# Everyone enjoying these new highs?



## james4beach

I try not to get emotional about money and investing, but I've got to admit that I really enjoy seeing these new all time highs.

Anyone else enjoying this?

My portfolio hit a new all time high in June, and I said to myself, that has to be the maximum, and it seems to have rocketed higher since then.

I realize this won't impress the retired people with large fortunes, but my investments have grown by ~ 150K in the last couple years, which is more than I could have saved through just paycheques alone. Markets have really been cooperating nicely.


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## Tostig

Makes me wonder if I should start selling call options on portions of my holdings. I bet there's an ETF for that already.


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## Synergy

Everyone likes to see their money grow, but the dips and valley's can be just as satisfying. Opportunity to purchase more at a discount! All depends on where you are at I guess. I'm still in the accumulation phase so I'm not overly concerned with all time highs.


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## AltaRed

It is nice but mostly means I give more away before the end of each year (most years).

In saying that, BC SPCA has just put out a Wildfire Alert for donations to send people into wildfire areas to rescue stranded animals and is building an evacuation shelter in Kamloops. These poor animals need all the help they can get. Given the year has been good, I will be punching out a donation tomorrow to help out. These are the real pleasures a rising market provides.


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## Rusty O'Toole

My trading account has doubled in value since Jan 1 2020 and this just took place a couple of days ago. So yes I am pleased, and hope it goes up more, but still keep my stoploss in place.

Up $137,000 last year, $151,000 so far this year. Started with $280,000. Now $567,854.


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## doctrine

My accounts have been hitting all time highs monthly since December 2020. Enjoy the feeling, but I doubt it lasts. August and September in particular can be very volatile. It's sometimes survival season until we get into October.


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## kellanfaraday

I have the same sentiments. Things have been looking way up lately, in quite a lot of industries (ah, diversification).

But I feel like we're in for a wake-up call soon. Bitcoin is starting to fall already, so stocks are likely to follow suit in a few months.


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## Thal81

I've made almost twice more in gains YTD than my typical annual spending, which was also the case for the last two years. Also just turned 40 years old and that triggered all sorts of things. Thinking of calling it quits with the job.


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## MrMatt

I like the new highs, but finding buying opportunities is getting hard.


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## MrMike

MrMatt said:


> I like the new highs, but finding buying opportunities is getting hard.


I'm conflicted because on the one hand, I think to myself, when will I buy more BMO? It's hard to pay $130/share when my avg price is $75.
But on the other hand, I would because in 15 years the price will be higher than that.


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## GreatLaker

DAX down 281
S&P futures down 58
Dow futures down 479
NASDAQ futures down 201
Jinx thread☹


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## Beaver101

^


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## MrMatt

GreatLaker said:


> DAX down 281
> S&P futures down 58
> Dow futures down 479
> NASDAQ futures down 201
> Jinx thread☹


Can it drop 30% or so? maybe on Fortis?


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## Tostig

MrMatt said:


> Can it drop 30% or so? maybe on Fortis?


Of course they can. Markets dropped over 35% March 2020.

Very timely that this thread started just before the 1.5% market drop on opening.


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## milhouse

Double edged sword. 
I psychologically enjoy seeing my portfolio grow like the next guy.
However, don't enjoy getting fewer shares from my DRIPs and additional buys costing more. Also, instead of just enjoying the ride, I can't help thinking "This is too good of a run. When's the pullback/correction?"


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## AltaRed

milhouse said:


> However, don't enjoy getting fewer shares from my DRIPs and additional buys cost more. Also, instead of just enjoying the ride, I can't help thinking "This is too good of a run. When's the pullback/correction?"


You will get over that in 9.5? months. Re-investment (DRIPS or new money) is a non-issue for those in net withdrawal. It's been over a decade since I have cared about any of that on an overall portfolio basis and is highly liberating. Perhaps just build your cash reserve leading into retirement shortly and that will take care of your re-investment angst.


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## Ukrainiandude

Unless you sell, these are all unrealized gains.
It feels like summer 2007 to me, all over again. People are bragging about how much they made, and everyone feels like a financial genius.


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## Ukrainiandude

milhouse said:


> When's the pullback/correction?


 If not for fed it should have happened in fall of 2020. Now that the fed decided to participate, who knows. Could be fall 2021. Or not.


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## AltaRed

There is growing consensus in financial circles I think that we may be mid-cycle of a bull market. Good for 2-5 years yet. 

There will be 10% corrections that occur, as they do in all bull markets, but no 20+% bear on the horizon. Waiting to 'time' is likely a mug's game. We might have a 20% gain before a 10% correction. Where does that leave you if you are waiting on the sidelines? Still 10% in the hole.


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## Ukrainiandude

AltaRed said:


> Good for 2-5 years yet.





AltaRed said:


> There is growing consensus in financial circles I think that we may be mid-cycle of a bull market.


 Yeah, and the more investors join the party the higher prices will go. 
My two pennies, no one knows the future. But some might pretend that they do.


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## AltaRed

Ukrainiandude said:


> Yeah, and the more investors join the party the higher prices will go.
> My two pennies, no one knows the future. But some might pretend that they do.


Well, of course. That is why no one goes full margin, or max's out their HELOC for investment purposes. It is about probabilities.


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## Ukrainiandude

AltaRed said:


> no one goes full margin, or max's out their HELOC for investment purposes


Keep believing that.


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## peterk

We're about +$500k in 2 years on net worth - crazy.

More and more I'm thinking I should cash out ~$100k of this "free money" and buy the things I know I'll need in a couple years from now anyways.. New SUV $60k, new windows and doors $20k, and several lifestyle and enrichment things for myself, wife, and children that we've been itching to buy for a while (piano, canoe, braces, etc.) $20k.

But I don't know...that does seems like unnecessary spending... probably the wrong long term decision. At the same time, I'll be some-pissed-off if 2 years from now our stocks are down $200k from right now, and I still need to buy that $100k worth of stuff...


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## sags

I would assume our DB pensions and the CPP are doing quite well along with everyone else in the markets.

Maybe it is time to re-calculate the benefit payouts in relation to the capital. At least the pension "deficit" threat is a thing of the past.

Our autoworker health care fund is doing so well they stopped taking premiums 6 months ago and expanded the coverage.


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## AMABILE

New SUV $60k,
new windows and doors 20k
piano, canoe, braces, etc. $20k.
of course you need to cash out and do this stuff *NOW.*


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## Eder

peterk said:


> At the same time, I'll be some-pissed-off if 2 years from now our stocks are down $200k from right now, and I still need to buy that $100k worth of stuff...


I thought you were fairly young. Who cares about 2 years down the road...accumulate no?


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## Ukrainiandude

peterk said:


> 2 years from now


_just hoping the next guy pays more_


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## gibor365

Our portfolio hit All time high 20 or 30 times this year. Last All time high was yeaterday......no anymore today . But more important that out dividend income grew up 10% comparing to half-year last year


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## Karlhungus

I realize the emotional side of my brain is happy, but then the logical side realizes thats not good long term. Logical side wins out. Much rather have a prolonged side/down market like the early 2000's so I can load up on cheap stocks.


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## Karlhungus

AltaRed said:


> Well, of course. That is why no one goes full margin, or max's out their HELOC for investment purposes. It is about probabilities.


You might enjoy this famous thread - https://www.bogleheads.org/forum/viewtopic.php?f=10&t=5934


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## peterk

AMABILE said:


> New SUV $60k,
> new windows and doors 20k
> piano, canoe, braces, etc. $20k.
> of course you need to cash out and do this stuff *NOW.*


Ha- I know... but when _AM I_ supposed to buy things, maybe things a bit nicer than the bare minimum, if not when markets are at all time highs? certainly not when when markets are low... then I should be investing more.

I'm sure I probably won't, too cheap...


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## james4beach

MrMatt said:


> I like the new highs, but finding buying opportunities is getting hard.


If you were investing in a balanced fund or 50/50, it's pretty clear what you would buy right now: bonds.

You could even diversify into more asset classes, like gold, and these days you would be buying gold & bonds since they both are relatively low in the portfolio.

I added over $100K to my portfolio this year so far, and most of it went into gold and bonds. Why would I buy stocks, when I'm already overweight in them, and other assets can be bought cheap?

*1 year chart of bonds*


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## MrMatt

james4beach said:


> If you were investing in a balanced fund or 50/50, it's pretty clear what you would buy right now: bonds.
> 
> You could even diversify into more asset classes, like gold, and these days you would be buying gold & bonds since they both are relatively low in the portfolio.
> 
> I added over $100K to my portfolio this year so far, and most of it went into gold and bonds. Why would I buy stocks, when I'm already overweight in them, and other assets can be bought cheap


I don't think anything is "cheap".
But I'm actually moving into commodities as an inflation hedge. 

I don't buy commodities directly, just the companies that produce them.

KL gold, WFG (West Fraser Timber), 

The Lumber market FYI is very volitile and cyclic

I'd like to get more copper, but not sure


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## MrBlackhill

MrMatt said:


> I'd like to get more copper, but not sure


I've been enjoying the ride with ERO. Bought in 2020 and I'm currently at +90%. Pretty volatile ride, but it's been going up.



MrMatt said:


> KL gold


I also have KL which I bought in 2020 and I added more recently. I'm waiting patiently.


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## MrMatt

MrBlackhill said:


> I also have KL which I bought in 2020 and I added more recently. I'm waiting patiently.


I bought DGC... watching the stream of good news out of KL makes me angry how ripped off I got.


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## Janus

james4beach said:


> If you were investing in a balanced fund or 50/50, it's pretty clear what you would buy right now: bonds.
> 
> You could even diversify into more asset classes, like gold, and these days you would be buying gold & bonds since they both are relatively low in the portfolio.
> 
> I added over $100K to my portfolio this year so far, and most of it went into gold and bonds. Why would I buy stocks, when I'm already overweight in them, and other assets can be bought cheap?


Bonds cheap? It's the only asset class I know of where I just can't understand how you generate a positive real return going forward.


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## mattw

Janus said:


> Bonds cheap? It's the only asset class I know of where I just can't understand how you generate a positive real return going forward.


 Agreed. Holding 50% of your bond allocation in a high interest savings is likely going to net you a better return without risk. Plus, benefit by rate increases.


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## AltaRed

That is true for now. These are the kinds of data points folks love to dredge up when it suits them. 

Not saying I'd buy a bond at this time (I would not) but it seems trendy to dismiss an asset class based on a point in time.


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## MrMatt

sags said:


> I would assume our DB pensions and the CPP are doing quite well along with everyone else in the markets.
> 
> Maybe it is time to re-calculate the benefit payouts in relation to the capital. At least the pension "deficit" threat is a thing of the past.
> 
> Our autoworker health care fund is doing so well they stopped taking premiums 6 months ago and expanded the coverage.


The pension deficit is a HUGE problem. We've got incredibly low rates and huge inflation, they're going to be in big trouble.


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## james4beach

Janus said:


> Bonds cheap? It's the only asset class I know of where I just can't understand how you generate a positive real return going forward.


There are many ways bonds can generate a positive real return. One way is if inflation drops. Another way is if interest rates go up in the coming years.

But in any case, bonds are supposed to help stabilize the portfolio. You get the high returns from stocks, and bonds add portfolio stability.

If you don't think you need portfolio stability, then no need for bonds.


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## james4beach

mattw said:


> Agreed. Holding 50% of your bond allocation in a high interest savings is likely going to net you a better return without risk. Plus, benefit by rate increases.


Actually, staying invested in bonds is a far better way to benefit for a rising interest rate environment. Bonds performed very well from 1940-1980 as interest rates went higher over 40 years.

Bonds & GICs will outperform cash over the long term, virtually a guarantee (it's called the term premium).

For example, a typical bond ETF today like VAB has a _yield to maturity_ of around 1.7% whereas even the highest paying high-interest savings account tops out at 1.25%. That means that you are sure to get a higher return by investing in a bond ETF today, than leaving the money as cash... which is exactly what you would expect based on the term premium (and yield curve).

Invest $1 in a HISA and it will be "working for you" at 1.25% or likely less. My best account pays 1.1%
Invest $1 in VAB or XBB and it will be "working for you" at 1.7%
Invest $1 in a 5 year GIC ladder and it will be something similar, around 1.7%

It's sad that people have this misconception that sitting in a cash account is somehow better than a bond fund. The exception to this would be 'short term bonds' where yeah, the return may not exceed a high interest savings account.


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## Gator13

We are in a position where we have money to invest every month and we are sticking to our plan. Invest in what we think are good solid companies and not try to time the market.


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## doctrine

More all time highs today for the S&P 500!

I wonder though. COVID cases are starting to move up on the delta variant. Up 25% week over week in the US, and 40% in Europe. It is virtually certain the death wave won't be as high, but its not clear how high it might go. If you aren't vaccinated, it seems like this variant is coming for you.

For investing, I suspect it means we may not actually get the inflation because re-opening won't be as strong as suspected. Look at the drop in bond yields this week. Could be pricing in more easing too. These low rates are supporting the market despite the lower potential growth because of delayed full re-opening.


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## Ukrainiandude

doctrine said:


> COVID cases


Old news, already priced it. Markets will go down but on something else unrelated to covid. And it will be unexpected and it will trigger the chain reaction and those people who invest with margin etc will be in for the reckoning.


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## gibor365

gibor365 said:


> Our portfolio hit All time high 20 or 30 times this year. Last All time high was yeaterday......no anymore today . But more important that out dividend income grew up 10% comparing to half-year last year


Back to All time high today


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## gibor365

doctrine said:


> More all time highs today for the S&P 500!
> 
> I wonder though. COVID cases are starting to move up on the delta variant. Up 25% week over week in the US, and 40% in Europe. It is virtually certain the death wave won't be as high, but its not clear how high it might go. If you aren't vaccinated, it seems like this variant is coming for you.
> 
> For investing, I suspect it means we may not actually get the inflation because re-opening won't be as strong as suspected. Look at the drop in bond yields this week. Could be pricing in more easing too. These low rates are supporting the market despite the lower potential growth because of delayed full re-opening.


Just follow Israel numbers, the country that fully vaccinate everyone who wanted with the best vaccines, so far 7 day moving average of deaths = 1 , in US states with high vaccination rate like NY 7 day moving average of deaths = 7...


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## doctrine

I am looking. Israel is starting to reintroduce some restrictions, especially on international tourism. And I think in other countries, there are more unvaccinated amongst older populations than Israel. It's not the end by any means, but it's also early in the delta spread. Might not really see what is going to happen until the fall. Or maybe this spread of COVID amongst the unvaccinated will increase vaccination numbers enough to make it a moot point.


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## james4beach

doctrine said:


> For investing, I suspect it means we may not actually get the inflation because re-opening won't be as strong as suspected. Look at the drop in bond yields this week. Could be pricing in more easing too. These low rates are supporting the market despite the lower potential growth because of delayed full re-opening.


Inflation is notoriously difficult to predict. It's one thing that economists have a very poor accuracy rate in forecasting... and it may depend on the pandemic direction, so who knows.

Many people at CMF are confident about their inflation predictions. It seems that every 2 hours or so, someone confidently declares the future direction of inflation and interest rates. Silly stuff.


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## peterk

Excellent. Just bought a tiny bit more of XIU in TFSA and VTI in RRSP yesterday with some cash that's trickled in from dividends in the last month. TFSA and RRSP fully maxed and 100% stocks.


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## Eclectic21

MrMatt said:


> The pension deficit is a HUGE problem. We've got incredibly low rates and huge inflation, they're going to be in big trouble.


Interesting that the recent reports are that the funding has improved to something like twenty year highs.

Why's inflation a problem for the DB pension?
At best, I've had a partially indexed pension so from my perspective, inflation is my problem.


Cheers


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## Jimmy

Good article in Globe. Another adviser today telling you wisely to avoid long term and govt bonds. You also have to be more active and scrap traditional, inflexible investment plans. No more 'set it and forget it' approaches.

Kurt Reiman, chief investment strategist for Canada at global investing BlackRock says to find 'other' solutions for the lousy yields of govt bonds. Their mean expected return over 10yrs for bonds is only 1.7%. So for now underweight govt bonds, look at ST corporate bonds < 5 yrs only and overweight stocks.

*Q: Let’s say I have a conventional 60/40 portfolio of stocks and bonds – what tweaks do I need to make to adjust for rising inflation? *

If you’re holding cash or government bonds,* yields are so low today that they’re not keeping pace with inflation.* So the purchasing power and the intended portfolio resilience to inflation is more limited. *We have to find other solutions.*

In the near term, meaning our tactical investment horizon over the next six to 12 months, we’re doing a few things. *We were underweight, now we’ve decreased that underweight.* And, we’ve increased our allocation to inflation-protected bonds. Another step to limit inflation impact is to overweight stocks – we’ve done that. Within stocks, we would lean into, for example, U.S. small caps, which have an increased allocation to cyclical sectors like energy, materials, financial and industrials.

*Q: Investors are really struggling with bonds – they understand the function bonds perform in acting as a hedge against stock market plunges, but yields are low and bond prices have fallen this year. What’s the best way to get your fixed income exposure right now?*

The first approach is to *shorten duration [by focusing on bonds maturing in the short term, usually meaning five years or less].* I would then ensure a reasonable allocation to corporate bonds, by virtue of the fact that they offer higher income [than government bonds]. I would also consider putting a portion in inflation-linked bonds. This requires quite a bit more due diligence than the kind of set-it-and-forget-it approach that investors used from the early 1980s to, basically, now. Fixed income is still a critical part of the portfolio, but it requires more attention than it did in the past.

It’s going to require investors to dig deeper to understand the outlook and where the opportunities lie. For Canadian aggregate bonds, our mean expected return is 1.7 per cent over 10 years.


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## :) lonewolf

james4beach said:


> Actually, staying invested in bonds is a far better way to benefit for a rising interest rate environment. Bonds performed very well from 1940-1980 as interest rates went higher over 40 years.
> 
> Bonds & GICs will outperform cash over the long term, virtually a guarantee (it's called the term premium).
> 
> For example, a typical bond ETF today like VAB has a _yield to maturity_ of around 1.7% whereas even the highest paying high-interest savings account tops out at 1.25%. That means that you are sure to get a higher return by investing in a bond ETF today, than leaving the money as cash... which is exactly what you would expect based on the term premium (and yield curve).
> 
> Invest $1 in a HISA and it will be "working for you" at 1.25% or likely less. My best account pays 1.1%
> Invest $1 in VAB or XBB and it will be "working for you" at 1.7%
> Invest $1 in a 5 year GIC ladder and it will be something similar, around 1.7%
> 
> It's sad that people have this misconception that sitting in a cash account is somehow better than a bond fund. The exception to this would be 'short term bonds' where yeah, the return may not exceed a high interest savings account.


 Individual bonds & GICs will out perform cash in long run as long as they do not default. rising Interest rates can cause bond funds unless target dated to lose a lot of money even if held long term 20, 40, 50 or 100 years.


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## MrMatt

Eclectic21 said:


> Interesting that the recent reports are that the funding has improved to something like twenty year highs.
> 
> Why's inflation a problem for the DB pension?
> At best, I've had a partially indexed pension so from my perspective, inflation is my problem.


Well it depends how they calculate the benefit, but many pensions do at least some indexing.
One I'm thinking of bases the pension off your last X years worked.


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## AltaRed

Many corporate pensions, including mine, have zero indexing. Spouse's civil service DB has 60% indexing. I have been retired 15 years, spouse 8 years. Thank goodness for benign inflation so far during my retirement. I may have dodged the majority of my inflation risk given I don't expect to live beyond another 15 or so years.... not that our DB pensions are very significant.


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## gibor365

doctrine said:


> I am looking. Israel is starting to reintroduce some restrictions, especially on international tourism. And I think in other countries, there are more unvaccinated amongst older populations than Israel. It's not the end by any means, but it's also early in the delta spread. Might not really see what is going to happen until the fall.* Or maybe this spread of COVID amongst the unvaccinated will increase vaccination numbers enough to make it a moot point.*


 Sure, maybe those who on the fence will decide to get vaccines... Also, more unvaccinated getting virus, less people who doesn't have any antibodies


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## james4beach

Jimmy said:


> Good article in Globe. Another adviser today telling you wisely to avoid long term and govt bonds. You also have to be more active and scrap traditional, inflexible investment plans. No more 'set it and forget it' approaches.


lol, more terrible advice. You've got to stop reading this trash Jimmy. These are the narratives of active managers and advisors.

You might as well watch CNBC while you're at it. They will tell you how to time the market as well.

Jimmy, just being real with you and telling you man... @MrBlackhill too ... "actively" navigating markets and using facile logic to reposition oneself does not work. It's a losing strategy in the long term and studies have shown this.


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## Jimmy

james4beach said:


> lol, more terrible advice. You've got to stop reading this trash Jimmy. These are the narratives of active managers and advisors.
> 
> You might as well watch CNBC while you're at it. They will tell you how to time the market as well.
> 
> Jimmy, just being real with you and telling you man... @MrBlackhill too ... "actively" navigating markets and using facile logic to reposition oneself does not work. It's a losing strategy in the long term and studies have shown this.


Respectfully, you are becoming a fanatic and there is no pt even arguing w such hysteria.

For your sake when there is an increasing chorus of professional financial advisers who do this for a living all saying the same thing, maybe you should consider what you are doing is crazy vs trying to convince people the group are crazy. They are hardly active managers and they are not 'timing' the market either. They just know when to make some tactical adjustments to avoid making crappy 1.7% returns on long term bonds.

These advisors have forgotten probably more than any of us here will ever know about investing. They are trying to save you from yourself and the faulty outdated investment plans out there and you should be grateful


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## james4beach

Jimmy said:


> They are trying to save you from yourself and the faulty outdated investment plans out there and you should be grateful


Active management doesn't work, and this has been proven countless times. Not sure what else I can tell you.

Advisors, active fund managers, and even hedge funds (with the smartest people on earth) cannot even beat passive investment strategies long term. So what does that tell you about their skills?


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## Thal81

I'm getting flashbacks of 2017. Sell your bonds! Buy short term bonds! Preferred shares is the new fixed income! (lol, ridiculous).
In retrospective, buying and holding aggregate bond funds was the right move in 2017. I don't know how it will turn out this time, but I don't think you can go wrong by sticking to ZAG, XBB or VAB. And I believe that's true even if this year and the next are negative. I'm crazy, right?


