The performance

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   By Guest Blogger Tatiana Enhorning
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Why do we begin investing in the first place? Many of us want our money to work in some capacity. We want to build our wealth for future goals or, at the very least, not see our hard-earned cash to be depleted by inflation. We want it to grow, and we don’t want to lose it.

Those who have a natural propensity toward risk often find they can simply go online, read a few articles, get the timing right on a stock or two and earn good short-term returns. It can seem easy and exciting to see money grow by 10% in a day! But if you are making risky investments without a strategy for protection, it’s not investing… it’s just gambling.

Charging headlong into high risk/high return securities can have a large upside but also a huge downside. This is not a feasible long-term strategy. As Warren Buffet taught us: “the first rule of investing is don’t lose money”. In order to actually sustain the performance of your investments over seven years or more, you must weather the down markets. That’s a skill requiring both nerves of steel and some finesse.

Investing can be compared to many competitive sports where achieving the best performance not only requires power but also precision. For example, a basketball player must be careful how hard he shoots the ball to make a basket, not just bounce it off the backboard. In gymnastics, you earn marks by taking risk such as throwing a backflip and landing on a four inch wide balance beam. By going higher and harder, you can earn more marks. However, if you fall, you will lose even more. Risk versus reward, it’s a fine balance.

Once you have the experience to know exactly how much risk you can take and still hit your target, you win. More often than not, you will actually perform better overall if you sacrifice some height to ensure you don’t fall off track.

That is why protecting on the downside is key to the long-term overall performance we want. In fact, when asset management firms build products for financial professionals to use with institutional investors like large pension plans and plan sponsors, they know high returns are not the only consideration. They are investing people’s pension savings for retirement over decades, without the option of losing them. Their data analysis and experience makes it clear a fund’s “downside capture ratio” is just as important as growth in achieving the desired performance.

Knowing the ‘downside capture ratio’

The downside capture ratio is a measure of how much an asset or fund falls compared to a benchmark. If the fund goes down 100% as much as the benchmark, there’s no protection. If it only goes down 80% as much as the benchmark, your assets don’t have to recover as much in order to get back into the black. Good downside protection leads to good long-term performance.

To achieve this, asset managers choose high-quality stocks or bonds, and they ensure portfolios are well balanced and diversified. Year-to-date, we have all been tested by the worst market returns in several decades. But Turner Investments employs an institutional management style and the downside capture ratio of our portfolio has been  66.16% when compared to an analogous balanced portfolio and has been 60.70% compared to the S&P 500 index. Protection on the downside is further highlighted when we take that balanced portfolio compared to the S&P 500 over the last three major bear markets:

01/07/2009 – 03/09/2009 (Credit crisis) = 44.92% downside capture
02/19/2020 – 03/23/2020 (Covid hits)  = 79.11% downside capture
01/03/2022 – 06/16/2022 (Rates surge) = 67.70% downside capture

For people who have not seen the natural patterns of financial markets repeating over long periods of time, it has been easy to fall into the trap of myopic loss aversion, getting emotionally attached to short-term market fluctuations, then wanting to take less risk. It’s normal, but can lead to common mistakes like avoiding all risk, or worse, locking in losses by cashing out at the bottom.

It’s important to remember the big picture, why you started investing. If you have a strategy that incorporates downside protection, you just have to remain steadfast to your logical plan when markets get tough instead of opting out of all risk and all gains, or succumbing to the adrenaline rush of gambling on the markets. Like an athlete going for gold, having a clear vision of what you want to achieve long-term, focusing on protection to achieve performance, and maintaining a calm, unwavering mind – that’s how you win.

One could say… it’s all about balance.

Tatiana Enhorning is a Financial Advisor with Turner Investments. She builds and maintains portfolios for clients across Canada, and has been in the business as an asset manager for more than a decade.

 

105 comments ↓

#1 crowdedelevatorfartz on 09.29.22 at 2:31 pm

Stock up and ride out the storm.
Got it.

I’m seeing pics from PEI today.
Still tons of power poles and transformers down.
The estimate that 30,000 customers now have power out of 86,000 customers isn’t resonating with the folks with rotten food and stinky clothes.

It may be weeks before power is fully restored.

#2 Hugh Jazz on 09.29.22 at 2:36 pm

First!

#3 jess on 09.29.22 at 2:51 pm

all about balance
…”in economics, Gresham’s law is a monetary principle stating that “bad money drives out good”.

Monday, September 26, 2022
Former CEO of Health Clinic Convicted of Medicaid Fraud

A federal jury convicted a former CEO of a health clinic for defrauding the Louisiana Medicaid Program over several years.

According to court documents and evidence presented at trial, Victor Clark Kirk, 73, of Baton Rouge, Louisiana, was the CEO of St. Gabriel Health Clinic Inc. (St. Gabriel), a Louisiana nonprofit corporation that provided health care services to Medicaid recipients and others. St. Gabriel was a federally qualified health center (FQHC) that contracted with the Iberville Parish School Board to provide medical services within the school district. As a FQHC, St. Gabriel could provide primary care services to students as well as services related to the diagnosis and treatment of mental illnesses – provided that such services were medically necessary – among other requirements.

Evidence at trial showed that St. Gabriel practitioners, at Kirk’s direction, provided character development and other educational programs to entire classrooms of students during regular class periods. Kirk then caused the fraudulent billing of these programs to Medicaid as group psychotherapy. To facilitate the fraudulent scheme, Kirk directed that St. Gabriel practitioners falsely diagnose students with mental health disorders. From 2011 through 2015, Kirk caused over $1.8 million in fraudulent claims for purported group psychotherapy services.

https://www.fbi.gov/how-we-can-help-you/safety-resources/scams-and-safety/common-scams-and-crimes/health-care-fraud

#4 Honest Realtor on 09.29.22 at 2:52 pm

This is a solid illustration for why, in contrast, real estate investing, with a long term focus (not flipping), is so reliable, safe and effective for Canadians.

#5 Dwilly on 09.29.22 at 2:53 pm

Thanks. This was interesting. I am not sure that I totally understand, though:

“the downside capture ratio of our portfolio has been 66.16% when compared to an analogous balanced portfolio and has been 60.70% compared to the S&P 500 index.”

So does “analogous balanced portfolio” mean something like a more generic 60/40, perhaps one comprised of just a S&P500 ETF + Bond ETF? And so during this decline, your portfolios have declined only 66.16% as much as that? I guess I am asking, what is the exact comparator?

And then when you say 60.70% as compared to the S&P 500 Index, does that mean directly that if the S&P500 Index overall declined by, say, 20%, your portfolio declined by ~12%?

(If I have that right then I am somewhat surprised by the comparison of those two “downside capture ratios”. Would imply the “analogous portfolio” performs almost the same as the S&P500 alone…which is sorta weird)

#6 Your English Teacher on 09.29.22 at 2:58 pm

A bunch of brick walls of text to explain downside protection. Garth writes better than anyone else on this blog.

#7 Dave on 09.29.22 at 3:01 pm

Canada is bringing in record amounts of immigration….historically it hasn’t been hard working families that want to join our communities.
No of course not….just Extremely weathly investors who guarantee investment in Canada. Show up buy a Mansion, exotic cars, shopping. No job, no contribution to society…just spend money.

Wonder what types of immigrants the Government is quietly focused on this time?

#8 Søren Angst on 09.29.22 at 3:08 pm

The Overthrow of the ‘downside capture ratio’ – what happens when you do that.

—————–

House Committee on Financial Services
Kenneth C. Griffin, CEO Citadel LLC (and Citadel Securities)
Talking to the Committee on Video Chat

Redditor Community watching live:

“He looks rich. He’s got plants behind him. That’s how you know he’s rich.”

Netflix
The GameStop Saga – Eat the Rich, Episode 3

—————–

As good as if not better than any movie yet on Mr. Market. It’s so “Millennial-ee-ish?” it’s a hoot to watch. Even the Narrator sounds like a kid.

Episode 1 sets the scene. Episode 2 is when all hell breaks loose. Episode 3 is picking up the pieces.

Told from the POV of the Retail Investor Reddit horde. It’s all there folks:

Keith Gill/Roaring Kitty (Deep-F-Value). Cramer. Ryan Cohen. Robinhood. Payment for Order Flow (banned in Canada). Musk/Gamestonk. Citron Research. Melvin Capital hedge fund. Chris “Krispy” Ream. Vlad Tenev. Jeff Amazon. AMC Theatres. Reddit horde extras.

