Dr. Garth

They may be stacked up in the local ER, waiting endless hours to see a nurse for their viral overload, but here at the GreaterFool Clinic & Vet Service, treatment’s as quick as it is dubious.

Let’s get right to the first patient. Wassup, Todd? Where does it hurt?

“I want to say that I am a long-time reader, and it saved me from refinancing my mortgage last year into a VRM,” he replies, sucking up.

I bought my house in 2017, 5% down, after seeing prices starting to climb and knowing I’d be priced out shortly. Since then, prices have skyrocketed. I got in at a decent time, but it was pure luck.

In May, I set up a HELOC and bought into the market. The market has since done what it does, and knowing the Smith Maneuver is a long-term strategy does not worry me. However, with interest rates rising (as you said in today’s post) upwards of 8% in HELOCs come spring, I wonder if it is the right strategy. Would you have any advice on this strategy in this rising interest market?

First, Todd, taking out home equity to invest, making interest-only payments and deducting them from taxable income isn’t the Smith Maneuver. That dubious and discredited strategy involves using a systematic withdrawal plan from mutual funds to service an investment loan. Don’t go there. Simply setting up a HELOC then using it to buy ETFs, claiming the interest expense is a timeworn tactic. It cn make considerable sense with inflated houses and depressed markets.

Yes, rates are going higher. Another full 1% perhaps. And they’ll stay elevated, with no return to the 2-3% range for a generation. Maybe never. Meanwhile financial assets are fully expected to rebound in 2023 as (a) inflation heads lower, (b) CBs pause their rate tightening, (c) corporate profits and GDP plump and (d) the crazy Ukraine war winds down. Why would you sell funds now, on the cusp of growth, when the interest payments on your line are fully deductible?

You’re fine. Go home.

So, here we are now, at the doors of our Montreal clinic. Say Bonjour to Jacques. More HELOC worries.

I’ve been reading your blog almost daily for well over a decade now and I’ve learned so much and usually get a good chuckle. It’s made a huge difference in our family’s life.  I have a quick question when you get a few minutes. Is it worth liquidating out our TFSAs to pay down our HELOC?

Being naturally financially conservative having been born in the 60’s, my wife and I bought the worst house on the best street we could afford on the West Island of Montreal. We paid $154k in 1999 with $60k down and so we borrowed $100k at 5% at the time. By the time the mortgage renewal came up, we had enough equity to qualify for a $250k HELOC. We took it and paid the mortgage with it. So, we replaced our mortgage with a $100k Variable Rate HELOC.

As the interest rates continued to go down, we only paid the interest. After more than 20 years in the house we are ready to sell in 2024 when we retire. We would probably get around $850k and over time the HELOC has grown to over $200k. Now, as the price of the loan increases with interest rates going past 7%, we were thinking of liquidating our investments in our TFSAs and paying down the loan. Once the house is sold, we would take the gains from the house and contribute $100k each back to our TFSA. This would decrease the monthly payments and would give us room on the HELOC for other projects like renovating a small retirement house we bought in NS.  Are there any major downsides to this strategy other than the obvious opportunity cost? Am I missing something?

The good news is that J & épouse increased their cash flow for two decades by making cheap, interest-only house payments. The bad news is they weren’t tax-deductible. Moreover, without an amortized loan that could have gone to zero by now, they used the HELOC like an ATM and doubled the debt load.

So what now? Hoover the TFSAs to pay off the line prior to selling? Nah. There’s no advantage in doing so since the loan will be paid upon closing from sale proceeds. Might as well maintain assets that are growing tax-free. Given the fact rates are rising, have yet to crest and will stay elevated, new HELOC borrowing no longer makes sense. Soon the effective rate will be higher than inflation, so without a tax-deductible, interest-only payment (which is the case with money going into a TFSA, as opposed to a non-registered account) it’s a bad plan.

I like the Nova Scotia part, though. Sounds like you bought before that province brought in its anti-Canadian tax. Bluenosers are going to regret that one. Especially after our special Dr. Garth NS user fee.

About the picture: “We are young snowbirds in our very early 50’s,” write Todd and Lisa. “The photo is of our dog Salsa, who we adopted the fall of 2018 in San Carlos, Sonora, Mexico, where we spend our winters.  They call them Sonoran Shorthairs.  She was tiny when we adopted her and thought she would be Chihuahua sized, but she’s just under 50 pounds, but has the long legs of a Greyhound, which makes for some discomfort in the night when she decides to stretch (as she sleeps between us)!  We love your blog and find it to be not only informative but entertaining.  Your weekly phone calls provide valuable insight into current events that impact our nest egg and help us to understand current conditions and make better decisions.”

 

75 comments ↓

#1 crowdedelevatorfartz on 11.27.22 at 11:34 am

The Smith Maneuver?
Yikes!
Are the audits painful?

Haiku over.

#2 Senator Bluto on 11.27.22 at 11:47 am

Just watching the anti lock down protestors in Communist China. Canadian press is protraying them as brave freedom fighters.

I sense the irony.

Who in Canada was locked in their houses for three months? – Garth

#3 Shawn on 11.27.22 at 11:51 am

Alberta Bound, Alberta Bound

#74 Don Guillermo on 11.26.22 at 10:29 pm
#64 Ronaldo on 11.26.22 at 7:21 pm
#15 jack on 11.26.22
——————————————————————
Reminds me of Alberta…..