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## MrBlackhill

Thal81 said:


> I'm getting flashbacks of 2017. Sell your bonds! Buy short term bonds! Preferred shares is the new fixed income! (lol, ridiculous).
> In retrospective, buying and holding aggregate bond funds was the right move in 2017. I don't know how it will turn out this time, but I don't think you can go wrong by sticking to ZAG, XBB or VAB. And I believe that's true even if this year and the next are negative. I'm crazy, right?


Maybe, but how far in the negative must the rates go before a majority of people start agreeing? Do you think people in Switzerland are buying bonds? I'm no expert, it's just an open question.


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## :) lonewolf

james4beach said:


> I try not to get emotional about money and investing, but I've got to admit that I really enjoy seeing these new all time highs.
> 
> Anyone else enjoying this?


I find repeating making money shorting the market during crashes the most rewarding feeling. After seeing Arch Crawford on FNN after the 1987 crash having made a huge amount of money during the crash I wanted to be able to do the same thing. I started reading his work Arch called the top of the 1987 market with a horrendous crash to follow to with in one day over a month in advance. ( Arch retired last month @ 80 years young. Like me he see's through the BS & refuses to wear a mask.

I also subscribed to Elliott wave international after Bob Prechtor set the all time record in the United States Trading championships in the options division. The money is made fast & in multiples of about 10 - 35 fold in my cases during crashes. Making money while everyone else is losing is a real confidence boaster in ones independent thinking & having done it multiple times it gives you the feeling it was not a lucky lottery ticket win.

I have been using Elliott wave playing the long side of the rally with small amount on the table using 3x ETFs. In the Nasdaq 100 looking for a possible 3rd wave top in the 15,000s where wave 1 would equal wave 5 in the 5 wave rally that started after the wave 2 crash that began in 2000


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## Jimmy

james4beach said:


> Active management doesn't work, and this has been proven countless times. Not sure what else I can tell you.
> 
> Advisors, active fund managers, and even hedge funds (with the smartest people on earth) cannot even beat passive investment strategies long term. So what does that tell you about their skills?


This isn't even a debate about 'active management' vs low return passive management.
Finance professionals are telling you to tweak traditional 60/40 and other out of touch investment plans for the new ST realities of low interest rates and they are right. XBB is down -3.5% ytd, XSB is down -.5%. looks like they are right.

BTW on 'active' investing again  advisors holding concentrated portfolios Lynch, Pape,Buffet, Gardner Brothers, Heinzl etc etc have all destroyed low return lazy index investing but you already know this. Mutual fund managers who have to hold 200+ stocks and basically buy the index obviously aren't going to beat it.


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## Spudd

Jimmy said:


> BTW on 'active' investing again advisors holding concentrated portfolios Lynch, Pape,Buffet, Gardner Brothers, Heinzl etc etc have all destroyed low return lazy index investing but you already know this. Mutual fund managers who have to hold 200+ stocks and basically buy the index obviously aren't going to beat it.


"have all destroyed" cannot be true, because the index is the sum of all investors' activity. Unless you think that retail investors are collectively large enough volume and horrible investors to counteract the absolute destruction of the indexes wreaked by literally every active advisor.


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## Jimmy

Spudd said:


> "have all destroyed" cannot be true, because the index is the sum of all investors' activity. Unless you think that retail investors are collectively large enough volume and horrible investors to counteract the absolute destruction of the indexes wreaked by literally every active advisor.


I didn't say every active investor though.

You omitted the ' advisors holding concentrated portfolios ' (and their list) part. You are free to compare Berkshire's returns to the S&P 500 if you don't think Buffet can beat the lazy index.


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## james4beach

Thal81 said:


> I'm getting flashbacks of 2017. Sell your bonds! Buy short term bonds! Preferred shares is the new fixed income! (lol, ridiculous).
> In retrospective, buying and holding aggregate bond funds was the right move in 2017. I don't know how it will turn out this time, but I don't think you can go wrong by sticking to ZAG, XBB or VAB. And I believe that's true even if this year and the next are negative. I'm crazy, right?


Yeah, these kinds of moods appear every once in a while. It's just human nature I suppose.

People who make all these prognostications, like the guys on CNBC and in the media, might get some of these calls right once in a while. For the short term anyway. The problem really is that they cannot successfully time their way through markets over the long term. We've seen the long term results of hedge funds and active, tactical fund... they suck.

Trying to time markets, asset classes, interest rates, is not a good strategy in the long term, assuming you have a 10+ year horizon.

Deciding on a strategy you like the best. And then stick with it. If you don't like 60/40 and think we now live in a world where you must be 80% stocks 20% preferreds, fine, then decide on that and *stick with* that, no matter what.


----------



## Eder

I think it might be fool hardy to stick with it no matter what. If conditions change so should a buy & hold portfolio imo.

I'm putting any maturing gic/bond into REIT's for the last 6 months. Not saying it is the right thing to do but changing conditions (not even beating the rate of inflation) requires me to not buy more.

When low rates first really hit a few years ago I started putting all maturing fixed into preferreds...maybe I got lucky but I still hold them instead of the GIC ladder I bought them with.

Once GIC rates & AAA bonds return to paying rate of inflation +1% I'll return to buying them.

No idea how a young person will ever retire getting 0% real return on their saved money.


----------



## james4beach

Eder said:


> I'm putting any maturing gic/bond into REIT's for the last 6 months. Not saying it is the right thing to do but changing conditions (not even beating the rate of inflation) requires me to not buy more.


How do you know your existing investments won't beat inflation?


----------



## MrBlackhill

james4beach said:


> @MrBlackhill too ... "actively" navigating markets and using facile logic to reposition oneself does not work. It's a losing strategy in the long term and studies have shown this.


Studies are not advice, they are a piece of information. This piece of information tells us about the risk and the distribution of that risk in the specific context of that study (population, methodology, hypotheses, etc).

If you are given a test that 95% fail but you are also given the choice to skip it and get the average score, you're the kind of person who would choose to skip it and you'd be happy with the average. I'm the kind of person who would be excited to take my chances.

When you're passionate about a subject, you don't want to be passive about it.

I never regret taking risks because that's how you learn the most and that's how you live the best experiences and adventures.



james4beach said:


> Yeah, these kinds of moods appear every once in a while. It's just human nature I suppose.
> 
> People who make all these prognostications, like the guys on CNBC and in the media, might get some of these calls right once in a while. For the short term anyway. The problem really is that they cannot successfully time their way through markets over the long term. We've seen the long term results of hedge funds and active, tactical fund... they suck.
> 
> Trying to time markets, asset classes, interest rates, is not a good strategy in the long term, assuming you have a 10+ year horizon.
> 
> Deciding on a strategy you like the best. And then stick with it. If you don't like 60/40 and think we now live in a world where you must be 80% stocks 20% preferreds, fine, then decide on that and *stick with* that, no matter what.


I'm wondering if there's a Swiss Money Forum with an equivalent of @james4beach telling people to keep buying Swiss bonds for the past decade.

Look at this :





__





iShares Swiss Domestic Government Bond 7-15 ETF (CH) | CSBGC0


The Fund seeks to track the performance of an index composed of Swiss government bonds.




www.ishares.com









__





Switzerland Government Bond 10Y - 2022 Data - 1994-2021 Historical - 2023 Forecast


The yield on the Swiss 10-year government bond rose to above 1.4%, tracking the rebound in global bond yields and approaching the 11-year high of 1.54% touched on September 27th as major central banks signaled their intent to continue raising interest rates despite the worsening macroeconomic...




tradingeconomics.com





Buy bonds for the uncorrelated asset class and the low volatility, but certainly not for the income or the performance.

I don't need the income, I don't care about volatility but I do care about performance, so my choice is clear and easy. No bonds.


----------



## Eder

james4beach said:


> How do you know your existing investments won't beat inflation?


I don't of course, but over the decades I have learned to trust my judgment.


----------



## gibor365

Thal81 said:


> I'm getting flashbacks of 2017. Sell your bonds! Buy short term bonds! Preferred shares is the new fixed income! (lol, ridiculous).
> In retrospective, buying and holding aggregate bond funds was the right move in 2017. I don't know how it will turn out this time, but I don't think you can go wrong by sticking to ZAG, XBB or VAB. And I believe that's true even if this year and the next are negative. I'm crazy, right?


Maybe 🤔 Who needs XBB with 1.6% YTM and -2.75% YTD return?! I’d prefer to have prefs with high rating and decent yield or US high grade ETF bonds like VCIT that yields 30% higher


----------



## james4beach

MrBlackhill said:


> I don't need the income, I don't care about volatility but I do care about performance, so my choice is clear and easy. No bonds.


For sure, if you have no concerns about volatility and want the highest probability of the highest performance, then you don't need bonds.


----------



## james4beach

I looked at my portfolio again on the weekend. Crazy, yet another all time high. Maybe this is what it felt like in the late 90s. Every day you look at the account, it's higher.

I think this is also the kind of market -- just like the 1990s -- which tests the discipline of people who are diversified (balanced funds and asset allocation). When a single asset, in this case stocks, takes off like a rocket, people start to feel like they should be fully invested in the rocket, and don't see the need for the diversification. This is demonstrated through many of the posts at CMF.

The point of diversification is not to get the highest return at all points in time. In fact it pretty much guarantees that you will hold some assets that are not performing well. At many times, diversification will be a drag on your returns.

@Jimmy you don't want that, right? Why would you want a drag on your returns. I think you should concentrate as much as possible into the highest returning area, especially whatever CNBC and the financial media promotes. That's what smart people do, I'm told.

Others like me will continue to hold diversified portfolios, even with some low performing components, and accept a drag on returns.


----------



## Beaver101

> Now the test is, do you stick with diversification and understand the point of it, or do you concentrate yourself into the hottest area and chase performance?


 ... I sleep through mine's so I think I belong in the first camp.


----------



## Jimmy

james4beach said:


> @Jimmy you don't want that, right? Why would you want a drag on your returns. I think you should concentrate as much as possible into the highest returning area, especially whatever CNBC and the financial media promotes. That's what smart people do, I'm told.
> 
> Others like me will continue to hold diversified portfolios, even with some low performing components, and accept a drag on returns.


Not going to bite on your sarcasm sorry. This isn't about me or you. You are free to do what you want. You just shouldn't attack articles in the Globe just because they disagree w your eccentric ideology. There is more educational value if the forums have a variety of opinion too vs the same limited personal views repeated over and over.


----------



## james4beach

Jimmy said:


> You just shouldn't attack articles in the Globe because they disagree w your views


It's very fair for me to point out that active market-timers have terrible track records. The problem is that *nobody* is able to predict which way these things will go, and financial writers -- including the Globe and Mail characters -- are pretending they can time markets. They can't.

Instead of being upset with me, you should be upset with those G&M writers. They are the ones using amateur analysis to advise people on how to change their investments, which is reckless and irresponsible of them.

Jimmy do you not remember a few years ago, when emerging markets were all the rage? How about commodities? Didn't you ever turn on BNN and see these people talking every single day, about how the only place to invest is in commodities, the energy sector, and emerging markets?

Think about how much money investors lost, listening to these worthless people.

I'm vocal about this because many people really get sucked in by these kinds of writers, and think that if they read the G&M or watch CNBC, or investment newsletter, that some "smart guy" can tell them which assets or sectors are the right place to be.


----------



## Jimmy

james4beach said:


> It's very fair for me to point out that active market-timers have terrible track records. The problem is that *nobody* is able to predict which way these things will go, and financial writers -- including the Globe and Mail characters -- are pretending they can time markets. They can't.
> 
> Instead of being upset with me, you should be upset with those G&M writers. They are the ones using amateur analysis to advise people on how to change their investments, which is reckless and irresponsible of them.
> 
> Jimmy do you not remember a few years ago, when emerging markets were all the rage? How about commodities? Didn't you ever turn on BNN and see these people talking every single day, about how the only place to invest is in commodities, the energy sector, and emerging markets?
> 
> Think about how much money investors lost, listening to these worthless people.
> 
> I'm vocal about this because many people really get sucked in by these kinds of writers, and think that if they read the G&M or watch CNBC, or investment newsletter, that some "smart guy" can tell them which assets or sectors are the right place to be.


I don't know who you have in mind but people like Warren Buffet, Gordon Pape, Rob Carrick etc aren't talking about timing markets. They just don't share your eccentric models and overweight views on LT bonds, wisely in in my opinion. But I don't want to get into a conflated argument again

You can view them anyway you like. What is fair is others here deserve to hear their opinions either way though. The forums should be balanced. Despite that people can still make their minds up for themselves.


----------



## james4beach

Jimmy said:


> Gordon Pape


He absolutely is writing about market timing. He is predicting interest rates and inflation, and changing the asset allocation decision based on that. That's a tactical allocation change which may, or may not, work out positively for the investor.

I realize that some people like timing the markets and asset classes. That's fine, but I am pointing out that it's market timing.



Jimmy said:


> What is fair is others here deserve to hear their opinions either way though


True, and we do hear a lot of market timing opinions here on a daily basis. I am pretty sure that both passive investing and market timing / tactical bets are discussed. @Eder just did one here as well. These views aren't exactly censored or anything, we hear them all the time. Here is Eder's market timing / tactical bet from above.

Eder is making a *prediction* about future rates of several things, and is using that to make a change to his portfolio allocation. That is called market timing. It's not inherently bad or anything... but let's recognize that it's timing the market:



Eder said:


> I'm putting any maturing gic/bond into REIT's for the last 6 months. Not saying it is the right thing to do but changing conditions (not even beating the rate of inflation) requires me to not buy more.


----------



## MrBlackhill

@james4beach People are free to tell their opinion, what's wrong with those articles that you hate so much?

Life would be so boring if we couldn't share our opinions. Life would also be much harder if we couldn't have access to the opinion of other people.

Giving an opinion is not disinformation.


----------



## james4beach

MrBlackhill said:


> @james4beach People are free to tell their opinion, what's wrong with those articles that you hate so much?


What's wrong with my criticism that you hate so much?

They make the argument, I make the counter argument. Plus the argument presented in the G&M is the *dominant* mainstream argument. This is the message we hear all the time: you just have to be a smart guy, and figure out what markets will do, and get rich.

That's the majority opinion. What I'm voicing is the minority opinion. There is no lack of the G&M and CNBC argument. It's blasted constantly across all media, all day, every day.


----------



## Flugzeug

@Jimmy, @MrBlackhill and @james4beach, I think all opinions help people reading this forum, no matter which opinion you hold.

Is it better to hold index ETFs or individual stocks? Depends who you ask. I’ve done both, and wouldn’t have learned a new way without reading differing opinions.

I don’t know what will happen in the future, and neither does anyone else.

The way @james4beach invests is not eccentric in my view. I’m diversified among asset classes, I once was all equities and learned it doesn’t suit my personality after 2008. I suspect others will come to the same realization in the future. (Not saying this will be Jimmy or MrBlackhill).


----------



## Beaver101

^ Well said.


----------



## MrBlackhill

Flugzeug said:


> @Jimmy, @MrBlackhill and @james4beach, I think all opinions help people reading this forum, no matter which opinion you hold.
> 
> Is it better to hold index ETFs or individual stocks? Depends who you ask. I’ve done both, and wouldn’t have learned a new way without reading differing opinions.
> 
> I don’t know what will happen in the future, and neither does anyone else.
> 
> The way @james4beach invests is not eccentric in my view. I’m diversified among asset classes, I once was all equities and learned it doesn’t suit my personality after 2008. I suspect others will come to the same realization in the future. (Not saying this will be Jimmy or MrBlackhill).


I'm all good with this and I agree. I'm all good with passive investments. Most people should learn DIY passive investing. But I'm an active investor simply because I enjoy it.

What irritates me is when someone who uses a different strategy criticize the tools used by people using another strategy.

I mean, for instance, I don't like sports cars and I don't shop for sports cars. So why would I criticize the articles and magazines that people read about sports cars? All I say is that I don't spend my money on sports cars and I'm done, I don't have any added value in discussions about sports cars review magazines.

Or... I like guitar music. Most people will just listen to guitar music (passive), while I want to buy a guitar and learn to play the guitar (active) even if I'm a bad musician and it takes me years, even if I never do better than the average guitar player. But why would someone who prefers to listen to guitar music come and criticize the tools that I use and the content that I read to learn to play the guitar by myself?


----------



## Jimmy

james4beach said:


> He absolutely is writing about market timing. He is predicting interest rates and inflation, and changing the asset allocation decision based on that. That's a tactical allocation change which may, or may not, work out positively for the investor.
> 
> I realize that some people like timing the markets and asset classes. That's fine, but I am pointing out that it's market timing.


Timing teh market implies predicting market tops and bottoms. He isn't predicting anything. He just sees rightly the returns on Lt bonds are not worth the risk and moving some $ into St bonds w in his FI portfolio. Same for everyone else including the recent advisor. *That isn't timing the market. That is tactical investing.* Either way I am not going to argue semantics w you


----------



## Jimmy

Flugzeug said:


> The way @james4beach invests is not eccentric in my view. I’m diversified among asset classes, I once was all equities and learned it doesn’t suit my personality after 2008. I suspect others will come to the same realization in the future. (Not saying this will be Jimmy or MrBlackhill).


Some of the plans discussed here ie the permanent portfolio are a little eccentric IMO. I never said diversification was eccentric. I have stocks in all markets, st bonds, cash, alts and preferred shares.


----------



## Flugzeug

MrBlackhill said:


> I'm all good with this and I agree. I'm all good with passive investments. Most people should learn DIY passive investing. But I'm an active investor simply because I enjoy it.
> 
> What irritates me is when someone who uses a different strategy criticize the tools used by people using another strategy.
> 
> I mean, for instance, I don't like sports cars and I don't shop for sports cars. So why would I criticize the articles and magazines that people read about sports cars? All I say is that I don't spend my money on sports cars and I'm done, I don't have any added value in discussions about sports cars review magazines.
> 
> Or... I like guitar music. Most people will just listen to guitar music (passive), while I want to buy a guitar and learn to play the guitar (active) even if I'm a bad musician and it takes me years, even if I never do better than the average guitar player. But why would someone who prefers to listen to guitar music come and criticize the tools that I use and the content that I read to learn to play the guitar by myself?



I totally understand. I suppose I view James’ comments in a different light and not as an attack, more of a counter viewpoint.

I enjoy active investing as well. I was a 100% equity, somewhat active investor at the beginning of my investing journey. I then diversified among asset classes. Now, I find I’m too busy (young kids, long commute to work) to be active so I’m passive investing now.

Did I read somewhere you have a child on the way soon? Congratulations. (Maybe the baby has arrived?)


----------



## Flugzeug

Jimmy said:


> Some of the plans discussed here ie the permanent portfolio are a little eccentric IMO. I never said diversification was eccentric. I have stocks in all markets, st bonds, cash, alts and preferred shares.


I mistook what you were getting at, my apologies.

The permanent portfolio is not the most conventional approach, I agree. I’ve met a handful of people who follow a modified permanent portfolio similar to what James has and it works for them. I find the PP concept interesting, personally, but I don’t follow it. It has similarities to Jakob Fugger, perhaps it’s the history that intrigues me, that people have follow a similar approach for a long time.


----------



## MrBlackhill

Flugzeug said:


> Now, I find I’m too busy (young kids, long commute to work) to be active so I’m passive investing now.


Yes, that's true.

I know I won't have time to try to find hidden gems throughout the next years. I'll still want to keep investing all in equities and stock picking but I'll take less risk (less research and less due diligence required). As long as I'm having fun. I'll slowly adapt my style to the context.

Finding the right balance between all my interests and passions has always been my most frustrating life quest.



Flugzeug said:


> Did I read somewhere you have a child on the way soon? Congratulation


The baby has arrived last Wednesday, on July 7th. Thanks!

We're currently pretty busy with all the back and forth at the hospital and some other issues, but otherwise everybody is healthy.


----------



## Flugzeug

MrBlackhill said:


> Yes, that's true.
> 
> I know I won't have time to try to find hidden gems throughout the next years. I'll still want to keep investing all in equities and stock picking but I'll take less risk (less research and less due diligence required). As long as I'm having fun. I'll slowly adapt my style to the context.
> 
> Finding the right balance between all my interests and passions has always been my most frustrating life quest.
> 
> 
> 
> The baby has arrived last Wednesday, on July 7th. Thanks!
> 
> We're currently pretty busy with all the back and forth at the hospital and some other issues, but otherwise everybody is healthy.


That’s great! It’s definitely a busy time. Enjoy it! Before you know it your child will be helping you make coffee!


----------



## MrMatt

MrBlackhill said:


> I'm all good with this and I agree. I'm all good with passive investments. Most people should learn DIY passive investing. But I'm an active investor simply because I enjoy it.
> 
> What irritates me is when someone who uses a different strategy criticize the tools used by people using another strategy.
> 
> I mean, for instance, I don't like sports cars and I don't shop for sports cars. So why would I criticize the articles and magazines that people read about sports cars? All I say is that I don't spend my money on sports cars and I'm done, I don't have any added value in discussions about sports cars review magazines.
> 
> Or... I like guitar music. Most people will just listen to guitar music (passive), while I want to buy a guitar and learn to play the guitar (active) even if I'm a bad musician and it takes me years, even if I never do better than the average guitar player. But why would someone who prefers to listen to guitar music come and criticize the tools that I use and the content that I read to learn to play the guitar by myself?


People criticize others because that's what people do.

Look at all the people criticizing gun ownership and shooting sports.
They don't own guns, they don't use guns, they don't even know about them, but they still criticize from their position of ignorance.

People seem to have an inherent desire to control others, even when it doesn't really affect them.


----------



## Eclectic21

MrMatt said:


> Well it depends how they calculate the benefit, but many pensions do at least some indexing ...


You really think 30% indexing on the full benefit paid is a problem?
That's all my pension has.




MrMatt said:


> ... One I'm thinking of bases the pension off your last X years worked.


Huh? Big inflation, low inflation, middle of the road inflation has nothing to do with a DB pension using "last X years worked" in their benefit formula.

BTW ... in another thread you complained about this formula for public sector pensions. I've always been in private sector DB pensions where all have used a "last X years worked". It seems you are concerned about DB pension formulas, public or private. Or do you have a private DB pension that you can point me to that uses a different formula?