The whole kit and kaboodle.

Revenge of the The 99%?

The “Yale/Wall Street/WSJ/Gov USA/NYU Intelligentsia” tries to make sense of it along the way (20/20 hindvision) and are pretty much an abject fail at it but fun to watch people use big words to describe:

Payback of the rich. Greed (incl. the Horde).

#9 crowdedelevatorfartz on 09.29.22 at 3:10 pm

@#6 English Teacher
“A bunch of brick walls of text to explain downside protection. Garth writes better than anyone else on this blog.”
$$$$$$$$$$

Those that can…. Do.
Those that can’t…Teach.

#10 Mr Fox on 09.29.22 at 3:14 pm

#5 Dwilly on 09.29.22 at 2:53 pm

As far as I understand that is:
If you had $100 to invest, and S&P500 went down 50% then if you were to invest it in:
1. Some kind of S&P500 ETF: you would have $50 left.
2. Other BnD portfolio: you would have $67 left
3. Their BnD portfolio: you would have $70 left

#11 Mr Fox on 09.29.22 at 3:18 pm

Would be super nice to have an example of a BnD portfolio from Turner Investments, with ETFs and the % for each of the ETF to have.
Like Questrade has it here: https://www.questrade.com/questwealth-portfolios/etf-portfolios#balanced

#12 epic bear on 09.29.22 at 3:19 pm

your benchmark isn’t the SP500 dear. its’ VBAL or XBAL or Questrades’ Balanced portfolio or any other 60/40 portfolio

how do you do vs one of those? not the SP.

does the same apply on the upside ? you only capture 60% of the upside?

hey. i lost less money than the index. give me a bonus. i hear that from mutual fund manager all the time.

your credit crisis dates are off by a wide margin. you may want to look at that again. as are your rate hike numbers. it’s 9/29/2022 today. try and give us up to date numbers.

#13 Chimingin on 09.29.22 at 3:25 pm

#6-Your English Teacher

It’s clear you weren’t anyone’s favourite teacher nor will you be; your rudeness marks you out to be a jerk.

#14 Flop… on 09.29.22 at 3:27 pm

#130 DON on 09.29.22 at 12:45 pm

Challenge for all…forget your wallet and take only a ten dollar bill and try and find a lunch option…drink and food.

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

Here’s what I would do here in Flopville, Uncle Don.

Go and grab a Vietnamese sandwich 6.50/7.50 depending on which topping you selected.

Leaves a few dollars for a drink, but the don’t usually mind giving you a glass of water for free, so your throat doesn’t get the dreaded bread burn, because you ate it too fast…

M48BC

#15 Søren Angst on 09.29.22 at 3:28 pm

‘downside capture ratio’

I use a stock β.

Investopedia Stuff …

“Beta is a concept that measures the expected move in a stock relative to movements in the overall market. A beta greater than 1.0 suggests that the stock is more volatile than the broader market, and a beta less than 1.0 indicates a stock with lower volatility.”

Used in CAPM – time honored (calculates the cost of equity funding and can help determine the rate of return to expect relative to perceived risk.).
.
.
.
Nothing is perfect incl. β. Why I like Yahoo!Finance’s Performance, Historical, Risk sections etc., B/S, Cash Flow, Revenue statements where I can get them. Stock Prospectus for high risk stock. And of course, gossip from anyone/anywhere, since a lot of stock purchases are made on emotion.

————-

At the end of the day, a USD $20K/year terminal from Bloomberg would do the trick … but alas.

#16 crowdedelevatorfartz on 09.29.22 at 3:29 pm

Stop the presses.
Stop the presses.

The planting and location of Urban trees …..is racist…..

https://www.burnabynow.com/local-news/bcs-urban-forests-are-failing-poor-and-racialized-communities-says-study-5885234

#17 jess on 09.29.22 at 3:36 pm

bandwagon effect?

Exclusive: Hindawi and Wiley to retract over 500 papers linked to peer review rings
https://retractionwatch.com/

read why these people quit
https://www.science.org/content/article/scientists-quit-journal-board-protesting-grossly-irresponsible-study-claiming-covid-19

https://www.cbc.ca/news/health/covid-19-vaccine-study-error-anti-vaxxers-1.6188806

#18 Nonplused on 09.29.22 at 3:36 pm

#45 conan on 09.28.22 at 5:04 pm
RE #13 Oakville Rocks! on 09.28.22 at 3:37 pm

I think that is the last thing he will do/can do.

No problem pressing the button if responding to a nuke attack , but doing a first strike is completely different. It is a different chain of command.

Just suggesting it in a serious way, when it goes against established first strike doctrine, is likely to get Putin thrown in prison, or a bullet between the eyes.

I could see him doing other things. Sabotage the Nordstream for one, or an accident at one of the Ukraine power stations.

If Putin did manage to launch a first strike nuke, would the West’s response be more nukes? I think it more likely that it triggers a massive conventional attack on Russia , with the hope that Russians join the West in getting rid of Putin.

———————————-

What we need to do, if we are to have any hope at all of understanding what another person is going to do or “reading their mind”, is try to imagine what we would do if we were in their shoes and our interests were the same as their interests.

With that in mind, we can be pretty confident that Putin did not sabotage his own pipeline, will not shell a power plant that he now considers his, or use a nuke if he has other options.

When evidence is lacking, investigators try and develop potential “motive” for the crime. It helps narrow the investigation to the most likely places to find “evidence”, rather than simply going on a snatch hunt. When looking for a missing person you don’t search the whole countryside. You start from where they were last seen and who they were last known to be with.

So, if we look at just the pipeline explosion: We know, or at least accept, that Putin is using energy as a negotiating tactic in this war. He is holding Europe hostage for this coming winter. He plans to freeze Germany and thus force concessions. But I ask you, what good are hostage negotiations if the hostages are all dead? What good is energy as a negotiating tactic if the energy cannot actually be supplied? It is completely self-defeating.

The only explanation there could be for Russia to blow up their own pipelines is insanity. No other motive makes sense.

Now let’s look at the area the attack occurred. It is a relatively shallow and narrow strait, and has more underwater sonograms than you can shake a stick at, so an attack by submarine is unlikely. The waters are essentially NATO territory, and so far Russia has not attacked NATO territory (for good reason, could be interpreted as an act of war). No other vessels or aircraft were observed in the area in the previous weeks other than NATO vessels.

So let’s go back to NATO, and their possible motives. We have it on record that “winning” in this war means “weakening Russia”. (I won’t use “destroying Russia’s military and economy” anymore because it seems some commenters with much higher IQ’s than I see those as two completely different things. Like somehow a “weakened” bridge is still more safe to traverse than a “destroyed” bridge. So “weakened” it is.)

All efforts to “weaken” Russia militarily have so far been focused in the Ukraine. But efforts to “weaken” Russia economically have been global. And this attack falls in the economic sphere. The pipeline is of no military significance.

And then there is this:

https://twitter.com/ABC/status/1490792461979078662?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1490792461979078662%7Ctwgr%5E8381b679b6c89e88ca8d3d093b4dbc11bd8d7689%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Feuroweeklynews.com%2F2022%2F09%2F28%2Fwatch-on-february-7-2022-us-president-joe-biden-threatened-to-end-the-nord-stream-2-pipeline%2F

So in addition to the circumstantial evidence, we also have a confession. And this isn’t some “anonymous source, it is the President himself speaking live to the world. The only mystery remaining, perhaps, is why it took so long.

And don’t get on me for being a “Putin lover” or suggest I move to Moscow. Flipping over to the western point of view, the damage to Nord Stream is a good thing and should be welcomed. It is not evil in the context of war. It could even be described as necessary or maybe even brilliant. It doesn’t require an apology. It should be celebrated as a success. But let’s not kid ourselves about who did it and why.

#19 Linda on 09.29.22 at 3:37 pm

Excellent post Tatiana. I think the main issue for a lot of investors is what is considered ‘long term’. We live in a culture where anything less than instant is considered too long, so for many the concept of having to wait literal years to see the return they desire is simply not acceptable. Hence the gambling on high, fast returns.

#20 Wrk.dover on 09.29.22 at 3:39 pm

Don’t let the media fool you, as usual.

Ft. Myers Beach damage is a re-run of Donna in 1960.
I saw the before in 1959 and 1960, then the after in ’61. Not much had been cleaned up by 1962 either.