As one young gal who was working in Ft. Mac said to me in summer of 06 that she was making $27/hr.

If I was young again and looking to start out, that’s where I’d be headed. Agree, Shawn?
###########

In the mid 80s I went to Ft Mac for 2 years. I was part of a group of contractors working at Syncrude on small projects. It was a resume builder, awesome for my bank account and a great time. We were all young, making great money and full of fun. The experience was key in propelling my career. I look back with fondness and still maintain many of the friendships.

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

Alberta bound, Alberta bound
It’s good to be Alberta bound
Alberta bound, Alberta bound
It’s good to be Alberta bound

#4 Emma Zaun - Greater Fool Unpaid Intern #007 on 11.27.22 at 12:07 pm

‘GreaterFool Clinic & Vet Service’

What?

OMG Turner, are you kidding!?

The unpaid Amazons are already overwhelmed having to be frontline psychiatric counsellors to so many of the unhinged deplorables who come to this comments section.

And now you want us to provide professional veterinary services as well? With no training?

At least let us practice our spay and neuter techniques on you and your suspender-snapping team, just to make sure we don’t harm any puppies, ok?

Emma Zaun
Shop Steward
CUPE (Canadian Union of Peelers and Exhibitionists)

#5 Faron on 11.27.22 at 12:18 pm

#85 crowdedelevatorfartz on 11.27.22 at 11:16 am

And your arguments against the factual contents are what exactly?

#6 Faron on 11.27.22 at 12:26 pm

#83 crowdedelevatorfartz on 11.27.22 at 9:48 am

That was an impressive feat of wilful ignorance there bub. Did you wake up this morning and say to yourself “I’m going to pander as hard as I possibly can to the right wing trolls today. Even if it means selling out my precious, rapidly dwindling supply of Intellectual honesty to the first passerby!”? Anyhow, congrats.

#7 Faron on 11.27.22 at 12:31 pm

#3 Shawn on 11.27.22 at 11:51 am
Alberta Bound, Alberta Bound
Alberta bound, Alberta bound
It’s good to be Alberta bound
Alberta bound, Alberta bound
It’s good to be Alberta bound

Would someone please get up and whack the CD player? It’s skipping again. Or, just put on a decent album that isn’t a cheap knock off of S+G. The RAA will do nicely, thanks.

#8 TurnerNation on 11.27.22 at 12:35 pm

The cold/cough syrup aisle in my local groceteria is stripped bare. Folks we need a return to the proven, infection fighting method which served us so well.
I propose a Two Week Lockdown to Stop the Spread and Flatten the Curve.
— All small business closed, in-person dining and gathering banned.
— Big Box Stores limited to 66.6% capacity.
— Stand 6-6-6 feet apart outside
— Non essential goods purchases only.
— A 10pm curfew.
Who’s with me? We are all in this together!!
We must protect the most vulnerable an save Hosipital Capacity.
——

Welcome to the first MEGA UN Smart City here. The GTA.
First hint was that in the economic shutdowns/reset of 2020 New Kando construction was not banned.
It was planned.
We have Kanadian Kommunist quotas for new apartment Blocs. Our leaders no longer work for us…if the past few years was not a hint.

https://www.cbc.ca/news/canada/toronto/planners-ford-housing-bill-1.6665015
And while Premier Doug Ford’s goal of building 1.5 million homes over the next decade is laudable, planners across Ontario should be part of that process, he adds.

#9 Dave on 11.27.22 at 12:46 pm

Oil prices are likely to soar with the Price Cap.

This will ensure interest rate hikes which lead to red in the stock market.

Is there a concern of $150 oil?

#10 crowdedelevatorfartz on 11.27.22 at 12:49 pm

@#5 Faron

“the factual contents”

+++

Bias; unfairly prejudiced for or against someone or something.
“we will not tolerate this biased media coverage”

Bias in any observations.
Pollutes the resulting outcome of any experiment.

As a scientist….you should know this.

Sad.

#11 Sail Away on 11.27.22 at 12:51 pm

Thanks Garth. Speaking of HELOCs…

Our HELOC borrow to invest entered in May/June (at prime+0.2) is currently +2.78% including divs.

Best performer: RSG +6.9%
Worst: CPD.TO -12.18% yow!

#12 Earlybird on 11.27.22 at 1:06 pm

Wow…thats crazy! Living on you re equity for 20 years…owing double…and coming out with 600 G. Just for buying a roof over your head.
I can’t tell if this was a genuis life decision or bad financial management….how on earth can anyone that bought before year 2000 not have a free retirement? How does the next generation join this punchbowl party?

#13 Hateful on 11.27.22 at 1:06 pm

#54 Flop

“Just don’t remember it being this hateful 7 or 8 years ago.

Maybe I missed something along the way.

When did this blog get filled up to the brim with so many extremists…”

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

There are people on here who gleefully post about somebody losing their shirts on a home purchase, and they get applauded.

Yup, it’s a sad world.

