.

And even if all the mayhem ended tomorrow, how are we ever going to put Humpty Dumpty back together again. We’re not. Revenge will be served up cold. Best prepare for that in every way one can.

Where is Under the Radar to provide an opinion on the fixed versus variable question? Riding around on a lawn tractor admiring the grounds of his estate, I suppose….

#18 Sail Away on 08.27.22 at 1:11 pm

#5 Shawn on 08.27.22 at 11:38 am

Tesla Charging costs

Actually it will be more than the $6.00 I mentioned because a portion of the delivery charges are variable. The total will be closer to 12 cents per kWh (The bills are so complex it’s a bit hard to tell). But at 12 cents the cost is about $9 for a full 75 kWh charge. This is for home charging which will be 95% of my needs.

———

Our home charging percentage is closer to 99%. Then there’s thousands and thousands of km of free supercharging on the account for the rare travel.

It’s almost indistinguishable from free transportation. And Saving The Planet. If only everyone could be as green as me (and thee).

#19 Theory of Everything on 08.27.22 at 1:19 pm

#8 Kootenay Dave

You ask a lot of questions Dave.

I am also 40 something.

I can only tell you how I see it.

There is a divide.

The pitchforks were going to come up.

Covid is the perfect fear/control mechanism to delay what many wealthy already felt was going to be a revolution. It has perhaps been delayed, but I think it is still in the forecast and in the upcoming act.

Notice how those in charge (Boomers) punished those at lowest risk (Young people).

Young people were punished in the most ridiculous ways possible. I realized it right away. The young are realizing it now. They won’t forget. Why shouldn’t they hold a grudge?

Also, there is this thought that you are your job. It’s a weird thing, but we find self identity through our work. I did for some time, even as deep inside I felt conflicted.

It is only when you are nothing, not working, that you realize that you are not your job.

(It’s weird for me to say this above sentence because I just finished reading Fight Club – DAMN IT, that book is good. So good, I know I’ll read it again in a few months just to enjoy the sentence compositions. )

Anyhow, people are more philosophical about things perhaps. They don’t want to just be consumers. They don’t want to be slaves to the debt politicians riddled them with. They don’t want their lives to be about accumulating wealth. They don’t want to chase the dollars just to get the latest MacBook or some EV.

Boomers have all the wealth. The houses. The money. The business ownership. The assets.

But they don’t have youth. Look at them. It is all the want. Cialis. Viagra. Surgeries. Who’s driving these Porsche 911s – not at all utilizing their capability? Look through the window, see those Boomers with their plastic surgery and botox want the one thing they can’t have.

And so…the young kids are seeing these people. These older or old people who chased the money all their lives, the house, the wealth…all man made stuff…and they don’t want this same path as their parents perhaps. The don’t want to participate in the same machine.

Welcome to the Machine? NO THANKS.

And we begrudge them for not wanting it?

It’s just a game. They don’t want to play it.

I have always felt that infant a good manager is a servant to his team and direct reports. Being a leader, manager is a privilege but even more so it is a responsibility.

I think this reality has not dawned on much of egotistical management and leadership of today. But it will. I leave you with a haiku from Fight Club.

Worker bees can leave
Even drones can fly away
The queen is their slave

#20 Sunshowers on 08.27.22 at 1:28 pm

177 Stoph on 08.27.22 at 12:33 am
“I expect that even our dear friend SunShowers agrees with Poilievre’s point that income is taxed too high.”

Yep, even a broken clock like Poilievre can be right twice a day. We should raise the capital gains inclusion rate to 100%, which would allow us to do lots of fun things. Investing more into healthcare, paying down deficits, and lowering taxes on income and/or the GST all sound like good things to consider.

#21 I have never seen such idiotic comments on 08.27.22 at 1:31 pm

Tesla Charging costs

Actually it will be more than the $6.00 I mentioned because a portion of the delivery charges are variable. The total will be closer to 12 cents per kWh (The bills are so complex it’s a bit hard to tell). But at 12 cents the cost is about $9 for a full 75 kWh charge. This is for home charging which will be 95% of my needs.

———

Our home charging percentage is closer to 99%. Then there’s thousands and thousands of km of free supercharging on the account for the rare travel.

It’s almost indistinguishable from free transportation. And Saving The Planet. If only everyone could be as green as me (and thee).

Where do you think electricity comes from? Your outlet at home? – Garth

#22 crowdedelevatorfartz on 08.27.22 at 1:54 pm

@#203 DON
“With all the people landing on the beaches gotta wonder if she will gain momentum. ”

+++
Meloni is leading by double digits in the polls.
Election in less than a month.
The political observers expect her to win a Majority.
The ghost of Mussolini will walk the halls of the Italian Parliament again.
Jane24 might want to ensure her citizenship is up to date with the new “anti immigrant party” about to win control in Italia..

#23 Dr V on 08.27.22 at 2:03 pm

18 Sailo

“And Saving The Planet. If only everyone could be as
green as me”
—————————————–

Haha. Nice try.

https://greenercars.org/news/press-releases/plug-and-gas-hybrids-top-greenercars%E2%80%99-2022-ratings-automakers-shift-larger-evs

“Automakers shouldn’t produce only huge EVs. Such EVs, though more energy efficient than similarly sized gasoline counterparts, mean higher consumer costs and planet-warming emissions than small electric cars.”

#24 Victor Llearna on 08.27.22 at 2:16 pm

I learn a lot about mortages today. Sheep that overpaid in Feb for their crappy houses will be relatively safe if they have mortgages that don’t fluctuate with changes to prime. Not sure what happens in 4.5 years when time to renew

#25 stealth on 08.27.22 at 2:21 pm

Thank you Ryan.

Would your analysis be any different depending on the amount of outstanding principal? Probably not for the most part therefore my question.