This link points out 75% of homes destroyed or damaged. Cape Coral hadn’t been developed yet, nor was there a bridge to Sanibel. The south couple of miles of Estero Island as well as the north end of Bonita Beach was vacant land due to a hurricane before my time.

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

#21 roofer on 09.29.22 at 4:05 pm

Anybody heard UK’s banking system almost collapsed the other day? 10 year yield curve proves this.

#22 Jesse on 09.29.22 at 4:07 pm

Garth, have you ever commented on one and done ETFs (like VGRO/VBAL) for the average Joe’s TFSA/RRSP? Do you like them?

#23 Adam on 09.29.22 at 4:10 pm

Not a big fan of this blog post but thank you for taking the time to write it anyways.

#24 Victor Llearna on 09.29.22 at 4:12 pm

On days like today it feels like markets are eventually going to zero

#25 Sail Away on 09.29.22 at 4:19 pm

#130 DON on 09.29.22 at 12:45 pm

Challenge for all…forget your wallet and take only a ten dollar bill and try and find a lunch option…drink and food.

——–

I’ll play. Any fast food signature burger. Wendy’s fully loaded baked potato: $3.50. Get two. And extra butter. A loaf of bread. 5lbs carrots. Chunky soup- eat it cold.

Or fast through lunch and invest the whole $10.

Drink water.

#26 Penny Henny on 09.29.22 at 4:31 pm

Still in the black YTD but just by the hairs on my chinny, chin, chin.

Onwards and Upwards!! please

#27 Father's Daughter on 09.29.22 at 4:32 pm

#130 DON on 09.29.22 at 12:45 pm
#123 Linda on 09.29.22 at 11:46 am
#52 ‘Don’ – so now I’m curious. How much was the cookie? Inquiring minds want to know.

$1 of pure sugar. The only other choice was candy or a sugar muffin at $2.25.

The guy at the counter asked if I wanted a drink with that. I couldn’t afford the drink.

Challenge for all…forget your wallet and take only a ten dollar bill and try and find a lunch option…drink and food.
————————————————

Well really didn’t really need to eat out today but I love a good challenge. $6.80 for a slice of “gourmet” pizza and a an of pop. Nice toppings. My 3yo daughter had 1/4 of the slice. Pizza is always a good idea. A healthier option would have been our top notch lunch spot nearby that sells homemade soup for $5, usually something hearty like minestrone or a mushroom barley. They have a free water station too.
Really best to forgo drinks out. The markup is ridiculous. Never buy water out.

#28 Bk on 09.29.22 at 4:34 pm

#4 Honest realtor
This is a solid illustration for why, in contrast, real estate investing, with a long term focus (not flipping), is so reliable, safe and effective for Canadians.

Except Canadians can no longer afford real estate. Nice try though.

#29 Mike Martins with the Mike Martins Channel on 09.29.22 at 4:48 pm

Australia’s house prices fall.

Australian homeowner Lili Zhang said her repayments will soon double to about A$16,000 a month and she is worried.

#30 Lunch Break on 09.29.22 at 4:49 pm

#11 Mr Fox –

A simple example was posted earlier in Sept here:

https://www.greaterfool.ca/2022/09/03/bd-and-thee/

“As for the weightings, here’s a good mix:

Cash, 1% (high-yield security)
Bonds (short term, floating rate, provincial, corporate), 26%
Preferreds (active Canadian, hedged North American), 13%
Canadian equities (TSX, dividend, 5% REITs), 22%
US equities (S&P hedged, S&P 500, small cap, value, biotech), 20%
International equities (global index, global dividend, emerging), 18%”

#31 Tony Greer on 09.29.22 at 4:54 pm

The Housing Bubble Has Officially Burst : Case-Shiller Records First Drop In Home Prices Since 2012.

This was the first sequential drop in home prices tracked by Case-Shiller since March 2012, or ten and a half years.

This comes at a time when the US housing market sees mortgage rates rising at the fastest pace in history, surging above 7% after touching 6% just two weeks ago!

Analysis of Google Trends data reveals that searches for ‘real estate market crash’ exploded 284% in the United States as of September 2022 – the highest level in Google Trends history.

#32 chalkie on 09.29.22 at 5:05 pm

From what we know and what we thing we know, home sales are foggy and the roads are winding, slow and steady will get you home.

Mortgage rates surging, home sales slowing and parts of our economy starting to sputter into low gear somewhat, these are all tattletale signs of the past coming back to haunt us.

Homes: DOM measures the number of days from the last time a listing is listed to the last pending status before the listing is sold. CDOM measures the number of days from when a property is first listed to when a property goes into the last pending status before being sold.
Check it out, the days on the market is climbing at a very quick pace in most areas.

Market conditions across Canada may have mostly run its course, there were six straight months of declines in sales ending August, lets wait and see what September sales number were, it’s not expected to show much excitement.

Inventory on a National basis, there were 3.4 months of inventory at the end of August, this number will only continue to get bigger as sales slow and new listings come to the market, driving prices South even more.

NDP is investigating the high food prices in Canada and I would guess they will find plenty of skeletons in the retailer’s closets mixed into their investigation, everything from soup to nuts including the vegetable stands. With the balance of power, maybe Justin will lend a hand & if we can get Pierre to swing the hammer in Jasmeet’s favor, maybe places like Costco and Walmart will come to bear reductions in their ridiculous fast rising food prices with little to no proof that it was necessary, looks more like Corporate Greed. For once, just for this one time, if we can only get the three major parties to admit and agree, Corporate Greed is wrong and work to fix it, no procrastination’s please, just do it for us, the taxpayers.

Returns to the stores, testing is underway to charge for all returns, let’s see how and where that goes.

Why do people leave a $10 tip at the Bar and yet bend over to pick up a dime on the sidewalk?

Listing skills: The pain you feel today, will be your strength tomorrow.

Quote of the day:
” Never spend your money before you have earned it”

#33 crowdedelevatorfartz on 09.29.22 at 5:11 pm

@#11Mr Cheap.
“Would be super nice to have an example of a BnD portfolio from Turner Investments, with ETFs and the % for each of the ETF to have.”
+++
Unfortunately for you.

Turner Investments doesn’t work for free.
Unlike this blog.

#34 Crowdedatticfarts on 09.29.22 at 5:16 pm

Protecting to the downside is getting out of stocks at the start of 2022 when the Fed members sold theirs and said they would start increasing rates until the stock market tanked enough to decrease spending and reduce inflation.

#35 Observer on 09.29.22 at 5:23 pm

#6. How rude.

#36 Arabesque on 09.29.22 at 5:24 pm

The sooner you realize that central banks are NOT going to bail out the stock market each time it farts due to all that foul credit as they keep increasing rates, the less you will lose.

Look at today, stocks down again, breaking June lows, where is the QE?

#37 Quintilian on 09.29.22 at 5:24 pm

———realtor says:

“This is a solid illustration for why, in contrast, real estate investing, with a long term focus (not flipping), is so reliable, safe and effective for Canadians.”

As long as interest rates are kept negative simultaneously with a booming economy.

#38 Scott in Gibsons on 09.29.22 at 5:30 pm

Thank you Tatiana for the very informative post. You have a rational and strategic approach that would benefit any investor. Also thank you for not insulting your readers and not repeating the narratives found on CBC/CNN. You’re a breath of fresh air on this blog.

#39 DON on 09.29.22 at 5:31 pm

#143 Linda on 09.29.22 at 3:30 pm
#130 ‘Don’ – now that IS a challenge! I wonder how healthy choices would compare price wise to junk food? Thanks to your input, we now know one can buy a cookie for $1 but $3 isn’t enough to buy a cookie AND a beverage. I think I could get a healthy choice lunch with beverage from a local grocery store for $10 or less even now.

******
Apologies Tatiana just continuing a prior convo on inflation in convenience stores and lack of good choices.

@Linda.

I could have bought an apple or banana or both (I hope) and almost did. I will remind myself about this conversation next time I am craving a crappy chocolate bar. Healthy choices, you are right…thanks for the kind reminder. If there is a next time when I forget my wallet and have some spare loonies I will walk a couple more blocks and buy a slice of peperoni pizza… and sit in front of the gym and watch other people work out through the window (lol) or buy the apple, sigh! I wonder what Mr. Bean would have done.

I usually take a lunch from home so triple lesson reminder.

@Uncle Fartzy…it has been quite a long time. Good group of regulars my friend.