#14 IHCTD9 on 11.27.22 at 1:16 pm

Last weekend’s foot of snow is now almost gone. Gas at 1.48. B+D wiggling upwards, local RE down 20%. A nice 4 figure scrap metal cheque hit the bank account. Big steaming pot of Beef Bourguignon on the stovetop, and a glass of Cabernet Sauvignon on the counter. Oh là là!

The sticks are becoming great again, I think I’m going to keep the quads.

#15 Nonplused on 11.27.22 at 1:21 pm

“Yes, rates are going higher. Another full 1% perhaps. And they’ll stay elevated, with no return to the 2-3% range for a generation.” – Garth

Words are important. Rates are not currently “elevated”. They are still low. It would be more appropriate to say rates at 2% were “depressed”, and thank Dog that’s over.

We should hope like crazy rates never return to sub 2%. We don’t need another financial crisis and over a decade, nearly two, of slow growth. That is the wrong thing to hope for. A much more glorious world is one in which economic growth rewards everyone, such that a 5% loan is serviceable and retirees see some sort of return on their savings, because those savings can be employed profitably in furthering the growth of the economy.

I’m actually now aware that I have been depressed for some time, years perhaps. Not because I couldn’t see hope for the future, but because so many other people were convinced that the future looked so gloomy. The only things people saw were unaffordable houses, climate catastrophe, and having to go back to walking everywhere and raising food using animals, or the world was doomed. Covid just came along and made it worse. So much depression. So little hope. No joy. It was as if winter set in and there was no sun.

The feeling rubbed off on me, but for a different reason. I thought heading back to the 1500’s looked gloomy to me. Why was everyone so depressed? Things are better now than they have ever been! The state of humanity is much better than it ever was! We have lots of problems, but never have we been more prepared than we are now to deal with them, if only there was a will. We’ve unlocked the secrets of the atom, for Dog’s sake! Never before have we had such potential.

We marvel at the pyramids and wonder how the ancients accomplished such a feat. Yet we’ve walked on the moon 50 years ago and have a space station (or at least developed the technology to fake it, still quite an accomplishment even the flat-earthers can’t deny).

I mean thing about it folks. A pyramid, or a cell phone. Which one most closely resembles the impossible? And everyone has a cell phone. Not very many people got a pyramid.

But what depresses me the most is what we are doing to the children. How can we raise them to have so little hope for the future? I don’t remember my parents and teachers ever doing that to me. Yet it seems to me my major job as a parent now is to deprogram my kids from all the gloom they learn at school or on Reddit. The scale of it truly astonishes me. No wonder suicide is now at crisis levels. We’re raising a generation of Grettas. Shame on you who do this to our children. Even if we fail for some unforeseen reason, it is better to die hopeful than to live in despair. So knock it off.

Folks, the proper analogy is we are like a child who has been given his first computer. We don’t even know what all it can do yet. But we’re going to figure it out. All these various problems are analogous to the software “bugs” every coder is familiar with.

#16 jess on 11.27.22 at 1:30 pm

inflation :
billions of dollars lost the largest, most destructive cyberattack the world had ever seen.

https://www.wired.com/search/?q=sandworm&sort=score+desc

Sandworm: A New Era of Cyberwar and the Hunt for the Kremlin’s Most Dangerous Hackers Paperback – Oct. 20 2020

by Andy Greenberg (Author)

#17 crowdedelevatorfartz on 11.27.22 at 1:31 pm

My Goodness.

The normally subservient and complacent people in their 3rd year of lockdowns have finally had enough…..

https://www.reuters.com/world/china/shanghai-hit-by-covid-protests-anger-spreads-across-china-2022-11-27/

We all get one guess as to how “Chairman for Life” Xi Jinping will deal with these “disruption to social harmony” malcontents…..perhaps a war with Taiwan to focus their anger?

#18 Sam on 11.27.22 at 1:46 pm

The TD 5 year fixed just got reduced from 5.95 to 5.45. Looks like peak has been reached and promo rates are going down again. I’ve also noticed prices rising slightly as homes are selling for more on Zolo and some people are resisting at higher prices and not lower. Maybe the correction was yet again short lived.

#19 Sam on 11.27.22 at 1:47 pm

Relisting* not resisting

#20 Karl hungus on 11.27.22 at 1:59 pm

What part of the Smith Maneuver is discredited?

#21 Faron on 11.27.22 at 2:00 pm

#10 crowdedelevatorfartz on 11.27.22 at 12:49 pm

And your arguments against the factual contents are what exactly?

#22 Faron on 11.27.22 at 2:10 pm

#8 TurnerNation on 11.27.22 at 12:35 pm

The incidence of cold and flu were down markedly during the two years of masking and very mild closures and restrictions. Highly infectious COVID was all that was leaking through.

Prior to 2020, I would get a cold once a year and the flu once a decade. I had neither until getting RSV from a packed thanksgiving weekend ferry ride in October. 2 and 1/2 years. N of 1, but supported by N of millions.

Also, getting COVID sucks. Long covid is pernicious and my symptoms are mild compared to the severe cases kicking around. Those who were protected from the severe early strains by Canada’s prudent measures should be nothing but grateful. Your conspiracy minded view isn’t supported by facts, is ignorant, cruel and sick. You have a heck of a lot of maturity and wisdom to gain. Boggles that Garth continues to host your steady beat of nonsense.

