The seg game

Pete’s mom is in her 70s now. “Recently, she’s been worrying about what will happen to her wealth when she passes away,” he says.

She should listen to her son. “I have told her that time is more important than money and that she should be making the most of the time she has while she’s mobile, sound of mind, and able.” The advice is spot-on. She has cash (P didn’t say how much), good health and some paid-for real estate. But she worries.

“She met with a financial advisor today who introduced her to segregated funds,” Pete reports.

I would really appreciate it if you or one of your colleagues could write about these funds at some point. To the best of my recollection, they’ve not been covered in a blog post thus far (unless they just fall under the category of mutual funds…then they’ve been adequately covered!) Thanks for your daily posts; reading what you write makes me feel a bit smarter every day.

This is a worthy topic. Seg funds have actually gone through a big revival lately, owing to the crazy world in which we live where dudes like Putin and SBF can come along and spread their evil. People worry about their investments when stocks and bonds decline together, when inflation and rates spike and taxes lurk behind every corner. So segregated funds look cool for a number of reasons.

First, they offer a no-loss guarantee if held long enough (like ten or 15 years). You will always get at least your principal back after that period of time.

Second, seg funds flow money to heirs when you leave this mortal coil without being taxed. No probate. No will. The kiddos can dig in right away.

Third, self-employed people often love them because they offer creditor protection. So if your business flames out and you end up in prison, bankrupt, being sued by irate, bilked clients, it’s all good. The funds are protected.

Fourth, seg funds offer more privacy than a will, which is on the public record. Beneficiaries get paid quietly and quickly and the fund contract can specify how they get their cash. Maybe as a monthly stipend, maybe a lump sum, perhaps an annuity – you can control things from the grave, which is cool.

Fifth, there are tax benefits over a GIC, where all income is taxed fully as interest. But a seg fund can offer similar capital preservation but also earn in the form of dividends or capital gains. Less tax.

So, what is a seg fund, and do the benefits spelled out above make buying one a reasonable thing to consider? Is Pete’s mom being buffaloed into something that’s inappropriate, or is this just another example of a salesguy masquerading as an advisor who’s real intent is to sell stuff and collect a trailer fee?

Well, a segregated fund is basically a mutual fund (but sometimes ETFs are used) which is wrapped in an insurance policy. So they’re sold by the same people who flog life insurance, and are almost always compensated through commissions. That can be a yellow flag.

Yes, there are benefits. There are also costs. The insurance policy does not come cheap. Typically seg funds will have MERs (management expense rations – the fancy name for fees) of about 4%. That is twice the cost of the typical equity-based mutual fund, four times the cost of hiring a fee-based advisor and eight times more expensive than an ETF. Also the seg fund MER is not (like an advisor’s fee) ever deductible from taxable income.

For most people a regular life insurance policy can pass money to heirs in a similar fashion – no probate, no tax and no public disclosure. In fact it might make sense for a lot of folks to (a) spend their money having a great time while on this earth, (b) take out a sizeable insurance policy so their kids get buckets of money when they kick the bucket and (c) have the children pay the premiums on that policy, since they’ll reap the big return later on.

Now, what about the guarantee of always getting your principal back at the end of the seg fund contract? (Pete’s mom was quoted 15 years.)

True enough. A guarantee is a guarantee. But the reality is there’s never been a time when financial markets were lower after a decade. This is an emotional crutch, not a financial benefit. You end up paying a huge extra amount in fees for a guarantee that’s not needed. At least not yet. And, by extension, never.

Yes, Pete, there is a role for seg funds in this world. For some people they provide a peace of mind that otherwise would keep them in comatose, high-taxed, inefficient GICs. And they’re great if you’re seriously bad at business and plan to fail financially, screwing suppliers.

But there are better options. Like blowing it all on yourself.

About the picture: “Watching all the pictures on your blog, we thought we would send an Xmas pic of our greyhounds Flynn (red fawn) and Kayla (the cow dog in back),” write Janet and Ken. “K decided not to wait until Xmas and took it upon herself to open the gifts. She tried to implicate her brother by dropping the bag by his head…but the trail told otherwise.  For the record, the donkey was hers for obvious reasons.  You can tell how hard done by she is – the toy box beside her is apparently not full enough.  Thank you and your team for all they do.”

77 comments ↓

#1 Ponnaps on 11.22.22 at 1:22 pm

First!

#2 dave on 11.22.22 at 1:23 pm

A local credit union in BC just laid off 10% of their staff.

Majority of these folks are Loan Officers.

#3 Richard L on 11.22.22 at 1:33 pm

This is a great topic Garth. Glad you have covered this product.

About 30 years ago I was taken in by an advisor who promoted seg funds due to the tax advantages. At the time I did not realize the high MER and in fact the fund I was in never made money.

In my experience Seg funds are sold aggressively because that pay high commissions to the agent. Buyer beware.

Can you do a column on Labour Sponsored funds (if they still exist)??

#4 Dave on 11.22.22 at 1:41 pm

Why isn’t there a possibility of a 40% correction in GTA or Metro Vancouver? There were huge gains during the 2 year pandemic

#5 VicPaul on 11.22.22 at 1:42 pm

Hmmm. Pete might want to buy his Mom’s residence (family deal…), his Mom will receive a windfall of cash to use as her muse moves her in coming years – no worries!
Possibly, as a tax shelter for some of these funds (she already has some “cash”), a benevolent gift to her grandchilden’s FHSA. Family money movement through generations without triggering tax….nice!