#40 Loonie Doctor on 09.29.22 at 5:31 pm

I liked this post. It was an aspect not discussed previously. Concise and clear.
-LD

#41 DON on 09.29.22 at 5:47 pm

#14 Flop… on 09.29.22 at 3:27 pm
#130 DON on 09.29.22 at 12:45 pm

Challenge for all…forget your wallet and take only a ten dollar bill and try and find a lunch option…drink and food.

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

Here’s what I would do here in Flopville, Uncle Don.

Go and grab a Vietnamese sandwich 6.50/7.50 depending on which topping you selected.

Leaves a few dollars for a drink, but the don’t usually mind giving you a glass of water for free, so your throat doesn’t get the dreaded bread burn, because you ate it too fast…

M48BC

*******

Good one!

Age…more like brothers. Then again I am an Uncle. lol

#42 DON on 09.29.22 at 5:53 pm

#37 Quintilian on 09.29.22 at 5:24 pm
———realtor says:

“This is a solid illustration for why, in contrast, real estate investing, with a long term focus (not flipping), is so reliable, safe and effective for Canadians.”

As long as interest rates are kept negative simultaneously with a booming economy.

*********

Quint I chuckled when I read ‘realtor wrote’. I knew you would sweep up. Sorry Honest!

#6 human up and apologize.

#43 Phylis on 09.29.22 at 6:17 pm

#100 Dr V on 09.29.22 at 1:19 am
95 Phylis

“Crud, the sale is over and the stores are closed. I wasn’t done shopping.”
———————————————————

Maybe the sale will continue tomorrow…….
Xxxxxxx
Yeah! Shop till I drop!

#44 Omasare on 09.29.22 at 6:19 pm

#7 Dave on 09.29.22 at 3:01 pm
Canada is bringing in record amounts of immigration….historically it hasn’t been hard working families that want to join our communities.

——————————————————————————

Well thanks « Dave » this immigrant is being made to feel even more welcome by the day…

This immigrant probably pays more in taxes than you do…

I could add more but hey, that kind of talk is banal in Canada nowadays.

Who knows, maybe this non hard working immigrant might go some other locale?

#45 Sail Away on 09.29.22 at 6:23 pm

Two quick airport traveling tips:

1. Buy a few sandwiches and pack them away after going through security
2. Carry a comfortable ultralight camping mattress- some of the newer ones pack down to the size of a pop can, weigh ounces and blow up 3″ thick.

Then if there’s a 10, 20, 30hr delay… who cares? Find a corner and you’ve got your bed, your food and finally some time alone. Perfect. Read a good book and savour the little extra vacation. Occasionally take a break from reading to chuckle at the rabble losing their minds. Pajamas might be pushing it, but no judgement here.

Similar to sailboat fishing, the longer the event, the more rested you’ll be.

#46 Ordinary Blog Dog on 09.29.22 at 6:31 pm

Tatiana, thanks for this, had not heard of it. Suspected the pros used techniques like this, but never had it explained to me before. I wish there were more posts like this. Keep up the good work, lots of people want to know how this stuff works.

#47 kommykim on 09.29.22 at 7:02 pm

RE: #22 Jesse on 09.29.22 at 4:07 pm
Garth, have you ever commented on one and done ETFs (like VGRO/VBAL) for the average Joe’s TFSA/RRSP? Do you like them?

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

He has and he doesn’t like them. But then, Garth manages larger portfolios where such funds lose the advantages they give to smaller portfolios. (Low costs)

#48 crowdedelevatorfartz on 09.29.22 at 7:05 pm

@#42 Uncle Don
“#6 human up and apologize.”

++++
Probably wont happen.
They’re good at lecturing….not listening.

#49 Tatiana Enhorning on 09.29.22 at 7:06 pm

#12 epic bear:
The S&P 500 index is a common benchmark investors across North America use to compare their performance to the stock market in a broad sense. I did not claim that to be our benchmark – it is 100% equities. I included it as it is a benchmark people on this blog tend to find interesting. Second, we would have to use a custom benchmark to compare accurately to our portfolio, but XBAL is a more apple-to-apples comparison. We have protected our clients far better with a 74.86% downside capture compared to XBAL year-to-date. So, I’m glad you asked. Finally, in order to best illustrate protection when the S&P is doing very badly, I used some of the worst periods during these last 3 major bear markets. Nowhere did I state these dates were for the entire bear markets. Does that help, dear?

#50 baloney Sandwitch on 09.29.22 at 7:10 pm

Nice post. Times like this people like me need to be reminded of downside ratio.

#51 Steven Rowlandson on 09.29.22 at 7:18 pm

“A report looking at 12 Canadian cities, including Burnaby, Richmond, Surrey, Abbotsford and Vancouver, found urban trees and their cooling effects are largely concentrated in rich, white neighborhoods.”

It looks like a racist attack on white people to me for having more trees planted. No one is stopping the anti-whites and nonwhites from planting trees. Go collect some seeds or seedlings from the bush and plant them. No one will stop you.

#52 Gravy Train on 09.29.22 at 7:19 pm

#20 Wrk.dover on 09.29.22 at 3:39 pm
Don’t let the media fool you, as usual.[…]

How did you make out with Fiona? Any damage to property?

#53 A simpleton investor on 09.29.22 at 7:32 pm

For most money managers it is not ok to succeed unconventionally. It is preferable to fail conventionally. Too much career risk if you don’t make money for clients when “the benchmark” is killing it. And if things are bad, well, it is bad for “everybody” so you have as much risk as the next money allocator down the street. You can even take a Pyrrhic victory if your downside capture is a fraction of a “benchmark” (which could be totally attributable to factors other than skill; for instance, rebalancing/timing luck).

I am a simpleton who manages its own portfolio. My portfolio is flat for the year. I don’t day-trade. I barely trade. How is this possible? For one I am not constrained by the equity/bonds mantra. I am
not constrained to be long-assets all the time. In particular, my managed futures etf exposure and my long vol etf exposure has saved my bacon. Unconventional. Uncorrelated.

What’s my downside capture ratio?

#54 Reality is stark on 09.29.22 at 7:45 pm

Just like all things in life, you need to guard against downside risk.
You should take about 8-10 years before deciding on a life partner to get a thorough analysis of their character.
It’s a 40 year commitment, take your time, after all time is on your side.

#55 Diamond Dog on 09.29.22 at 7:54 pm

Straight talk.

Anyone paying attention to what the Fed had to say in terms of guidance some days back, was not disappointed. The Fed, to remind, gave an outlook that suggested rates will go as high as 4.6% and remain in the 4’s throughout 2023 and into 2024.

This year has been brutal for investors as credit conditions have tightened, Europe has gone to war and the U.S. and China have slipped into recession coming off bubbly valuations. The NASDAQ has gone from 16,500 in November highs to 10,737 as of today’s close and the Dow has gone from 36,800 to 29,225. Normally, bonds offset but since the Fed has raised rates from basically zero to 3 – 3.25%, yields have popped causing prices to fall. Most years, 60/40 works but this year, not so much. In short, it’s been an ugly year for investors across the spectrum.

We are not alone. Investors abroad have been creamed in markets the world over and by drops in currency elsewhere. Check out the currency chart on the 7:15 mark on the video below:

https://www.youtube.com/watch?v=F2NLsTIYvI0

The loonie has given up 7% to the dollar but most other currencies out there have given up more. This means maple $ in most markets has faced losses just in the currency exchange alone except for the U.S. which, looking at indexes and bond markets has been less than kind. Couple this with losses world markets have faced overall and we see a picture that the world is experiencing losses everywhere and it doesn’t look to change any time soon.

So, lets go through some future dangers and opportunities and go back to the Fed. The Fed should, if the economy can take it, raise rates to 4.5 with 4 of the next 5 meetings, getting there sometime around February. As the Fed rate continues to climb higher, so will the dollar. Is there a currency play here? Yes there is. I wouldn’t do it within the next week or so as the U.K. tries to walk back unforced errors, but before the next rate hike, the dollar will continue to trend up until Jan/Feb.

From Jan/Feb on, it’s a green light to load up on bonds meaning 60/40’s are back in vogue. The problem with this however, is that most of us aren’t well acquainted with bonds so we rely on managers to fill in the blanks (for many, it’s mostly blanks) and because of this, we also get talking into equities but my best opinion is, stall on equities if you can or talk to a manager who is flexible.