#23 AM in MN on 11.27.22 at 2:10 pm

Going to be a lot of pain coming for some.

Got an RE agent buddy in the LM who has done very well over the last decade or more. Told ne he’s getting calls from folks who bought houses where he was the selling agent, not their buying agent.

Average people who owe over $1M+ on a VRM for some very average house or townhouse. They are scared, wondering if he thinks he can get them out soon without them being crushed. He says it’s like being the Doctor who has to tell the family to start making the funeral arrangements, although he’s starting to get used to it.

Many of the average people who sold for $1M+, sometimes closer to $2M, still happy on the Island or the Okanagan and calling about condo deals yet. Another year or so he figures…

#24 Dolce Vita on 11.27.22 at 2:12 pm

#9 Dave

Unless you own …

yeah oil

like a bunch of us here do.

————–

EU can’t agree on the price at the moment.

Which mean Italia, Germany and France will have to dole out more appeasement money to the EU p!$$ant countries so fall into lock step.

Welcome to Europa.

Have a nice day (unless your IT, D, F).

#25 Dolce Vita on 11.27.22 at 2:31 pm

And ya, I’m in a BAD MOOD ’cause Canada got clobbered by Croatia 4-1.

Canada got the 1st goal, downhill after that. Croatia’s geriatrics * good at taking the legs out from under Canada, literally …

Croatia Fouls 13, Canada 5.

Shots on Target tell the story Croatia 10, Canada 2.

Canada mathematically eliminated. They still played well.

At least Canada made it to the World Cup unlike some other country in the Mediterranean, shaped like a boot.

And it got cold today, only 13 deg C. Double anger.

—————

* Age and treachery will overcome youth and skill.

– Fausto Coppi (a.k.a., Luka Modrić, 37 yrs old + Cane)

#26 Observer on 11.27.22 at 2:46 pm

#2 Senator Bluto on 11.27.22 at 11:47 am
Just watching the anti lock down protestors in Communist China. Canadian press is protraying them as brave freedom fighters.

I sense the irony.

Who in Canada was locked in their houses for three months? – Garth

^^^^^^^^^^
I know right. Logic totally escapes self-proclaimed Canadian “freedom” fighters and their supporters.

#27 Pulp Faction on 11.27.22 at 2:50 pm

I didn’t want to be trapped in a devalued, illiquid property with a bloated mortgage that was in excess of the value of the property.
Thanks for that.
Because of your words of wisdom, I never got house horny or suffered from FOMO.
I saw it all as a bad infectious disease I didn’t want to catch, and my awareness has served me well in my dating life too. There’s one thing I’m still horny for but not if she’s struggling to service overwhelming debt and falls in love with my “cash diet” lifestyle.
Thanks again for saving my life, Doctor.

#28 Triplenet on 11.27.22 at 2:53 pm

Faron,

A professional scientist – as opposed to an unprofessional scientist?
That’s intellectual humour!
Your a funny guy.

#29 IHCTD9 on 11.27.22 at 2:54 pm

#12 Earlybird on 11.27.22 at 1:06 pm

…how on earth can anyone that bought before year 2000 not have a free retirement? How does the next generation join this punchbowl party?

———

By thinking on your feet. Gen X and Boomers found themselves winning a lotto they never bought a ticket for. Mils on down have other advantages in the form of high wages, technology, mobility, globalization, easy credit, and single life, no kids, DINK normalization.

If I were a Gen Z, I’d be setting myself up with a decent $50-60K remote job doing whatever. Then I’d move to a small struggling town along highway 11, and buy an 8-900 sf fixer-upper with garage for 50K. I’d fix the house and be debt free in under 10 years for less than a bad coffee habit.

Immediately, I’d start plowing cash into tax sheltered investments in a way the Boomers and X’ers never could. All the while, I’d be leveraging the limitless local free wood supply for no cost heat, growing veggies, and live in a simple, minimal way. I’d enjoy backcountry exploring, fishing, hiking, ATV trails, camping, projects, and maybe buy a .410 and take up bird hunting. I’d consider getting my pilots license and buying a used Quad City Challenger II on floats, or a SHERP amphibious ATV for ultimate remote northern exploration.

In under 40 years, I’d be a millionaire with a sub 20K COL. Frankly, I wish I was a Gen Z. They got options for living like never before. As a Gen X, cultural, technological, and economic barriers prevented me from ever living this kind of awesome life. Owning a cheaply bought, highly appreciated house will never provide me with same. Cashing out just means I need to find a new roof – and now I’m in the same boat as you. They all cost the same as I just sold for.

The biggest thing, is to avoid excuses. No making excuses for why you can’t make this happen. No excuses why you can’t leave the GTA. No excuses about where your family and friends are. No cultural community excuses. That’s called planning to fail, and you absolutely will. If so, you’ve only got yourself to blame. IMHO, the ability to live a [email protected] lifestyle for peanuts, yet still retire like a baller; has never been greater. All you have to do, is make it happen.

Leverage your generation’s strengths and win. Same as ever.

#30 ElGatoNeroYVR on 11.27.22 at 3:01 pm

#13 Hateful on 11.27.22 at 1:06 pm
#54 Flop

“Just don’t remember it being this hateful 7 or 8 years ago.

Maybe I missed something along the way.