IAC, low rates seem more to be more of a threat by increasing the CV for the payout to those leaving. New equity highs with low rates likely is increasing the funding for the DB pension ... unless the pension managers switched to and are staying with stuff like GICs.


Cheers


----------



## Eclectic21

james4beach said:


> I looked at my portfolio again on the weekend. Crazy, yet another all time high. Maybe this is what it felt like in the late 90s. Every day you look at the account, it's higher ...


Doesn't feel like it to me.
I'm not seeing the high tech mania (ex. Nortel) and don't have as many co-workers talking about firing their advisor as they allegedly can do better one their own.


Cheers


----------



## MrMatt

Eclectic21 said:


> Huh? Big inflation, low inflation, middle of the road inflation has nothing to do with a DB pension using "last X years worked" in their benefit formula.


Actually that has a lot to do with the DB pension liability.
If you have 5% inflation, they'll likely push for a 5% raise, which will increase the DB pension liability by 5%.



> BTW ... in another thread you complained about this formula for public sector pensions. I've always been in private sector DB pensions where all have used a "last X years worked". It seems you are concerned about DB pension formulas, public or private. Or do you have a private DB pension that you can point me to that uses a different formula?


I'm not sure what the "complaint" was in that unreferenced post I allegedly made.
But yes there is a lot wrong with overly generous public sector benefits.



> IAC, low rates seem more to be more of a threat by increasing the CV for the payout to those leaving. New equity highs with low rates likely is increasing the funding for the DB pension ... unless the pension managers switched to and are staying with stuff like GICs.


Low rates mean there is less growth in the portfolio to pay the benefits, increasing the likelihood of a pension shortfall.
Which will mean government bailouts that I have to pay for.

Really, why should I, the taxpayer be responsible for the fact that your employer promised you something that they didn't deliver?


----------



## Eclectic21

MrMatt said:


> Actually that has a lot to do with the DB pension liability.
> If you have 5% inflation, they'll likely push for a 5% raise, which will increase the DB pension liability by 5% ...


Are you thinking that the pay raise is exempt from the pension contribution rates?

More wages means more pension contributions made, going forward. Should that 5% raise bump one over YMPE then typically the over amount has it's pension contributions bumped by 2% or so, in addition to the base rate - depending on the plan.




MrMatt said:


> ... I'm not sure what the "complaint" was in that unreferenced post I allegedly made. But yes there is a lot wrong with overly generous public sector benefits ...


Basically that "X years average" was a bad feature of public service DB pensions. As I say, it's a feature of DB pensions, whether the pension is public or private (including business owners setting up their own DB pension).




MrMatt said:


> ... Low rates mean there is growth in the portfolio to pay the benefits, increasing the likelihood of a pension shortfall ...


You'll have to explain how having more assets _increases_ the likelihood of a pension shortfall. 

If you meant "low rates means slow or no growth", it makes logical sense but the reporting of _increased_ growth in the funding says there has been significant growth. IIRC, the posted link had DB pensions at a twenty year high for funding.

Don't forget, there is money flowing into the plan with each pay so where the pension manager was doing their job properly, stocks were bought that have now doubled or more (plus paid income).




MrMatt said:


> ... Really, why should I, the taxpayer be responsible for the fact that your employer promised you something that they didn't deliver?


I'm in a private DB pension so you are not on the hook for my DB pension.

If you are in Ontario, then if it were to fail then AFAICT, as a tax payer, your involvement would be the Ontario Pension Benefits Guarantee Fund.


Considering that like other DB pensions, mine is reporting that the funding has improved - I'm doubting bankruptcy anytime soon.


Cheers

*PS*
The simple answer as to why a tax payer is on the hook for public service pensions is because you are the employer.


----------



## Ukrainiandude

Fascinating reading, recommended. Free PDF copy. 
*Manias, Panics, and Crashes
A History of Financial Crises* by 
Charles P. Kindleberger and
Robert Z. Aliber


http://www.untag-smd.ac.id/files/Perpustakaan_Digital_1/FINANCE%20Manias,%20panics,%20and%20crashes%20a%20history%20of%20financial%20crises.pdf


----------



## MrMatt

Eclectic21 said:


> Are you thinking that the pay raise is exempt from the pension contribution rates?


No


> More wages means more pension contributions made, going forward. Should that 5% raise bump one over YMPE then typically the over amount has it's pension contributions bumped by 2% or so, in addition to the base rate - depending on the plan.


And the current principle needs to grow to catch up, that's the problem.



> You'll have to explain how having more assets _increases_ the likelihood of a pension shortfall.


I never made that claim. 
If rates go down, and liabilities increase, the required assets increases significantly.
If the required assets increases too much, you'll have a shortfall.

Remember, if you have 30 years of contributions that's a lot of money, and if rates drop you can find that you have massive shortages, it's simple math.



> Don't forget, there is money flowing into the plan with each pay so where the pension manager was doing their job properly, stocks were bought that have now doubled or more (plus paid income).


For some plans, not enough. Look at the Sears pensions.
And I don't think someone like myself, who has no pension, should be left holding the bag.



> I'm in a private DB pension so you are not on the hook for my DB pension.
> 
> If you are in Ontario, then if it were to fail then AFAICT, as a tax payer, your involvement would be the Ontario Pension Benefits Guarantee Fund.


You proved my point, you claim that I'm not on the hook, then showed that I am. Thanks.


----------



## james4beach

Eclectic21 said:


> Doesn't feel like it to me.
> I'm not seeing the high tech mania (ex. Nortel) and don't have as many co-workers talking about firing their advisor as they allegedly can do better one their own.


Well, Yahoo Finance is running a massive webinar, an introduction to trading meme stocks and crypto currencies. So there are a few signs of weirdness.

Valuations in the US are getting pretty extreme too. The most recent Morningstar survey that I saw, which cites analysts from JPMorgan, Vanguard, and Morningstar's own team, makes a projection of roughly 0% real return in US stocks over the coming decade.

It's pretty rare to see forward-looking forecasts of zero returns in stocks, so things are getting a bit heated for sure.


----------



## Eclectic21

MrMatt said:


> ... I never made that claim.
> If rates go down, and liabilities increase, the required assets increases significantly.
> If the required assets increases too much, you'll have a shortfall ...


Then perhaps your wording from post # 92 needs changing as it has you saying:
"*Low rates mean there is growth in the portfolio to pay the benefits, increasing the likelihood of a pension shortfall*.
Which will mean government bailouts that I have to pay for."

There's no mention I can see of liabilities.




MrMatt said:


> ... Remember, if you have 30 years of contributions that's a lot of money, and if rates drop you can find that you have massive shortages, it's simple math ...


It's also smoke and mirrors to an extent.

Whether rates have dropped or not - those who are retired have what benefits they are owed.
As I say, I suspect the bigger issue for low rates is people encouraged to take a CV that is inflated.




MrMatt said:


> ... For some plans, not enough. Look at the Sears pensions.


You mean the one where a Sears shareholder is reported to have setup a $509 million dividend to shareholders while ignoring that the pension was short $109 million coupled with a loss of $118 million operating loss?


https://www.cbc.ca/news/business/sears-canada-retirees-pension-eddie-lampert-court-1.4930785



Sounds more like shenanigans instead of a failed DB pension.




MrMatt said:


> ... You proved my point, you claim that I'm not on the hook, then showed that I am.


If it floats your boat to think you are on the hook for everything - far be it for me to get in your way.


Cheers


----------



## MrMatt

Eclectic21 said:


> Then perhaps your wording from post # 92 needs changing as it has you saying:
> "*Low rates mean there is growth in the portfolio to pay the benefits, increasing the likelihood of a pension shortfall*.
> Which will mean government bailouts that I have to pay for."


Sorry typo, low rates means there is less growth to pay the benefits.



> There's no mention I can see of liabilities.


Paying the benefits is the liability.



> You mean the one where a Sears shareholder is reported to have setup a $509 million dividend to shareholders while ignoring that the pension was short $109 million coupled with a loss of $118 million operating loss?
> 
> 
> https://www.cbc.ca/news/business/sears-canada-retirees-pension-eddie-lampert-court-1.4930785
> 
> 
> 
> Sounds more like shenanigans instead of a failed DB pension.


I think consistently poor corportate management is why Sears and the Sears pension failed.



> If it floats your boat to think you are on the hook for everything - far be it for me to get in your way.


The reality that I have to bail out failing businesses with my tax dollars is a problem.
I don't support it.
You have a contract with someone, it's your responsibility to hold them to it, not mine to give you money when they back out of the contract.


----------



## Ukrainiandude

People that remember 70th and inflation, what was the best hedge against inflation in seventies? 
It’s coming.


----------



## Ukrainiandude

“Unfortunately, earnings reported in corporate financial statements are no longer the dominant variable that determines whether there are any real earnings for you, the owner. For only gains in purchasing power represent real earnings on investment. If you (a) forego 10 hamburgers to purchase an investment; (b) receive dividends which, after tax, buy two hamburgers; and (c) receive, upon sale of your holdings, after-tax proceeds that will buy eight hamburgers, then (d) you have had no real income from your investment, no matter how much it appreciated in dollars. You may feel richer, but you won’t eat richer.


----------



## Ponderling

Does anyone remember 1999- early 2000's when holdings slumped for a quite a while? That is the other side of all time highs. So learn to live and invest within your means in either scenario. And stay in balance.


----------



## james4beach

Ponderling said:


> Does anyone remember 1999- early 2000's when holdings slumped for a quite a while? That is the other side of all time highs. So learn to live and invest within your means in either scenario. And stay in balance.


Why would stocks ever drop? Interest rates will be low forever


----------



## Ukrainiandude

james4beach said:


> Why would stocks ever drop? Interest rates will be low forever


What was the interest rate in 2006 ?


----------



## james4beach

Well that's a sharper drop than I was expecting.

Stocks really ran up pretty fast, so any correction at this point could be painful. Even if they fell down to the 200 day moving average (very plausible), the bull market could still be intact.

The TSX could fall another 7% and S&P 500 could fall another 8%, while still remaining in an uptrend.


----------



## MrMatt

james4beach said:


> Well that's a sharper drop than I was expecting.
> 
> Stocks really ran up pretty fast, so any correction at this point could be painful. Even if they fell down to the 200 day moving average (very plausible), the bull market could still be intact.
> 
> The TSX could fall another 7% and S&P 500 could fall another 8%, while still remaining in an uptrend.


Yeah, bit surprising, but a good time to buy!


----------



## doctrine

james4beach said:


> Well that's a sharper drop than I was expecting.


Escalator up, elevator down. One shouldn't be too surprised, this is really typical. People/institutions/bots are sometimes just looking for excuses to sell. Everyone needs their day in the sun.


----------



## james4beach

doctrine said:


> Escalator up, elevator down. One shouldn't be too surprised, this is really typical. People/institutions/bots are sometimes just looking for excuses to sell. Everyone needs their day in the sun.


It could also be the start of a major reversal. The UK is struggling to keep their economy open, and is probably going to be forced to shut down again with rising COVID hospitalizations. The same could happen to the US within the next few months, so maybe stocks are reacting to this.

This could even be the market reacting to less liquidity, since the Federal Reserve is now shrinking its corporate debt market support. This is one way in which the Fed is tightening... and stocks are mainly driven by Fed liquidity.

So who knows. But it could be happening for many logical reasons, or not. That's what makes stocks so fun


----------



## doctrine

The UK example is very interesting and could be Canada and the US in a few months. But there is a major difference and that is wide availability of vaccines. And somewhere between 97-99% of people in hospitals are unvaccinated. Canada has several million doses in surplus now, and that was before 7.7 million show up this week. It's a different show, in the developed world especially, with the US exporting vaccines and Europe hitting that point in a matter of weeks as well. This is rapidly becoming a pandemic of the unvaccinated, as Fauci described it.


----------



## Eder

So now 2-3% moves are a trend? Seriously?


----------



## MrBlackhill

Eder said:


> So now 2-3% moves are a trend? Seriously?


I agree. All the indices are up compared to a month ago and now we're panicking on a 2% downward move in 2 days?

I'm not seeing a trend, but I am certainly expecting a correction at some point. I'm actually relieved to see the markets going slightly down. I've been expecting S&P 500 below 4,000 and I keep believing NASDAQ over 14,000 is totally unsustainable. It should be in the low 13,000.

I'm actually hoping the market to go down because I should have some decent money to buy stocks in early fall.

First time my 16-month-old newbie playground portfolio is below the 50% XIRR. (EDIT: And it's already back above 50% XIRR)


----------



## james4beach

MrBlackhill said:


> I agree. All the indices are up compared to a month ago and now we're panicking on a 2% downward move in 2 days?


There is always the possibility that one trend is ending and another is starting. These things are impossible to know in real time. You only know it well after the fact.



MrBlackhill said:


> I'm actually hoping the market to go down because I should have some decent money to buy stocks in early fall.


What if it enters a bear market, and keeps going down for years? Always a possibility. One never knows.


----------



## Ukrainiandude

doctrine said:


> The UK example is very interesting and could be Canada and the US in a few months. But there is a major difference and that is wide availability of vaccines. And somewhere between 97-99% of people in hospitals are unvaccinated. Canada has several million doses in surplus now, and that was before 7.7 million show up this week. It's a different show, in the developed world especially, with the US exporting vaccines and Europe hitting that point in a matter of weeks as well. This is rapidly becoming a pandemic of the unvaccinated, as Fauci described it.


Israel got their vaccine in January February. Canada and the USA few months after. 
_We do not know exactly to what degree the vaccine helps, but it is significantly less,” Bennett said.

At the moment, around 60% of the patients in serious conditions have been vaccinated. Moreover, according to Hebrew University researchers who advise the government, around 90% of newly infected people over the age of 50 are fully vaccinated.

The “percent of cases that turn critically ill is now 1.6%, compared to 4% at a similar stage in the third wave when there were no vaccines,” Prof. Eran Segal, a computational biologist at the Weizmann Institute of Science who advises the coronavirus cabinet, tweeted on Friday._


----------



## MrBlackhill

james4beach said:


> What if it enters a bear market, and keeps going down for years? Always a possibility. One never knows.


I'd be thrilled. The more it drops, the more I'll buy.


----------



## doctrine

Ukrainiandude said:


> Israel got their vaccine in January February. Canada and the USA few months after.
> _We do not know exactly to what degree the vaccine helps, but it is significantly less,” Bennett said.
> 
> At the moment, around 60% of the patients in serious conditions have been vaccinated. Moreover, according to Hebrew University researchers who advise the government, around 90% of newly infected people over the age of 50 are fully vaccinated.
> 
> The “percent of cases that turn critically ill is now 1.6%, compared to 4% at a similar stage in the third wave when there were no vaccines,” Prof. Eran Segal, a computational biologist at the Weizmann Institute of Science who advises the coronavirus cabinet, tweeted on Friday._


Israel has a huge unvaccinated population of young people unique to developed countries, most of whom are ineligible for the vaccine, some of whom are catching COVID delta and then are spreading it to both unvaccinated and vaccinated people, who sometimes have other pre-existing conditions and may end up in the hospital (in all likelihood would be at high risk of death if they weren't vaccinated). In the US, Canada, and Europe, with larger numbers of unvaccinated adults who are spreading COVID amongs themselves, numbers of hospitalized people with COVID who are vaccinated are 3% or less - the evidence of vaccine effectiveness is overwhelming. But the unvaccinated spreaders are inevitably spreading it to vaccinated people, unfortunately. A pandemic of the unvaccinated still because the vaccines are so effective. Israel is seeing practically no deaths because of their high rates of Pfizer vaccinations, a trend in the UK as well that deaths are a fraction of what they were just months ago.

The new waves are not going to be like any of the previous ones and without hospitals being overwhelmed, there is not going to be political will to shutdown anything.


----------



## MrMatt

james4beach said:


> It could also be the start of a major reversal.


You can say that about any time the price changes by a fraction of a cent.
Realistically I think 10-30% swings are a normal part of the stock market and nothing to get worked up about.

I think a 2-3% swing is less interesting than the latest clearance sale.


----------



## Thal81

Damn I was hoping for a nice correction...


----------



## Ukrainiandude

Thal81 said:


> Damn I was hoping for a nice correction...


Historically corrections more often happened in fall, never during summer time. Wait for it.


----------



## MrBlackhill

Thal81 said:


> Damn I was hoping for a nice correction...


Yeah, that was short lived. People are stressing about usual volatility once after only 2 days down...


----------



## Benting

New high ? It is on paper only if you do not sell.

Well, sold a few to replenish my cash reserve for next couple of years. Now all set to watch the roller coaster market on the side line until 2024. 

In the mean time, I am still playing a bit of short term 'hit and run' fun with my dividend when I am bored. 

D***, miss my favourite BB today this time !


----------



## MrMatt

Ukrainiandude said:


> Historically corrections more often happened in fall, never during summer time. Wait for it.


Yeah, single day changes are in March/October.





List of largest daily changes in the Dow Jones Industrial Average - Wikipedia







en.wikipedia.org





But those are "changes", both positive and negative.

Make your plan, stick to your plan.
Known that an equity portfolio will likely have 20-30% swings and significant periods of no or low growth, over any non-trivial period.


----------



## Ukrainiandude




----------



## Eder

Or you get an easy low risk double with RY,CNR, and FTS...at least I deem these 3 less risk than the FANG+ stuff.


----------



## MrBlackhill

Ukrainiandude said:


> View attachment 21913


Shopify is in its own league. Totally crazy.


----------



## Eder

Remember Valeant, Research in Motion, Nortel...Bre-X on & on.


----------



## Ukrainiandude

What can possibly go wrong, right guys?


----------



## MrBlackhill

Ukrainiandude said:


> What can possibly go wrong, right guys?
> View attachment 21914


Just recall that's an exponential function so it's normal that when you look at it over 50 years it seems like it's climbing vertically.

You should watch it in log scale. In log scale, a straight line is to be expected.

Below, you can clearly see in the log scale that the dot com bubble started in 1995 when it broke its line to follow a new line trending up faster. We're not there yet with the S&P 500 in 2021 but the 2020 crash added some noise because we're moving up a bit faster but it may not last.


----------



## Ukrainiandude

MrBlackhill said:


> You should watch it


So you reckon it’s completely normal and sustainable? Because it scares me, vertical growth.


----------



## MrBlackhill

Ukrainiandude said:


> So you reckon it’s completely normal and sustainable? Because it scares me, vertical growth.
> View attachment 21916


You're not in log scale. Look at the bigger picture. It was a flash crash with a flash recovery, but set aside the crash, the upward trend has been accelerating just a tiny bit, which calls for a small correction, but not a crash.


----------



## MrBlackhill

It is in a dangerous zone, but it may drop -20%, which is a big correction, but not catastrophic.

This is a 7.3% CAGR trend line in log scale (price valuation return).


----------



## Ukrainiandude

MrBlackhill said:


> Look at the bigger picture.


 If I look at the bigger picture the 2008 crush and maybe even 2000 were completely unjustified. They happened never the less.


----------



## MrBlackhill

Ukrainiandude said:


> If I look at the bigger picture the 2008 crush and maybe even 2000 were completely unjustified. They happened never the less.


They were justified by bubbles.


----------



## Ukrainiandude

MrBlackhill said:


> They were justified by bubbles.


Not if you look at log scale. Maybe for 2000 dot com. But definitely not for 2008 crush.


----------



## MrBlackhill

Ukrainiandude said:


> Not if you look at log scale. Maybe for 2000 dot com. But definitely not for 2008 crush.


The 2008 was specific to the real estate, so it's seen on another graph. The rate of increase of the line on a log scale from 1990 to 2008 kept accelerating instead of staying linear. I drew 3 identical green lines. Why do you think Michael Burry started to short the housing market in 2005... The acceleration was clear (plus all the analysis about the subprime market, because obviously it wasn't all that clear at that time, it's now clear in hindsight).


----------



## MrMatt

Divide out interest rates and it's even less extreme.

Myself I think Shopify offers a great product at a very reasonable price.
If you look at the value these companies actually provide I think there is something there.

I have Netflix & Disney, much better than cable TV for a far lower price.


----------



## Ukrainiandude

WASHINGTON, July 23 (Reuters) - U.S. Treasury Secretary Janet Yellen urged lawmakers on Friday to increase or suspend the nation's debt limit as soon as possible and warned that if Congress does not act by Aug. 2 the Treasury Department would need to take "extraordinary measures" to prevent a U.S. default.

How many times have they increased the debt limit? On May 19, the debt ceiling was raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period.
Perhaps they could make it like 100 trillion this time and forget about it for few years.


----------



## KaeJS

This has been one of my favourites for a decade:


----------



## Ukrainiandude

Interesting reading from American economist and a professor who teaches at New York University's Stern School of Business. He predicted the previous 2008 crush.
*The Looming Stagflationary Debt Crisis*
Jun 30, 2021NOURIEL ROUBINI
Years of ultra-loose fiscal and monetary policies have put the global economy on track for a slow-motion train wreck in the coming years. When the crash comes, the *stagflation of the 1970s will be combined with the spiraling debt crises of the post-2008 era*, leaving major central banks in an impossible position.
As matters stand, this slow-motion train wreck looks unavoidable. The Fed’s recent pivot from an ultra-dovish to a mostly dovish stance changes nothing. The Fed has been in a debt trap at least since December 2018, when a stock- and credit-market crash forced it to reverse its policy tightening a full year before COVID-19 struck. With inflation rising and stagflationary shocks looming, it is now even more ensnared.

So, too, are the European Central Bank, the Bank of Japan, and the Bank of England. The stagflation of the 1970s will soon meet the debt crises of the post-2008 period. *The question is not if but when.
Link to whole story.*








The Looming Stagflationary Debt Crisis | by Nouriel Roubini - Project Syndicate


Nouriel Roubini warns that conditions are ripe for a simultaneous repeat of the 1970s inflation shock and the 2008 debt crisis.




www.project-syndicate.org


----------



## Ukrainiandude

In April, I warned that today’s extremely loose monetary and fiscal policies, when combined with a number of negative supply shocks, could result in 1970s-style stagflation (high inflation alongside a recession). In fact, the risk today is even bigger than it was then.
After all, debt ratios in advanced economies and most emerging markets were much lower in the 1970s, which is why stagflation has not been associated with debt crises historically. If anything, unexpected inflation in the 1970s wiped out the real value of nominal debts at fixed rates, thus reducing many advanced economies’ public-debt burdens. 