M58BC

#6 WhereToNow on 11.22.22 at 2:04 pm

Whatever you do, I would avoid having any accounts go through the estate dept of the Green Bank. They have horrendous service for closing accounts in estates. Just switch all your holdings to another better service bank in the later years of life. Also consolidate accounts to only one bank for ease of estate settlement. And yes, start spending some of that hard earned cash on things that enrich your life.

#7 chalkie on 11.22.22 at 2:09 pm

The housing boom is over, the grip of the cheap money, FOMO price driven appreciation unparalleled among the economy.
Now that the baseless sky-high home prices are behind us, the pain is spreading fast with more and more sorrowful home ownership stories being heard each passing day, cannot afford it.

You saw mortgages handed out at rates that will never be seen again in your lifetime.

My heart bleeds for those families that are caught up into this mortgage mess, most being from the younger generation and had no idea of what they were getting themselves into, when they signed on the bottom line.

The 2% stretch test is a Federal Program, meaning if you get a mortgage through a bank, then yes, you must prove that you can be stretched to be able to afford to pay 2% more should interest rates rise.

This is not the case, if you get a private mortgage loan through one of the mortgage brokers, in other words the banks own only a portion of all monies loaned or mortgages against home ownership.

From my own experience of private money some 50 years ago, they were not as friendly, patient, helpful or tolerable as the big 5, when it came time to pay up, I suspect it would not be much different now, it’s personal and not stock market money that you have borrowed.

There are 10’s of thousands of Canadians with short-term mortgages that are not Federal approved, this is where the problem lies right now-private mortgages, most private money lenders, do not want or will not loan on long-term.

The fate of our housing market depends fully on how long these folks can hold on before the letter on foreclosure arrives to their home, it is unfortunate but it is a shock wave in the making right now, with Ontario and British Columbia taking the brunt of it.

Will it be a relatively orderly correction or a brutal crash, it is a 50-50 guess and no other word can describe it, everyone has got an opinion, we are into a rough ride wave and none of us know what way the wind will move the current.

Canada is a trailblazer and not for the good, if we move into the next phase, forced sales will spring up in every neighborhood right across this beautiful land of ours.
A lot of People were hoping to use Real Estate to quickly grow their nest eggs, but the shiny shell cracked and the egg is showing its true colors, that shiny white is becoming a sticky yellow.

There is no such thing as a free ride, who do we think was paying for the cost of the variable-rate mortgages when they were at 1-1/2 and 2 %, the chicken has come home to roost, it depends if he will stay around or go back to mating, it was the money owners that was dormant and waiting for the markets to move on and invest, so the piper is now collecting for his time in waiting, not much different than buying stock PUT”s, it’s called time value.
Canada has 260 billion in Variable Mortgages, that is not a number to sneeze at, we all know that snot sticks like glue.
The real causes of the Canada housing and financial crisis was private mortgage lending in the early 2003-2006, it blew up in 2007-2008, notice a pattern this time around in 2022.
During 2008, there were thousands of stories in Canada, particularly Ontario, where people just packed their suitcases and walked away when variable rates skyrocket and mortgages came due.

For the United States, it was further fueled by the Subprime sending shockwaves through their neighbor Canada.

The 1 ½ % crowd mortgage divers are now paying 5% variables and climbing, do the math.
There is one number that is floating around, showing that 20% of all home sales in 2021, were made up of investors hoping to flip the homes for a profit, so be it, it is what it is, “Oh the pain”.

If we get a forced seller market it will send shock waves through an economy that is already teetering on the edge of a recession, your policy makers are preparing for, from a boom to a bust.

I must admit, I am not much of a gambler, but I did lose a large Tim’s coffee bet to my friend, that the housing boom would blow up within a year, I lost the bet, it lasted a little longer.
What we had was just another 2008 Scenario that had nowhere to go, but unfold, history for some reason, always seems to repeat itself.

The next time that a real estate agent tells you, property has nowhere to go but up, they are not making any more of it, let them know, should you slip, it is a long way down in a deep hole with no soil beneath your feet until you hit bottom.
Hold onto your wallet for now, your best home deals have not yet arrived.

Quote of the day: He who is not content with what he has, may not be content with the journey to get there.

#8 Jerry on 11.22.22 at 2:20 pm

DELETED (Anti-immigration)

#9 Dr V on 11.22.22 at 2:27 pm

https://ca.finance.yahoo.com/news/bank-canada-says-high-rates-165208162.html

Hmmm…

Lotsa green today…..

#10 Sail Away on 11.22.22 at 2:29 pm

Thanks Garth. Very helpful description for another unnecessary financial instrument.

It is truly amazing the endless and endlessly complicated systems in place for the purposes of shuffling a lump of money. And as always, like a bar of soap, the more touching that’s done, the smaller it gets.

#11 baloney Sandwitch on 11.22.22 at 2:39 pm

Good article – did not know seg funds were so bad.
The 4% charge is a killer. You can only expect 6 – 7% from the market on average so you are giving most of it away to the “helpers”.