Also, would your analysis differ for non-normal distribution scenarios (looking at edge cases) where mortgage is either very large or very small?

For example a friend (for real, not for me this time) asked if it made sense for him to even mortgage his property even if he still owed less than 100K on it. He compared this against mortgage company having rights on his house, being named on his home insurance, etc, essentially having a hand in there.

Is there a break even point where you can put a value on a risk of having a mortgage company’s hand on your property and insurance not being worth it. i.e getting out and using another financial instrument to service the remaining debt. (LOC, spend cash etc)

A lot of discussion is taking place however noone is really quantifying the value of risk in the equation such as what is the risk factor premium in even having a mortgage of any type, kind, flavour, duration etc.

So basically when not to renew, when to just get out.

If this doesn’t make sense, completely acceptable, it is Saturday so we have obviously been “relaxing”)

Thanks for your stellar posts

Cheers to you and your family Ryan. (Garth, Doug, Sinan, Tatiana and team as well)

#26 Shawn on 08.27.22 at 2:37 pm

Money talks?

#15 crowdedelevatorfartz on 08.27.22 at 12:52 pm

I used to listen to Money Talks.
But the Ozzie Jurock “Its always a good time to buy property …..somewhere!”…..Used to grate.

And then there is the disturbing factor that Michael Campbells brother Gordon was the ex Premier of BC.

**********************************
I used to listen going back I think close to 30 years ago and maybe longer and I was regular listener for many years but not recently. Michael Campbell was always a bit of a doomer.

But “He is not his brother’s keeper”. I don’t think I ever heard him mention his brother. He steered clear of that. I seem to recall he has multiple siblings.

You have to admit Ozzie was right. Anyone who listened to Ozzie and bought BC real estate circa 25 years ago (even 5 years ago) has done fantastically well especially if it was investment property where they can realise the gain. (Most people are seldom in a position to sell their principal residence just for a gain)

#27 Shawn on 08.27.22 at 2:45 pm

Teslas are Green?

It’s almost indistinguishable from free transportation. And Saving The Planet. If only everyone could be as green as me (and thee).

Where do you think electricity comes from? Your outlet at home? – Garth

**************************
Right, SailAway should stick to the real benefits of owning a Tesla.

Never mind Green as in saving the planet. It’s about green as in saving green backs. And impressing people. And virtue signaling (whether really green or not). And about the cool technology – showed the fart feature and the light show to our friends just last night. Toys for big boys.

But B.C. power is actually pretty Green. Hydro is green especially once the dam is built and the land flooded and that damage is done, actually using the water to spin the turbine is pretty darn green.

#28 Philco on 08.27.22 at 2:47 pm

#15 crowdedelevatorfartz on 08.27.22 at 12:52 pm

Hey CEF Mike hates his bro. lol
His Bro was a piece of work and walked away from a DUI with a sorry. Try that. These politicians are exempt from rules and laws for the most part.
Ozzie actually went bearish on RE. He did say peeps lost their minds and prices were redick.
RE is a great inflation hedge but we all know why it went to far. It needed to get wacked.

Brian Gritt is a must listen too.
As an engineer and a career in building cell networks I know exactly how stupid and dangerous the gov green policies are. Everyone’s getting a taste and I warned. The fools in power are clueless to the big pic and are incapable of planning or building.
They don’t even listen to the public its all fake. Most people are very ignorant of what is happening.
Brians info is bang on. Nuke is our only option for prime energy.

We have prime power cell sites where I need a hr chopper ride to get to.
That means no hydro input just massive diesel tanks like the size of a tanker truck and 2 gensets as 1 is a backup. They run 24/7 and get filled annually.
WE BURN DIESEL. People have no idea what’s out there. Enjoy your cell phone ya greenie wennie!
Cheers

#29 baloney Sandwitch on 08.27.22 at 2:54 pm

I too was pounding the table in 2020 to remortgage our paid-up house and buy the big the 6 bank stocks. But my wife dug in her heels and vetoed the idea.

#30 Søren Angst on 08.27.22 at 2:55 pm

#22 crowdedelevatorfartz

Don’t even get me going, Lefty me here. I think Italians are desperate for change at the top. Any change better than no change.

Right wing Italia will make Austria happy. Lest you forget the Kurtz legacy still in play:

https://www.trtworld.com/opinion/austria-s-sebastian-kurz-is-out-but-his-right-wing-policies-remain-50686

Kurtz makes Fdi’s Georgia Meloni look like a Woke, Mao’s Little Red Book toting, Lefty. And not much has changed in Austria since Kurtz.

—————-

The one thing about Italia is that at the Gov level there is disorganization. At the people level, highly organized.

How else would Italia with few resources, other than its people, become a G7 country?

And unlike frenetic N. America, UK, etc., Italia takes 3 hrs off in the middle of a work day.

Imagine if they actually worked a full 8 hr day?

They’d be the G1 all by themselves.

#31 Quintilian on 08.27.22 at 3:08 pm

Hey Ryan, sorry but I have to give your analysis at best C-.
You really should read Garth’s posts more carefully, if you did; knowledge of recency bias would have prevented you from such a leap.

You are guessing.

Think about it.

The guys with supercomputing brains, (almost as smart as I am), and have the advantage of proprietary raw data, were taken by surprise from the fallout of Jackson Hole last week.

These are people who placed bets a SHORT week before.

#32 Free speech on 08.27.22 at 3:09 pm

#6 Prince Polo on 08.26.22 at 2:24 pm

Any comments on what JayPow said today about blasting inflation to smithereens?

Are you willing to give up the reins and let the pathetic steerage section up/downvote the lovers/H8Rs?

______________

“Give up the reins” … too funny! It would be a frosty Friday on the sun before that happens. You cant control the narrative if you allow free speech. Do you know of any other blog where that happens? Close to 3/4 million posts but who knows how many were submitted.