Conversely, during the 2007-08 financial crisis, high debt ratios (private and public) caused a severe debt crisis – as housing bubbles burst – but the ensuing recession led to low inflation, if not outright deflation. Owing to the credit crunch, there was a macro shock to aggregate demand, whereas the risks today are on the supply side.
We are thus left with the worst of both the stagflationary 1970s and the 2007-10 period. Debt ratios are much higher than in the 1970s, and a mix of loose economic policies and negative supply shocks threatens to fuel inflation rather than deflation, setting the stage for the mother of stagflationary debt crises over the next few years.

For now, loose monetary and fiscal policies will continue to fuel asset and credit bubbles, propelling a slow-motion train wreck. The warning signs are already apparent in today’s high price-to-earnings ratios, low equity risk premia, inflated housing and tech assets, and the irrational exuberance surrounding special purpose acquisition companies (SPACs), the crypto sector, high-yield corporate debt, collateralized loan obligations, private equity, meme stocks, and runaway retail day trading. At some point, this boom will culminate in a Minsky moment (a sudden loss of confidence), and tighter monetary policies will trigger a bust and crash.

But in the meantime, the same loose policies that are feeding asset bubbles will continue to drive consumer price inflation, creating the conditions for stagflation whenever the next negative supply shocks arrive. Such shocks could follow from renewed protectionism; demographic aging in advanced and emerging economies; immigration restrictions in advanced economies; the reshoring of manufacturing to high-cost regions; or the balkanization of global supply chains.
More broadly, the Sino-American decoupling threatens to fragment the global economy at a time when climate change and the COVID-19 pandemic are pushing national governments toward deeper self-reliance. Add to this the impact on production of increasingly frequent cyber-attacks on critical infrastructure and the social and political backlash against inequality, and the recipe for macroeconomic disruption is complete.

Making matters worse, central banks have effectively lost their independence, because they have been given little choice but to monetize massive fiscal deficits to forestall a debt crisis. With both public and private debts having soared, they are in a debt trap. As inflation rises over the next few years, central banks will face a dilemma. If they start phasing out 
unconventional policies and raising policy rates to fight inflation, they will risk triggering a massive debt crisis and severe recession; but if they maintain a loose monetary policy, they will risk double-digit inflation – and deep stagflation when the next negative supply shocks emerge.

But even in the second scenario, policymakers would not be able to prevent a debt crisis. While nominal government fixed-rate debt in advanced economies can be partly wiped out by unexpected inflation (as happened in the 1970s), emerging-market debts denominated in foreign currency would not be. Many of these governments would need to default and restructure their debts.

At the same time, private debts in advanced economies would become unsustainable (as they did after the global financial crisis), and their spreads relative to safer government bonds would spike, triggering a chain reaction of defaults. Highly leveraged corporations and their reckless shadow-bank creditors would be the first to fall, soon followed by indebted households and the banks that financed them.

To be sure, real long-term borrowing costs may initially fall if inflation rises unexpectedly and central banks are still behind the curve. But, over time, these costs will be pushed up by three factors. First, higher public and private debts will widen sovereign and private interest-rate spreads. Second, rising inflation and deepening uncertainty will drive up inflation risk premia. And, third, a rising misery index – the sum of the inflation and unemployment rate – eventually will demand a “Volcker Moment.”

When former Fed Chair Paul Volcker hiked rates to tackle inflation in 1980-82, the result was a severe double-dip recession in the United States and a debt crisis and lost decade for Latin America. But now that global debt ratios are almost three times higher than in the early 1970s, any anti-inflationary policy would lead to a depression, rather than a severe recession.
Under these conditions, central banks will be damned if they do and damned if they don’t, and many governments will be semi-insolvent and thus unable to bail out banks, corporations, and households. The doom loop of sovereigns and banks in the eurozone after the global financial crisis will be repeated worldwide, sucking in households, corporations, and shadow banks as well.

As matters stand, this slow-motion train wreck looks unavoidable. The Fed’s recent pivot from an ultra-dovish to a mostly dovish stance changes nothing. The Fed has been in a debt trap at least since December 2018, when a stock- and credit-market crash forced it to reverse its policy tightening a full year before COVID-19 struck. With inflation rising and stagflationary shocks looming, it is now even more ensnared.

So, too, are the European Central Bank, the Bank of Japan, and the Bank of England. The stagflation of the 1970s will soon meet the debt crises of the post-2008 period. The question is not if but when.









The Looming Stagflationary Debt Crisis | by Nouriel Roubini - Project Syndicate


Nouriel Roubini warns that conditions are ripe for a simultaneous repeat of the 1970s inflation shock and the 2008 debt crisis.




www.project-syndicate.org


----------



## Jimmy

The 1970s had oil shocks that led to the stagflation. Oil rose from $4/bbl in 1974 to $39 in 1980 or almost 1000% and stayed above $25 until 1984. It sent gold soaring as well.

There is nothing like that happening now.


----------



## Ukrainiandude

Jimmy said:


> There is nothing like that happening now.


If you have read the whole article, you could find the reasoning.
Time will tell if Roubini will be correct this time. I am sure there were many sceptical people in 2006.

*On Sept. 7, 2006, Nouriel Roubini, an economics professor at New York University, stood before an audience of economists at the International Monetary Fund and announced that a crisis was brewing.* In the coming months and years, he warned, the United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. These developments, he went on, could cripple or destroy hedge funds, investment banks and other major financial institutions like Fannie Mae and Freddie Mac.

*The audience seemed skeptical, even dismissive.* As Roubini stepped down from the lectern after his talk, the moderator of the event quipped, “I think perhaps we will need a stiff drink after that.” People laughed and not without reason. At the time, unemployment and inflation remained low, and the economy, while weak, was still growing, despite rising oil prices and a softening housing market. And then there was the espouser of doom himself: Roubini was known to be a perpetual pessimist, what economists call a “permabear.” When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer.








Dr. Doom (Published 2008)


Two years ago, Nouriel Roubini predicted the current economic crisis. Now he sees things becoming far worse.




www.nytimes.com


----------



## Jimmy

That guy is always predicting doom and gloom He finally got it right 1 year.

As far as inflation , forecasts are in the 2% range. The CBs will do what they always do w the debt. just print $ and inflate it away.


----------



## james4beach

With the poor track record of all these clowns who make forecasts, I can't believe anyone listens to them.

Nobody has any clue what's going to happen in markets. Stocks, bonds, interest rates, or inflation... nobody has any idea.

That's why I hold a passive stock & bond portfolio and tune out all the predictions and forecasts. And it makes no difference if once in a while, some clown in the media gets a prediction right. Anyone can get that success rate by accident.


----------



## Ukrainiandude

james4beach said:


> clown


Roubini speaks English, Persian, Italian, Hebrew, and conversational French.

How many languages do you speak?

attended the local Jewish school and then the Bocconi University, earning a B.A., _summa cum laude_, in economics. He received his Ph.D. in international economics from Harvard University in 1988.

Did you go Harvard?

Roubini combined academic research with policy making by teaching at Yale and then in New York, while also being employed at the International Monetary Fund, the Federal Reserve, World Bank, and Bank of Israel. Currently, he is a professor at the Stern School of Business at New York University.



*2020*
On Feb. 17 he warned of financial vulnerabilities that "could trigger severe economic, financial, political, and geopolitical disturbances unlike anything since the 2008 crisis."[36][37] Two days later, the market peaked prior to what would become the 2020 stock market crash. Following a relatively minor decrease, on the 24th Roubini warned that the markets were still too complacent about coronavirus, predicting a government response to the followed by positive market reaction, which would then fizzle.

He doesn’t strike me as a clown.


----------



## james4beach

Ukrainiandude said:


> He doesn’t strike me as a clown.


He's a clown because he pretends he can forecast and predict markets, when he clearly cannot. He has a poor track record in forecasting and fortune telling.

He can have observations and musings, fine. But he is not capable of forecasting market directions.


----------



## Ukrainiandude

james4beach said:


> He has a poor track record


Not true.


----------



## Ukrainiandude

Jimmy said:


> That guy is always predicting doom and gloom


When you are making claims, it’s best to support them with facts.


----------



## Jimmy

Ukrainiandude said:


> When you are making claims, it’s best to support them with facts.


"After the crisis, Mr. Roubini stuck with his bearish views, failing to foresee the economic rebound and powerful stock market rally that followed. In August 2011, he told The Wall Street Journal that the risk of a global recession was at least 50%. By 2014, he had turned more bullish. "

"
Eric Tyson, a former financial adviser and author of several financial books in the Dummies series, has made a hobby out of critiquing Mr. Roubini’s financial predictions.
On Mr. Roubini’s January 2009 warning that oil would stay below $40 a barrel for the entire year, Mr. Tyson pointed out that it climbed to $80 a barrel 10 months later.
He cited a March 2009 call by Mr. Roubini that the S&P 500 would fall below 600. The index gained 65% over the next nine months.
According to Mr. Tyson, after predicting recessions every year from 2004 through 2008, Mr. Roubini “was finally right in 2008.”



Not sure why you are fluffing for him but he is a notorious bear . Every year he predicts a downturn. Bound to be right once in awhile


----------



## MrMatt

Ukrainiandude said:


> When you are making claims, it’s best to support them with facts.


This is game people play, a lot of people make claims, then after the event happens, they go back and pick those who were right, as if they have special knowledge.

Also I warned that massive government handouts and money printing would result in inflation. Paying people to not work, will also kill economic growth.

As far as other predictions,
"He laid out a bleak sequence of events: homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt."
Everyone with a clue predicted that. The US set up a system, where the government encouraged people to buy houses they couldn't afford, and banks to lend to them. The systematic effect was a bit more, but we all know that when you take a bad idea, and push it along letting it get bigger and bigger, the eventual reckoning will get larger.

We're doing this in Canada now with our Real estate bubble.


----------



## Ukrainiandude

*Federal Reserve starts US$500bn overnight liquidity window as Powell Bubble rages*
The Federal Open Market Committee on Wednesday announced the establishment of two standing repurchase agreement (repo) facilities—a domestic standing repo facility (SRF) and a repo facility for foreign and international monetary authorities (FIMA repo facility),” the Federal Reserve said in a statement.

“These facilities will serve as backstops in money markets to support the effective implementation of monetary policy and smooth market functioning.

“Under the SRF, the Federal Reserve will conduct daily overnight repo operations against Treasury securities, agency debt securities, and agency mortgage-backed securities, with a maximum operation size of $500 billion. 
Global commodity prices have risen sharply under Fed Chairman Jerome Powell as liquidity was injected in stimulus despite a sharp recovery in domestic credit.

He has suggested there is no link between money supply and inflation, an opinion put forward by others after the collapse of the housing and commodity bubble fired by the Fed up to 2008. Classical economists have suggested that Powell was ‘delusional’.

*








Federal Reserve starts US$500bn overnight liquidity window as Powell Bubble rages | EconomyNext


The US Federal Reserve said it had started a 500 billion dollar overnight standing liquidity window for domestic banks and dealers and another facility for foreign central banks as global commodity prices rose and domestic asset prices went up.




economynext.com




*


----------



## Ukrainiandude

The central bank currently is buying at least $120 billion a month in bonds, with at least $80 billion going to Treasurys and another $40 billion floor on mortgage-backed securities. Critics say the Fed’s mortgage purchases are helping stoke another housing bubble, with prices at record levels even though sales have tailed off amid tightening supply.


----------



## sags

deleted


----------



## james4beach

Federal Reserve said nothing noteworthy today. The party is still on !!!


----------



## Ukrainiandude

This is not good.


----------



## MrBlackhill

Other than the valuation issue and the potential bubble, aren't we just scared due to recency bias?

Many experienced investors have seen two of the worst crashes ever. The Dot Com and the Financial Crisis. Then otherwise there's only the Oil Embargo which was comparable. And then obviously there's the Great Depression which happened during World Wars.

Over the past century, two of the three worst crashes ever (other than the Great Depression) occurred during the same decade. Starting to invest in 2000 was definitely not a fun game.

Look at this graph. What stands out? The Great Depression and the 2000+2008 crashes.


----------



## james4beach

MrBlackhill said:


> Look at this graph. What stands out? The Great Depression and the 2000+2008 crashes.


That's just the US. Historically speaking there have been severe bear markets in many countries.

Japan for example. But also many bad years in France, Italy and several other European countries.


----------



## MrBlackhill

james4beach said:


> That's just the US. Historically speaking there have been severe bear markets in many countries.
> 
> Japan for example. But also many bad years in France, Italy and several other European countries.


We're talking about the ATH of the US and Canadian market in this thread, not?

Where do most Canadians put their money? In US and Canadian stocks.

Canada is correlated with US.









World stock correlation table and analysis


World stock market correlation table, matrix and cloud for selected group of securities. Includes correlation matrix for indexes from major exchanges




www.macroaxis.com





And anyways what were the worst crashes of the Global ex-US aggregate? 2000 & 2008


----------



## MrBlackhill

Bets are open. Will BTC & ETH reach new ATH?


----------



## MrBlackhill

No bets? Make a bet before the new ATH is reached, haha.

Have a nice FOMO.


----------



## m3s

MrBlackhill said:


> Bets are open. Will BTC & ETH reach new ATH?


Given insane monetary policies and humans being humans I'm watching for the blow off top

Maybe late 2021 for BTC then early 2022 for ETH similar to the 2017-2018 blow off. ADA should settle down with much more of the market share imo. Assuming smart contracts launch smoothly.

All the dog coins go to heaven


----------



## MrBlackhill

Seems like the Yield Curve Model has always been a good recession predictor.

And it's saying we're now in the safe zone after this flash recession. Doesn't mean we won't have a correction though. I believe a correction would be healthy.

One thing to note though is that there was a recession after each peak in the recession probability curve and we've just had that peak in 2019 and maybe the flash recession in 2020 wasn't enough. Look at 2008, the recession came a bit late after the peak.










You can also calculate a recession probability, which has worked out pretty well so far.

















Yield Curve Indicates Stock Market is Strongly Overvalued


Based on the yield curve, the New York Federal Reserve currently predicts the odds of the US being in a recession in 12 months to be ~38%.




www.currentmarketvaluation.com





There are other valuation models on this website, but you'll note that only the Yield Curve Model has been the best predictor of recessions.









Data Driven US Stock Market Valuation and Analysis


Our evaluation of simple, fundamental valuation indicators suggests that the market is currently Overvalued.




www.currentmarketvaluation.com


----------



## james4beach

Ukrainiandude said:


> Did you go Harvard?


You're putting way too much emphasis on all these things. Sadly this is something that tricks many people (including you apparently)... the reality is, nobody can predict the markets, even if they have a PhD from Harvard.

Anyone who pretends they can is a fool, and should be exposed as that.

Besides, economics (and market finance) fields are quite new, and pseudo scientific to begin with. This field is full of people who apply flaky pseudo science and pretend they know what's going on. Markets cannot be precisely modelled. They are full of uncertainty because they are based on human behaviours, emotions, and culture.

If someone confidently says they know what the market is going to do in the coming years, and says it's backed by scientific analysis, they are a fool.

Roubini is a fool and a clown. As @Jimmy pointed out, this guy has been frequently wrong. And that's the case for all of these characters who wave their PhDs around to try convincing people that they know how to outsmart markets.


----------



## Ukrainiandude

Will Afghanistan retreat have the similar effect to Vietnam on the stock market?
The USA dollar stands on American might and investors conference in the US ability to support and defend their allies.


----------



## james4beach

Ukrainiandude said:


> Will Afghanistan retreat have the similar effect to Vietnam on the stock market?
> The USA dollar stands on American might and investors conference in the US ability to support and defend their allies.


An interesting question. But it was obvious that Iraq and Afghanistan were US failures a long time ago.

Iraq turned into an unstable state of chaos, and Afghanistan was always tenuous. So I don't think there is any surprise here, or anything new.


----------



## MrMatt

james4beach said:


> An interesting question. But it was obvious that Iraq and Afghanistan were US failures a long time ago.
> 
> Iraq turned into an unstable state of chaos, and Afghanistan was always tenuous. So I don't think there is any surprise here, or anything new.


I think people underestimate how much work it is to build a liberal western state.

Particularly those who think destroying our system here will easily be replaced with something better.


----------



## Ukrainiandude

MrMatt said:


> I think people underestimate how much work it is to build a liberal western state.
> 
> Particularly those who think destroying our system here will easily be replaced with something better.


Apparently 38 millions of Afghans don’t think “western liberal“ is better for them. Thus overwhelming support of Taliban.


----------



## Fisherman30

Sold almost all of my US stocks the other day, did Norbert's gambit, and got a double whammy with a nice return on my USD conversion. About half of my portfolio is still invested on the TSX, and I'm now just sitting on this cash out from my US stuff waiting for the right opportunity.


----------



## Thal81

Fisherman30 said:


> Sold almost all of my US stocks the other day, did Norbert's gambit, and got a double whammy with a nice return on my USD conversion. About half of my portfolio is still invested on the TSX, and I'm now just sitting on this cash out from my US stuff waiting for the right opportunity.


And what prompted that move? Do you believe the US economy will fail or something?


----------



## Fisherman30

Thal81 said:


> And what prompted that move? Do you believe the US economy will fail or something?


I can't predict what will happen. I was happy with the gains I had on my US investments, I'm nervous about the way things are going in several parts of the US, and I'm more comfortable right now just locking in my gains, and sitting on cash for a bit.


----------



## Ukrainiandude

If a (multi) decade long bear market happens (and stock markets all over the world proved, that such things do happen), this requires to keep investing, even though you will have to take continuously losses over a very long time.

Do you think average retail investors have the patience and physiological strength to takes losses over such a long time, watching losing money month over month and stil keep investing or is this just a strategy which sounds good in theory but mostly doesn't work in practice?


----------



## MrMike

Fisherman30 said:


> I can't predict what will happen. I was happy with the gains I had on my US investments, I'm nervous about the way things are going in several parts of the US, and I'm more comfortable right now just locking in my gains, and sitting on cash for a bit.


Obviously do whatever makes you comfortable.

I wasn't invested during 2008 crash. When that recovered in 2012, we had 8 bull market years. I'm sure many people, many times said they're worried that markets will fall but they didn't - and even when they did, no one predicted it's because of a global pandemic. If covid never happen, we would still be in a bull market.

So even though I'm new at investing at all time highs (it does suck paying 20% more than I did before) I feel like this bull market can last for another 10+ years. I'll keep investing.


----------



## james4beach

Regarding selling or avoiding the US due to the insane run in stocks...

This is why I like my diversified portfolio of stocks + bonds + gold, without any large concentration in a single asset class.

If someone is a heavy equity investor, then they are often nervous about the direction of stocks, worry about them being too high, etc. That anxiety is justified.

But a more diversified portfolio is not just dependent on a single stock market. US stocks definitely look expensive, but trading in and out of stocks also tends to be a losing game. If you look at something like Mawer Balanced Fund, they are only 20% US stocks, which is a very reasonable weight in an overall portfolio. So there is no particular reason to get anxious about US stocks, because the remaining 80% is invested in other stuff.

Similarly, I have 15% in the S&P 500 and I don't feel stress about an over-extended US market because 85% of my money is invested in other stuff.


----------



## m3s

Ukrainiandude said:


> Will Afghanistan retreat have the similar effect to Vietnam on the stock market?
> The USA dollar stands on American might and investors conference in the US ability to support and defend their allies.


USA's goal to coerce the few remaining countries into submission backfired


----------



## Eder

Worldwide insatiable appetite for plastic junk.


----------



## MrBlackhill

Look at this! NASDAQ is touching 15,000.

Almost doubled in 2 years, almost tripled in 5 years.


----------



## james4beach

My portfolio hit a new all time high on Friday. During the covid crash of 2020, I would have never guessed that this is where we'd end up. Here is the % change (on a CAD basis) of things since April 1, 2020

+61% ... TSX Composite (XIC)
+59% ... S&P 500 (ZSP)
+53% ... MSCI all country (XAW)
+6% ... Bonds (XBB)

+34% in a 60/40 balanced fund (XBAL) and the XBAL return is now 9.9% annualized over the last 3 years. *Just ludicrous*.

Congrats to all those who invested in "boring old balanced funds"


----------



## m3s

Everything goes up when you debase your unit of measurement

It's like shrinking the length of a meter just to make it appear the football field got longer when it actually got shorter

You need to measure with a finite unit


----------



## james4beach

m3s said:


> Everything goes up when you debase your unit of measurement


You're right in general, but the increase in asset prices seen recently is not just an effect from currency depreciation.

The proof of this is in the cost of goods & services. While a basket of investments has performed at 10% CAGR over 3 years, the cost of goods and services is increasing at maybe (if we're being pessimistic) something like 4%. More realistically closer to 3%.

The reality is that diversified investors continue to beat inflation. And generally will, over the long term.


----------



## m3s

james4beach said:


> The reality is that diversified investors continue to beat inflation. And generally will, over the long term.


Yes who knew that debasing the fiat currency would reward the wealthy. It all comes down to luck, right?

As long as the wealthy don't spend too much on peasant consumer goods & services the CPI should be an accurate measurement


----------



## wayward__son

i think cost of basic consumer goods and services should be decreasing on a secular basis on the strength of technological advances and productivity gains. the fact that those costs increase at all seems like a problem to me.


----------



## Benting

Guess those high in equities would enjoy more......


----------



## james4beach

It's nice to see bonds selling off a bit (yields going up).


----------



## james4beach

New all time highs in all equities. Ridiculous.


----------



## m3s

Market knows Jerome Powel can't taper. We're too addicted to easy money


----------



## james4beach

m3s said:


> Market knows Jerome Powel can't taper. We're too addicted to easy money


Do you remember when everyone was screaming about how rates were going to go up any moment? Man, people really don't get it.

It's kind of cute that people thought the central banks would raise rates. What next, they're going to stop stimulating the mortgage market?


----------



## Eder

I don't look at my ~30% gains in the last 12 months as legit...just keeping up with real inflation as blue chip equities are prone to do.


----------



## james4beach

The market is definitely getting overheated. I just ran into one of my neighbours, and he said he is going to try investing for the first time. Apparently he's been hearing a lot about stocks from his family recently.