#12 Sail Away on 11.22.22 at 2:46 pm

A thought on the faddish anti-oil activists gluing themselves to famous art: why don’t the galleries use the protestors as a modern art display? Things would get quite interesting after 6 or 7 hours.

Maybe title it ‘Glorious Revolt?’ or ‘Stand Up (a really long time) For the Cause’ or ‘Strength of Spirit, Weakness of Body’

#13 Damifino on 11.22.22 at 2:52 pm

#6 WhereToNow

Whatever you do, I would avoid having any accounts go through the estate dept of the Green Bank. They have horrendous service for closing accounts in estates.
——————————————-

Sad recent experiences lead me to offer a very similar warning about the Blue Bank.

#14 Balmuto on 11.22.22 at 2:57 pm

Wow, it’s now HALF of all variable rate fixed payment mortgages that have hit their trigger rate:

https://globalnews.ca/news/9297311/trigger-rate-mortgages-bank-of-canada/

This could get ugly.

#15 Lord Garth of Izar on 11.22.22 at 3:21 pm

War is peace
Freedom is slavery
Diversity is strength

Average cost of renting a two-bedroom in Toronto soars by 24% to more than $3,300

https://www.thestar.com/business/2022/11/22/the-average-cost-of-renting-a-one-bedroom-in-toronto-hits-2502.html

My gods, Canadians are such freaking losers. It’s become quite comical.

Rents fell during the pandemic. The 24% increase is from that lower level, and misleading. – Garth

#16 Søren Angst on 11.22.22 at 3:25 pm

I think StatCan wants attention, feeling neglected.

Sept 2022 Retail Trade, StatCan (a.k.a., we’ll all be killed) …

“Retail sales decreased 0.5% to $61.1 billion in September. Sales declined in 7 of the 11 subsectors, led by sales at gasoline stations (-2.4%) and food and beverage stores (-1.3%).”

No. We won’t be all killed. Cdns spending at a nice clip. *

Sept retail sales almost always go down vs. Aug (Not Seasonally Adjusted, $ x 1,000, % change vs August) …

2022 61,979,266 / -4.1%
2021 58,024,865 / -2.4%
2020 55,903,643 / +1.9%
2019 51,321,540 / -6.4%
2018 51,356,806 / -5.4%
.
2015 44,907,164 / -1.6%
.
2010 36,923,390 / -1.3%
.
2005 30,914,826 / -3.5%

Cdns not abating their spending habits no matter how much they whine, cry, b!tch about inflation.

It’s all THEATRE. Lying thru their teeth to get low rates again.

* Here is the RT chart + trendline …

https://twitter.com/bsant54/status/1595149848491470849

Use not seasonally adjusted to show year cyclical spending.

————

Rates will undoubtedly keep going up until spending abated. NO SIGN of that happening any time soon.

RT is 37% of GDP and 63% of Consumer Spending (2021).

#17 james on 11.22.22 at 3:31 pm

Many moons ago I visited one of the big banks looking for investment help.

They tried to flog mutual funds on me, when I read the terms it said something along the lines of: if the fund loses money, it comes out of my pocket. If the fund earns money, I get to keep the first 7% and the bank steals…I mean keeps anything above that!

When I told the bank guy that was unacceptable he got indignant.

Banks are nit there to help you.

#18 Mindbender on 11.22.22 at 3:34 pm

It’s later than you think.

#19 Søren Angst on 11.22.22 at 3:42 pm

PS:

Italia Serie A 3 + Mbappe 1 (France) – Kangaroo Land 1
79′

Rabiot plays for Juventus, Giroud x 2 for AC Milan and Mbappe (my fave) plays for somebody else.

———–

Argentina declares a week or mourning.

Argentina 1 – Saudi Arabia 2

Sorry Garth. Back to RAI TV 4K for Calcio.

#20 Nora Lenderby on 11.22.22 at 4:01 pm

#6 WhereToNow on 11.22.22 at 2:04 pm
“Whatever you do, I would avoid having any accounts go through the estate dept of the Green Bank. They have horrendous service for closing accounts in estates. Just switch all your holdings to another better service bank in the later years of life. Also consolidate accounts to only one bank for ease of estate settlement. And yes, start spending some of that hard earned cash on things that enrich your life.”

I’m afraid I also had a less-than-optimal experience with the local branch of the first bank in Canada. I really don’t expect much from any of them.

Trust, but verify. Make sure you get confirmations and printouts of everything they say they’ve done, and don’t expect anyone to know (or care) more than you do.

I completely agree about consolidating banks though. And credit cards. Also make accounts joint with the most trustworthy member of family, if appropriate.

I had been too cautious about dealing with my mother’s finances as she got older. I should have put on the big girl pants and done it sooner.

You will need cash to deal with the estate, bills, legal bills, probate fees, an so on. Credit cards are closed on death, any bills paid from the CC are bounced. If an executor has at least one joint account or is the beneficiary of a TFSA they have some cash to do that.

The bank cannot be trusted to know what they are doing – they are all very nice, while being fairly useless and they pretend they know it all. The local branch has no authority and the head office doesn’t talk to you.

I could have got a local bank estate clerk disciplined, but I’m not into torturing puppies.