#33 Summertime on 08.27.22 at 3:11 pm

So with CPI 8-9 % and inflation of necessities double that (min 15-18 %) we are going to get rates maxed at 3.5-4 % and then cuts.

Engrave that deeply in your brain.

————————-

Wallflower.

Life is ugly. Suck it up and move on /Canadian saying.

#34 Søren Angst on 08.27.22 at 3:16 pm

Ryan L.

Big fan of your work and predictions.

When doing Mergers & Acquisitions work, a Business Plan and such, you run 3 scenarios:

1. Optimistic.
2. Pessimistic.
3. Most Likely.

and not just 2 though I read somewhere in there, between the lines, you had the makings of another scenario.

Still, good work. It’s a start for sure.

Since yours is a multivariate problem (ivar, ifix x changing in time) – learn to use Solver to build a Quantitative Analysis Model.

Taught this and did it for myself when doing similar calculations. With time, change the input variables and presto, new answer once the Model has been built.

Run changing scenarios at your heart’s content.

———————

Sail Away

and his plug in car.

And you’re an Engineer?

Garth is correct.

#35 Boomer busted on 08.27.22 at 3:35 pm

#19 Theory of Everything on 08.27.22 at 1:19 pm
#8 Kootenay Dave

You ask a lot of questions Dave.

I am also 40 something.

I can only tell you how I see it.

There is a divide.

The pitchforks were going to come up.

Covid is the perfect fear/control mechanism to delay what many wealthy already felt was going to be a revolution. It has perhaps been delayed, but I think it is still in the forecast and in the upcoming act.

Notice how those in charge (Boomers) punished those at lowest risk (Young people).

Young people were punished in the most ridiculous ways possible. I realized it right away. The young are realizing it now. They won’t forget. Why shouldn’t they hold a grudge?

__________________

I completely agree. You make some very good points. They should have allowed COVID to kill off their parents and grandparents so they could get their inheritance decades earlier and get that Porsche before they were wrinkled.

Your comments highlight the main reason I chose not to have children… in case they turned out like you. Whether you choose ever to work again and be a productive member of society could interest me in the least. Worst case, I will need to was my car myself.

If you’ll excuse me, I need to get to the yacht club before noon … last there be a lineup of wrinkles at the bar afterwards.

#36 Søren Angst on 08.27.22 at 3:39 pm

Ryan L.

PS:

To impress and since you will have probabilities of outcomes, use a Monte Carlo Simulation. You can feed the variable results into a Solver Model that seeks to minimize cost (and no cupcakes, Goal Seek is for a SINGLE variable and NOT multivariate unless some of you want to make less than helpful suggestions).

I used it in Aerospace, Defense projects where the “thing” for the US DoD had never been done before and no one had a clue as to how long an activity would take or cost. For example, one such project was the:

Canadarm *

Just poll a bunch of people and get their estimates for the probabilities, costs. Then Monte Carlo the heck out of it. You can also use different probability distribution plots (skew, normal, flat, kurtosis, etc.) for that je ne sais quoi.

* One thing you can’t pick up off a shelf at Canadian Tire.

#37 Philco on 08.27.22 at 3:52 pm

#23 Dr V on 08.27.22 at 2:03 pm

Hybrids at this time have the smallest carbon foot print.
Toyota Prius arguably the most reliable hybrid made. That’s why there a million cabs.

My Leaf Plus pilot pro cost me $30k with 10,000kms on it imported from the US of A. I installed the charging outlet in my garage and I had the parts so it cost me $50.
64Kw x aprox 9cents plus all the other crap they add on so call it under $7 buks. Public chargers are way higher.
Went to charge at BCIT use to be free. Prolly a couple mill spent on the experimental solar and station setup. Most the time they were broken when I was there.
I sent an email to them 3 times…WHY ARE WE PAYING FOR THIS?
The gov coughed up the money to build it (That us) and its solar powered.
No answer.
My 3rd EV.
EV s are not near as green as portrayed SALO.
Yup 5 cargo ships burning bunker sea crude produce more CO2 than all the ice engine. Save the planet…lol cute.

#38 Nonplused on 08.27.22 at 4:01 pm

Is it just me, or has anybody else noticed that the market for big ticket discretionary items like classic cars, motorcycles, boats, and RV’s has just stopped? Maybe it’s just seasonal….

#39 Dogman01 on 08.27.22 at 4:06 pm

#19 Theory of Everything on 08.27.22 at 1:19 pm
#8 Kootenay Dave on 08.27.22 at 11:48 am

“It’s tragic to think that heroic man’s great destiny is to become economic man, that men will be reduced to craven creatures who crawl across the globe competing for money, who spend their nights dreaming up new ways to swindle each other. That’s the path we’re on now.” – Jack Donovan

“Rise like Lions after slumber
In unvanquishable number—
Shake your chains to earth like dew
Which in sleep had fallen on you—
Ye are many—they are few.”
– Shelley “The Mask of Anarchy”

#40 JPOW on 08.27.22 at 4:09 pm

20 million households in USA have not paid the power bill for months. Half the Fortune 500 have already announced big layoffs coming soon.

The EU is in an energy crisis, 90 second showers, factories shutting in production, the list is long.

Chinas real estate market is the biggest in world history and folks waiting for ground to be broken that hasn’t in years are not paying their mortgages anymore. water shortages are decimating their economy.

JPOW laid it out again and again and again – he will keep raising rates.

Bonds will go down, stocks will go down. The 40 year 60/40 split is dead, for 8 months already. Interest rates go up, they go down,

Just look at yesterday’s market action after JPOW spoke.

With the world awash with the most debt evah, and highest inflation in 40 years, it won’t take much higher rates to crash the currently imploding economy.