When did this blog get filled up to the brim with so many extremists…”

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

There are people on here who gleefully post about somebody losing their shirts on a home purchase, and they get applauded.

Yup, it’s a sad world.
============
What should we do instead ,give them a Participation medal in the housing race and a “Welcome to bancrupcy ,it’s all good” bumper sticker ? Some people sadly only learn from the schol of Hard Knocks.

While I don’t enjoy other people’s misery and will not cheer for someone losing their life savings what is sad is that these people could have listened to better advice such as given on this blog or just do basic math and take into account the worst case scenario rather than only count on the best. One of my kids pretty much stopped talking to us after we told them not to give into FOMO and buy a bigger place they could not possibly afford if anything goes sideways. Fast forward a few years and now into a bigger place ,with a child and only one working and they had to make major changes .
At least for them the grandparents that insisted on them buying came through to help them out , welcome to multi-generatinal living.
Yeah ,i don’t cheer for it nor am I happy that we were right ,but the whole financial education in this country must change .

#31 Ustabe on 11.27.22 at 3:03 pm

#13 Hateful on 11.27.22 at 1:06 pm

#54 Flop

“Just don’t remember it being this hateful 7 or 8 years ago.

Maybe I missed something along the way.

When did this blog get filled up to the brim with so many extremists…”

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

There are people on here who gleefully post about somebody losing their shirts on a home purchase, and they get applauded.

Yup, it’s a sad world.

We are all, each one of us, a little bit narcissistic. When you hasten your pace towards the grocery check out in order to beat the old lady to the line because that is how you roll, that is narcissism with a bit of sociopathy.

Most of us manage to keep it to beating old ladies to a place in line but when you combine those tendencies with a lack of empathy you get the menagerie we have now. And you have here in the Dog Pound, a high concentration of sturdy yet insecure while being narcissistic conservative types swirling around in a pretty small container. Fueling one another.

Me, I’m better than you, I deserve this, I worked hard for it, why should I care about this, I’m not wrong, let me tell you about me, you are off topic, its OK if I go off topic because what I have to say is so much more important that whatever it is you have to say. Have I mentioned my Tesla lately?

You are known for the company you keep. Those allowing themselves to swing their narcissistic tendencies closer to sociopathic behaviors in words or deeds will find out what Canadians want in the next election. I can hardly wait for that to be intellectually parsed and discussed on here, eh?

#32 Summertime on 11.27.22 at 3:29 pm

‘F….g’ Croatia closing the big mouth of Herdman (Heardman makes more sense).

When Alfonso Davis scored in the 2nd minute (congrats, great goal!) I said there we go, now we will get 5 in return. We got 4, which is a kind of achievement.

Challenging the finalists from the previous world cup, a very mature team with a very inexperienced squad is not a good idea.

A lot of emotions and energy, very little thinking and maturity.

Some respect and less trash talk, a little humility would be more appropriate.

#33 Sail Away on 11.27.22 at 3:32 pm

#10 crowdedelevatorfartz on 11.27.22 at 12:49 pm
@#5 Faron

“the factual contents”

—————

Bias; unfairly prejudiced for or against someone or something.
“we will not tolerate this biased media coverage”

Bias in any observations.
Pollutes the resulting outcome of any experiment.

As a scientist….you should know this.

Sad.

—————

Very astute, sir!

Without reading the link, I’m going to guess the date was factual and the rest was a hot mess. Heck, even the author’s pronouns might be biologically (you know, scientifically) non-factual.

#34 willworkforpickles on 11.27.22 at 3:52 pm

BANNED (Abusive)

#35 Westcdn on 11.27.22 at 4:04 pm

My sister and I fought like cats and dogs. I was the cat person. Katie would seek me out. I would look at her – meow. She had character.

Diane died of cancer and suffered. My SIL was worthy. Diane told me a story about a school experience. She raised her hand when the teacher asked why Greek women wear black dresses.

“To make them look thinner”

What I say? She could have been right.

#36 Dogman01 on 11.27.22 at 4:08 pm

#15 Nonplused on 11.27.22 at 1:21 pm

For You:

https://www.mrmoneymustache.com/2012/10/03/the-practical-benefits-of-outrageous-optimism/

Side note: why so high on Fission’s future but no love for Fusion…..

I grew up on Fusion sci-fi, flying mega cars powered by mini fusion reactors….

#37 Midnight’s on 11.27.22 at 4:18 pm

#8 TurnerNation on 11.27.22 at 12:35 pm

ABSOLUTELY RIGHT ON!!
Plus sooo much more from the, Rules for thee but not for me crowd.

#38 Shawn on 11.27.22 at 4:39 pm

Where’s the Price Competition?

An extremely basic feature of our capitalist and kind of free market system is that consumers are theoretically protected from price gouging by competition and the ability to shop around.

The idea and perhaps once the reality was that there were multiple competitors for most products and services and you could easily shop around. Where there were monopolies, they were regulated.

I think 50 years ago most Canadians believed and were taught that this was reasonably true.

Today, I’m pretty sure that the majority of Canadians believe that there is price gouging and a lack of competition in most of the things they spend their money on. And that the various new monopolies created by technology ae not regulated as to price.

I’m not going to bother listing all the products and services where there are less than say 6 competitors to choose from and where oligopolistic prices and profit margins exist.