#21 Lower the Boom....er not on 11.22.22 at 4:05 pm

Yogism 7: “I like to learn new things when I find out”.

#22 Binder Dundat on 11.22.22 at 4:15 pm

Balmuto on 11.22.22 at 2:57 pm
Wow, it’s now HALF of all variable rate fixed payment mortgages that have hit their trigger rate:

https://globalnews.ca/news/9297311/trigger-rate-mortgages-bank-of-canada/

______________________________________
Thanks for the link- this little tidbit is a little concerning as well…

“With market rates for variable mortgages expected to continue to rise, the Bank of Canada expects 65 per cent of these mortgages will hit trigger rates by mid-2023.”

#23 Chameleon on 11.22.22 at 4:18 pm

These dogs as useful as those other animals on the basket.

Stuffed.

Except you don’t have to scoop after the stuffed ones.

#24 millmech on 11.22.22 at 4:27 pm

#9 DR V
Trillion Energy on a little bit of a tear lately, still holding until a dollar, TQQQ has been doing well as a daily play, does the opposite of the Sailaway soap analogy.

#25 Søren Angst on 11.22.22 at 4:45 pm

Worth sharing.

Saudi fans at home after KSA gets go ahead goal against Argentina …

https://www.youtube.com/watch?v=0DafAQA8_Ss

The BEAUTIFUL GAME and a reno coming soon to a home in Saudi.

#26 MILLY on 11.22.22 at 4:53 pm

Hi Garth!

My parents are hitting retirement as well, and talk about annuities. Can you do a post covering these types of investments? It seems like buying yourself a pension, but I am not sure if it’s a good investment and if it just buys peace of mind, too.

Thanks!

#27 Dr V on 11.22.22 at 4:59 pm

24 Millmech – thanks but sorry, a little beyond my investing scope and comfort level. Trillion looks like a 3 bagger YTD though. Nice!

#28 Nonplused on 11.22.22 at 5:05 pm

“For most people a regular life insurance policy can pass money to heirs in a similar fashion – no probate, no tax and no public disclosure. In fact it might make sense for a lot of folks to (a) spend their money having a great time while on this earth, (b) take out a sizeable insurance policy so their kids get buckets of money when they kick the bucket and (c) have the children pay the premiums on that policy, since they’ll reap the big return later on.”

Insurance policies are a lot like casinos in some ways. I mean, if we could all get rich using insurance, why aren’t we all rich? Yet the only one who seems to make any money over the long run is the house (or insurance company).

Fact is the expected payout on a large number of policies is always less than the premiums plus investment profits, by the amount of the expenses and profit of the insurance writer.

So life insurance beyond what your family needs to get buy if they lose a breadwinner is seldom advisable, and even then not profitable. What you are doing is giving away money now in the hopes that if you die prematurely your kids and spouse will be ok financially.

And you should never spend more on life insurance than that. Chances are it is just an expense.

#29 Ponzius Pilatus on 11.22.22 at 5:07 pm

#131 Shawn

SOME deeply discounted rate resets will likely manage a capital gain, if they were pushed down too far due to these other factors. Or if the issuer decides to redeem them at $25 but not sure why they would in most cases. Who wants to pay off cheap “debt”?
————————————-
Yeah.
Particularly, if the debt interest is fixed, and inflation is high.
Kinda like what we talked about the other day:
People selling their winners and keeping their losers.
But, as it’s been mentioned often here:
Many investors are not that smart.
Fear will trump Greed most of the time.

#30 TurnerNation on 11.22.22 at 5:15 pm

“Buy Term and Invest the Difference? Har-har.

#31 jess on 11.22.22 at 5:19 pm

FOR IMMEDIATE RELEASE
Monday, November 21, 2022
Two Estonian Citizens Arrested in $575 Million Cryptocurrency Fraud and Money Laundering Scheme

Two Estonian citizens were arrested in Tallinn, Estonia, yesterday on an 18-count indictment for their alleged involvement in a $575 million cryptocurrency fraud and money laundering conspiracy.

The indictment was returned by a grand jury in the Western District of Washington on Oct. 27 and unsealed today.

According to court documents, Sergei Potapenko and Ivan Turõgin, both 37, allegedly defrauded hundreds of thousands of victims through a multi-faceted scheme. They induced victims to enter into fraudulent equipment rental contracts with the defendants’ cryptocurrency mining service called HashFlare. They also caused victims to invest in a virtual currency bank called Polybius Bank. In reality, Polybius was never actually a bank, and never paid out the promised dividends. Victims paid more than $575 million to Potapenko and Turõgin’s companies. Potapenko and Turõgin then used shell companies to launder the fraud proceeds and to purchase real estate and luxury cars.

“New technology has made it easier for bad actors to take advantage of innocent victims – both in the U.S. and abroad – in increasingly complex scams,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The department is committed to preventing the public from losing more of their hard-earned money to these scams and will not allow these defendants, or others like them, to keep the fruits of their crimes.”

“The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme,”

https://www.justice.gov/opa/pr/two-estonian-citizens-arrested-575-million-cryptocurrency-fraud-and-money-laundering-scheme

===========

riday, November 18, 2022
Fugitive Couple Extradited to the United States from Montenegro to Begin Prison Sentences for $20 Million Fraud

A California couple who fled to Montenegro to avoid serving lengthy prison sentences has been returned to the United States after approximately one year and two months as fugitives.