#41 Ryan Lewenza on 08.27.22 at 4:14 pm

Stealth “Would your analysis be any different depending on the amount of outstanding principal? Probably not for the most part therefore my question.”

No the analysis and recommendations remain the same. The size of the mortgage wouldn’t have a big impact on the call. – Ryan L

#42 Sail Away on 08.27.22 at 4:17 pm

“Where do you think electricity comes from? Your outlet at home? – Garth”

———

Literally, yes. Prior to that, it is gifted from the skies by the rain gods, providing a surplus of hydroelectricity. So much that water is occasionally released purely to reduce reservoir level.

Well, in BC, anyway. Tesla owners where diesel or coal is burnt for electricity don’t get similar green props.

Doing our small part to avert The Climate Crisis. Yes, the same crisis that will make southeastern US unsurvivable by mammals in 20 years- or so we’ve been told by an unimpeachable authority on the subject.

https://www.bchydro.com/energy-in-bc/operations/power-trading-and-its-benefits-to-b-c

#43 Mr Fox on 08.27.22 at 4:17 pm

Amazing analysis. You answered a question I was thinking about for a longer time. Thank you.

#44 Ryan Lewenza on 08.27.22 at 4:18 pm

Soren Angst “ To impress and since you will have probabilities of outcomes, use a Monte Carlo Simulation. You can feed the variable results into a Solver Model that seeks to minimize cost.”

I’ve done some Monte Carlo analysis in my old job as an investment strategist. But I try to adhere to the KISS principal so more people can understand and digest my posts/analysis. – Ryan L

#45 DON on 08.27.22 at 4:23 pm

#30 Søren Angst on 08.27.22 at 2:55 pm
#22 crowdedelevatorfartz

Don’t even get me going, Lefty me here. I think Italians are desperate for change at the top. Any change better than no change.

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

Isn’t that how Mussolini got elected in the first place.

#46 DON on 08.27.22 at 4:28 pm

#28 Philco on 08.27.22 at 2:47 pm
#15 crowdedelevatorfartz on 08.27.22 at 12:52 pm

Hey CEF Mike hates his bro. lol
His Bro was a piece of work and walked away from a DUI with a sorry. Try that. These politicians are exempt from rules and laws for the most part.
Ozzie actually went bearish on RE. He did say peeps lost their minds and prices were redick.
RE is a great inflation hedge but we all know why it went to far. It needed to get wacked.

Brian Gritt is a must listen too.
As an engineer and a career in building cell networks I know exactly how stupid and dangerous the gov green policies are. Everyone’s getting a taste and I warned. The fools in power are clueless to the big pic and are incapable of planning or building.
They don’t even listen to the public its all fake. Most people are very ignorant of what is happening.
Brians info is bang on. Nuke is our only option for prime energy.

We have prime power cell sites where I need a hr chopper ride to get to.
That means no hydro input just massive diesel tanks like the size of a tanker truck and 2 gensets as 1 is a backup. They run 24/7 and get filled annually.
WE BURN DIESEL. People have no idea what’s out there. Enjoy your cell phone ya greenie wennie!
Cheers

********
You mean the developer friend that became mayor and then faced recall as a premier and his brother who supported the policies behind the scenes in a round about way? I used to follow them both and you can see the cloaked policy support.

Sometimes even the smart cookies get the wool pulled over their eyes.

#47 Ambi and Vasu on 08.27.22 at 4:37 pm

Since the beginning of the year the BoC has hiked the overnight rate by 2.25% and currently sits at 2.5%.

Please check your numbers Ryan!!!!!

Bank of Canada first raised the rates on March2, 2022

Read more here: https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/

#48 DON on 08.27.22 at 4:39 pm

#32 Free speech on 08.27.22 at 3:09 pm
#6 Prince Polo on 08.26.22 at 2:24 pm

Any comments on what JayPow said today about blasting inflation to smithereens?

Are you willing to give up the reins and let the pathetic steerage section up/downvote the lovers/H8Rs?

______________

“Give up the reins” … too funny! It would be a frosty Friday on the sun before that happens. You cant control the narrative if you allow free speech. Do you know of any other blog where that happens? Close to 3/4 million posts but who knows how many were submitted.

********

Upvote functionality so all the idle honest realtors can up vote stupidity like on ‘reddit but didn’t understand it’. Or all the wall street analyst who bet on a dovish take at Jacksonhole. Were all these analyst around the last time inflation was high.

How is the Heloc market making out?

#49 Wrk.dover on 08.27.22 at 4:57 pm

I wonder if you can even get an aftermarket windshield for a Tesla?

I also wonder if I have this right:

Putin had a lot to do with electing Trump (although James Comey can take most of the credit).

Trump had a lot to do with Powel getting confirmed.

Two degrees of separation for the bad call of “transitory” twelve short months ago.

#50 Yukon Elvis on 08.27.22 at 4:59 pm

I wonder if rates will continue to rise until inflation is “2%” again.

#51 chalkie on 08.27.22 at 5:23 pm

Powell surprised the markets yesterday with his announcement and sent the markets into a tail spin.
It would not surprise me, if we get up to another 3 full basis pointed tacked on over the next year, there is nothing in the forecast that shows, we are topping out with inflation, hold onto your hats folks, what the US does happens this side of the border, we are glued at the hips.
The 10-year yield climbed above the 3% mark for the first time in a month this week, a sign of very choppy waters ahead.

#52 crowdedelevatorfartz on 08.27.22 at 5:37 pm

Hmmm the political fallout from the Liberal Gun control freight train seems to be gathering speed as it heads…..down hill….towards the bridge….thats out.

https://www.halifaxexaminer.ca/featured/the-view-from-10000-feet-rcmp-commission-brenda-lucki-must-go/

One wonders if Trudeau will support her or…throw her under the bus and then give her a $150,000 Senate appointment for being a loyal political hack.