Safest play in the markets is a currency play with the U.S. dollar until Jan/Feb. . From this point on, it’s bonds but bonds including the dollar are likely to go sideways into the second half of 2023 so some patience is required to see profits from bonds (yields fall, prices rise). Equities should pop sometime between the spring and fall of 2023 as the markets near closer to a Fed rate pivot. I could be too soon with this because of credit conditions, but the markets don’t break up or down all at once as a rule, it’s choppy and uneven. 60/40 should work as a formula from Feb on, but if one was to try to time it, bonds Jan/Feb and equities spring and beyond.

Late 2023 and 2024 is when we see yields drop, the dollar drop and commodities will benefit. This should offer good tailwinds for the markets overall. Can’t say how long it will last and there’s some structural problems globally that won’t be fixed right away (Europe war and sanctions after the war, Chinese real estate crash, bond market disruption) but there will be a recovery and buyers do not want to miss out on this.

It’s been difficult for me to offer opinions or financial advice on a site like this because since Nov of 2022 (really before then), I’ve been negative on the markets. Couple this with managers who rely on volume to make a living and I want to see money managers do well, but you just can’t with this market, not with a 60/40, not with most investments when credit conditions tighten so universally to the extent they have in the backdrop of nosebleed valuations. There have been some notable rallies but by in large, it’s a super challenging environment. Earlier this year, the shorts and puts were easy with market excess everywhere. That’s changed. It’s been a dangerous market all year and likely through the end of the year but with it, I will remind, comes opportunity.

The Fed, offering a forward plan through the next 5 quarters which they rarely do, is telling us it will get worse before it gets better. Larry Summers not so long ago suggested that “neutral” (the Fed rate that is neither growth or recessionary) is between 4 and 4.5%. If readers don’t know who Larry Summers is, they should get acquainted.

If we overlay this with Friedman’s works on monetary policy, the timelines given to reverse inflation (2 years for broad money, 12 to 18 months for m2) and realize there is some compression there due to a more modern age and note when the Fed began to actually raise rates or just as importantly when m2 dipped below the annual 6.8% average (April) and couple this with lagging indicators and the need to break human behavior to lower prices in tandem with a shrinking supply, we will now understand the logic of the Fed including the Fed giving guidance so far out. They are not admitting it, but they are following Friedman’s playbook assuming they stay on script.

As the Fed rate hits neutral or beyond (it’s combined with QT), the money supply will begin to shrink. Not by much, but it buys time. So, as long as the Fed holds the course, it should work to get inflation down but in so doing, it will also bite strongly into earnings and this is the one thing that influences markets most beyond everything we read or hear.

What happens in late 2023 and beyond? I predict the war will end sometime mid to late next year and give a big boost to the markets when it does. The dollar will fall as the Euro pops, so there’s some excellent overseas opportunity there. Commodities will stay strong as sanctions are likely to stay in place for years. I say the war will be over sometime late 2023 because Russia will run out of cash some time around next winter or before.

Putin will try to defend the land he’s stolen and negotiate. He could try nukes, but that would be the 7 trumpets of Revelations… so… lets just hope the mad king is smarter than this and doesn’t take it beyond it’s limits. Hopefully Russia rises up against him, the best case scenario.

Russia had $600 billion in reserve currency before the war. $300 has been frozen by the west (to keep corps whole) and Russia has spent $80 billion of the remaining $ 300 since the beginning of the war. It means $220 billion is left, couple it with a burn rate of $160 billion or more annual and a devalued currency and sometime around next summer to winter, Russia will have run out of money to keep it going. I’m basing this opinion heavily on some work out of Yale, but readers who have time should watch it to get an idea of the financial disruption Russia is facing because of this war:

https://www.youtube.com/watch?v=vzvR958CYTw&t=965s

That said, there’s something to be said for measuring the intensity of whats going on in any nation or economy. Once competence and trust has been established, the best people who will tell you what’s going on in say, Italy or Russia is an Italian or Russian or with people who speak the language with connections back home.

To that end, I like the opinions of Julia Ioffe, Vladimir Vexler as examples and Russian journalists like Yevgenia Albats or with politics and economics here at home and beyond, the right honorable Garth Turner. I’m going dark for a couple weeks (lots going on) which is why I’ve decided to embellish with such a long comment and wish you all the best of weekends.

#56 Summertime on 09.29.22 at 7:57 pm

People invest because they have no trust in inflating currencies due to incompetent central bank policies and irresponsible government debt incentivized schemes.

If currencies were stable and there was no inflation with strongly negative real rates as we have now but instead with decent real return on savings, much less would have cared to worry about investing.

So in current economic conditions it is basically a life saving choice to avoid legal theft of capital and labour.

#57 yvr_lurker on 09.29.22 at 8:04 pm

#34 Protecting to the downside is getting out of stocks at the start of 2022 when the Fed members sold theirs and said they would start increasing rates until the stock market tanked enough to decrease spending and reduce inflation.
——

That is a bit cynical for sure, but there is for sure an element of truth to it.

For the long-term in a mildly fluctuating environment Tatiana is spot on. However, in periods where there are
sharp sudden declines that last a few years getting out at the start and sitting on the sidelines may not be bad strategy. It sure looked ominous around Feb with the clear inflationary spiral setting in, the spector of huge interest rate spikes over the next year, and the Russia peril. With my B+D defined contribution plan at my work (the largest employer in BC) there was no way to head to the sidelines as it is all run by managers with no option to “park” (which was my inclination in Feb). As a result, -11% in the B+D since Jan. I was damned sure not to put the extra unexpected amount that I got in June back into the market. If I did I’d be down a further 5% on just that alone. Park it in a GIC for 1 year and see in June 2023 where we are at.

#58 Flop… on 09.29.22 at 8:05 pm

I’ve seen plenty of people on here suggest capital gains on a house be taxed at a certain rate depending on how long you’ve had the place.

People on here, every time the boss of this blog tells people to behave, flood the comments section telling him to close it.

Phooey.

Where else are politicians gonna go to get new ideas…

M48BC

————————————————

“David Eby promises new BC flipping tax on homes based on ownership duration.

A home that is traded between multiple different owners over a span of only a few years, sometimes merely months apart, suggests the property is being used as an investment purpose for a quick profit — not for its intended purpose as a shelter.

In his housing platform announced today for his campaign to become the next Premier of British Columbia, he states the flipping tax will apply on the sale of the home. The rate of the tax is based on a scale for how long the property is owned, with the tax rate going up for those who hold the property for the shortest period of time, and the tax rate going down to 0% the longer the property is held. After two years, the flipping tax rate automatically drops to 0%. 



The flipping tax is intended to significantly slow down the rapid rate of home price escalation from speculative demand, but it is not intended to discourage people from buying homes for long-term rental investment opportunities.

Some exceptions for the flipping tax include death of the owner, employment loss, divorce, or disability. As well, builders will be exempted to ensure it does not hamper new housing supply.”

https://dailyhive.com/vancouver/david-eby-bc-flipping-tax-homes-ndp

#59 Mr Fox on 09.29.22 at 8:06 pm

#30 Lunch Break on 09.29.22 at 4:49 pm
I missed this article somehow. Thank you.

#33 crowdedelevatorfartz on 09.29.22 at 5:11 pm
Captain obvious, get a life.

#60 Summertime on 09.29.22 at 8:08 pm

UK/bank of England just switched from QT to QE in an environment of rising rates as the market priced the cost and risk of government debt at skyrocketing astronomical levels, which makes it absolutely impossible for government to borrow on the open market.

So basically government borrows money at suppressed rates but from Bank of England as nobody is interested in their bonds when the CPI is in double digits and real inflation much higher, from that borrowed money government will pay very little/close to none as it goes on the BoE balance sheet, so basically they print cheap money for government while rates for everyone else rise.

An absolute and total failure of central banks that places government debt in separate debt category detached from markets and establishes horrific foundations for future inflation.

Expect more central banks to follow.

#61 Brendan on 09.29.22 at 8:09 pm

so performed the same as the vanguard 60/40 etf VBAL? has the same downside capture ratio vs the SPY

#62 Summertime on 09.29.22 at 8:18 pm

Downside in an environment of rising rates in the economic/aka interest rates cycle/ which pretty much guarantees stock market correction is normally achieved through hedging/puts with different durations, rebalancing to inverse corelated equities or assets, partial or complete exit from risk equities/ combination of all based on the risk preference of the investor/fund manager.

Managed dynamically based on the dynamics of the environment/markets.