Richard Ayvazyan, 44, and his wife, Marietta Terabelian, 38, were extradited by Montenegro and arrived in Los Angeles last night. They are expected to appear in U.S. District Court in Los Angeles this afternoon.

In June 2021, Ayvazyan and Terabelian were convicted by a federal jury of leading a conspiracy to fraudulently obtain over $20 million in COVID-19 relief funds. After the trial, Ayvazyan and Terabelian fled the United States. In November 2021, they were sentenced in absentia. Ayvazyan was sentenced to 17 years in prison, and Terabelian was sentenced to six years in prison. U.S. authorities later determined the couple had fled to Montenegro.    

According to court documents and evidence presented at trial, Ayvazyan and Terabelian were members of a Los Angeles-based fraud ring who engaged a scheme to fraudulently obtain more than $20 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) COVID-19 relief funds. Ayvazyan and Terabelian used dozens of fake, stolen, or synthetic identities – including names belonging to elderly or deceased people and foreign exchange students who briefly visited the United States years ago and never returned – to submit fraudulent applications for approximately 150 PPP and EIDL loans.

https://www.justice.gov/opa/pr/fugitive-couple-extradited-united-states-montenegro-begin-prison-sentences-20-million-fraud

#32 Maybe on 11.22.22 at 5:26 pm

Thank you very much for this information.

Also, Flynn and Kayla are beautiful!

#33 under the radar on 11.22.22 at 5:30 pm

Rents fell during the pandemic. The 24% increase is from that lower level, and misleading. – Garth

Sorry disagree. Rents fell but for rentals which became vacant and then were rented. Many of those tenants did well. For the last 10 months or so rentals that come on the market , have far surpassed pre -covid rents.

#34 tbone on 11.22.22 at 5:35 pm

# 26 Milly

ZWB ( canadian banks ) , Pays 6.99 % dividend income .
And you get to keep the initial investment capital .
It might even go up in value , Or go down, but if you are looking for cash flow its another option .
Gets taxed favourably too.

#35 I’m confused Canadian on 11.22.22 at 5:35 pm

DELETED (Conspiracy doodle)

#36 Ponzius Pilatus on 11.22.22 at 6:24 pm

#2 dave on 11.22.22 at 1:23 pm
A local credit union in BC just laid off 10% of their staff.

Majority of these folks are Loan Officers.
————
I worked fo the largest CU on BC in the early 90s when mortgage business went south.
We assigned most of the Loan Officers to help out in other areas, mostly deposit taking.
When things turned around we were way ahead of the pack, becoming the largest mortgage lender in the West.
Musk has got it all wrong.

Y

#37 Ponzius Pilatus on 11.22.22 at 6:32 pm

#12 Sail Away on 11.22.22 at 2:46 pm
A thought on the faddish anti-oil activists gluing themselves to famous art: why don’t the galleries use the protestors as a modern art display? Things would get quite interesting after 6 or 7 hours.
—————
Good post.
I was thinking about getting a few steerage committe members joining me and applying some rotten eggs on Sailos Hawaiin Whale pictures.
Anyone up to it?
Faron?

#38 Penny Henny on 11.22.22 at 6:36 pm

Is that a deer in the picture?

#39 Penny Henny on 11.22.22 at 6:50 pm

#35 I’m confused Canadian on 11.22.22 at 5:35 pm
DELETED (Conspiracy doodle
//////////////

Is that a Collie poodle mix?

#40 Cow Man on 11.22.22 at 7:03 pm

I had Manulife GIFs. They were segregated funds. After 10 years they were down $150,000 on the original $450,000 invested. Manlife paid me out in full. Yes the MER was 4%.

#41 Sail Away on 11.22.22 at 7:04 pm

#37 Ponzius Pilatus on 11.22.22 at 6:32 pm

I was thinking about getting a few steerage committe members joining me and applying some rotten eggs on Sailos Hawaiin Whale pictures.

Anyone up to it?

———

Sure, come by anytime if you must.

The octopus (octopi?) artwork bears many similarities to John Wick’s dog: beautiful, innocent and deeply meaningful.

#42 Felix on 11.22.22 at 7:21 pm

Two days in a row with pics showing lazy, useless, dogawful mutts doing absolutely nothing.

A very clear representation of the species.

#43 Dominoes Lining Up on 11.22.22 at 7:37 pm

Some more signs that this property market correction may become much gloomier than optimists might suggest. Read the article, it gives a nice comparison of the cost to income factor that has gone so bananas in Canada.

https://www.thestar.com/business/2022/11/22/how-much-worse-will-it-be-canadian-mortgage-interest-costs-increased-to-highest-levels-since-1990s-housing-crash.html

“The late 80s and early 90s looks like a walk around the park compared to today.”

Plus here’s another survey showing how perilous things are for ordinary households with rising costs and debt.

https://www.iheartradio.ca/newstalk-1010/news/soaring-costs-are-causing-some-families-to-reach-a-tipping-point-1.18826148

#44 Ohm on 11.22.22 at 7:39 pm

#105 Faron-from a few days ago. My apologize I do not read Garths blog as often nowadays. I am more old school where when Garth could see both sides, now, not so much! All is good. it is his blog and it is free for all of us that are willing to read, much appreciated Garth..