#53 Shawn on 08.27.22 at 6:01 pm

High Interest Savings Accounts?

Okay, so the Bank of Canada overnight rate is 2.50%.

And meanwhile you can now get 2.25% on cash in your brokerage account. For example at TD you buy TDB 8150 under the mutual fund area and you are effectively putting your cash into a bank account that pays almost as much as the Bank of Canada rate. You can access the money immediately to buy stocks but there is a small penalty if you access it within 30 days. After the 30 days or if you have older funds in there you can use it to buy stocks just like cash.

It’s not great but it beats the almost 0% you will get if you literally leave the funds in cash.

2.25% is not much and it trails inflation and is taxable in taxable accounts etc. You always invest in higher yielding things but at least you CAN get close to the Bank of Canada rate on cash in brokerage account if you want.

Now, cue the complainers.

#54 Ryan Lewenza on 08.27.22 at 6:08 pm

Ambi and Vasu “ Since the beginning of the year the BoC has hiked the overnight rate by 2.25% and currently sits at 2.5%.

Please check your numbers Ryan!!!!!

Bank of Canada first raised the rates on March2, 2022”

You check your numbers!!!!! The overnight rate is at 2.50% which is what your link shows. I know the BoC hiked rates in March but I was referring to their total rate hikes of 2.25%. If you’re going to try to correct me then have your numbers correct. – Ryan L

#55 TurnerNation on 08.27.22 at 6:09 pm

Fixed? A public service reminder to please spay or neuter your Blog Dogs. There’s enough of us down here….

——

My portfolio has been diagnosed with a Bear Market.
I am on my fourth dose of rebalancing and am grateful for the protection it provides.
It Would Have Been Much Worse Without It. ®

—-

— Just a reminder that the “Rules” are Permanent in Kanada — at least for the compliance of youth.
You will read nothing else in the newspaper of but Corvid and Climate. Nothing else.

.Science table won’t make formal recommendation on masking in Ontario schools citing ‘lack of consensus’, but says schools should be ‘mask friendly environments’ (toronto.ctvnews.ca)

.Student backlash builds over Western University mask, vaccine mandate (lfpress.com)

https://www.cbc.ca/news/canada/manitoba/cmu-third-dose-covid-19-studentsstaff-rapid-testing-1.6297231
“Canadian Mennonite University requires 3rd vaccine dose, rapid testing for all students, staff
Additionally, all CMU students, staff and faculty will have to participate in a rapid testing program twice per week once in-person learning resumes.”

#56 Theory of Everything on 08.27.22 at 6:23 pm

##35 Boomer busted

They should have allowed COVID to kill off their parents and grandparents…

Glad you feel sacrificing the young was a very easy and logical decision, especially since Boomers were the ones making it.

I always know that I’m close to the truth when the reply features personal attacks with a serving of empty bragging that is apparently supposed to impress.

#57 PT Barnum on 08.27.22 at 6:23 pm

#42 Sail Away on 08.27.22 at 4:17 pm

That was a quick 3 months. Or maybe clowny is still worked up from the last exchange? But, it’s cool, heat related death of U.S. dwelling humans in the five figures each year are no big deal after ignoring tens of millions COVID deaths

#58 Theory of Everything on 08.27.22 at 6:25 pm

#39 Dogman01

Thank you.

Those are keeper quotes.

#59 I’m stupid on 08.27.22 at 7:17 pm

Great analysis Ryan but I disagree. If my thoughts on fixed vs variable rates is wrong I’d appreciate the correction.

I say always go with variable rate with an increase or decrease in payments depending on rates. Over a 25 year mortgage you would assume that 50% of the time you would win with rates and 50% you would lose in the end you pay market rates over the 25 year term. With a fixed rate you could get lucky and hit bottom on every renewal but you could also be unlucky and hit top on every renewal. That’s market timing rates every 5 years plus having to pay a premium in rate vs variable.

Am I wrong?

#60 Is anybody listening? on 08.27.22 at 7:26 pm

So much for EV’s are cheaper to run than petrol driven cars!

After the October rise in electricity prices, driving 400 miles in the UK will cost three times (£149) as much in an electric car compared to its petrol equivalent (£50).

https://www.telegraph.co.uk/money/consumer-affairs/electric-cars-will-expensive-run-petrol/

#61 Ponzius Pilatus on 08.27.22 at 7:33 pm

#51 chalkie on 08.27.22 at 5:23 pm
Powell surprised the markets yesterday with his announcement and sent the markets into a tail spin.
It would not surprise me, if we get up to another 3 full basis pointed tacked on over the next year, there is nothing in the forecast that shows, we are topping out with inflation, hold onto your hats folks, what the US does happens this side of the border, we are glued at the hips.
The 10-year yield climbed above the 3% mark for the first time in a month this week, a sign of very choppy waters ahead.
—————
Yeah,
That shows that the “Efficient Markets” theory which states that all available info is baked into the cake, is a bunch of baloney.
You are on your own my friends.
Or hand over your money to Garth and the boys, and go golfing.

#62 Philco on 08.27.22 at 7:55 pm

#46 DON on 08.27.22 at 4:28 pm
#28 Philco on 08.27.22 at 2:47 pm
#15 crowdedelevatorfartz on 08.27.22 at 12:52 pm

No wool bro i was a lad back then could give a hoot.
Mike hasn’t mentioned his name for 20 years.