To construct defensive portfolio is also smart in such environments but could limit upside potential.

But again, futures are not for everyone.

#63 crowdedelevatorfartz on 09.29.22 at 8:23 pm

@#59 Foxy Fussybritches
“Captain obvious, get a life.”
+++
True.
But…. It’s better than being Captain Oblivious.

++++

As I scrolled up from the bottom of the comments
I hit ….the endless tome…the prattling press release….the politicians’ waffle gab….and then…after my scroll finger almost died…I reached the author….
Diamond Dog.
Sorry DD. I was too tired to read it. Maybe tomorrow. After coffee. Several coffee.

#64 Terry on 09.29.22 at 8:26 pm

The powers that be really want peoples shares. Don’t sell!
Buy more! Sale prices are fantastic right now! Remember………….all shares are owned by someone, there is no float unless there are new issues. It looks bad right now but it’s all designed to get you to sell and take a loss. DON’T DO IT! Add more to your your positions……you won’t regret it after the winter.

#65 Grateful in Victoria on 09.29.22 at 8:30 pm

Great post and a good reminder.

#66 Flop… on 09.29.22 at 8:42 pm

Millennials have been doing it wrong, all along.

First you buy a mansion with an Avocado farm, then you get a house and get to eat Avocado Toast too…

M48BC

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

“Sandra Bullock is selling her California avocado farm for $9.3m.”

https://www.realestate.com.au/news/sandra-bullock-is-selling-her-california-avocado-farm-for-93m/?rsf=syn:news:nca:hs:article

#67 Wrk.dover on 09.29.22 at 8:48 pm

#52 Gravy Train on 09.29.22 at 7:19 pm
#20 Wrk.dover on 09.29.22 at 3:39 pm

How did you make out with Fiona? Any damage to property?
_____________________________________

We are so far left on the mainland peninsular map, we only got 26mm rain and normal cold weather storm whitecaps. Not even streamers.

The windows look pretty salty with morning dew on them since. Not a place to park outdoors.

The newest helicopter shots on CNN really bring home my still very sharp Ft. Meyers memories. Except for the development, all news to me.

They have a problem amplified by that!

#68 Wrk.dover on 09.29.22 at 8:55 pm

Edit; Ft. Myers Beach, memories

#69 Ronaldo on 09.29.22 at 8:59 pm

#57 yvr_lurker on 09.29.22 at 8:04 pm

Re: timing the market.

From January 1/20 to March 23/20 our B&D portfolio had shed 18.4%.

By June 5/20 (74 days) it had totally recovered with a 22.8% rise.

By December 31/20 it was up 11.6% for the year.

At the bottom on March 23rd/20 my wife was panicking and wanting to dump everything. Fear.

I told her that if she did that, it would be the worst thing she could do. So, she didn’t.

Now were back to this current situation again and once again she is caught in fear as all the gains made this year and all of 2021 have disappeared and we are now back to September 2020 levels. So, we are up 6.7% from the January 1st/20 level. (2.75 years). Down 14.5% ytd. We have some recovering to do.

I don’t know what and when I could have done to prevent this but I do know that timing the market is next to impossible. We’ll just have to hang on and see what happens. Luckily we do not have any need to draw from these funds.

On the other hand I reminded her that the house has gained at least $400,000 in that same time. Funny how we tend not to take that into account.

#70 Sail Away on 09.29.22 at 9:03 pm

With financial yearend books done, it’s been another good year with scrumptious dividends.

What’s the best use of this? Hmmm… another parcel of land? Plug into uncertain markets? Preferred shares? Utilities? Upgrade the 2015 Tesla?

Decisions, decisions.

#71 yvr_lurker on 09.29.22 at 9:20 pm

#69 At the bottom on March 23rd/20 my wife was panicking and wanting to dump everything. Fear.

I told her that if she did that, it would be the worst thing she could do. So, she didn’t.

Now were back to this current situation again and once again she is caught in fear as all the gains made this year and all of 2021 have disappeared and we are now back to September 2020 levels. So, we are up 6.7% from the January 1st/20 level. (2.75 years). Down 14.5% ytd. We have some recovering to do.

I don’t know what and when I could have done to prevent this but I do know that timing the market is next to impossible. We’ll just have to hang on and see what happens. Luckily we do not have any need to draw from these funds.

On the other hand I reminded her that the house has gained at least $400,000 in that same time. Funny how we tend not to take that into account.
———

I agree to a point. Indeed timing the market is a no-win game when the fluctuations are relatively short-lived. I was not at all worried during COVID as the Gov’ts had to step in and spend oodles to prevent a collapse with so industries shuttered. The gloom since January is not of the same type: it is likely an event to last for 2–3 years and is driven by situations that are harder for Gov’t to control; inflationary spiral, Russia losing its mind, the upcoming winter in europe having to find a new gas supply, interest rate hikes…. it has a feeling more like what went on in the 70s which lasted many years where the market went sideways at best. To have had an option to pull out in February to re-position oneself would have been better than staying on this track

#72 Doug t on 09.29.22 at 9:46 pm

#70 sail away

How bout a cork

#73 Faron on 09.29.22 at 10:02 pm

#101 millmech on 09.29.22 at 1:52 am
Lots of people believing markets are going to keep on tanking so why not buy insurance which puts basically are for.
The smart put sellers always sell in high volatility times as premiums are much higher and hope that contract expires worthless, kind of like how Buffet made his billions by collecting insurance “premiums” and reinvesting them in ongoing business concerns.

Don’t wait until your house is on fire to buy insurance.

Made money selling vol today. If PCE comes in at all friendly tomorrow, could be a nice rally.

Doesn’t hurt that JP Morgan is putting on their quarterly downside protection for JHEQX tomorrow. Maybe sell them some puts while the premium is high?

#74 Alex on 09.29.22 at 10:30 pm

Less downside means less upside (e.g. your portfolio will NOT rise as 60/40 or SP500). No free lunch in this universe.
OK, show me the money e.g. NET TOTAL returns (price + divs minus fees which you have as 1% vs 0.03% on index) over last 20 years, let’s start from 2002.
I’d bet pure USD (!) to exclude FX corrections returns on S&P500 will beat 60/40 and any “balanced”. Yes, volatility would be higher so would be returns. Once again no free lunch here – less volatility – less returns, so far everybody claims he can beat that but failed to deliver
And as you quoted the Buffet, his advice about investing was to invest 90% s&p500 index fund and 10% to treasuries bonds. No mentions about high-quality stocks or bonds manager has to pick up, eh?

P.S. would like to see would that pass the censorship here…

Our clients desire long-term performance and controlled volatility that will let them have good lives. It’s not a race. – Garth

#75 Sail Away on 09.29.22 at 10:32 pm

#72 Doug t on 09.29.22 at 9:46 pm
#70 sail away

How bout a cork

——–

Already have a couple hundred. Twenty gallons of this year’s yellow plum crop is busy fermenting away. Bottling and corking won’t be happening for awhile.

#76 Linda on 09.29.22 at 10:40 pm

#39 ‘Don’ – just to clarify, not a comment on personal food choices so much as wondering whether healthy food costs more, less or about the same as junk food. Was remembering a news story on the cost of living I’d seen where the family was trying to figure out how to pay for prescription drugs needed by one family member & still afford food (story was based in the USA, but I think it could also apply to Canada). The children were trying to decide between fresh fruit or junk food choices.

#77 Ronaldo on 09.29.22 at 11:18 pm

#71 yvr_lurker on 09.29.22 at 9:20 pm

I agree what you say about feeling like the 70’s during the oil crisis and the runaway inflation. Remember it well. I had sold my condo in N.Van in Feb. of 73 having gained in value 26% over the three years that I’d owned it and thought I’d made off like a bandit.

I repurchased a home in Port Coquitlam for $26000 a couple months later and saw it rise to $49000 by August of 74. An 88% gain in roughly 18 months.

Then the housing market came to a grinding halt by September. I ended up selling it for $41000 that December. A 16% drop but would have been much worse had I held on.

We had been transferred up north. Nothing was selling as the banks tightened up and we had to carry a 2nd mortgage at 12% in order to sell it. By the end of the year price of homes in West Vancouver at dropped 40%.

We were fortunate in that we were living in company supplied home rent free so the recession had very little effect on our family. That was sheer luck.

Prices remained low for a very long time after that. I see similar happening now. I was not that involved in the stock markets at that time so don’t remember too much about that.