Everyone loves stocks when they're at all time highs.


----------



## Ukrainiandude

Morgan Stanley’s optimistic view of the economy isn’t keeping it from warning about a looming correction in the U.S. stock market. “The issue is that the markets are priced for perfection and vulnerable, especially since there hasn’t been a correction greater than 10% since the March 2020 low,” said Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, in a note Tuesday. The bank’s global investment committee expects a stock-market pullback of 10% to 15% before the end of the year, she wrote.

“The strength of major U.S. equity indexes during August and the first few days of September, pushing to yet more daily and consecutive new highs in the face of concerning developments, is no longer constructive in the spirit of ‘climbing a wall of worry,’” said Shalett. “Consider taking profits in index funds,” she said, as stock benchmarks have dismissed “resurgent COVID-19 hospitalizations, plummeting consumer confidence, higher interest rates and significant geopolitical shifts.”

She suggested rebalancing investment portfolios toward “high-quality cyclicals,” particularly stocks in the financial sector, while seeking “consistent dividend-payers in consumer services, consumer staples and health care.”


----------



## MarcoE

My stocks are hitting all time highs every time I look at them, it seems. I'm looking forward to the next correction.


----------



## MrBlackhill

Seeing the markets down

S&P 500 -0.77%
NASDAQ -0.87%
Dow Jones -0.78%
TSX -0.35%
Makes me feel good when my portfolio is up +0.31%.


----------



## Ukrainiandude

Interesting turn of events 

According to the British newspaper The Sunday Telegraph, recently the Central Bank of China has stepped up the purchase of shares of British companies, including those that make up the key stock index FTSE100 - the largest companies by market capitalization, whose shares are traded on the London Stock Exchange. According to the publication, as well as Bloomberg statistics, to date, the Central Bank of China owns shares of such companies for a total of $ 17.1 billion.In the second quarter, the Chinese Central Bank owned these shares only for $ 2 billion.

In particular, it is reported that the Chinese state bank now owns 1.5% of the shares of oil and gas companies such as BP and Royal Dutch Shell. In the latter, the Central Bank of China is already the fourth largest holder of class A shares. In addition, the Chinese state bank owns more than 1% in the mobile operator Vodafone and the mining companies BHP and Anglo American.

The Sunday Telegraph clarifies that the Central Bank of China already owns stakes in more than 100 UK companies, with an emphasis on energy stocks, which account for about a quarter of its portfolio in UK companies. In second place are shares of companies in the mining sector: 16% of the portfolio. The British publication believes that foreign shares owned by the Central Bank of China are part of China's foreign exchange reserves, which has recently begun to reduce its investments in the dollar and bonds. It is reported that the Central Bank of China also owns shares in companies in a number of other countries, such as Italy and Malaysia. At the same time, according to Bloomberg, there are no American shares in his portfolio.








China boosts stake in UK with London shares spree


The People’s Bank of China now owns stakes in most of the FTSE 100, with a dramatic increase in exposure in recent weeks




www.telegraph.co.uk


----------



## Ukrainiandude

*Powell Says Fed Can’t Protect Markets U.S. Default
“No one should assume the Fed or anyone else can fully protect the markets or the economy in the event of a failure.”


Bloomberg - Are you a robot?


*


----------



## james4beach

The level of complacency in the market is incredible.

Nobody really thinks stocks will fall and nobody has any fear. I wonder how long we can go on like this... it's just amazing how quickly everyone forgets.

The declines in stocks in the 2020 crash were incredible. Those were some of the sharpest daily movements we've ever seen. It can all happen again, we just need one bad shock or big surprise. When everyone becomes so complacent and ultra bullish, the vulnerability to downside volatility increases.

I remember one day when the TSX index fell 10% ... in a single day. XIC at some point was down something like 11% or 12% that day in March 2020.

The short memories are amazing and dangerous


----------



## MrMatt

james4beach said:


> The level of complacency in the market is incredible.
> 
> Nobody really thinks stocks will fall and nobody has any fear. I wonder how long we can go on like this... it's just amazing how quickly everyone forgets.


Yes



> The declines in stocks in the 2020 crash were incredible.


Not really, like I said at the time, they were normal and to be expected.
I still don't understand what the big deal is. Honestly it was just typical market volatility.
It was just as "shocking" as COVID19, which we were pretty much expecting since something we get a pandemic capable virus situation every 10 years, and conveniently COVID19 is even a nice round 100 years from the last major pandemic.

These are normal and expected things.



> Those were some of the sharpest daily movements we've ever seen. It can all happen again, we just need one bad shock or big surprise. When everyone becomes so complacent and ultra bullish, the vulnerability to downside volatility increases.


It will happen again. It happened many times before. 



> The short memories are amazing and dangerous


People make bad decisions. Particularly if they ignore expected repeatable events.

I know a guy who kind of gets money management, and he got an emergency fund.
But then he had his emergency and depleted it, but he wasn't in a rush to replenish it, because "it was a one time thing that won't happen again ". I pointed out that he had 6 "one time things" in the last year, and maybe he should consider that he'll likely have an "emergency" every 2 months or so.
History doesn't repeat itself, but it rhymes.


----------



## MrBlackhill

There is no free market anyways. The Fed will save the market, as we know.










Let's take a closer look.









Wait, why did the Fed suddenly increased its balance sheet as soon as September 2019?

Well maybe because of the yield curve inversion which predicts an upcoming recession. Maybe that is the reason of the amazing little bubble of a bull run from September 2019 to February 2020.


















Also, the Fed saved the market as soon as mid March 2020.

Now we'll just pay with inflation, something ranging around 3% which will hold for 3+ years.


----------



## MrMatt

MrBlackhill said:


> There is no free market anyways. The Fed will save the market, as we know.
> 
> Also, the Fed saved the market as soon as mid March 2020.


They didn't "save" the market.



> Now we'll just pay with inflation, something ranging around 3% which will hold for 3+ years.


Yeah, we have lots of pent up inflation from all the market manipulation. 


When the government goes in and messes with stuff, ie "saving" the market, there will be a price to pay, and it will likely be higher. Printing money and all these games doesn't save the market or solve the problem, just adds more cost that we eventually end up paying for anyway.

The sad thing is most people don't realize how all this hurts them.


----------



## MrBlackhill

MrMatt said:


> When the government goes in and messes with stuff, ie "saving" the market, there will be a price to pay, and it will likely be higher. Printing money and all these games doesn't save the market or solve the problem, just adds more cost that we eventually end up paying for anyway.
> 
> The sad thing is most people don't realize how all this hurts them.


Yes, I agree, they didn't "save" the market in the sense of solving an issue, but I meant they "saved" the market in the sense of taking short-sighted action against a crash. But on the long term, that's pretty bad.

That's also why I'm moving towards value stocks. Growth won't last.


----------



## m3s

james4beach said:


> The level of complacency in the market is incredible.
> 
> Nobody really thinks stocks will fall and nobody has any fear. I wonder how long we can go on like this... it's just amazing how quickly everyone forgets.


I think the savvy investor is aware that stocks can fall. Problem is this conservative investor gives in after being punished every time the Fed props up the market like helicopter parents

The last time the Fed announced a taper the market had a "taper tantrum" like spoiled brats and the the rich parents gave in and open up the candy drawer rather than face reality. The spoiled kids are bringing down the entire neighborhood now. China wants to keep up with the Joneses so they do the same

Of course there are the young investors who are disenfranchised from stagnant salaries and inflated costs who just yolo into into meme stocks. They are playing with relatively smaller amounts


----------



## Ukrainiandude

This time it’s different.


----------



## MrBlackhill

Ukrainiandude said:


> This time it’s different.
> View attachment 22206


The US household equity allocation has been the best predictor of forward 10 years market returns.

We are poised to a 0% CAGR between 2021 and 2030. The market may have a -5% to -10% correction by the end of the year. But we're not done with the current momentum yet. Give it another year or two, maybe even three. Then it'll start to fall apart.


















The Single Greatest Predictor of Future Stock Market Returns


Consider the following chart, which shows the average investor portfolio allocation to equities from January 1952 to December 2013: The metric in this chart takes no input from any variables tradit…



www.philosophicaleconomics.com


----------



## m3s

Houston? We have a problem


----------



## Ukrainiandude

*Europe’s Energy Crisis Is Coming for the Rest of the World, Too


Bloomberg - Are you a robot?


*


----------



## Jimmy

The markets are overvalued only 5% according to Morningstar. An analysts on BNN today from UBS didn't see the doom some are predicting here either. Companies are having record earnings and sales growth. In fact, there is so much demand out there for energy they are talking about an energy crisis from lack of supply in China and the EU. Companies are constrained from growing from other shortages too, chips and building materials for ex.





__





Market Fair Value | Morningstar


Learn whether or not the current stock market is overvalued, to decide if now is a good time to invest or sell.




www.morningstar.com


----------



## Ukrainiandude

Jimmy said:


> In fact, there is so much demand out there for energy they are talking about an energy crisis from lack of supply in China and the EU.


*Climate change and the policies to curb it lie behind skyrocketing gas, coal, and electricity prices in Europe and Asia.








Why This Energy Crisis Is Different


Climate change and the policies to curb it lie behind skyrocketing gas, coal, and electricity prices in Europe and Asia.




foreignpolicy.com




*


----------



## peterk

I am now overweight stocks by about 30-40k. Wondering if I should take the drastic step of rebalancing (I have never sold stocks before for the purpose of rebalancing), or if I just "wait it out" and only add to cash only for the next 6 months and see how it goes.


----------



## sags

I read that Brexit is behind the UK gas lineups.

All foreign tanker drivers couldn't work in the UK without a visa and left to work for more money in Germany and France.

Now the UK needs 100,000 tanker drivers.

As the head of the Romanian Truckers Union said it........they didn't want our drivers doing work they didn't want to do, so now they can deal with it.


----------



## james4beach

peterk said:


> I am now overweight stocks by about 30-40k. Wondering if I should take the drastic step of rebalancing (I have never sold stocks before for the purpose of rebalancing), or if I just "wait it out" and only add to cash only for the next 6 months and see how it goes.


Rebalancing is for risk control, but does not increase returns.

I've mostly rebalanced the same way you're describing, except I hold bonds, so I've been buying purely bonds so far this year. That nudges down my stock allocation (a bit) and kind of rebalances things.


----------



## Ukrainiandude

Jul. 15, 2021 — Fed Chair Powell Still Insists Inflation is Transitory, And the Markets Agree. 



Sept 28,2021 Fed Chair Powell to warn Congress that inflation pressures could last longer than expected

And

Congress must raise the debt limit by Oct. 18, Treasury Secretary Yellen warns in new letter as potential default looms.


----------



## Ukrainiandude

The government funds itself with treasuries and so the yield it has to pay is a major deal. The US has $29t in debt, at a 1.4% yield that's $400b/year in interest payments. Manageable. At 14%, as it was in the 80s, that's $4t a year, almost as much as the entire yearly $6.5t budget. Unmanageable.

This massive debt expansion gives very little room for the fed to manoeuvre, which makes it very predictable. The fed cannot allow inflation run too hot as it would bankrupt America.

Given a choice between crashing the market and inflation it will crash the market. It does not have the option to do anything else, it cannot let yields rise significantly.


----------



## james4beach

Well hey, look at that. The market didn't keep going up every day!


----------



## MrBlackhill

james4beach said:


> Well hey, look at that. The market didn't keep going up every day!


This end of year will be expected. Going down. Either flat from here to EOY or down by another -5%, maybe even -10%.


----------



## james4beach

MrBlackhill said:


> This end of year will be expected. Going down. Either flat from here to EOY or down by another -5%, maybe even -10%.


If that's expected, wouldn't all the institutions and hedge funds have already sold?

I think it's very interesting that stocks are now falling as interest rates go higher. Could get scary... higher interest rates are *very* bad for stocks.


----------



## MrBlackhill

james4beach said:


> If that's expected, wouldn't all the institutions and hedge funds have already sold?


Because for every random dude on the internet like me who expects a downside move by EOY, there's another random dude on the internet who expects an upside move by EOY.

When I say "that's expected", that's just a personal opinion, not a fact. In the prediction contest, I predicted S&P 500 at 3,888 and TSX at 18,888. So far, I'm wrong, but the market needs only a -5% to -10% to get nearer of my prediction. Unfortunately, I work with trends, and I can't predict the volatility, so I can't predict *when *will the mean reversion occur. I just see it as a probability to be right, but that doesn't mean I'll necessarily be right, and certainly not when constrained by a time frame, like the contest ending at EOY.

That's why institutions and hedge funds haven't "already" sold.



james4beach said:


> higher interest rates are *very* bad for stocks.


I'm slowly moving out of growth stocks. I see a higher probability that value will outperform growth in the next 5 years. But I don't know when within those 5 years.


----------



## MrBlackhill

MrBlackhill said:


> The US household equity allocation has been the best predictor of forward 10 years market returns.
> 
> We are poised to a 0% CAGR between 2021 and 2030. The market may have a -5% to -10% correction by the end of the year. But we're not done with the current momentum yet. Give it another year or two, maybe even three. Then it'll start to fall apart.
> 
> View attachment 22207
> 
> 
> 
> 
> 
> 
> 
> 
> 
> 
> The Single Greatest Predictor of Future Stock Market Returns
> 
> 
> Consider the following chart, which shows the average investor portfolio allocation to equities from January 1952 to December 2013: The metric in this chart takes no input from any variables tradit…
> 
> 
> 
> www.philosophicaleconomics.com


That's not just me. Here's a more scientific analysis.

Expected CAGR from 2021 to 2030 : *1.05%*









Market Timing Using Aggregate Equity Allocation Signals


When it comes to predicting long-term equity returns, several well-known indicators come to mind—for example, the CAPE ratio, Tobin’s Q, and Market Cap to GDP, to name a few.Yet there is anot




alphaarchitect.com





I guess I shouldn't expect an early retirement as I was dreaming of.


----------



## gibor365

james4beach said:


> If that's expected, wouldn't all the institutions and hedge funds have already sold?


It's all speculations! Nothing is expected. Indexes fell down 2.5-3% and same gloom talk is starting .... Last 10+ years , same story was maybe hundreds of times....


----------



## gibor365

MrBlackhill said:


> I'm slowly moving out of growth stocks. I see a higher probability that value will outperform growth in the next 5 years. But I don't know when within those 5 years.


I mostly invest into blue chips that paying and increasing (or at least not cuttting) dividends for many years.



> I guess I shouldn't expect an early retirement as I was dreaming of.


 for early retirement (where I'm already ), dividend/interest income is much more important than total portfolio fluctuation...


----------



## Eder

It will take a while for fixed income to out do the tax advantaged dividend stream many people invest in even if the market continues to crash another stunning 1.4% tomorrow as well.


----------



## Ukrainiandude

wasn’t Canada at one point planning to build LNG plant and export gas to Asia? I wonder what happened to it.
*The energy crunch is roiling markets
Wholesale natural gas prices in Europe hit fresh records on Monday and continue to rally Tuesday, according to Tom Marzec-Manser at market intelligence firm ICIS. In the United States, natural gas futures have also jumped, surpassing levels last hit in 2014, when temperatures plunged across much of the country.








The energy crunch is roiling markets


Energy prices are skyrocketing around the world, with major consequences for markets as investors worry about the state of the economic recovery.




www.cnn.com




*


----------



## sags

My wife's HOOPP pension fund has returned over 11% annually over the last 10 years. They are 117% funded even after raising benefits substantially.

The big pension funds seem capable of making adjustments to their portfolios. A 20% crash would be meaningless to them.

I suspect many institutional funds are in the same enviable position.


----------



## sags

I remember when people were heating their homes with electricity (ceiling coils, and baseboard heaters) because it was so much cheaper than natural gas.

Today's price is $4.96 USD. In 2005 it was $20.43 USD. We aren't anywhere near panic mode yet.

Natural Gas Prices - Historical Chart


----------



## peterk

^ Wow I didn't know that we were at all time gas lows... I didn't lock in my gas contract when I moved here a year ago (a big old house with bad windows lol) Maybe it's not too late? (I feel like it's too late).

Keeping the house at 67 degrees for now. We're all 4 of us going to be home 24/7 all winter, using every room of the house all hours of the day lol. (1 working from home dad, 1 stay at home mom, 1 toddler, and 1 infant)


----------



## Eder

Eder said:


> It will take a while for fixed income to out do the tax advantaged dividend stream many people invest in even if the market continues to crash another stunning 1.4% tomorrow as well.


boink...heres how to sleep well at night...

Fortis (NYSE:FTS) declares CAD 0.535/share quarterly dividend, 5.9% increase from prior dividend of CAD 0.505. 

routine....wonder if my GIC increases the 2.3% they were paying me?


----------



## james4beach

Eder said:


> routine....wonder if my GIC increases the 2.3% they were paying me?


The GIC cannot fall 30% in the blink of an eye, as FTS did during the covid crash.

FTS had reached a high of $59.28 in early 2020, then swiftly crashed along with the market, reaching a low of $41.52 ... 30% decline in just *one month*.

The GICs are for capital preservation, obviously. They don't crash.

I hold tons of FTS myself too, but let's not forget they are equities and come with equity risk.


----------



## KaeJS

james4beach said:


> The GIC cannot fall 30% in the blink of an eye, as FTS did during the covid crash.
> 
> FTS had reached a high of $59.28 in early 2020, then swiftly crashed along with the market, reaching a low of $41.52 ... 30% decline in just *one month*.
> 
> The GICs are for capital preservation, obviously. They don't crash.
> 
> I hold tons of FTS myself too, but let's not forget they are equities and come with equity risk.


Eder knows this. He's in it for the dividends, not the equity.

Also, GIC's have GUARANTEED risk. The risk being that you lose purchasing power on a consistent basis.


----------



## Ukrainiandude

KaeJS said:


> Eder knows this. He's in it for the dividends, not the equity.
> 
> Also, GIC's have GUARANTEED risk. The risk being that you lose purchasing power on a consistent basis.


With stocks you can lose ten years worth of inflation in several days or months. Neither is perfect, investors should have both.


----------



## m3s




----------



## doctrine

Markets like S&P 500 are broadly down about 5% from highs. Halfway to an official correction of 10%. Commodities and cyclicals, though, are down less - energy, for example, has just been hitting post-COVID highs. Value and growth have been opposite sides of the performance curve and at the moment, value/cyclical is ahead and nosebleed technology has come down.

Energy is the best performer on both the S&P 500 and S&P TSX this year. Up 70% here and a solid 40%+ in the S&P 500. But it's still barely 2% of the S&P 500. It's very interesting, energy is rarely this strong in the weak season and is technically very strong at new recent highs. Energy is so under owned that there could be big moves if institutions move to the sector to avoid falling behind, and quantative / momentum strategies could also jump in given energy is hitting all time highs when the indexes are underperforming.

September has turned out to be the negative month it usually is. This negativity often continues into October before getting back on track.


----------



## Ukrainiandude

New highs.
While Statistics Canada estimates the consumer price index for food has risen 2.7 per cent over the past year, the Dalhousie University team says it has found the inflation rate is closer to five per cent.
Global food prices rose 30 per cent year-over-year in August, an index compiled by the UN Food and Agriculture Organisation shows.








Rising food prices are forcing grocery shoppers to change habits: ‘It’s been hard’ - National | Globalnews.ca


A new report from Dalhousie University's Agri-Food Analytics Lab found 86 per cent of Canadians surveyed believe food prices are higher than they were six months ago.




globalnews.ca





How lucky we are, food prices increased only by 2.7% in Canada, while in the rest of the world it’s 30%.
Strong Canadian dollar vs weak all other hundred plus global currencies.


----------



## sags

Fish, vegetables, rolls, pasta, rice, and ice cream are cheaper in price. Some prices are flat and meat is the biggest jump in cost.

We shop the sales and stock up when it is cheap. People can control their own cost of living if they put some effort into it.

Our son and partner have 4 kids to feed, so he complains to me about it. I say......yea, but you get $1700 a month child benefits and we never got a dime.

So too bad.......so sad. Stop spending $70 on Chinese takeout and make Irish stew.......like your mom did and still does.


----------



## kcowan

The Statscan fudge factory produces what the government wants. They have to keep COLA down.


----------



## MrMatt

kcowan said:


> The Statscan fudge factory produces what the government wants. They have to keep COLA down.


I think you have to look very carefully at what the definition of inflation is, and is not.

Statscan is pretty legitimate, and for most stats they do publish a full method.

The Dalhousie Report doesn't appear to show any methodology or be a peer reported study. Just a headline number.

It actually looks like they are publishing a report on peoples opinions and behaviors, which is very different from inflation, but in some ways actually more important.

Honestly you likely could come up with whatever inflation number you want.
Oat prices haven't changed much, if anything it's been on sale more. (I Buy the exact same box of Oats from Costco regularly)
Green onions and apples, oranges and a lot of in season produce are on sale for the same price as they've ben for the last year. Some other items seem more expensive.

Meat does seem more expensive.


----------



## sags

Inflation is an increase in the money supply.

What people are talking about are price increases, and that is a function of supply and demand.

Covid shut down manufacturers and disrupted supply chains. The government "printed" money to offset the lost wages.

An increase in the money supply should be offset by the loss in wages, but I haven't seen that comparison anywhere.

Prices will decline as the supply chain improves. Prices for used vehicles increased due to a lack of computer chips for new models.

Foreign supply of steel chassis for trucks and vehicles is very low.

Currently, the on time arrivals for the supply chain is very low and the supply chain system is struggling to get going.

Demand is outstripping the supply and companies are re-thinking the "just in time" inventory business model.

Some companies may transfer to a domestic supply chain.

Analysts say the backup in the supply chains may not be resolved until mid to late 2022 at the earliest.


----------



## MrMatt

sags said:


> Inflation is an increase in the money supply.


No that's not what inflation is.




__





definition inflation - Google Search






www.google.com





ECONOMICS
a general increase in prices and fall in the purchasing value of money.

Now if you increase the money supply you'll likely get inflation, but they're not the same thing.


----------



## kcowan

I spent a lot of time with the Statscan inflation number including a debate with an expert in Ottawa and concluded that it has no bearing on my life whatsoever. CPP amd OAS are insigniificant so I use my own assumptions. And they are quite high today.

I also have rented for 26 years and I apppreciate their low numbers for that! I am getting the deal of a lifetime for my 3300 sq.ft. penthouse. That more than compensates for their underestimates on everything else.