Now politics mater. Back then there were WAY LESS regulations, poliicies, taxes ect ect. Now their up my but in my face and way to in my wallet.
Not I give a sh!t as I see people hurting and our kids struggle.
Maybe Mr Mike need forgiveness. We all do at times. If there is none then nothing would work. I just for gave a big gun lawyer I fired for trying rip my off. I busted his AZZ. He sent a letter of apology (That never happens from a lawyer) dropped $27000 off my bill. He billed me 5k.
Sometimes you give people a break if the have the gonads to admit fault. Still waiting for T2.
You guys bust Campbells chops lol. Find a real target.
Cheers

#63 Ryan Lewenza on 08.27.22 at 8:02 pm

I’m stupid “Great analysis Ryan but I disagree. If my thoughts on fixed vs variable rates is wrong I’d appreciate the correction.

I say always go with variable rate with an increase or decrease in payments depending on rates. Over a 25 year mortgage you would assume that 50% of the time you would win with rates and 50% you would lose in the end you pay market rates over the 25 year term. With a fixed rate you could get lucky and hit bottom on every renewal but you could also be unlucky and hit top on every renewal. That’s market timing rates every 5 years plus having to pay a premium in rate vs variable.

Am I wrong?”

First I don’t always recommend fixed rates. It depends on the outlook for rates. Second, interest rates go in cycles and we’ve been in a 30+ year decline in rates so variable has been the best strategy. But now we could be in for a higher interest rate environment in which case fixed may beat variable more consistently. – Ryan L

#64 Sail Away on 08.27.22 at 8:33 pm

#57 PT Barnum on 08.27.22 at 6:23 pm
#42 Sail Away on 08.27.22 at 4:17 pm

That was a quick 3 months. Or maybe clowny is still worked up from the last exchange? But, it’s cool, heat related death of U.S. dwelling humans in the five figures each year are no big deal after ignoring tens of millions COVID deaths

——–

I’m a convert to the Climate Crisis Cause. If complete mammal death in southeastern US in 20 years, clearly Mexico will lose all mammals countrywide in… 10 years? 15 years!? Just spreading The Word from The Expert. Peeps need to know. Clearly no clowns in the serious science centres.

From thy mouth to my bullhorn. But worry not; full credit for the prediction will be given.

#65 crowdedelevatorfartz on 08.27.22 at 9:13 pm

@#62 Philco.
“You guys bust Campbells chops lol. Find a real target.”

+++
Ok.
Your abysmal written English would be a good start.

#66 Flop… on 08.27.22 at 9:23 pm

Well, I’ve told the story of how my Dad arranged for 2 mutual fund salesman to come around to our house for me to sign on the doted line and start investing back in 1992, shortly after my 18th birthday.

You’re going to have to look after yourself one day, he stated.

I guess it’s time to write the final chapter in our investment story.

After 2 decades of no contact, I called him to fulfill one of his dying wishes, and he asked if I was going alright financially, and seemed surprised at how many little things I had going on to try and save for retirement.

I explained the basics of a TFSA, and explained I now focus on that the most and let my Australian superannuation compound over time, after decades of small monthly deposits.

A few weeks after the phone call and a few weeks before his death a small package arrived.

On the outside of the package he had written, $1000, a tie, and Thank You card.

I suspected I knew what the tie was going to be, I used to borrow one of his ties when I was in my early 20’s.

The cash, I didn’t understand, didn’t want to ask any questions, ultimately it didn’t matter, or so I thought.

After his passing I spoke to my Mum in recent weeks, the second phone call she asked if I had received a package lately.

I said yes, but didn’t understand why he put a thousand dollars in with the tie.

My Mum said he wanted to put the $1000 in my TFSA and invest it.

I know, most of you will say it’s a paltry amount, but these are not rich people, I looked at the currency trade at the moment, I would only get about 850 bucks Canadian, so I will respect the money and wait for a better rate down the line.

In the Thank You card, he joked that the tie was a family heirloom that needed to be passed down to the next generation.

I get what he was trying to do with the money, but the tie definitely means more to me.

Every time I wore it I would get comments, it was definitely a real conversation starter.

It has a picture of one of Australia’s most famous sporting events of my Dads lifetime, in 1970, before I was even born.

I guess the Canadian equivalent is the famous Bobby Orr goal for Boston.

https://www.nbcboston.com/news/sports/50-years-later-everybodys-still-talking-about-flying-bobby-orr/2121466/

Bobby Orr scored that goal on May 10, 1970, people still talk about it.

Alex Jesaulenko did the Australian Football equivalent a short time later on September 26th, 1970.

https://www.youtube.com/watch?v=gBeHVLs3kdU

https://www.carltonfc.com.au/news/800925/50-years-on-jezzas-giant-leap-for-mankind

He took that mark in front of a crowd of over 120,000 people.

Alex Jesaulenko, gave my Dad a lot of joy,for that I’m grateful.

And now for one of the most famous sports broadcast calls to finish up.

Jesaulenko, you beauty…

M48BC

#67 crowdedelevatorfartz on 08.27.22 at 9:57 pm

@#66 Flop

That tie is worth a million dollars……..

#68 Montezuma's Revenge on 08.27.22 at 11:03 pm

#64 Sail Away on 08.27.22 at 8:33 pm

You may wish to brush up on your tropical meteorology before you make any more foolish statements like the above. But, if you would like to keep extrapolating linearly about a sphere within a nonlinear dynamical regime, have at ‘er.

#69 Brian on 08.27.22 at 11:33 pm

Here we go again! May the hoarding commence!

https://yle.fi/news/3-12596812

Finnish firm warns of toilet paper shortage as energy costs wipe out production

#70 Tom from Mississauga on 08.28.22 at 12:43 am

We’re losing commodities out of the former Soviet space, cheap manufactured goods out of China, shrinking Western labour force as Boomers retire, whiny population that wants more government printing. Um, I’m going with higher inflation and interest rates as far as the eye can see.