From last week, I try and catch up when I get free time. I guess we both misunderstood our posts, all is good, thank you.

#45 Ohm on 11.22.22 at 8:00 pm

#42 Felix
lol, those beautiful canines are just doing (for a brief time) what felines do all day. Felines keep busy for ten minutes then go back to sleep and try to convince you how tough there day was when you walk into your door, they got you,hook,line and sinker! Adopt a few more, unfortunately the SPCA has many to adopt..

#46 Midnight’s on 11.22.22 at 8:01 pm

DELETED

#47 Manulife GIFs on 11.22.22 at 8:13 pm

#40 Cow Man

As a financial advisor competing against Manulife I was scratching my head as to how they could possibly offer such incredibly generous guarantees.

When they almost went bankrupt as a result I got my answer.

You were lucky. And that’s ok, better to be lucky than good as they say!

#48 crowdedelevatorfartz on 11.22.22 at 8:30 pm

@#42 Felix
“Two days in a row with pics showing lazy, useless, dogawful mutts doing absolutely nothing.
A very clear representation of the species.

+++
The average Cat can sleep up to 70% of the time in a 24hr period.

#49 Dr V on 11.22.22 at 9:00 pm

I see more links posted for the variable mortgages hitting the “trigger point”.

Do you think that maybe, just maybe, the BOC was smart enough to see this from the start and dropped the last rate increase to 0.5% just to avoid disaster?

Let’s review. Tiff warned us about household debt and mortgages. He then said they would “frontload” the rate increases. Now they mention inflation could be easing.

All part of the plan from the start?

#50 Faron on 11.22.22 at 9:03 pm

#12 Sail Away on 11.22.22 at 2:46 pm
A thought on the faddish anti-oil activists gluing themselves to famous art: why don’t the galleries use the protestors as a modern art display? Things would get quite interesting after 6 or 7 hours.

Just FYI, these galleries are not in the business of making art.

—————

#37 Ponzius Pilatus on 11.22.22 at 6:32 pm

I was thinking about getting a few steerage committe members joining me and applying some rotten eggs on Sailos Hawaiin Whale pictures.
Anyone up to it?
Faron?

That might make it an interesting work of art, so I would have to charge for the time and creative input. I’ll pass along my bitcoin address when a price is settled upon.

#51 Adam on 11.22.22 at 9:22 pm

“But the reality is there’s never been a time when financial markets were lower after a decade”

This is not exactly true. The S&P 500 was 1191 in July 1998, and 667 on March 2009. That is cherry picking the ultimate high and ultimate low. But still, down 44% after 10 years. It *has* happened before and it *will* happen again. Maybe not today or anytime soon, but history always repeats itself.

Factor in inflation and dividends, and get back to us. – Garth

#52 Calgary on 11.22.22 at 10:33 pm

https://twitter.com/ABDanielleSmith/status/1595240705940914177

#53 TurnerNation on 11.22.22 at 11:06 pm

Land. Posted many times here that Wars are fought over land , and I believe global WW3 kicked off March 2020.
‘you will own nothing and be happy’??

BC. How far will our Rulers be taking this.

https://council.vancouver.ca/20221025/documents/p1.pdf
Disposition of City-Owned Lands/Repatriation of Lands to Nations
As the City of Vancouver embeds recognition of Musqueam, Squamish, and
Tsleil-Waututh as the rights and title holders of these lands with jurisdiction and the right
of consent, it’s important to address return of lands and decision-making authority on
land use decisions.

—–
—–
As mentioned here.

#33 TurnerNation on 07.03.21 at 4:10 pm

https://www.vancouverislandfreedaily.com/news/lawyer-large-scale-transfer-of-crown-land-to-first-nations-will-shock-b-c-s-system/

Lawyer: Large-scale transfer of Crown land to First Nations will shock B.C.’s system
Jack Woodward says the next generation will see large chunks of B.C. move to Indigenous ownership

#54 Dr V on 11.22.22 at 11:51 pm

53 TN – thanks for reposting the article re crown land

#55 SK on 11.23.22 at 12:01 am

#52 Calgary
What a breath of fresh air in the cesspool of Canadian politics. Thank you.

#56 Wrk.dover on 11.23.22 at 6:37 am

#52 Calgary on 11.22.22 at 10:33 pm
https://twitter.com/ABDanielleSmith/status/1595240705940914177
________________________________________

Not a word of her conclusion was plagiarized from J(r). Trudeau. So obvious, that. Pity!

#57 crowdedelevatorfartz on 11.23.22 at 8:22 am

After almost 3 YEARS of covid lockdowns…..

https://www.reuters.com/technology/foxconns-zhengzhou-plant-hit-by-fresh-worker-unrest-social-media-livestreams-2022-11-23/

Are the natives getting restless?
That foxconn factory employs 200,000 workers.
Locked down.
They aren’t allowed to leave but they are allowed to work……., living in quarantine dorms, inadequate food…., treated like prisoners.

They smashed security cameras, windows, barriers and escaped….sounds like a prison riot.