A shorter list would be the areas where there are still many competitors and where there is not an oligopoly or monopoly somewhere in the supply chain.

Well, it’s good for us as investors at least.

#39 Dolce Vita on 11.27.22 at 4:47 pm

#18 Sam

Some hope …

https://twitter.com/ronmortgageguy/status/1596233411760463874

Short lived …

https://twitter.com/ronmortgageguy/status/1596168536178982913

Sad news for some homeowners.

I can’t remember if was Ron the Mortgage Guy but a Tweet about someone working at CMHC saying that the “phones were ringing off the hook” from the Banks, best described as a:

Bloodbath

out there.

If so, this cannot be good for Canada – Banks and the People.

#40 Sail Away on 11.27.22 at 4:49 pm

Speaking of Tesla… let’s start with Wow! And follow with this:

1. A fully loaded 81,000 lb Tesla Semi completed its inaugural 500 mile run last week, in a world’s first. Big contracts, massive production for the foreseeable future.
2. Tesla charging stations are being built at a crazy pace. Many of these are un-advertised and built on cheaper land away from major road stops because all Teslas automatically return to Daddy.
3. Full self driving Beta full North America wide rollout. Feedback is phenomenal. Tens of thousands of users over last few days and zero accidents. It has arrived!
4. Record deliveries at all factories. But this is to be expected.
5. Cybertruck rolling out in 2023. 1.5M pre-orders. Like it or hate it, it’s a-coming.

Up, up, and… away!!

#41 Midnight's on 11.27.22 at 4:52 pm

DELETED (Anti-vaccine whackadoodle)

#42 Baba Novac on 11.27.22 at 5:41 pm

So Dr. Garth and blog dogs, can we take the first GarthER clinical case evaluation even further?

I’m in Todd’s situation with a 2-part mortgage (5-yr VRM @ p-1.15% and HELOC @ p-0.10%) taken out in the summer of 2021, solely to invest in my non-registered account. As such, the interest is fully deductible, and currently “subsidized” by fed/prov governments to the tune of 53.53% of paid duductible interest, as I am in the top marginal tax bracket in Ontario.

Going by Dr. Garth’s eminently reasonable current projections of 1-1.25% cumulative further increases by BOC into spring 2023, my investment-purposes HELOC will go to 6.85-7.15%. Dr. Garth does not see HELOC rates coming back down significantly anytime soon (and maybe not below 3% for a generation).

I’ve got a couple more years in the top tax bracket, and during this time BOC/prime rates will stick at that high level or start to moderate slightly into 2024. Once I subsequently drop 3-4 tax brackets during a sabbatical (as early as 2024), at what tax bracket/interest rate differential does it then make more sense to unwind some of the HELOC-backed B&D ETFs and repay the HELOC? DCA out?

I’d love to see some italicized doctor’s script from Garth at the bottom. But that is understandably elusive during this time of packed ERs, so blog dogs’ and Amazons’ insights welcome.

#43 Well ... on 11.27.22 at 5:51 pm

from what I have seen of Mexican dogs … Salsa is one lucky pooch … good onya.

#44 VicPaul on 11.27.22 at 5:55 pm

#29 IHCTD9 on 11.27.22 at 2:54 pm
#12 Earlybird on 11.27.22 at 1:06 pm

…how on earth can anyone that bought before year 2000 not have a free retirement? How does the next generation join this punchbowl party?

———

By thinking on your feet. Gen X and Boomers found themselves winning a lotto they never bought a ticket for. Mils on down have other advantages in the form of high wages, technology, mobility, globalization, easy credit, and single life, no kids, DINK normalization…

IMHO, the ability to live a [email protected] lifestyle for peanuts, yet still retire like a baller; has never been greater. All you have to do, is make it happen.

Leverage your generation’s strengths and win. Same as ever.
*********

Another logical, positive post from an elder to the great young men comin’ up – nice.
Get busy building your life – planning, working, loving, teaching, sharing – until your thirty/thirty-five (you have no age-clock for children). When your ducks are in a row and you’ve developed into the authentic you (integrity and ethics, a man’s mix of compassion and killer instinct – a high-value man) then the quality of potential mates will be in your orbit. Choose well, it’s the most important choice you’ll make.

M58BC

#45 Earlybird on 11.27.22 at 6:02 pm

#29 IHCTD9
Fair enough…that was an impressive answer!

Agreed that you can really live a kick ass life these days doing those things for peanuts….thats how we roll too…

I guess its monkey see, monkey do with that age group…they expect the same thing as thier parents and that shipped has sailed. The ones I meet and work with have lost hope or are hateful about it….

Great take…

#46 Is Anybody Listening? on 11.27.22 at 6:12 pm

“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.” ― Friedrich Nietzsche

#47 Peter in AB on 11.27.22 at 6:22 pm

Anyone see the new Michael Moore documentary? He does a pretty good job of showing that “renewable energy” is a pyramid scheme and at the heart of the climate disaster is the over-population burden driven by growth which is driven by our capitalist system.

Worth a watch:
https://www.youtube.com/watch?v=Zk11vI-7czE&t=20s

BTW, I’m team nuclear baseload w/nat gas peak mix of energy until fusion is viable.