----------



## james4beach

kcowan said:


> I also have rented for 26 years and I apppreciate their low numbers for that! I am getting the deal of a lifetime for my 3300 sq.ft. penthouse. That more than compensates for their underestimates on everything else.


Wow that must be pretty sweet... congrats on not giving that one up earlier!

My rent is going up by at most, 1.5% next year. It did not increase at all in 2021.

So if I get the max 1.5% increase, that will mean my housing cost has increased by *0.75%* annually. Not everyone is seeing skyrocketing housing costs.


----------



## nathan79

Unless you intend to rent for life, you're just deferring the inflation until you buy.


----------



## m3s

sags said:


> Inflation is an increase in the money supply.


Inflation is a result of an increase in the money supply

Increasing the money supply debases its value. It benefits those who get to spend it first

Hence a country like El Salvador is screwed for using USD


----------



## MrMatt

nathan79 said:


> Unless you intend to rent for life, you're just deferring the inflation until you buy.


Uhh yeah, that's kind of the point.


----------



## james4beach

nathan79 said:


> Unless you intend to rent for life, you're just deferring the inflation until you buy.


What's to stop me from renting for the rest of my life? I've already been renting for 17 years, and I think it's been pretty nice.

And money I saved (by not having a house) during that time has been invested. Market investments typically have higher returns than homes. Even a market like Vancouver, which many people think of as super high performing, has only had like 6% CAGR long term price appreciation (for condos).

And many markets in Canada have, over the long term, performed worse than equity & bond investments. Regression analysis on real estate shows that investing in RE is roughly equivalent to 50/50 equity and fixed income. There's nothing particularly special about holding real estate.

The only reasons people talk about RE being fabulous for wealth creation is (a) the massive leverage they are using, and (b) the fact it forces them to *buy and hold*, rather than trading in & out like they do with stocks. Something I've discussed off line with @MarcoE quite a bit.

@nathan79 my point is that you aren't missing out by not owning a home. If you save and invest the same money, you can always swap it back (into a home) later on, and you're not missing anything along the way... assuming you are a disciplined investor. _You are getting the same price inflation_ in your market investments (say a balanced fund) as you would have had in a home.


----------



## nathan79

Glad you're happy renting. I don't mind renting temporarily, but I do aspire to own. I know it's not for everyone, though.

I would agree that condos don't typically outperform the markets. Condo units are an artificially scarce commodity, unlike land. You can always make more condos by building higher, but you can't make more land. Condos also have high fixed carrying costs and restrictions that make them different and less desirable than houses.

I would argue that suburban detached homes have generally outperformed the markets, but of course that depends on the location.

Leverage is the key component that allows for high returns on housing. Where can you buy stocks at 5x or 20x (CMHC) leverage? If you do buy stocks on leverage, they could drop and you may get a margin call, but you can't get a margin call on your house unless you stop making payments. The government will also do whatever it takes to support the housing market, which is more than you can say about the stock market.


----------



## james4beach

nathan79 said:


> I would argue that suburban detached homes have generally outperformed the markets, but of course that depends on the location.
> 
> Leverage is the key component that allows for high returns on housing. Where can you buy stocks at 5x or 20x (CMHC) leverage? If you do buy stocks on leverage, they could drop and you may get a margin call, but you can't get a margin call on your house unless you stop making payments. The government will also do whatever it takes to support the housing market, which is more than you can say about the stock market.


I agree with you there. The government gives unfair advantages to real estate people with the leverage.

Even if someone totally screws up their mortgage, there are given plenty of second and third chances before they are ultimately foreclosed. It takes a long time. Look at how mortgage payments were forgiven during covid and banks were given subsidies to give leeway on payments.

Did brokerages also give leeway on margin loans and relax their stock lending? I'm guessing "no".

As you point out, we don't have access to the same leverage with our stock portfolios. One quick margin call and we're done.


----------



## MrBlackhill

I don't like that we compare the leverage of a mortgage to the leverage of a margin account.

First, as noted, when you leverage more than 5x (20% down payment), you have to pay CMHC. I'm currently paying a premium worth 4% of my purchase price because I've put the minimum down payment which was near 20x leverage (a bit more than 5% down payment). That's 4% of the total amount that I won't ever see again, it's an expense.

Second, as I live in Quebec, I had to pay the transfer tax, which was worth almost 1.5% of my property value. Another amount that I won't ever see again, an expense.

I also had to pay the notary fees, the inspection fees, etc. That's not much, but still over a thousand dollars.

Third, when I'll sell, if I deal with realtors, it'll cost me maybe 4% in commission, that's a 4% on the sell price that I won't pocket. But if it's my principal home, then I don't have to pay taxes on capital gains, as opposed to selling in a margin account.

Fourth, every year, I pay about 1% of my property value in taxes. Plus the cost of insurance.

Fifth, every year, I must budget for maintenance costs, which are about at least 1% of my property value. And add to this the time wasted on that maintenance every year.

So, did we add up all the costs, so far?

Sixth, all that leverage went into a single asset. That leverage is definitely not diversified. It is not liquid, as I cannot decide to sell it tomorrow and get my money tomorrow. I also cannot decide to reduce my leverage by selling half of my property.

Seventh, it's a leverage that has a term so I'm committed to pay back a part of the capital every month, not only the interests.

Eighth, as far as what I've seen on my brokerage, you can leverage 5x when you buy "safe" investments like SPY (and even QQQ, ha!) where you need only 20% of cash, same as buying a property without CMHC. But yeah, then there's a margin call to watch for.

Anyways, I mean, there's so many differences between the leverage of owning a property with a mortgage and the leverage of owning equities in a margin account that the comparison is just apples and oranges, IMO.


----------



## Ukrainiandude

MrBlackhill said:


> I had to pay the transfer tax, which was worth almost 1.5% of my property value.


 What income have you made that you have to pay tax already?


----------



## nobleea

Ukrainiandude said:


> What income have you made that you have to pay tax already?


Some provinces have land transfer taxes upon a purchase that are paid on closing to the government.


----------



## james4beach

MrBlackhill said:


> Sixth, all that leverage went into a single asset. That leverage is definitely not diversified. It is not liquid, as I cannot decide to sell it tomorrow and get my money tomorrow. I also cannot decide to reduce my leverage by selling half of my property.


Very good points, including this one. The concentration in a single asset is really a noteworthy disadvantage.


----------



## kcowan

Mr. Blackhill
That is a good summary, There is also the cost of building inspector/appraisal.

Plus much of the maintenance such a lawn maintenance and snow removal is often unpaid servitude that owners often bear themselves. I know a number of former owners who love the personal time they get back.

And there is the siren song that we should "invest" in whatever because it will improve the property value.

And making a change is a huge financial commitment (high frictional costs).


----------



## james4beach

kcowan said:


> And there is the siren song that we should "invest" in whatever because it will improve the property value.


From what I see among friends of mine, people are spending a ton of money on these constant upgrades and renovations.

I think it's a kind of sickness that has seized the nation. It's some kind of renovation mania, where people really just want more luxuries but tell themselves that it will improve the property value.

The never-ending real estate bubble just fuels this as well, since people feel justified in spending massive amounts on their home, since "it's going to help boost the value even more".

And I have friends doing endless renovations in all cities. Vancouver, Calgary, Winnipeg, Toronto, Ottawa, makes no difference. Spending *insane* amounts of money.


----------



## MrMatt

james4beach said:


> From what I see among friends of mine, people are spending a ton of money on these constant upgrades and renovations.
> 
> I think it's a kind of sickness that has seized the nation. It's some kind of renovation mania, where people really just want more luxuries but tell themselves that it will improve the property value.
> 
> The never-ending real estate bubble just fuels this as well, since people feel justified in spending massive amounts on their home, since "it's going to help boost the value even more".
> 
> And I have friends doing endless renovations in all cities. Vancouver, Calgary, Winnipeg, Toronto, Ottawa, makes no difference. Spending *insane* amounts of money.


Absolutely. I see some where they are enjoying it.
But some, I'm not sure what they're thinking. Last year they put in new flooring, now they're ripping out a wall (load bearing so they have an Engineer coming in, to redo those same rooms again. It's crazy.


----------



## james4beach

MrMatt said:


> But some, I'm not sure what they're thinking. Last year they put in new flooring, now they're ripping out a wall (load bearing so they have an Engineer coming in, to redo those same rooms again. It's crazy.


My poor old parents are actually suffering from all this. They live in a condo, and everyone in the building is frantically renovating their condos.

This means constant noise, hammering, power tools. And then their water is shut off every few weeks, for some plumbing work (or a plumbing disaster from renos). Some idiot in the unit directly above them tried his own plumbing, causing a leak which trickled down and destroyed some of their ceiling. Right during COVID lockdowns.

All these renovators are having _tons_ of fun. Nothing more fun than tearing up the floors again!

Meanwhile, my parents suffer. The never ending noise is unbelievable. My mom now stores water in buckets and plastic jugs, because the water shutoffs are so frequent.

It's sick.


----------



## m3s

kcowan said:


> Plus much of the maintenance such a lawn maintenance and snow removal is often unpaid servitude that owners often bear themselves. I know a number of former owners who love the personal time they get back.


Yup. I've owned a few houses and rented a few outside of Canada.

The deck needed to be repainted on the last house. I spent a lot of time painting shingled houses, barns etc as a teen so a little deck looked easy enough. Just a small weekend project right? After multiple trips to Rona and a small fortune spent on supplies I found myself wasting several weekends. The buyer immediately tore that deck down for an expansion.

If you are good to your landlord and they are good to you renting is great. I always pay on time and respect their property as if it was my own and they've been great for me. They are always happy to look after the place if I'm gone since it is theirs. My capital does much better invested elsewhere because I can trade and diversify. No surprise property tax and insurance rate hikes

I much prefer renting


----------



## james4beach

m3s said:


> The deck needed to be repainted on the last house. I spent a lot of time painting shingled houses, barns etc as a teen so a little deck looked easy enough. Just a small weekend project right? After multiple trips to Rona and a small fortune spent on supplies I found myself wasting several weekends. The buyer immediately tore that deck down for an expansion.


Wow... it's sad to hear that the buyer immediately tore it up. Think of all that wasted effort, but also the wasted raw materials.


----------



## peterk

james4beach said:


> My poor old parents are actually suffering from all this. They live in a condo, and everyone in the building is frantically renovating their condos.
> 
> This means constant noise, hammering, power tools. And then their water is shut off every few weeks, for some plumbing work (or a plumbing disaster from renos). Some idiot in the unit directly above them tried his own plumbing, causing a leak which trickled down and destroyed some of their ceiling. Right during COVID lockdowns.
> 
> All these renovators are having _tons_ of fun. Nothing more fun than tearing up the floors again!
> 
> Meanwhile, my parents suffer. The never ending noise is unbelievable. My mom now stores water in buckets and plastic jugs, because the water shutoffs are so frequent.
> 
> It's sick.


Did you have a part in talking them into a condo building, I wonder? With your hate-on for living in blissfully quiet detached homes and the American dream? 



james4beach said:


> From what I see among friends of mine, people are spending a ton of money on these constant upgrades and renovations.
> 
> I think it's a kind of sickness that has seized the nation. It's some kind of renovation mania, where people really just want more luxuries but tell themselves that it will improve the property value.
> 
> The never-ending real estate bubble just fuels this as well, since people feel justified in spending massive amounts on their home, since "it's going to help boost the value even more".
> 
> And I have friends doing endless renovations in all cities. Vancouver, Calgary, Winnipeg, Toronto, Ottawa, makes no difference. Spending *insane* amounts of money.


Fair enough - but it's still better than most other spending... Cars, vacations, electronics etc. Those all go to zero are are consumed rapidly. At least a new kitchen, bathroom or deck is used for a long, long time and every single day. Renos are probably even better than _investing_ for many people if they are just going to gamble it in penny stocks or bitcoin or EV startups. At least the reno will give them 40-50% back instead of nothing.

If you compare renovations to a sensible CMFer investment plan then sure it's a bad idea... But we should be comparing it to the average persons use of money which they don't have - like an iPhone on their credit card, or a new car with dealer financing... then renos don't seem so bad.


----------



## james4beach

peterk said:


> Did you have a part in talking them into a condo building, I wonder? With your hate-on for living in blissfully quiet detached homes and the American dream?


Definitely not. I've never been a fan of condos.

I've been consistent in my own position, which is that I would either live in a proper (detached) house, OR a rental apartment that I can walk away from at any time.


----------



## kcowan

m3s said:


> If you are good to your landlord and they are good to you renting is great. I always pay on time and respect their property as if it was my own and they've been great for me. They are always happy to look after the place if I'm gone since it is theirs. My capital does much better invested elsewhere because I can trade and diversify. No surprise property tax and insurance rate hikes.


My landlord has even approved some planters that make our large patio more esthetically pleasing.


----------



## MarcoE

james4beach said:


> The only reasons people talk about RE being fabulous for wealth creation is (a) the massive leverage they are using, and (b) the fact it forces them to *buy and hold*, rather than trading in & out like they do with stocks. Something I've discussed off line with @MarcoE quite a bit.


I rented for about ten years before I bought a house. I think it depends on the type of real estate you want to live in. When I was single, a small apartment in Toronto was fine. In that case, rent made sense. If I bought a condo, I'd end up paying just as much (likely more) in mortgage interest + condo fees. Renting was easy and convenient. Especially since I moved between apartments every 2-3 years. But eventually I moved to the suburbs to raise a family, and renting a house in the suburbs is actually quite expensive -- I think that right now, to rent a nice house in Toronto's suburbs can cost you about $3,000-4,000 a month. Buying just makes a lot more sense, especially when you can get such good rates on mortgages. So it just depends on your situation.

I think when it comes to your primary residence, there are also many considerations beyond financial. Lifestyle considerations, psychological considerations, depends how long you want to live in the place (are you just hoping to live there 3 years or 30?) and so on.


----------



## MarcoE

james4beach said:


> From what I see among friends of mine, people are spending a ton of money on these constant upgrades and renovations.
> 
> I think it's a kind of sickness that has seized the nation. It's some kind of renovation mania, where people really just want more luxuries but tell themselves that it will improve the property value.


I've owned two houses. And I noticed some interesting things about this.

My first house was only 3 years old when we moved in. It needed no work. Everything was new and shiny. We didn't have to do any maintenance or upgrades. 7 years later, we tried to sell the house. And it took a LONG time to sell. Most potential buyers turned the house down. Why? They all said the same thing: "There are no upgrades." They wanted to see an upgraded kitchen, upgraded this and that... We eventually sold the house, but without upgrades, it was an uphill battle. So there might be some merit to the idea of renovations and upgrades increasing the value of your property (only relevant if you want to sell of course.)

We then moved into a house that's 30 years old, and instantly, we noticed a difference in the maintenance required. In a house that's 30 years old, there are a lot of things that are old and breaky. Lots of things in a house need to be replaced every 10-25 years: windowsills, floors, roofs, decks and fences, brickwork on the exterior, and the list goes on.

When you buy a house, I think it's important to consider all this. I think that maintenance costs are an ongoing expense when it comes to house ownership, and something you have to budget for. Depending on your house's condition and ambitions, ongoing maintenance costs can be significant.

You do, however, have leeway when it comes to what you want to upgrade or fix. If your patio is falling apart and crumbling, you don't HAVE to upgrade it. If your yard is weedy, you don't HAVE to hire a gardener. But if your furnace breaks or your pipes burst, that's not optional. So you do have some control over what to spend and how.


----------



## MarcoE

kcowan said:


> Plus much of the maintenance such a lawn maintenance and snow removal is often unpaid servitude that owners often bear themselves. I know a number of former owners who love the personal time they get back.


Unless you have mobility issues, those aren't a huge burden, in my experience. Gas-powered lawnmowers and snowblowers take most of the physical effort away. There are also usually teenagers in the neighborhood who'll mow your lawn or remove your snow for a small fee. I suppose it depends on the size of your property. Most real estate in my area (Toronto suburbs) is on small plots of land, where taking care of grass and snow is fairly easy, due to the small area involved. I can see it being more of a struggle in areas where houses sit on big lots.


----------



## kcowan

MarcoE said:


> ...
> I can see it being more of a struggle in areas where houses sit on big lots.


Yes our home in Toronto was on an acreage north of Unionville and had a one acre lot and it had lots of grass and the driveway was 350 feet long so shoveling it by hand was not an option so we had to hire a service and the same with the lawn it was a lawn service that looked after it. Plus trimming all the trees and raking all the leaves. And fertilizing and trimming all the planters.

During blizzard snowfalls, I had to park at the end of the driveway because our contractor had the airport contract and couldn't guarantee being there before 8am. I also had to have boots and carry shoes. We had racoons who loved our roof and constantly had to repair the roof because they use shingles to make their winter nests.

We did look after the pool though.

I have other numerical friends who kept track of their costs too and there is no question the ongoing costs are significant. No one publishes it because the real estate, mortgage and government interests are against any adverse publicity.


----------



## Ukrainiandude

Owning a house in Canada makes you a tax resident, if you want to work remotely for the USA or Canadian companies and live in the country with lower taxes and warmer climates, CRA will come after you.


----------



## MrMatt

Ukrainiandude said:


> Owning a house in Canada makes you a tax resident, if you want to work remotely for the USA or Canadian companies and live in the country with lower taxes and warmer climates, CRA will come after you.


Nope, owning a house doesn't make you a tax resident.
Maintaining a home however likely would.







Determining your residency status - Canada.ca


Information for individuals on residency for tax purposes.




www.canada.ca


----------



## Ukrainiandude

MrMatt said:


> Nope, owning a house doesn't make you a tax resident.
> Maintaining a home however likely would.
> 
> 
> 
> 
> 
> 
> 
> Determining your residency status - Canada.ca
> 
> 
> Information for individuals on residency for tax purposes.
> 
> 
> 
> 
> www.canada.ca


Significant residential ties with Canada include:


a home in Canada
a spouse or common-law partner in Canada
dependants in Canada
Secondary residential ties that may be relevant include:


personal property in Canada, such as a car or furniture
social ties in Canada, such as memberships in Canadian recreational or religious organizations
economic ties in Canada, such as Canadian bank accounts or credit cards
a Canadian driver's licence
a Canadian passport
health insurance with a Canadian province or territory
Here in Canada the meaning of home and house is used interchangeably. Go figure.


----------



## MrMatt

Ukrainiandude said:


> Significant residential ties with Canada include:
> 
> 
> a home in Canada
> a spouse or common-law partner in Canada
> dependants in Canada
> Secondary residential ties that may be relevant include:
> 
> 
> personal property in Canada, such as a car or furniture
> social ties in Canada, such as memberships in Canadian recreational or religious organizations
> economic ties in Canada, such as Canadian bank accounts or credit cards
> a Canadian driver's licence
> a Canadian passport
> health insurance with a Canadian province or territory
> Here in Canada the meaning of home and house is used interchangeably. Go figure.


No, the terms "house" and "home" are not interchangeable, they often have significant overlap, but they're actually different terms with slightly different meanings.

I actually pointed out this distinction when I posted the link you quoted.


A house typically means a detached or semi detached building for residential purposes.
A home, means your personal residence.

If you own a house and rent it out, it isn't your home.
If you live in condo, it is your home, even though it isn't a house.


----------



## Ukrainiandude

*World at risk of sudden, steep selloffs in stocks, housing market, IMF warns *
IMF says home prices could decline by 14 per cent over next three years in a worst-case scenario in advanced economies








World at risk of sudden, steep selloffs in stocks, housing market, IMF warns


IMF says home prices could decline by 14 per cent over next three years in a worst-case scenario in advanced economies




financialpost.com





one day those predictions will turn out.

Since end-August, the S&P500 has been on its longest downward trend post-COVID. Currently down over 4%. Everyone is waiting for a correction, but we could already be in a bear market.


----------



## AltaRed

Lots of space to go yet to get to a 20% bear. I don't foresee it absent a SARs type covid variant.


----------



## m3s

Spike in consumer confidence..


----------



## Eder

Well if a 20% pull back hits it means I'll only be up 10% for the year plus dividends. Most here will be in the same boat.


----------



## doctrine

Markets peaked in early September but the commodity/value trade has been soaring for the last 3 weeks especially with little pullback, unlike the push/pull of the previous 5-6 months between value and growth. 

Enjoying the ride. Up nearly 25% vs -2.5% S&P 500 just since early September, one of my biggest delta outperformances over a 6 week period ever. Copper, oil, lumber, natural gas. Boom.


----------



## m3s

If you're in O&G or commodities you're probably set for the next rotation

I'm up like 10x this year and I feel like the last leg of this bubble could be a blow off before the crash

Never let a crisis go to waste they say


----------



## m3s

Last week I day traded a meme and realized more gainz than my salary in a matter of hours

No wonder everyone is quitting their day jobs. It's a huge opportunity cost to go to work these dayz

How much longer can the insanity last


----------



## james4beach

m3s said:


> Last week I day traded a meme and realized more gainz than my salary in a matter of hours


Have you considered quitting your job to trade full time? Assuming your results can be reliably replicated, it might be a better use of your time than your regular job.


----------



## Ukrainiandude

New oil highs?
Should buy SU








Is gas really heading to $2 a litre in Canada?


Opinion: The Clean Fuel Standard is going to cost the average Canadian a pretty penny




financialpost.com




The scary part is that $2.00 gas might be the good news. Because while the rest of us seem to have been happy to ignore the good old laws of supply and demand, Adam Rozencwajg, he of those spot-on predictions, has been busy tracking the oil market these last 12 months. Based on how much oil is currently being produced — and more importantly, how much can be produced in the near future — he says the smart money sees the cost of oil soaring to US$150 and even $200 a barrel.


----------



## Eder

Well its not Alberta's first oil boom. Hopefully this time we can use the leverage to dump Eastern Canada and go our own way.


----------



## m3s

james4beach said:


> Have you considered quitting your job to trade full time? Assuming your results can be reliably replicated, it might be a better use of your time than your regular job.


Of course.

Although I don't want to spend more time trading. My job includes restrictions due to the pandemic which gave me a lot more time to follow markets and trade. I'll still spend some rainy days rebalancing but ultimately more freedom means less screen time ideally

The markets should settle down and travel should go back to normal in time. US land borders finally reopening


----------



## m3s

Eder said:


> Well its not Alberta's first oil boom. Hopefully this time we can use the leverage to dump Eastern Canada and go our own way.