I was too busy raising two children and making ends meet to be investing in stocks. In the end things turned out pretty well for us. The majority of our wealth came from real estate as with most people in our category.

Everything is temporary as with life. There are more important things in life than money. Just be content with what you have, stay healthy and give your wife/husband a hug every once in awhile. Have a good evening. Oh, and make sure you read Garths blog.

#78 Grunt on 09.29.22 at 11:20 pm

Some handy hints

On road parking only?
No new car. Buy used.

No e-commerce. Forget Apple Aritzia Atallah Lego etc.

Instead stuff it in the rrsp or tfsa.

You’d be surprised the fools throwing it away on internet junk or in the road gutter.

#79 DON on 09.29.22 at 11:27 pm

#74 Linda on 09.29.22 at 10:40 pm
#39 ‘Don’ – just to clarify, not a comment on personal food choices so much as wondering whether healthy food costs more, less or about the same as junk food. Was remembering a news story on the cost of living I’d seen where the family was trying to figure out how to pay for prescription drugs needed by one family member & still afford food (story was based in the USA, but I think it could also apply to Canada). The children were trying to decide between fresh fruit or junk food choices.

******
Lately I experienced increased prices in Junk food…fast food and processed foods in grocery stores. It is cheaper to buy whole foods from local farm markets and cook at home, plus you get left overs. My kids, usually go with the healthy choices thanks to my better half.

#80 Gr8unwashed Steerage Denizen on 09.29.22 at 11:44 pm

Saw someone recommend BNS for the dividend, but then read the story below …any opinions from steerage?

https://www.bloomberg.com/news/articles/2022-09-28/scotiabank-shares-face-worst-year-since-2008-as-new-ceo-enters

#81 Faron on 09.30.22 at 12:09 am

Soon-to-be hurricane Orlene bearing down on Don Guillermo’s neck of the woods in Mex. Monday w/ potential 85kt winds. The rain is always the killer in Central America. Stay safe.

#82 Tony on 09.30.22 at 12:35 am

I can see some sort of risk/reward outside of the U.S. stock market. I’m always astounding how long the bankers can keep the charade going.

#83 the awakened one on 09.30.22 at 2:22 am

Can’t believe I actually learn something new and exciting from a fine lady on here. Maybe I shouldn’t say anything to my wife.. she might not like it!

Thanks Tana, appreciate free lessons always.
What a wonderful world… @}–,–‘—

#84 Midnight’s on 09.30.22 at 5:06 am

Freeland will not see the light of day as a P.M.

Who commented saying she was going to be nominated? Lol. Right!
Mrs. Tatiana Enhorning, that was a nice balanced piece you wrote. No jabs, no cheap shots, just straight commentary.

#85 unbalanced on 09.30.22 at 6:12 am

#55 Diamond Dog. I always come here to learn something. That was one hell of a comment you just penned. Very informative. Keep it up. Thanks! Where are you invested ? Just kidding!

#86 Dharma Bum on 09.30.22 at 9:08 am

I bought a cool cowhide rug at a leather store on King Street yesterday.

There was an awesome bearskin rug for sale too – with the complete head and claws intact – but it was 3 times the cost of the cowhide and would have freaked out the insane chihuahua that we sometimes dog sit.

That cowhide should make an interesting conversation piece. Luckily, I have no vegan friends.

Downtown Toronto was really hopping yesterday afternoon. I haven’t seen so many freaks and weirdos out and about since I visited Seattle in the early ’80s.

It was a nice distraction from watching markets tank.

#87 jess on 09.30.22 at 9:47 am

offshore /onshore courtiers?

i wonder which former parliamentarian received the flowers?

Deripaska, through the corporate entity Gracetown Inc., illegally utilized the U.S. financial system to maintain and retain three luxury properties in the United States (the U.S. Properties), and further employed Olga Shriki and Natalia Mikhaylovna Bardakova to utilize U.S. financial institutions to provide hundreds of thousands of dollars’ worth of services for his benefit in the United States. For example, in or about 2019, Shriki facilitated for Deripaska’s benefit the sale of a music studio in California for over $3 million. Deripaska had owned the studio through a series of corporate shell companies that obscured his actual ownership. Following the sale of the studio, Shriki attempted to expatriate over $3 million in proceeds through one such shell company, Ocean Studios California LLC, to a Russia-based account belonging to another Deripaska company.

Bardakova – largely based in Russia – directed Shriki to engage in particular illegal transactions on Deripaska’s behalf. These instructions included directing Shriki to obtain U.S. goods and technology for Deripaska. Moreover, between in or about May 2018 and in or about 2020, Bardakova instructed Shriki to purchase and send flower and gift deliveries on behalf of Deripaska to Deripaska’s social contacts in the United States and Canada. The deliveries included, among others, Easter gift deliveries to a U.S. television host, two flower deliveries to a then-former Canadian Parliament member, and two flower deliveries in 2020 to Voronina while she was in the United States in 2020 to give birth to Deripaska’s child.

https://www.justice.gov/opa/pr/russian-oligarch-oleg-vladimirovich-deripaska-and-associates-indicted-sanctions-evasion-and

#88 Tony on 09.30.22 at 9:52 am

Re: #80 Gr8unwashed Steerage Denizen on 09.29.22 at 11:44 pm

It might help if the Bank of Nova Scotia paid comparable interest to the rest of the big 5. 2.70 percent for a 5 year GIC will scare any new money away.

#89 Sail Away on 09.30.22 at 9:58 am

Re: Cowhide Conversations

Is that a cowhide?
Yes!
Cool. I thought it looked like one

Come see my cowhide!
Ah. Now that’s really something

Look dear, DB has a cowhide
Yes, I see
We could get one
….

You will one day inherit my most prized possession: the cowhide
Oh boy

#90 Quintilian on 09.30.22 at 10:13 am

#58 Flop… on 09.29.22 at 8:05 pm
“David Eby promises new BC flipping tax on homes based on ownership duration.

Flop, I think the politicians can start the fire and also feed it, but they cannot extinguish it.

And Eby knows it, but at the political theater there is always a comedy or a tragedy playing, and it doesn’t matter which is playing as long as the spectators remain confused.

However, what I find interesting is that the politicians seem to be aware, probably from polling, that there is public support for affordable housing, which seems so strange to me that the curmudgeons are satiated and might finally stop eating their young.

So the bubble will eventually pop on its own, but there is the probability that the left won’t pay the political price for what the corrupt previous politicians engineered.

#91 crowdedelevatorfartz on 09.30.22 at 10:16 am

@#jess
“The deliveries included, among others, Easter gift deliveries to a U.S. television host, two flower deliveries to a then-former Canadian Parliament member, and two flower deliveries in 2020 to Voronina while she was in the United States in 2020 to give birth to Deripaska’s child.”

+++
It would be interesting to find out who the “television host and retired MP” are.

I also wonder when the US is going to stop the automatic granting of US citizenship on babies born in the US by the parents deceptive means.

#92 Don Guillermo on 09.30.22 at 10:23 am

#81 Faron on 09.30.22 at 12:09 am
Soon-to-be hurricane Orlene bearing down on Don Guillermo’s neck of the woods in Mex. Monday w/ potential 85kt winds. The rain is always the killer in Central America. Stay safe.
########
Thanks Faron. Last October you’ll recall we waited out hurricane Pamela in Cabo for a couple of days. Tomorrow we’re flying to Phoenix with a scheduled flight to Mazatlan Sunday morning. Hopefully we can get into our house before Orlene hits. So far the models show we’ll be a little ahead of it but if not we’re in wait mode in Phoenix.

#93 Ponzius Pilatus on 09.30.22 at 10:45 am

#92 Don Guillermo on 09.30.22 at 10:23 am
#81 Faron on 09.30.22 at 12:09 am
Soon-to-be hurricane Orlene bearing down on Don Guillermo’s neck of the woods in Mex. Monday w/ potential 85kt winds. The rain is always the killer in Central America. Stay safe.
########
Thanks Faron. Last October you’ll recall we waited out hurricane Pamela in Cabo for a couple of days. Tomorrow we’re flying to Phoenix with a scheduled flight to Mazatlan Sunday morning. Hopefully we can get into our house before Orlene hits. So far the models show we’ll be a little ahead of it but if not we’re in wait mode in Phoenix.
———————-
Looks like “Waiting for Godot”.
Time to settle down?