#58 crowdedelevatorfartz on 11.23.22 at 8:27 am

More good news on the Trump family saga.

https://www.reuters.com/legal/trump-rebuffed-by-judge-new-york-fraud-lawsuit-trial-date-set-2022-11-22/

Daddy and his entitled brats get to face a judge and have their sordid real estate business deals exposed to the world.

#59 crowdedelevatorfartz on 11.23.22 at 8:37 am

@#34 Ponzie and #59 Faron
“That might make it an interesting work of art, ”
+++
A terrible waste of perfectly good eggs.
A better use of your time?
A Pickle Ball tourney with Ponzie as the only participant.
Faron as the Judge.
A turnip as the prize.
Ponzie wins a turnip.
Nobody argues with the judge.
The turnip dies in a pot.
Everyone goes home happy.

#60 Ponzius Pilatus on 11.23.22 at 9:12 am

#57 crowdedelevatorfartz on 11.23.22 at 8:22 am
After almost 3 YEARS of covid lockdowns…..

https://www.reuters.com/technology/foxconns-zhengzhou-plant-hit-by-fresh-worker-unrest-social-media-livestreams-2022-11-23/

Are the natives getting restless?
That foxconn factory employs 200,000 workers.
Locked down.
They aren’t allowed to leave but they are allowed to work……., living in quarantine dorms, inadequate food…., treated like prisoners.

They smashed security cameras, windows, barriers and escaped….sounds like a prison riot.
—————————-
That Foxconn factory had troubles way before Covid.
Workers jumping out of windows to their death.
Had to install nets.
Something to think about when you buy your Apple products.

#61 Quintilian on 11.23.22 at 9:40 am

“B.C. Premier David Eby has announced a new law to crack down on money laundering. Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets”

As I said before, sometimes the ends do justify the means.
And no Garth, this is not racist.
It is not a Chinese Dude Tax, It applies to criminals from Russia or anywhere else as well.

I like this law, most honest people will agree.

Big Brother. There can never be too much government for the kids today. They’ll learn. – Garth

#62 Ian on 11.23.22 at 9:41 am

#51 Adam
“But the reality is there’s never been a time when financial markets were lower after a decade”

This is not exactly true. The S&P 500 was 1191 in July 1998, and 667 on March 2009. That is cherry picking the ultimate high and ultimate low. But still, down 44% after 10 years. It *has* happened before and it *will* happen again. Maybe not today or anytime soon, but history always repeats itself.
_________________________

Factor in inflation and dividends, and get back to us. – Garth
________________________

According to https://www.officialdata.org/us/stocks/s-p-500/1998?amount=100&endYear=2009
with dividends re-invested your $100 would be worth $94.62 from Jan 1998 to Feb 2009. Extending a month or two gets a positive result.

#63 earthboundmisfit on 11.23.22 at 9:53 am

#52 Calgary
“What a breath of fresh air in the cesspool of Canadian politics. Thank you.”

Let me fix that for you. Whack job. Total fruit loop. Nuttier than a squirrel turd. Consigned to the history books May 29, 2023. You’re welcome.

#64 millmech on 11.23.22 at 10:31 am

Interesting to watch Credit Suisse Group, more losses to come, billions being pulled out. One wonders about their ETNs and if they are going to be done with them in the next while.

#65 DON on 11.23.22 at 11:02 am

#61 Quintilian on 11.23.22 at 9:40 am
“B.C. Premier David Eby has announced a new law to crack down on money laundering. Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets”

As I said before, sometimes the ends do justify the means.
And no Garth, this is not racist.
It is not a Chinese Dude Tax, It applies to criminals from Russia or anywhere else as well.

I like this law, most honest people will agree.

Big Brother. There can never be too much government for the kids today. They’ll learn. – Garth

********************
I welcome the change to clean up the mess. If you can prove where the money comes from then no problemo.

We have a really big gang problem in BC that shifted their focus after weed was legalized. The CRA demands compliance from the rest of us, but yes more big brother if you have bags of cash sitting around. Then again you can always say that you got the cash from your Grandma.

#66 Shawn on 11.23.22 at 11:06 am

Danielle Smith just announced $600 payments to each senior where their income (with a spouse if applicable) is under $180,000.

Apparently in Alberta making under $180,000 is basically low income!

Did I not beg you people to move to this wonderful province! The streets here are paved with (black) gold!

And we take care of the most vulnerable too. I mean disabled adults on the provincial disability income program are also getting the same $600. That’s “on top” of the $1,685 per month that they already get. Yeah, don’t move here if you are disabled.

How not to control inflation: hand out $2.5 billion in cash (more fiscal stimulus) when the CB is tightening rates (less monetary stimulus). She just blew it. – Garth

#67 millmech on 11.23.22 at 11:10 am

New Zealand raised their rates 75 basis points today, it is looking like another 75 basis points here in a couple of weeks and with the Fed pushing for continuous rate increases next year. I would not be surprised to see 25 basis point increases at every meeting next year, so close to another 300 basis points by this time next year with no pause or pivot is very likely.

#68 Shawn on 11.23.22 at 11:10 am

I loves me a nice Run on the Bank…

#64 millmech on 11.23.22 at 10:31 am

Interesting to watch Credit Suisse Group, more losses to come, billions being pulled out. One wonders about their ETNs and if they are going to be done with them in the next while.