Canada needs to better manage the wealth fund this time before Alberta burns it all to spite itself again. Need to leverage it to develop new industries for Albertans

Texas is using nat gas flares that would otherwise be wasted to mine BTC. Hut 8 is also doing this in Alberta. Hopefully Albertan conservatives can embrace some new fangled tech


----------



## Eder

Yes, even though no other Province has a wealth fund,we appreciate advice on how to use ours.


----------



## m3s

Albertans are a standard deviation or two smarter than your typical Canadian, especially the French ones

Hopefully they will take pity on us ungifted second class citizens


----------



## james4beach

m3s said:


> Albertans are a standard deviation or two smarter than your typical Canadian, especially the French ones


lol


----------



## nobleea

It IS the most educated province, but it'll be interesting to see how the 'test the separatism waters' referendum question works out next week.


----------



## MrBlackhill

When I look at the current market valuation, current investor behavior and what's coming in the next 5-10 years, then I would say that...

US stocks in 10 years will have grown by less than 5% CAGR
Bonds in 10 years will have grown by less than 5% CAGR

So, where to put our money? International stocks should do a bit better than US. But Emerging markets should do even better. I think EM will be a nice bet. And within the next 5-10 years, the growth bubble should have bursted, so the place to be should be Small Cap Value. The tech sector will have bursted and the energy sector will have been the place to be. Gold may outperform bonds, US stocks and international stocks, but not SCV and EM. And... I hate to say this, but if I have to bet on the investor behavior, the best performer will be crypto... And I don't hold crypto and I'm reluctant to holding crypto.

I believe that for the next 10 years, we'll have something like:

Crypto > EM > SCV > Gold > Canada > Int > Bonds > US

Crypto maybe 12% CAGR in 10 years.
EM maybe 10% CAGR.
SCV maybe 8% CAGR.
Gold maybe 6% CAGR.
Canada maybe 5% CAGR.
International maybe 3% CAGR.
Bonds maybe 2% CAGR.
US maybe 1% CAGR.

Ball park.


----------



## Thal81

MrBlackhill said:


> I believe that for the next 10 years, we'll have something like:
> 
> Crypto > EM > SCV > Gold > Canada > Int > Bonds > US


I generally agree except for Crypto, I think there will be a hard reckoning sooner than we think and the Ponzi scheme will collapse.

EM is an oddball, it all depends on China. They grew up too much too fast and I wonder if Evergrande is just the tip of the iceberg. Also, the pandemic taught the western world that dependency on China and other EM countries for manufacturing is not a good thing, so we might see a major shift of business that will hurt EM countries in the next few years.


----------



## MrBlackhill

Thal81 said:


> I generally agree except for Crypto, I think there will be a hard reckoning sooner than we think and the Ponzi scheme will collapse.


I would agree but I weighted heavier towards the current behavior. There's over a trillion dollar invested in crypto, it's been there for over 10 years, it's currently being accepted inside ETFs, there's now derivatives, so it's getting too big and it's now just a gambling game of supply-demand. There won't be any action taken from governments. And there will still have gamblers investing in crypto. Whether crypto truly gets adopted at some point in the future or it doesn't and stays a gambling game of supply-demand, in both cases it'll go up.

And not too far to how FAANG stocks keep increasing insanely in valuation, as there's no anti-trust action taken against the big names, and that's what allows valuation to go insane as they are getting to control the world in one big monopoly or near-monopoly as there's duopoly.

Mean reversion takes care of the future expected returns as sooner or later everything has to revert to the mean, even if it may take decades.


----------



## james4beach

MrBlackhill said:


> There's over a trillion dollar invested in crypto, it's been there for over 10 years


No, that's not true. The large amounts of money only entered in the last 3 years or so. Most of the money came after the huge run-up.

I still suspect it's just a big pump & dump scheme. Probably orchestrated by a few silicon valley heavyweights -- likely a giant scam. Once they get out, I doubt there will be anything left.

The market is heavily rigged and the early years (maybe first 5 years) were a very crooked market, prices manipulated through wash trades and collusion. So the initial pump was easy to orchestrate.


----------



## m3s

Move over USA. We're number 1










Thanks Obama


----------



## KaeJS

Lol, game over. Do not pass go. Do not collect $200.


----------



## Thal81

KaeJS said:


> Lol, game over. Do not pass go. Do not collect $200.


Instead, collect $500/week for months. It's how that chart came to be!


----------



## KaeJS

Thal81 said:


> Instead, collect $500/week for months. It's how that chart came to be!


I'm betting the Liberals extend the programs. They are supposed to end on Saturday. But I bet you they get extended for another month.


----------



## MrBlackhill

But wait, even though that's a bad increase, it's a percentage, it's relative to our prior debt. Maybe we aren't that bad in absolute terms.

I mean, let's say I make $100,000/year and I have $20,000 debt, then the next year I have $40,000 debt, an increase of +100%. And let's say my friend makes $100,000/year and had a debt of $80,000 and the next year $100,000, an increase of +25%. Even though I had a huge percentage increase of my debt, I'm better off in absolute terms.

Right?





__





Debt to GDP Ratio by Country 2022






worldpopulationreview.com


----------



## KaeJS

MrBlackhill said:


> But wait, even though that's a bad increase, it's a percentage, it's relative to our prior debt. Maybe we aren't that bad in absolute terms.
> 
> I mean, let's say I make $100,000/year and I have $20,000 debt, then the next year I have $40,000 debt, an increase of +100%. And let's say my friend makes $100,000/year and had a debt of $80,000 and the next year $100,000, an increase of +25%. Even though I had a huge percentage increase of my debt, I'm better off in absolute terms.
> 
> Right?
> 
> 
> 
> 
> 
> __
> 
> 
> 
> 
> 
> Debt to GDP Ratio by Country 2022
> 
> 
> 
> 
> 
> 
> worldpopulationreview.com


That's a positive spin on a negative situation.

But you are correct. It's still not good, though lol


----------



## james4beach

m3s said:


> Move over USA. We're number 1


IMO this is mostly a picture of our runaway real estate bubble.

This is showing mostly an increase in household and non-financial corp debt, so it's probably mostly due to mortgages + consumer credit + other stupid borrowing for renovations etc


----------



## Ukrainiandude

Thal81 said:


> Instead, collect $500/week for months


How can I arrange that? Because I hate working and paying taxes that go to financing people on welfare. I would rather join their ranks, do nothing and get paid.


----------



## Ukrainiandude

james4beach said:


> mortgages + consumer credit + other stupid borrowing for renovations etc


Government made money dirty cheap, below the inflation, why not borrow? You live only once and tomorrow the same sh .t will be more expensive.


----------



## james4beach

Ukrainiandude said:


> Government made money dirty cheap, below the inflation, why not borrow? You live only once and tomorrow the same sh .t will be more expensive.


But money is cheap to borrow in every country. Canada isn't any different, in terms of the ultra cheap borrowing rate. It's even cheaper in Europe where you can get 0% loans or slightly below zero I think.

So your assessment is incorrect. The off-the-charts Canadian borrowing isn't due to the cheap cost of money; every country has that.

What's different is that we have a runaway real estate bubble and total RE mania. You wouldn't believe how many of my friends bought properties in the last 12 months... it's just insanity.


----------



## Ukrainiandude

james4beach said:


> What's different is that we have a runaway real estate bubble










Apparently in the eighties the inflation rate was calculated differently.


----------



## Ukrainiandude

That’s what you get with jackass government that locked everything down and reduced the output, but then printed and gave everyone money so they could buy no existing product.


----------



## KaeJS

The future is bleak. But what do you do?
I often wonder if there is any point to saving/investing these days.

Seems more worth it to just buy **** and live life.


----------



## Eder

Can you imagine if we all did that when Canada's inflation was running over 12%.


----------



## james4beach

KaeJS said:


> The future is bleak. But what do you do?
> I often wonder if there is any point to saving/investing these days.


Maybe you're forgetting about the whole point of investing. It's to get a positive real return, to preserve the value of your money.

If you're investing in a diversified portfolio, the odds are that you will beat inflation over time. It's the people who don't invest, or who don't have any assets, who are in big trouble due to inflation.


----------



## Ukrainiandude

Eder said:


> Can you imagine if we all did that when Canada's inflation was running over 12%.


if you were to use the system from eighties to calculate inflation now, it would be around 10% as well.


----------



## james4beach

The TSX is unstoppable. Federal Reserve money printing + commodities is propelling it higher and we've been outperforming the US too.

XIC's 1 year return is 31%
3 year return is 14.4%
5 year return is 10.6%

The oldest ETF (XIU) was created in 1999. Even if you bought it then, at the peak of the Nortel bubble, the annualized return of XIU through today has been a whopping 7.7% CAGR

My equities have always been Canada-heavy.


----------



## AltaRed

Eder said:


> Can you imagine if we all did that when Canada's inflation was running over 12%.


S&P500 adjusted for inflation since 1/1/1970 did well enough per the table of data at the bottom of the link, taking into consideration the high inflation 1970s. With the exception of the 1974-75 'crash', stock market investors did okay during the high inflation era.


----------



## Tostig

james4beach said:


> Maybe you're forgetting about the whole point of investing. It's to get a positive real return, to preserve the value of your money.
> 
> If you're investing in a diversified portfolio, the odds are that you will beat inflation over time. It's the people who don't invest, or who don't have any assets, who are in big trouble due to inflation.


Remember that old Trimark commercial during RRSP season? It was a man just standing there getting older as the past headlines of world and financial crises flashed on the screen.


----------



## KaeJS

james4beach said:


> Maybe you're forgetting about the whole point of investing. It's to get a positive real return, to preserve the value of your money.
> 
> If you're investing in a diversified portfolio, the odds are that you will beat inflation over time. It's the people who don't invest, or who don't have any assets, who are in big trouble due to inflation.


Have fun making a positive real return with real estate rising more than annual salaries. You're just getting further behind, especially with your percentage of bonds and gold.

It is not I who has forgotten the point of investing.

At your age, and in this environment, you shouldn't even own bonds. What is your positive real return? And how do you feel about the real estate/rent prices?

How are you not concerned?
Do you feel you are not falling behind?

Unless you are a boomer with old property, you are in trouble. Are we not the same age?

I know you ignore some of my posts, and that's fine. But please respond to this one.


----------



## james4beach

AltaRed said:


> S&P500 adjusted for inflation since 1/1/1970 did well enough per the table of data at the bottom of the link, taking into consideration the high inflation 1970s. With the exception of the 1974-75 'crash', stock market investors did okay during the high inflation era.


Even better if the investor held both the TSX and S&P 500. Canadian stocks held up better during that high inflation period.

And we might be seeing a repeat of this now


----------



## james4beach

KaeJS said:


> Have fun making a positive real return with real estate rising more than annual salaries. You're just getting further behind, especially with your percentage of bonds and gold.
> 
> It is not I who has forgotten the point of investing.
> 
> At your age, and in this environment, you shouldn't even own bonds. What is your positive real return? And how do you feel about the real estate/rent prices?
> 
> How are you not concerned?
> Do you feel you are not falling behind?
> 
> Unless you are a boomer with old property, you are in trouble. Are we not the same age?
> 
> I know you ignore some of my posts, and that's fine. But please respond to this one.


Yeah we're the same age. Or I'm late 30s, not sure about you.

Falling behind in real estate? Then I'll buy a smaller place, or rent forever. Who cares ... I don't need a mansion. Square footage of homes has increased tremendously since the 1970s but I'll be OK living in a small place. I would be OK with something the size of a 1960 or 1970 home.

I can't speak for other Canadians but it's their problem, if they insist that they "deserve" a very large home that's beyond their means.

With my bonds in my asset allocation, yes I am getting a positive real return. Measuring it since I started tracking it about 6 years ago, my whole portfolio is performing at *7.0% CAGR* which is well above the inflation rate. And that's with 50% bonds, annual rebalancing, Canada & US equities.

An excellent, positive real return along with stability. I barely noticed the drop during the 2020 crash.

Falling further behind? I don't see it. Maybe I'm just more of an optimist than you. As far as housing, somehow I'm not concerned about that either. IMO the market will calibrate the price of housing such that mortgage payments will be comparable to rent.

I can afford rent, so I can afford a mortgage too. To me it's kind of arbitrary which way to go.


----------



## KaeJS

james4beach said:


> Yeah we're the same age. Or I'm late 30s, not sure about you.
> 
> Falling behind in real estate? Then I'll buy a smaller place, or rent forever. Who cares ... I don't need a mansion. Square footage of homes has increased tremendously since the 1970s but I'll be OK living in a small place. I would be OK with something the size of a 1960 or 1970 home.
> 
> I can't speak for other Canadians but it's their problem, if they insist that they "deserve" a very large home that's beyond their means.
> 
> With my bonds in my asset allocation, yes I am getting a positive real return. Measuring it since I started tracking it about 6 years ago, my whole portfolio is performing at *7.0% CAGR* which is well above the inflation rate. And that's with 50% bonds, annual rebalancing, Canada & US equities.
> 
> An excellent, positive real return along with stability. I barely noticed the drop during the 2020 crash.
> 
> Falling further behind? I don't see it. Maybe I'm just more of an optimist than you. As far as housing, somehow I'm not concerned about that either. IMO the market will calibrate the price of housing such that mortgage payments will be comparable to rent.
> 
> I can afford rent, so I can afford a mortgage too. To me it's kind of arbitrary which way to go.


What's the point in trying to achieve a positive real return if you're so content to downsizing?

The point of investing and achieving a positive real return is to make more. To get further ahead.

Saying you don't "need" a mansion is one thing. But I'm sure you'd like one.

You don't "need" a positive real return, either. But you'd like one.

I am almost 32.


----------



## AltaRed

james4beach said:


> Even better if the investor held both the TSX and S&P 500. Canadian stocks held up better during that high inflation period.
> 
> And we might be seeing a repeat of this now


Due to commodities generally doing well in inflationary periods


----------



## Eder

AltaRed said:


> S&P500 adjusted for inflation since 1/1/1970 did well enough per the table of data at the bottom of the link, taking into consideration the high inflation 1970s. With the exception of the 1974-75 'crash', stock market investors did okay during the high inflation era.


I was responding to Kae's quote "Seems more worth it to just buy **** and live life. "

I was building spec houses paying 19% builders loans...4 kids and wife. Never once thought the future was bleak even after quickly going bankrupt when the housing market dried up.


----------



## AltaRed

Yes, I understood that. My response was that investing, rather than just buying shite and live life, is indeed worth it.


----------



## MrBlackhill

Well, @KaeJS has a point.

Investing to beat inflation sure is the goal, but in order to invest to beat inflation, you must have extra money to be able to invest, and in order to have extra money to invest and beat inflation, your income must grow faster than inflation.

At the source, the goal is to have an income increasing faster than inflation.

If you start your career investing 20% of your income, but then there's 10% inflation over the next decade like back in the 70s while your income increases only 5% per year, you're f*cked.

On this graph below, the average wage in constant dollars decreased during about 20 years and otherwise it has barely moved. Also, net worth has decreased.


----------



## AltaRed

The second graph is quite telling in my opinion for the post-2008 period.

One interpretation: Folks bailing from the stock market post-2008 crisis and not getting back into the market (vs staying all-in in the first place).
Second interpretation: Continued home foreclosures which really didn't end in a significant way until about 2011 I think.

The second one may be more correct simply by comparing it with the 2000 dotcom bust that was pretty much limited to the stock market and not the housing market. Net worth bounced right back post dotcom bust, with both stock market and housing surges.


----------



## james4beach

KaeJS said:


> What's the point in trying to achieve a positive real return if you're so content to downsizing?
> 
> The point of investing and achieving a positive real return is to make more. To get further ahead


The point of the real return is to preserve the value (and hopefully grow a little) the money you've accumulated in life.

Even if you're got a 2% or 3% real return, you're winning.

I also don't know what you mean when you keep saying "get ahead". Get ahead of _what_? Aren't you already well ahead of countless other Canadians? As I recall, at age 32 you have a pretty significant net worth that's far above the median at your age.

In your early 30s you also haven't hit your peak income earning years yet. That usually happens in the 40s and 50s. Nobody at age 25 is wealthy.


----------



## MrBlackhill

About income by age group:









Exploring Canadian Income by Geography, Sex, and Age | The Measure of a Plan


Interactive charts to explore Canadian income -- by geography, sex, and age group




themeasureofaplan.com


----------



## KaeJS

james4beach said:


> Even if you're got a 2% or 3% real return, you're winning.


I guess. But you're winning by a small amount while others are winning by large ones. So it's like you're winning a game that doesn't really matter.



james4beach said:


> I also don't know what you mean when you keep saying "get ahead". Get ahead of _what_? Aren't you already well ahead of countless other Canadians? As I recall, at age 32 you have a pretty significant net worth that's far above the median at your age.


There is no such thing as enough. Just because I have more than people my age doesn't mean I am satisfied. I'll be satisfied when my houses are paid off and I have a nice portfolio with a Porsche in the driveway. Until then, I will keep grinding. There are plenty of people who have more than us, who make more than us, who are doing better than us.

Being on a financial forum, we both know money compounds. It is a race. The faster you get it, the more you'll have for less working hours. Who doesn't want that?


----------



## james4beach

KaeJS said:


> I guess. But you're winning by a small amount while others are winning by large ones.


It sounds like you're caught up on what other people are doing. Why are you so concerned about the occasional people who are having big gains?

There are also many people having big losses from speculation and bad luck. Are you remembering to include them as well, when you think of what others are doing?

Sounds to me like you're experiencing a kind of FOMO and greed for riches.


----------



## james4beach

KaeJS said:


> But you're winning by a small amount while others are winning by large ones.


I'm curious how you'd answer this. Imagine all of the investors and property owners out there, so anyone with a positive net worth (you, me, everyone here at CMF, every rich person, every billionaire)

Now think of each investor's rate of return over a 30 year timespan. That includes Buffett and Soros who made around 20% CAGR, and Jim Simons with his 40% CAGR. Or people who owned Toronto real estate this whole time. But it also includes people who bought crappy real estate in Detroit and got -2% CAGR. It also includes people who got scammed and lost everything. Or people who totally suck at managing their money, who got 0% return.

ignoring inflation...

What would you guess is the average CAGR, among everyone?

I do understand that you aspire to be above average (and so do I), but I'm really curious about where you think the average CAGR is.


----------



## KaeJS

james4beach said:


> What would you guess is the average CAGR, among everyone?
> 
> I do understand that you aspire to be above average (and so do I), but I'm really curious about where you think the average CAGR is.


I'm not sure. Going in completely blind, I'd say maybe 5%?


----------



## KaeJS

james4beach said:


> Sounds to me like you're experiencing a kind of FOMO and greed for riches.


I don't know how anyone around our age group is not experiencing FOMO looking at real estate prices.

You say you are fine and that you'll just downsize, move away, and rent. But real estate prices impact rent rates, too. These increases in real estate prices are only benefitting the people who have many properties, and mostly those that have purchased 10 years ago or more.

So, when you look at your positive real return and compare it to the insanity in real estate, crypto, meme stonkz, NFTs.... Are you really getting ahead?

Not to mention gasoline and food prices.


----------



## Beaver101

The pandemic just enhanced the meaning of "you can't take it with you". Of course, this is for those who actually understand that meaning.


----------



## MarcoE

james4beach said:


> With my bonds in my asset allocation, yes I am getting a positive real return. Measuring it since I started tracking it about 6 years ago, my whole portfolio is performing at *7.0% CAGR* which is well above the inflation rate. And that's with 50% bonds, annual rebalancing, Canada & US equities.


This is an excellent result. You could get a higher CAGR with a more aggressive portfolio. But you'd also be taking on more risk.

Your portfolio is designed to last. For years, decades, even generations. To provide safety, stability, and real positive returns. And it's doing exactly what it's designed to do.

I personally don't think of investing in terms of "winning" or "beating other investors" or having a Porsche on my driveway. I'm much more concerned with having financial freedom, peace of mind, safety, and stability. I don't need a mansion or Porsche; I don't want them either. What I do want is financial freedom. I want a portfolio that will last for my life and my heirs' lives, surviving different economic climates and still giving my family positive returns. 

It's not crazy to own bonds, IMO. I don't know what will happen to real estate, stocks, bonds, gold, or any other asset class tomorrow, let alone 40 years from now. My portfolio, like yours, is designed to last. Some years, others might brag that they're "winning" or "beating us." Okay. Enjoy, winners. I'm happy getting real positive returns for decades, relaxing in my normal house, driving my normal car, and knowing that I'll be fine whatever happens.


----------



## MrBlackhill

Just so you guys know, when looking at the US household equity allocation, when looking at the CAPE, when looking at the yield curve, when looking at the current trailing 3 calendar year returns, we should all know that the market will drop by at least -30% by 2023.

A CAPE ratio over 32 has never returned more than 2% CAGR during the next 5 years, from the past 140 years of US data. The CAPE ratio was above 32 back in 2018 when the S&P 500 was at 2,800. By 2023, the S&P 500 is very likely to drop to 3,100 or below. We're currently at 4,500. That would be a -30% drop.

Back in 2013, the US household equity allocation predicted a 10% CAGR over the next 10 years. We're currently at 15% CAGR after 9 years. A regression to the mean to make that prediction accurate (because historically that predictor was always very accurate) would also predict a -30% drop from current levels by 2023.

2019, 2020 and 2021 YTD all had calendar returns above 15%. In the past 100 years, having a 4th calendar year above 15% occurred only 3 times. In the 40s, in the 50s, and... during the dot-com bubble which was the only occurrence of 5 consecutive calendar years above 15%. In all cases, the following year was always a negative calendar year.

The only signal missing at the moment is the yield curve inversion. If the yield curve gets inverted in the next 18 months or less, it'll predict a crash by 2023.

Mark my words and get ready to buy S&P 500 at levels below 3,500 by 2023.

2022 and 2023 will be very, very interesting years.


----------



## james4beach

KaeJS said:


> I'm not sure. Going in completely blind, I'd say maybe 5%?


This illustrates a difference in how we see things. I suspect that the average return (among everyone with money) is much closer to 0%. People are terrible investors / gamblers.