#71 under the radar on 08.28.22 at 6:24 am

17- Yes ! riding on my zero turn zen machine under an endless horizon and big blue sky snatching an apple from the orchard, while the family German Sheppard keeps her lookout. Mystical. Van Morrison comes to mind.
All very far away from the laser focused Fed. The only near term pivot I’m certain of, is when I move from the orchard to the forest for some trial maintenance. For those who live in the present, fixed rate for now as JP is not done.

#72 epic bear on 08.28.22 at 7:37 am

#61 Ponzius Pilatus on 08.27.22 at 7:33 pm

#51 chalkie on 08.27.22 at 5:23 pm
Powell surprised the markets yesterday with his announcement and sent the markets into a tail spin.
________________________________________

This wasn’t a surprise to anyone with a brain. Powell’s job has always been to put the economy into recession. You’ve been warned of this being an epic bear market. We are not halfway through yet. But we ARE going to new lows this fall. The market won’t bottom for another 12-24 months and will be 30-40% lower from today.

#73 the Jaguar on 08.28.22 at 8:04 am

@#71 under the radar on 08.28.22 at 6:24 am
17- Yes ! riding on my zero turn zen machine under an endless horizon and big blue sky snatching an apple from the orchard, while the family German Sheppard keeps her lookout. Mystical. Van Morrison comes to mind.
All very far away from the laser focused Fed. The only near term pivot I’m certain of, is when I move from the orchard to the forest for some trial maintenance. For those who live in the present, fixed rate for now as JP is not done.+++

No JP is not done, and lazy August is almost at an end, Lights will be turned on again in corner offices and agendas drawn up for plans of world domination and whatnot.

Enjoy the zero turn zen machine and Van the Man. I hear Huntsville has some forest land and is quite nice. Don’t let word get out though…

#74 Dharma Bum on 08.28.22 at 8:55 am

The most important factor in deciding whether to fixed or variable is certainty and sleeping well.

The only thing that supersedes certainty is greed.

If a fixed 5 year rate is around 2%, why wouldn’t someone go for it? Because they think that they might do better at 1.8% or 1.5%? That is greed trumping certainty.

My favourite and most pleasurable time of the day has been when I am asleep. Ahhhhh…blissful, serene, sleep.

Fully one third of life is spent sleeping. About 40%-45% of our time is spent in our bedrooms (mostly sleeping, some part just relaxing).

Why would I want the added stress of worrying about rising variable mortgage rates when the available fixed rate was down and dirty in the first place?

How low can you go?

Nighty-night, sleep tight.

Mmmmmmmm….fixxxxxxxed raaaaaaaaaate…zzzzzzzzz.

#75 crowdedelevatorfartz on 08.28.22 at 9:05 am

@#70 Tom
“I’m going with higher inflation and interest rates as far as the eye can see.”

+++

Yep.
We could be in this for a long haul.
Several years or (god help us) Japan’s several decades of stagflation.
Mind you.
Japanese property prices went from the most expensive in the world in 1990 to “affordable” and have stayed there for …..32 years.
Stick that in yer pipe and smoke it, commission based Realtors.

#76 Tony on 08.28.22 at 10:07 am

Jerome Powell said in the recent Jackson Hole speech they want to keep interest rates high for a long time knowing if they cut too early inflation can come screaming back. He referenced the Paul Volcker era where rates were cut too early in time and inflaiton came roaring back. Certainly the Canadian economy will fall apart before the American economy but the dollar in Canada will be at risk. If I had a mortgage I would definitely go variable.

#77 Tony on 08.28.22 at 10:31 am

Re: #53 Shawn on 08.27.22 at 6:01 pm

Mutual fund fees in Canada are the highest in the world. Who would buy mutual funds in Canada?

#78 Quntilian on 08.28.22 at 10:59 am

Higher rates, wouldn’t be an insurmountable problem, if not coupled with slower growth, and higher inflation.

Here in the trenches, at the real business front, the top line is being compressed downward, and the costs are on rocket boosters.

But all is well, I’m sure Shawn can find an article and an supplementary chart on Investopedia that can resolve this pesky little problem

#79 Tony on 08.28.22 at 11:13 am

Re: #29 baloney Sandwitch on 08.27.22 at 2:54 pm

If you had of read my comments if you’re into day trades or very short term trades I told some guy on this blog to wait until August 24th to go short instead of when he was going to go short like 2 and a half weeks ago. The 25th at the close would have been a better day but luck plays a big part.

#80 PBrasseur on 08.28.22 at 11:15 am

@Tom #70

Agreed, Trudeau and the likes may pay lip service to how bad inflation is, but I’m sure they appreciate the higher taxes, shrinking debt to GDP ratio, increased fiscal income and although it hurts the little guy it keeps big government and the big red machine going, for now. IMO it was always end like this.

Either way not sustainable.

#81 Ronaldo on 08.28.22 at 11:33 am

#77 Tony on 08.28.22 at 10:31 am
Re: #53 Shawn on 08.27.22 at 6:01 pm

Mutual fund fees in Canada are the highest in the world. Who would buy mutual funds in Canada?
——————————————————————
I would and have for years. Depends who you deal with. They are not all sharks. MERs less than 1 percent.

#82 Ronaldo on 08.28.22 at 11:48 am

Time for a refresher for the Millies.

https://www.youtube.com/watch?v=hLpE1Pa8vvI

#83 Shawn on 08.28.22 at 11:50 am

#77 Tony on 08.28.22 at 10:31 am strangely said:

Re: #53 Shawn on 08.27.22 at 6:01 pm

Mutual fund fees in Canada are the highest in the world. Who would buy mutual funds in Canada?

*********************************
Read my comment at 53 a little more slowly. I referred to high interest bank accounts available inside a brokerage account that are listed under the mutual fund category (at least on TD Direct). They are not mutual funds. There is no fee at all actually.