******************
Billions being pulled out? Nice.

I must watch Mary Poppins again which has that run on the Fidelity Fiduciary Bank. Or It’s a Wonderful Life.

In Canada we had that nice run on Home Capital in 2017 but Warren Buffett spoiled the fun.

#69 Midnight’s on 11.23.22 at 11:12 am

DELETED

#70 Squire on 11.23.22 at 11:19 am

#61 Quintilian on 11.23.22 at 9:40 am
“B.C. Premier David Eby has announced a new law to crack down on money laundering. Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets”

As I said before, sometimes the ends do justify the means.
And no Garth, this is not racist.
It is not a Chinese Dude Tax, It applies to criminals from Russia or anywhere else as well.

I like this law, most honest people will agree.

Big Brother. There can never be too much government for the kids today. They’ll learn. – Garth
———————————————–
#61
It will cost more in legal battles than what they bring in with revenue. Just ask the U.K. Sheesh
It boggles my mind why people never learn from the past and seems to love socialism. Did the thought ever cross anyone’s mind why the USA is the most successful country in history ? Oh, let me guess, it’s because of socialism, yup that’s it.

#71 Slim on 11.23.22 at 11:25 am

# 63 earthboundmisfit

Let me fix that for you. Whack job. Total fruit loop. Nuttier than a squirrel turd. Consigned to the history books May 29, 2023. You’re welcome.
———————————————–

Amen to that!
Before she screws up the province with her wacky ideas.

#72 Quintilian on 11.23.22 at 11:45 am

#70 Squire on 11.23.22 at 11:19 am
“Did the thought ever cross anyone’s mind why the USA is the most successful country in history ? Oh, let me guess, it’s because of socialism, yup that’s it.”

How on earth did you connect socialism to laws to protect people against criminals?

Logic Board malfunction.

USA is messed up in a lot of ways, but the way they go after criminals and money launderers would be a good template for the Canada to adopt.
The Vancouver Model for laundering money is well known around the world and criminals love it.

Many multimillion-dollar mansions owned by students and housewives with no income will soon be on sale.

Tick Tock, Tick Tock

Are you in the market for a mansion? Or is this your envy talking? Because there is zero logic. – Garth

#73 Shawn on 11.23.22 at 12:03 pm

Danielle Smith

How not to control inflation: hand out $2.5 billion in cash (more fiscal stimulus) when the CB is tightening rates (less monetary stimulus). She just blew it. – Garth

*****************************
You bet, especially with the $600 each for virtually all seniors. And gasoline and utility subsidies to all.

AND in the same speech she ripped the feds for buying votes (You can’t make this up.)

AND she apologised for past and future mistakes since she is still learning.

There is no one to vote for.

#74 wills on 11.23.22 at 12:08 pm

Nitpick – wills aren’t public in Canada – unless you mean once they’ve been probated (or a “certificate of appointment of a will trustee”, it’s now called) in which case technically they are part of court records which are publicly accessible by people who know how to access them. Even so, generally you couldn’t understand a lot of detail about what actually passed to a beneficiary from the will because of the way they are written.

The reference was to probated wills, as stated. Yes, they are accessible. – Garth

#75 Dragonfly58 on 11.23.22 at 12:26 pm

Regarding # 72 . Garth, it is probably not so much envy. But rather the perception that cheaters who game the system out here in the wild west come out on top. The rest of us just earn a living, pay out taxes and mortgages . And just slowly wither away financially. Many of us who have lived in the Vancouver area for the last 30 + years have seen and read about it all to often.

#76 Dharma Bum on 11.23.22 at 12:31 pm

#70 Squire

Did the thought ever cross anyone’s mind why the USA is the most successful country in history ?
———————————————————————————————————

People love to bash the U.S.A.

Certainly, it has its faults. It’s advantages, however, are myriad.

It depends where one’s sentiments and priorities lie. If one is ambitious, fiscally motivated, educated, creative, intelligent, and loves independence, the U.S.A. is tough to beat for income, housing, opportunity, weather, topography, geography, cultural diversity, retail shopping, infrastructure, burger joints, road trips, muscle cars, cheap flights, craft breweries, sports, investments, chicks, BBQ, beaches, guns, and pizza.

Notwithstanding their “anti-socialism” chest thumping, the U.S. has more social programs than Canada. However, their required usage is viewed as a personal failure, as opposed to the badge of honour Canadians love to apply to their “social safety net”.

Canada needs to create more real economic opportunities for its citizenry, as opposed to continually inventing ways to provide vote-buying handouts and make-work-project government jobs.

#77 VicPaul on 11.23.22 at 2:14 pm

#41 Sail Away on 11.22.22 at 7:04 pm
#37 Ponzius Pilatus on 11.22.22 at 6:32 pm

I was thinking about getting a few steerage committe members joining me and applying some rotten eggs on Sailos Hawaiin Whale pictures.

Anyone up to it?

———

Sure, come by anytime if you must.

The octopus (octopi?) artwork bears many similarities to John Wick’s dog: beautiful, innocent and deeply meaningful.

*********

(slow clap)…very nice…(head shaking affirmatively).

M58BC