#48 Lower the Boom....er not on 11.27.22 at 6:29 pm

Yogism 8: “I heard it said that when you write the number 8 it has no real end, so I’m not going to start”.

#49 Ron on 11.27.22 at 7:01 pm

https://www.cbc.ca/news/world/china-zero-covid-protests-1.6665822

#50 Is anybody listening? on 11.27.22 at 7:13 pm

WhatsApp data leak: 500 million user records for sale, thanks Facebook

https://cybernews.com/news/whatsapp-data-leak/

#51 Sail Away on 11.27.22 at 7:21 pm

#42 Baba Novac on 11.27.22 at 5:41 pm

Re: Heloc borrow-to-invest

It’s probably best to build a spreadsheet and run different scenarios. An important factor is the total borrowed amount, because the larger the leverage, the lower the return differential you may choose to accept.

$1M @ 7% is a lot different than $10M at the same when the hope in the end is to use money from elsewhere purely to your benefit, without it really costing you anything.

In the end, it comes down to your personal comfort level.

#52 Over Population on 11.27.22 at 7:24 pm

#47 Peter

LOL, the wealthier capitalist nations have the lowest birth rates. Virtually everyone knows that well documented, undeniable fact. Or I thought they did.

So much for your ‘capitalism drives population growth’ nonsense. (I doubt even Moore would make such an easily disprovable claim.)

The world has endless resources, and we will continue to make better use of them.

Please don’t tell me you are one of the Malthusians who hasn’t figured out yet that we have a giant nuclear reactor that helps us grow things over and over and it will never run out of ‘fuel’.

Hint: It’s big and yellow and rises every day. (And no, it won’t stop doing that, sigh.)

#53 crowdedelevatorfartz on 11.27.22 at 7:26 pm

@#28 Triplenet
“A professional scientist – as opposed to an unprofessional scientist?’

+++
One of the oldest professions.

#54 Sail Away on 11.27.22 at 7:27 pm

#29 IHCTD

Yes! We have a number of young 20’s relatives who bought cheap places in Arizona and drive trucks for the family company. Basically, they live in their trucks working as many gigs as possible back to back, then have a home when they decide to chill for a month or so. Perfect at that age and single.

Lots of options out there. Review carefully and approach logically.

#55 Quintilian on 11.27.22 at 7:52 pm

#31 Ustabe on 11.27.22 at 3:03 pm

“You are known for the company you keep. Those allowing themselves to swing their narcissistic tendencies closer to sociopathic behaviors in words or deeds will find out what Canadians want in the next election.”

Ustabe, you are wise.
I gather you have studied Spinoza.

#56 Something very bad is happening on 11.27.22 at 7:57 pm

#22 Faron on 11.27.22 at 2:10 pm

#8 TurnerNation on 11.27.22 at 12:35 pm

The incidence of cold and flu were down markedly during the two years of masking and very mild closures and restrictions. Highly infectious COVID was all that was leaking through.

Prior to 2020, I would get a cold once a year and the flu once a decade. I had neither until getting RSV from a packed thanksgiving weekend ferry ride in October. 2 and 1/2 years. N of 1, but supported by N of millions.

Also, getting COVID sucks. Long covid is pernicious and my symptoms are mild compared to the severe cases kicking around. Those who were protected from the severe early strains by Canada’s prudent measures should be nothing but grateful. Your conspiracy minded view isn’t supported by facts, is ignorant, cruel and sick. You have a heck of a lot of maturity and wisdom to gain. Boggles that Garth continues to host your steady beat of nonsense.

—————

Sorry to hear that. You have long covid and got RSV despite taking precautions…. Sounds like a compromised immune system. I’m hearing of many such cases since last year, and it appears to be getting worse. So many people constantly getting sick and dying all of a sudden and scientists are baffled as to what’s causing it.

Take care of yourself, maybe look into some of the protocols that have been developed to deal with long covid and v injuries… I hear many are having positive outcomes.

All the best, good luck.

#57 Midnight’s on 11.27.22 at 8:06 pm

BANNED (Congratulations)

#58 crowdedelevatorfartz on 11.27.22 at 8:07 pm

@#50 Listening….?
“WhatsApp data leak: 500 million user records for sale, thanks Facebook”
++++

hahahahaha.
Whats Meta shares dropped to now?

#59 Ponzius Pilatus on 11.27.22 at 8:45 pm

Is it just me,
Or is Christmas on earlier and earlier every year.
I suggest let’s combine Black Friday, Cyber Monday, Christmas and Valentines in a one week shopping orgy.
And get it over with.

#60 Ponzius Pilatus on 11.27.22 at 9:21 pm

Sailo,
Re: Self driving cars.
Billions of women around the world are finally allowed to drive.
Do you think they will give that up to be chauffeured, again?

#61 Ponzius Pilatus on 11.27.22 at 9:24 pm

36 Dogman01 on 11.27.22 at 4:08 pm
#15 Nonplused on 11.27.22 at 1:21 pm

For You:

https://www.mrmoneymustache.com/2012/10/03/the-practical-benefits-of-outrageous-optimism/

Side note: why so high on Fission’s future but no love for Fusion…..

I grew up on Fusion sci-fi, flying mega cars powered by mini fusion reactors….
——————
Looks like you still have not grown up.
And, keep on dreaming.