#84 Philco on 08.28.22 at 11:53 am

#65 crowdedelevatorfartz
Good one CEF.
I can actually extremely well, which is a shocker considering I hated English. Math shops PE straight As. Got the Ken Wheeler bursary award college for a 4.0 year. Tutored guys failing on Trg and stuff.
I respond to legal issues like lawyer talk as then I pay attention. When I respond to knuckle heads….no point.
But here I could give a rats to proof.
If this is your life here picking everything apart being the man.
It’s a cracker. Talk a week off or go to an addiction centre. It’s kinda sad and weird your here all the time..maybe get a puppy?
Like I said find a real target
Also my grade 5 teacher said I was an idiot. Maybe he was right :)

#85 Shawn on 08.28.22 at 11:54 am

Ambition is the Mother of Success

Further to the work ethic debate.

It may be obvious or maybe it’s worth saying: The most successful people, teams and businesses are always highly ambitious. They constantly strive to grow and win and improve.

#86 Squire on 08.28.22 at 12:00 pm

#21 I have never seen such idiotic comments on 08.27.22 at 1:31 pm
Tesla Charging costs

Actually it will be more than the $6.00 I mentioned because a portion of the delivery charges are variable. The total will be closer to 12 cents per kWh (The bills are so complex it’s a bit hard to tell). But at 12 cents the cost is about $9 for a full 75 kWh charge. This is for home charging which will be 95% of my needs.

———

Our home charging percentage is closer to 99%. Then there’s thousands and thousands of km of free supercharging on the account for the rare travel.

It’s almost indistinguishable from free transportation. And Saving The Planet. If only everyone could be as green as me (and thee).

Where do you think electricity comes from? Your outlet at home? – Garth

——————–
A regular car is still cheaper and likely better for the environment. One can buy 2 regular ICE cars for the price of a Tesla. Tesla drivers often believe they are Holier Than Thou and somehow saviors of the plant while making Elon rich. What do you think all the plastic and tires are made of on a Tesla car. Sheesh

#87 Philco on 08.28.22 at 12:05 pm

Hay CEF
I listen to the peeps on MC. You mentioning irelavant points to me just how lonly you are.
He has all sorts excellent guests.
Enjoy your shafting from your gov. Peeps are clueless.
All one can do is protect themselves from idiocracy with loot.
They said BRAIN not Train.

#88 Philco on 08.28.22 at 12:37 pm

sorry CEF just playin.

#89 Dr V on 08.28.22 at 1:24 pm

77 Tony

TDB8150 is not a MF, it is just the mechanism used to access an “investment savings account”.

#90 fondle.com on 08.28.22 at 2:07 pm

Are you in.
Guy standing at a bookshelf
Fall seven times, stand up eight.
He played the villain in the movie that famously stated.
Life is too short to surround yourself with toxic people.
Want a few more.
But these days.
For example.
Practice what you preach.
Aphorisms often use metaphors or creative imagery to express ideas.
Nanakorobi yaoki.
Moris7l*all George Washington is known for his wise sayings.
This aphorism is short and sweet, but it teaches us a valuable truth.
The complete quote was, A Jack of all trades and master of none, but oftentimes better than a master of one.
It originated from Lady Mary Montgomerie Currie’s poem Tout vient a qui sait attendre.
As they say, Nothing ventured, nothing gained.

#91 Is anybody listening? on 08.28.22 at 2:11 pm

DELETED

#92 crowdedelevatorfartz on 08.28.22 at 2:20 pm

@#84 Sgt. Philco
“Also my grade 5 teacher said I was an idiot. ”

+++
Even a stopped clock is right twice a day.
Question…
Is grade 5 considered “post secondary” if you pass kindergarten?

#93 Shawn on 08.28.22 at 2:24 pm

Squire regarding Tesla low chargeing costs

A regular car is still cheaper and likely better for the environment. One can buy 2 regular ICE cars for the price of a Tesla. Tesla drivers often believe they are Holier Than Thou and somehow saviors of the plant while making Elon rich. What do you think all the plastic and tires are made of on a Tesla car. Sheesh

********************************
Right, one does not buy a Tesla to save money.

As far as buying 2 Internal Combustion cars, I only needed one car.

It’s still fund to point out that the cost of a full charge will be about $9.00 or about 10% to at most 20% of the cost of filling the tank of a similar size gasoline car.

And still fun to push your buttons regarding being green. But you are green… with envy it seems.

#94 Squire on 08.29.22 at 1:06 am

#93 Shawn on 08.28.22 at 2:24 pm
‐————–

Green with envy lol, not even close. Would I buy electric, sure but not tesla at those prices.
I don’t see the point of it considering all the environmental effects involved with electric batteries. Now Toyota’s hydrogen plan has potential. It takes 5 min to fill the tank as apposed to 45 min electric charge.

#95 Prince Polo on 08.29.22 at 2:05 pm

I upvote this comment:

#54 Ryan Lewenza on 08.27.22 at 6:08 pm
Ambi and Vasu “Please check your numbers Ryan!!!!!”

You check your numbers!!!!! …. If you’re going to try to correct me then have your numbers correct. – Ryan L

I downvote these comments:

#48 DON on 08.27.22 at 4:39 pm
#32 Free speech on 08.27.22 at 3:09 pm
______________

“Give up the reins” … too funny! It would be a frosty Friday on the sun before that happens. You cant control the narrative if you allow free speech. Do you know of any other blog where that happens? Close to 3/4 million posts but who knows how many were submitted.

********

Upvote functionality so all the idle honest realtors can up vote stupidity like on ‘reddit but didn’t understand it’. Or all the wall street analyst who bet on a dovish take at Jacksonhole. Were all these analyst around the last time inflation was high.

How is the Heloc market making out?

It’s a joke! I know Garth is never going to put up/downvotes on here.