#94 Westcdn on 09.30.22 at 10:52 am

I am thinking a short squeeze is approaching. When it might happen, I do not know. I might buy some out of the money long dated call options. It is a gamble, but the reward/risk ratio looks favorable to me. 50/50 I rate the bet if I can find candidates come mid-October. I expect an official recession announcement for North America by the end of the 1st quarter 2003 despite lower ongoing inflation rates. Wage demands will take more than a year to crush.

I think interest rates have risen too quickly and I think a slowdown is merited. I recommend monthly 1/4 point increases starting November until the BoC decides mission accomplished. It would give markets time to adjust at the cost of BoC omnipotence.

In my opinion, the US/Nato have the most to gain from the Nord Stream sabotage. It is similar to burning bridges behind you in order to raise every one’s commitment to an end goal. Whoever is responsible, it likely will backfire. It seems our fearless leaders refuse to admit they were wrong/stupid and hide truth that threatens their reputation and power. I will tell a truth. No one can’t be replaced eventually, hopefully by a better overall person.

#95 crowdedelevatorfartz on 09.30.22 at 11:16 am

@#90 Quinty’s Questionable Quantifiables.
“that there is public support for affordable housing, which seems so strange to me that the curmudgeons are satiated and might finally stop eating their young.”

+++
Nothing strange about it.
The curmudgeons are sated.
Its the greedy Mills that “want it all, want it now, money for nothing”…etc etc etc.

Eby is pandering to the Mill vote, not the curmudgeon vote.
Hence the “flipper tax”.
doesnt matter.
Interest rates will follow the US Fed in lockstep.
5%? 6? Or God help us… 7 or 8?
It wont be middling , provincial govt interference that will sink the real estate dreadnought….
It will be rising rates and rising unemployment that will torpedo that listing Realtor scow as the band on deck keeps playing ” nearer my heart to thee”.

#96 Flop… on 09.30.22 at 11:18 am

#90 Quintilian on 09.30.22 at 10:13 am

#58 Flop… on 09.29.22 at 8:05 pm
“David Eby promises new BC flipping tax on homes based on ownership duration.

Flop, I think the politicians can start the fire and also feed it, but they cannot extinguish it.

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

Yeah, who knows what’s gonna happen, normally when they try something the opposite consequence occurs.

I remember when the NDP won the election people were worried they were going to crash the market, they tried a few things here and there, but the market roared to record highs, so that fear didn’t come to pass.

Apart from a Flipping Tax, one of the other prominent parts of Eby’s platform was to strip strata control over rentals, with just a few exceptions.

Dunno, the main thing I see is a power struggle between the province and the municipalities.

We have civic elections coming up, and pretty much all the talk that I’ve seen has been about housing, renting or buying is still the biggest topic in town.

If Eby gets his way the province will override a lot of municipal rules, but some of the mayors want to be the saviours and stay relevant, so they’ll probably point out, hey don’t you have some health care that needs fixing, or something…

M48BC

#97 yvr_lurker on 09.30.22 at 11:23 am

#77 Ronaldo
————–
Nice story and you had some journey for sure going through some turbulence of the early years. We are in good shape, but as with many people I hope that this rather large financial market correction does not signal
some longer period of decline lasting many years…. as this will mess up some numbers on the retirement calculator…..

#98 Don Guillermo on 09.30.22 at 12:42 pm

#93 Ponzius Pilatus on 09.30.22 at 10:45 am
#92 Don Guillermo on 09.30.22 at 10:23 am
#81 Faron on 09.30.22 at 12:09 am
Soon-to-be hurricane Orlene bearing down on Don Guillermo’s neck of the woods in Mex. Monday w/ potential 85kt winds. The rain is always the killer in Central America. Stay safe.
########
Thanks Faron. Last October you’ll recall we waited out hurricane Pamela in Cabo for a couple of days. Tomorrow we’re flying to Phoenix with a scheduled flight to Mazatlan Sunday morning. Hopefully we can get into our house before Orlene hits. So far the models show we’ll be a little ahead of it but if not we’re in wait mode in Phoenix.
———————-
Looks like “Waiting for Godot”.
Time to settle down?
########
It is actually. Plan on settling in Mazatlan in a couple of years. A few home improvements to look after first. Maybe some hurricane shutters on the west side? :-)

#99 DON on 09.30.22 at 12:48 pm

#95 crowdedelevatorfartz on 09.30.22 at 11:16 am
@#90 Quinty’s Questionable Quantifiables.
“that there is public support for affordable housing, which seems so strange to me that the curmudgeons are satiated and might finally stop eating their young.”

+++
Nothing strange about it.
The curmudgeons are sated.
Its the greedy Mills that “want it all, want it now, money for nothing”…etc etc etc.

Eby is pandering to the Mill vote, not the curmudgeon vote.
Hence the “flipper tax”.
doesnt matter.
Interest rates will follow the US Fed in lockstep.
5%? 6? Or God help us… 7 or 8?
It wont be middling , provincial govt interference that will sink the real estate dreadnought….
It will be rising rates and rising unemployment that will torpedo that listing Realtor scow as the band on deck keeps playing ” nearer my heart to thee”.

*******
Yup!

It’s just good politics being seen surfing the wave that is already in motion. But I am sure he means well as the need is immediate. Never let a good crisis go to waste.

#100 SoggyShorts on 09.30.22 at 1:15 pm

#74 Alex on 09.29.22 at 10:30 pm
Less downside means less upside (e.g. your portfolio will NOT rise as 60/40 or SP500). No free lunch in this universe.
OK, show me the money e.g. NET TOTAL returns (price + divs minus fees which you have as 1% vs 0.03% on index) over last 20 years, let’s start from 2002.

***************************
Why stop there? Why not compare to a 3x leverage S&P portfolio? or more?

Yes, being a cowboy would pay according to past returns, and everyone is sure that “they won’t sell at the bottom”. Things change when you see 4-5 years of wages vanish in a few days.

By all means, though, try it. Plunk your entire NW (preferably your retirement fund of 7 figures) into all equities. Let’s see that iron gut.

#101 Tatiana Enhorning on 09.30.22 at 1:34 pm

#10 Mr Fox and #5 Dwilly:
Yes, the downside capture ratio is useful to shows how much a portfolio has protected during down market periods. So if we know the S&P500 did badly during a certain time frame, we then look at how our portfolio performed in that same period. So 60% downside capture effectively says if you could invest in the S&P500 and your market value went down by $100 during a particular time period, your market value would have only gone down by $60 by being in the portfolio.

#102 Tatiana Enhorning on 09.30.22 at 1:46 pm

#19 Linda
Great question, and of course ‘long-term’ is subjective, but for our purposes we would say about 7 years would be considered a long-term time horizon. This is because the equity market cycle from peak-to-peak take an average of 7 years. So if you invested your money and hit a downturn, 7 years would likely give you enough time to wait for it to come back before you needed to withdraw.

#103 Ronaldo on 09.30.22 at 4:00 pm

#97 yvr_lurker on 09.30.22 at 11:23 am
#77 Ronaldo
————–
Nice story and you had some journey for sure going through some turbulence of the early years. We are in good shape, but as with many people I hope that this rather large financial market correction does not signal
some longer period of decline lasting many years…. as this will mess up some numbers on the retirement calculator…..
—————————————————————-
Yes for sure and as one gets older, the years to recover get lesser and if you have to draw funds from a declining portfolio that’s not so great. Luckily we don’t have to. Have ridden these things out several times before so will see how this one plays out. I have a hunch we are near the bottom and we could have a good rally come year end.

#104 chalkie on 09.30.22 at 4:20 pm

For the Record
Looks like lots of interest for the $500,000.00 earned.
He/She would owe the government almost $230,00 in Income tax.
Dont forget, Mr Trudeau has his hand out, even with his cute smile

Your average tax rate is46%
Taxable income:
Taxable employment and interest income$500,000
Taxable dividends$0
Taxable capital gains$0
RRSP contribution$0
Donations$0
Total taxable income$500,000
Payable taxes :
Taxes owing$229,621
Taxes paid$0
Balance due (refund)$229,62

As stated, the income is household, not individual. Your numbers are invalid. – Garth

#105 robert james on 09.30.22 at 11:29 pm

Leaky fridge costs B.C. strata owner over $100K — before he even moved in https://www.castanet.net/news/BC/388133/Leaky-fridge-costs-B-C-strata-owner-over-100K-before-he-even-moved-in#388133 This does seem right and that is a understatement…