#62 Victor Llearna on 11.27.22 at 9:46 pm

Just wait until when the liberals create the dental care act. getting a filling will take 8 months and dentist offices will have 24 hour waiting times.
Governments mess up everything they touch.

#63 crowdedelevatorfartz on 11.27.22 at 11:16 pm

@#62 Victor
“Governments mess up everything they touch.”

+++
Shhhhh.
Faron still believes in the Liberal tooth fairy….

On another wasteful govt expenditure note.

Nasa has spent 10 years and $200,000,000 ( yes million) on designing a new space suit for the Moon, Mars missions.
It still has issues.
They have finally decided to put out a competition to…wait for it……..the private sector……

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwj1w7u2gdD7AhULATQIHTjRBNEQtwJ6BAgQEAI&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DAlbwpoaNJlU&usg=AOvVaw3HLA5ppTTpv-hA55KWoHSr

#64 Midnight’s on 11.27.22 at 11:17 pm

BANNED

#65 Nonplused on 11.28.22 at 1:02 am

#36 Dogman01 on 11.27.22 at 4:08 pm

“Side note: why so high on Fission’s future but no love for Fusion…..”

I can forgive you for not reading every single comment I’ve made and remembering every single thing I said…

I’m all in favor of fusion too, but I perceive that’s still 20 years out, as it has been for the last 60 years. But I’m all for research now and implementation if they get it working. Could be even bigger than the AI “singularity” they talk about. Literally the end of all our worries. (But in cars? Let’s get the big plants working first. ;-)

Gen IV fission on the other hand technically pencils out now. The only question is economics, but I can’t believe it will be worse than solar or wind. Time to build a few plants and see how it goes.

#66 Tony on 11.28.22 at 7:59 am

Inflation is only heading lower because of the lockdown in China. Gasoline being a major component in the CPI in America. When the lockdown ends oil and gasoline will spike in price.

#67 crowdedelevatorfartz on 11.28.22 at 8:18 am

@#59 Perturbed Ponzie’s Potential Presents

“Or is Christmas on earlier and earlier every year.
I suggest let’s combine Black Friday, Cyber Monday, Christmas”
+++++
Story time!
It seems you forget several decades back when advertisers used to pump Christmas commercials immediately after Halloween.
The backlash was epic. People hated it.
“Black Friday’ “Cyber Monday”, “Christmas”, “Boxing Day”
All those “sales” scams don’t mean a thing when customers are tapped out.

It’s looking like the Black Friday sales are a bust this year.

A harbinger of the Recession to come?

#68 Tony on 11.28.22 at 8:20 am

Re: #9 Dave on 11.27.22 at 12:46 pm

The lockdown in China can’t last forever either. Once it ends the shorts on oil and gas will cover.

#69 crowdedelevatorfartz on 11.28.22 at 8:25 am

Midnights

Banned.

++++
Look on the bright side.
It could be worse.
300 years ago.
Loquacious Pirates that talked crazy used to have their tongues cut out.
And
You’re in an exclusive club with EmptyPickleJar
Alas.
I have no empathy for EmptyPJ.

#70 Dharma Bum on 11.28.22 at 10:20 am

#28 Triplenet

You’re a funny guy.
—————————————————————————————————-

Funny how?

https://www.google.com/search?q=goodfellas+funny+how+youtube&oq=goodfellas+funny+how+youtube&aqs=chrome..69i57j0i390l3.7797j0j15&sourceid=chrome&ie=UTF-8#fpstate=ive&vld=cid:53946eeb,vid:iT9ZivXBkmc

#71 Dharma Bum on 11.28.22 at 10:23 am

Actually, Faron is funny.

I spit my coffee through my nose when he called Pe-Pe’s mouth a “garbage fountain”! LOL!

Now that’s funny, I don’t care who y’are!

https://www.google.com/search?q=larry+the+cable+guy+thats+funny+i+dont+care+who+you+are+youtube&oq=larry+the+cable+guy+thats+funny+i+dont+care+who+you+are+youtube&aqs=chrome..69i57.17196j0j7&sourceid=chrome&ie=UTF-8#fpstate=ive&vld=cid:b2fdd85f,vid:RFlCD5CYAcU

#72 Dharma Bum on 11.28.22 at 10:36 am

#62 Victor

Governments mess up everything they touch.
—————————————————————————————————–

Ain’t it da truth!

https://www.youtube.com/watch?v=c0dgPlAFyK8

#73 Sail Away on 11.28.22 at 11:33 am

“[Iraq is a] crappy place filled with a bunch of, you know, semiliterate primitive monkeys,”

— Tucker Carlson

#74 Old Boot on 11.28.22 at 2:53 pm

#60 Ponzius Pilatus on 11.27.22 at 9:21 pm
Sailo,
Re: Self driving cars.
Billions of women around the world are finally allowed to drive.
Do you think they will give that up to be chauffeured, again?

————-

Are Austrian babies especially slippery?

#75 Garrett on 11.29.22 at 10:36 am

Thanks for another great entry, Garth. I was debating whether to refinance my rental property and put the money in my TFSA. I didn’t think about the additional interest write-off from the heloc / second mortgage. I will do some more thinking but I believe I have my answer. Thank you.