If you're able to pull off 5% or 6% long term after fees, I think you're doing much better than most others.


----------



## kcowan

I think Eder, J4B and KaeJS are just expressing different benchmarks of how to get there, and "there" is different for each.

Isn't that the value of this forum? There is a richness is the variety and there is no one path to financial success.


----------



## Ukrainiandude

james4beach said:


> my whole portfolio is performing at *7.0% CAGR* which is well above the inflation rate.











Do you believe in accuracy of the inflation rate that Stat Canada feeds you?


----------



## MrBlackhill

Ukrainiandude said:


> View attachment 22272
> 
> Do you believe in accuracy of the inflation rate that Stat Canada feeds you?


I hope my income will move up 7%... Even though I doubt.

At least, I already own a property and I barely use my car so I don't care when I see gas above $1.50/L.


----------



## KaeJS

I completely have to disagree with James and Marco.

While you both might be "comfortable" with your subpar returns... The rest of the world is running away from you. I don't think you guys are seeing the wealth being created through RE and Crypto or even stocks.

You guys say you want financial freedom, but I don't think you're going to get it. Not unless your idea of freedom is sitting in a 1 bedroom apartment paying rent forever and eating ramen noodles.

I want financial independence, too. All I want in this entire world is to not have to go to my sh!tty full time job anymore. But you know what? Investing in things like bonds or gold or safe investments will mean I have to stay there for 30 years (and I STILL don't get the Porsche).

There is a reason 20 year olds are YOLO-ing their accounts. It's because money means nothing anymore. You either get rich or die trying. It honestly boggles my mind when I see people working for minimum wage. Like who would even work at a place like Subway anymore, or any fast food joint? I just can't imagine working for $15/hour. It's a waste of time. I'm surprised people still do it.

You guys may beat a mythical benchmark in terms of real return, but in real life, you're falling behind. It's not hard to see. Just look around you.

And while you guys may not agree, right now having a mortgage is an asset. A mortgage is not a liability currently. The rates are so low that it actually makes sense to NOT pay down a house at all. The only thing that makes sense is to own one and keep taking out all your equity and blending and extending your amortization.


----------



## MrBlackhill

KaeJS said:


> I don't think you guys are seeing the wealth being created through RE and Crypto or even stocks.


Maybe 5 years from now, you'll be saying: I don't think you guys are seeing the wealth being *destroyed* through the RE bubble crash and crypto bubble crash or even stocks bubble crash.


----------



## KaeJS

Crypto and stocks, maybe.
Real estate? Nah.


----------



## MrBlackhill

KaeJS said:


> Real estate? Nah.


Historical real house prices (red line) in developed countries. It doesn't only go up.


----------



## james4beach

KaeJS said:


> While you both might be "comfortable" with your subpar returns... The rest of the world is running away from you. I don't think you guys are seeing the wealth being created through RE and Crypto or even stocks.


I think my returns are above average, not below.

I think you are taking social media-hyped, short term returns way too seriously. This is kind of like how people look on Facebook and think all their friends and neighbours are living amazing lives.

It's often fake or misleading. Social media is not an accurate reflection of reality.

Super high returns do not persist in the long term. Gamblers get high returns one moment, then lose it all the next moment. It can't be sustained.


----------



## MarcoE

KaeJS said:


> While you both might be "comfortable" with your subpar returns... The rest of the world is running away from you. I don't think you guys are seeing the wealth being created through RE and Crypto or even stocks.
> 
> You guys say you want financial freedom, but I don't think you're going to get it. Not unless your idea of freedom is sitting in a 1 bedroom apartment paying rent forever and eating ramen noodles.
> 
> I want financial independence, too. All I want in this entire world is to not have to go to my sh!tty full time job anymore. But you know what? Investing in things like bonds or gold or safe investments will mean I have to stay there for 30 years (and I STILL don't get the Porsche).


My portfolio includes many stocks, real estate, and some crypto. It also includes many bonds and gold -- because it's designed to last.

You said that the thing you want most is to leave your shitty full time job. In your situation, I might want an aggressive portfolio too, so that I could strike it big and escape. If I were 32, and stuck in a job I hated, I'd probably invest aggressively too.

My situation is different. I have enough money that I don't need to work a day job, shitty or otherwise. And I haven't needed to for quite a few years now. At this point, I don't need to take big risks. I want capital preservation.

Once you have a large portfolio, I think your attitude might change. Once you've "won" the game, why go back to the casino? You're interested in preserving your wealth. Generally, in my experience, wealthy individuals are interested in capital preservation more than growth. If you already have lots of money, you're willing to sacrifice potential growth for safety.

I'm making about 8% CAGR and am quite happy with that. I could make more, but I'd be taking more risk. I'm interested in preserving my wealth for many years to come.

(And BTW, I live in a nice house and eat well. No 1 bedroom apartment or ramen here, don't worry.)


----------



## MarcoE

james4beach said:


> Super high returns do not persist in the long term. Gamblers get high returns one moment, then lose it all the next moment. It can't be sustained.


I agree. That's why it's so important to diversify. Bonds and gold stink these days, especially bonds. In 10 or 20 years, who knows what'll happen? We could have a real estate crash, stock market crash, or some black swan event I can't even imagine. Everyone feels like an investing genius while their asset-of-choice is doing well. And everyone else seems dumb. But then the weather changes, and fortunes change with it. Personally, I'm interested in surviving. And I want to survive for decades to come.

Bonds aren't keeping up with inflation right now. But they can still be worth a lot of money. If the stock market crashes 50% tomorrow (and crashes of 50% are not unheard of), will you be able to weather the storm? What if the recession lasts for years? Can you really hold out and not end up selling in a panic? Many investors think "oh, sure, no problem!" Until it happens in real life. And suddenly they're not so tough anymore. If a high allocation to bonds and gold comforts you psychologically, offers you some fixed income during hard times, prevents you from selling in a panic, or even gives you the ability to rebalance and buy more stocks -- those bonds are worth a FORTUNE.


----------



## m3s

I agree with @MarcoE about diversification but I also think bonds are overrated and broken now. I held bonds and the responsible diversified assets mentioned up until the pandemic.

In March 2020 everything that was liquid crashed including bonds. This defeated the purpose of bonds. I held bonds to be able to rebalance during a fire sale - but nothing held up not even gold. Luckily I had emergency funds that I could deploy during the crash. It has more than 10x since while bonds were lucky to break even again. I ditched the pathetic bonds and won't look back

Now I hold algorithmic stablecoins that earn good yield unlike bonds and can be used to rebalance (I have used them for this several times now) Stablecoins are not all created equal, need to be regulated, and do pose a risk if you don't understand what they are. But bonds on the other hand are being manipulated, yield below inflation before tax, and don't hold up when you need them

Diversification is huge for the opportunity to rebalance during volatility. Bonds are broken imo and holding 50% of anything is far too much. Ideally 30-40% max of any asset class imo


----------



## KaeJS

MrBlackhill said:


> Historical real house prices (red line) in developed countries. It doesn't only go up.


Tell that to Australia, New Zealand, Canada, Norway and Sweden.

You know, lots of these countries have a lot in common which is why the charts look relatively the same.

Canada is special and I think that is what you are missing about it versus some of the other countries. As a socialist, democratic, multicultural country with "free" healthcare... We are an attractive place to be for families. We have decent infrastructure, a good reputation, and our country is safe.

Our country is also cold and most people don't want to live past a certain point. When we also bring in foreign money and foreign people... Your house prices will forever be propped up.

There simply is too much demand for Canadian real estate. Just because some other countries (Portugal, for instance) seem to have been on a downward trend does not mean it will happen here.

I'm not saying it can't be flat for a while or even drop a tiny bit. But, I really can't see it going down long term. And I definitely don't see any crashes coming, either. 

Also - the government would never let it crash. And I truly believe that.


----------



## KaeJS

james4beach said:


> I think my returns are above average, not below.
> 
> I think you are taking social media-hyped, short term returns way too seriously. This is kind of like how people look on Facebook and think all their friends and neighbours are living amazing lives.
> 
> It's often fake or misleading. Social media is not an accurate reflection of reality.
> 
> Super high returns do not persist in the long term. Gamblers get high returns one moment, then lose it all the next moment. It can't be sustained.


I'm up over 30% this year in my stock portfolio. I'd normally say that's really good, but this year that's actually not great. I thought there would be a bigger resurgence in some stocks that never materialized quite as well as I hoped and that hurt my returns.

The other thing you're missing is that people use leverage to increase their returns. You can't use leverage with bonds or gold. I mean, you could. But it would be extremely silly and you'd likely lose money. But leverage can really help you get ahead. Especially at times like this when governments are printing money like it means nothing.

I rarely use social media. I don't have time to scroll through the lives of other people. Also, I don't need to see returns online. I see them when I walk outside. I see them when I see a ferrari, or a bigger house than mine, etc. There is money being made out there, and it is being made at a much higher and faster rate than your 7% CAGR. That's all I'm saying.

And yes - to cover my bases, I understand that people finance or lease things. I could go buy a Porsche tomorrow in cash. But I won't. Because it's still out of reach for me. Just because I can afford it doesn't mean I should do it. But I do recognize not everyone has that intelligence level and that some of the success I see is not as much as I think it might be and could only be surface deep.


----------



## KaeJS

MarcoE said:


> My portfolio includes many stocks, real estate, and some crypto. It also includes many bonds and gold -- because it's designed to last.
> 
> You said that the thing you want most is to leave your shitty full time job. In your situation, I might want an aggressive portfolio too, so that I could strike it big and escape. If I were 32, and stuck in a job I hated, I'd probably invest aggressively too.
> 
> My situation is different. I have enough money that I don't need to work a day job, shitty or otherwise. And I haven't needed to for quite a few years now. At this point, I don't need to take big risks. I want capital preservation.
> 
> Once you have a large portfolio, I think your attitude might change. Once you've "won" the game, why go back to the casino? You're interested in preserving your wealth. Generally, in my experience, wealthy individuals are interested in capital preservation more than growth. If you already have lots of money, you're willing to sacrifice potential growth for safety.
> 
> I'm making about 8% CAGR and am quite happy with that. I could make more, but I'd be taking more risk. I'm interested in preserving my wealth for many years to come.
> 
> (And BTW, I live in a nice house and eat well. No 1 bedroom apartment or ramen here, don't worry.)


If you've made it - you've made it. Then you're doing the right thing.

Hey - if I didn't have to work, had a nice house, ate well, and had a large portfolio like you, I'd be happy with an 8% CAGR also. That's only sensible that you'd want capital preservation as a priority. 

But I'm not there yet. And as such, I need the highest returns possible.


----------



## KaeJS

m3s said:


> Now I hold algorithmic stablecoins that earn good yield unlike bonds and can be used to rebalance (I have used them for this several times now) Stablecoins are not all created equal, need to be regulated, and do pose a risk if you don't understand what they are. But bonds on the other hand are being manipulated, yield below inflation before tax, and don't hold up when you need them
> 
> Diversification is huge for the opportunity to rebalance during volatility. Bonds are broken imo and holding 50% of anything is far too much. Ideally 30-40% max of any asset class imo


Bonds are broken. Absolutely. They don't make much sense unless you're old and/or rich as hell already.

The only Stablecoin I have right now earning me a yield is USDC.

I should probably increase my positions in Stablecoins, to be honest.


----------



## MarcoE

m3s said:


> I agree with @MarcoE about diversification but I also think bonds are overrated and broken now. I held bonds and the responsible diversified assets mentioned up until the pandemic.


Bonds are "broken" now. But I don't know what will happen in the future. 

Take a look at XBB today, a popular bond fund for Canadians. The YTM is only 1.93%. Pretty terrible, considering inflation, and considering recent returns in other asset classes. But fast forward to a possible 2028. The stock market has crashed 50%. The real estate bubble has burst. There's deflation. Or any other doomsday scenario we can imagine. During this possible post-apocalyptic future, the man earning 1.93% is king.

Will that happen? I don't know. My portfolio is designed to withstand different economic "seasons." I don't try to guess what will happen next or time the market. I stick to my predetermined asset allocation. During some years, certain asset classes will be losers. Today it's my bond allocation. Ten years from now, it might be another asset class. I still stick to my asset allocation, because I can't predict the future, and I can't time any asset class.




m3s said:


> Ideally 30-40% max of any asset class imo


That sounds reasonable to me. My largest asset class is stocks at 40% (and they're very diversified between countries and sectors).


----------



## m3s

Google "Greg Foss bonds" on youtube or podcasts (30 years in Canadian finance and bonds) He explains how nobody wanted to buy bonds when they were new and lucrative

Sound familiar? People have an aversion to shiny new things. Stablecoins are more advanced and capital efficient today but people are scared of them like they were bonds when they were new. There is good risk adjusted yield for those who dare to learn something new

Now everyone says you need to hold 40-60% bonds in case of a crash. Like we had last year.. With everyone holding 40-60% bonds the yield just isn't there today imo. Markets are markets. Supply and demand. As more people get into stablecoins I'm sure the yields will come down as well.

I am far more agile with today's tech and don't need to sit around holding bonds in case I will want them in the next crisis even though they didn't help last time. If I can see a use for bonds on the horizon I can switch back in a heartbeat with today's tech

Maybe when all the financial advisoor experts start a trend to hold 40-60% stablecoins I can balance back into bonds


----------



## MarcoE

KaeJS said:


> The other thing you're missing is that people use leverage to increase their returns. You can't use leverage with bonds or gold. I mean, you could. But it would be extremely silly and you'd likely lose money. But leverage can really help you get ahead. Especially at times like this when governments are printing money like it means nothing.


Depends on the asset class. Personally I don't use leverage to invest in stocks. Too risky for me. But YMMV.



KaeJS said:


> I rarely use social media. I don't have time to scroll through the lives of other people. Also, I don't need to see returns online. I see them when I walk outside. I see them when I see a ferrari, or a bigger house than mine, etc. There is money being made out there, and it is being made at a much higher and faster rate than your 7% CAGR. That's all I'm saying.


Seeing big houses and Ferraris can be misleading. Most wealthy individuals live in nice but "normal" houses and drive nice but "normal" cars. Many people with mansions and sports cars aren't actually wealthy, and often their assets were purchased using debt. (The Millionaire Next Door is the most famous book describing this phenomenon.) But judging by your footnote you already understand this. Personally I'd much rather drive a Honda or Hyundai than a Ferrari or Porsche and invest the difference, and I think most millionaires are like this.

Also, when people do earn big money consistently, it's usually not by investing. It's very hard to beat the market, i.e. a plain old index funds. Very few investors can do this consistently. Some can, even some members in this group, but it's rare. Often, people are rich due to work in other areas -- they work in high-income professions (e.g. they're successful doctors or lawyers), or they started successful businesses. It's quite rare for somebody with a "shitty job" (as you previously described yours) to take a modest amount of money into investing and rake in millions. It can happen but most rich people you see didn't make their money that way.


----------



## MarcoE

KaeJS said:


> There is a reason 20 year olds are YOLO-ing their accounts. It's because money means nothing anymore. You either get rich or die trying. It honestly boggles my mind when I see people working for minimum wage. Like who would even work at a place like Subway anymore, or any fast food joint? I just can't imagine working for $15/hour. It's a waste of time. I'm surprised people still do it.


Why? Lots of reasons to work for $15 an hour. Some young people need to work their way through college. Some people don't have the education to get a better job. Not everyone can be rich. There's honor in working minimum wage jobs. I respect the janitor as much as the CEO, and I respect the girl flipping burgers at McDonalds as much as the CEO. They're working hard to provide for themselves and maybe their families too. No need to look down on them. Not everyone is able to work "better" jobs. They're still working hard and providing a necessary service.


----------



## agent99

james4beach said:


> Maybe you're forgetting about the whole point of investing. *It's to get a positive real return*, to preserve


Hey James - Glad to see you post that  Change of heart?


----------



## agent99

james4beach said:


> I think my returns are above* average*, not below.


James, how do you find an average return to compare with?

I have read that 'on average' most retail investors actually lose money. Not surprising, and not hard to beat that. That is why I asked above question. We need a benchmark to compare with.


----------



## MrBlackhill

KaeJS said:


> Tell that to Australia, New Zealand, Canada, Norway and Sweden.
> 
> You know, lots of these countries have a lot in common which is why the charts look relatively the same.
> 
> Canada is special and I think that is what you are missing about it versus some of the other countries. As a socialist, democratic, multicultural country with "free" healthcare... We are an attractive place to be for families. We have decent infrastructure, a good reputation, and our country is safe.
> 
> Our country is also cold and most people don't want to live past a certain point. When we also bring in foreign money and foreign people... Your house prices will forever be propped up.
> 
> There simply is too much demand for Canadian real estate. Just because some other countries (Portugal, for instance) seem to have been on a downward trend does not mean it will happen here.
> 
> I'm not saying it can't be flat for a while or even drop a tiny bit. But, I really can't see it going down long term. And I definitely don't see any crashes coming, either.
> 
> Also - the government would never let it crash. And I truly believe that.


In some way, I wish you are right. I've bought a rental property and I live in one of the units, and I did so with 20x leverage (5% downpayment) and since it's a rental property I was able to buy a property worth 50% more due to rental income, so I can't be more leveraged than that. And the similar properties in the neighborhood increased in value by an average of more than 7% CAGR over the past 18 years and I hope it'll continue.

But then I think that everything going up too fast eventually goes back down. There will certainly be a crash within 10-15 years from now. It's unsustainable.

But I live in Montreal, so I'm just watching Vancouver and Toronto and hoping for the same path and when Vancouver and Toronto will crash, I'll know that Montreal will also crash at some point.


----------



## MrBlackhill

agent99 said:


> James, how do you find an average return to compare with?
> 
> I have read that 'on average' most retail investors actually lose money. Not surprising, and not hard to beat that. That is why I asked above question. We need a benchmark to compare with.


Very good point.

People like to choose the average that makes them look good.

My income is above Canada's average income, yay!
But wait, is my income above my age group's average income? Yes, yay! But the difference is a bit less.
But wait, is my income above my city's average income for my age group? Yes, yay! But the difference is a bit less, again.
But wait, is my income above my city's average income for my age group and field of study? Yes, yay! But the difference is a bit less, again.
But wait, is my income above my city's average income for my age group, field of study and current job type? Hmm, wait, not so sure anymore.

So when you say that your investment return is above average, you should compare yourself to other people who are actively investing, having similar financial goals, etc.

The level of granularity depends on what you want to focus on.


----------



## AltaRed

MrBlackhill said:


> So when you say that your investment return is above average, you should compare yourself to other people who are actively investing, having similar financial goals, etc.
> 
> The level of granularity depends on what you want to focus on.


To some extent I agree. I do think a key tenet relates to age, e.g. aggressiveness in early accumulating years, transitioning more into certainty and balance during decumulation years. That is probably a better age related reference point than the classic 'global neutral balanced' 60/40 index used by Morningstar, but the 60/40 global index could be a lifelong reference point too. I think it is important to keep it at a high level despite there being many roads leading to Rome.

If one wants to be a bit cute about it, use the Stingy Investor Asset Mixer and create your own cocktail for variable equity/fixed income ratios over the years, perhaps vary it in 10 year increments. Example:
1) 100/0 while holding a mortgage on one's principle residence, or to say, age 40 whichever comes first. Drop equity component by 10 percentage points for every 10 years of age thereafter. e.g. 90/10 at age 50, 80/20 at age 60, 70/30 at age 70, 60/40 at age 80, 50/50, etc.
2) 90/10 to age 40, decreasing 10 points every 10 years thereafter.

I am against designer benchmarks (such as my own circle of friends/cohort) because that is like slicing and dicing boutique ETFs rather than staying with mainstream indices. Slicing and dicing is just being in denial of the big average real world.


----------



## Ukrainiandude

Analysis: What lies beneath? Hidden debt fears feed China's property woes



> "Nearly every developer has borrowings in disguise. The sector's debt problem is worse than what you see," said He Siwei, attorney at Hui Ye Law Firm.
> Chinese developers owed 33.5 trillion yuan ($5.24 trillion)through various channels at the end of June, Nomura estimates, based on official statistics, adding "there are definitely other obscure financing channels yet to be covered."
> Private bonds issued by shell companies in offshore locations have emerged as a new concern.
> In a note this month, Fitch ratings agency said that Fantasia Holdings Group (1777.HK), a property developer which has since defaulted, had recently told it "for the first time" that it had $150 million of private bonds that do not appear to have been reported in its financial statements.
> Fantasia did not respond to a request for comment. The company had over $4 billion worth of cash at the end of June and two weeks before it defaulted said that it had "ample capital".


----------



## james4beach

agent99 said:


> Hey James - Glad to see you post that  Change of heart?


I'm not sure why you're surprised by anything I'm writing here. I've always said that the goal of my *portfolio* was to provide a good, positive real return. I mean the whole portfolio. I have two goals:
(1) preserve capital, with stability
(2) positive real return

That portfolio contains a bunch of different stuff. I know you don't like my XBB and GICs which have negative real returns. Yeah I understand the criticism... but I look at the whole overall portfolio.

If you start over analyzing the constituents, you'll have all kinds of problems. Maybe you should get out of the S&P 500 right now. The P/E ratio is through the roof! It could be a stupid holding. And remember a few years ago when everyone hated Canadian stocks, and nobody would dare hold the TSX? Remember everyone on CMF who said the TSX is a horrible index that goes nowhere?

That's the problem with agonizing over the individual holdings. So I just decided to hold all of them -- TSX, S&P 500, bonds -- without trying to guess at whether they are good or bad holdings today.


----------



## james4beach

agent99 said:


> James, how do you find an average return to compare with?
> 
> I have read that 'on average' most retail investors actually lose money. Not surprising, and not hard to beat that. That is why I asked above question. We need a benchmark to compare with.


I don't have hard stats on it. I have heard the same thing you said here (and there is some evidence in the Dalbar studies of actual investor returns).

Real investors don't do too well. It's very hard to make good investment decisions, and it's really hard to avoid behavioural mistakes. I saw a Dalbar study that said that while a typical balanced fund returns 6% or something, the actual investor -- due to chasing returns and constantly trading in and out -- makes more like 2%. This is just from memory, but check out Dalbar studies.

I'm not talking about mutual funds versus their benchmarks. @AltaRed I'm talking about behavioural mistakes, fear, greed, failure to stick with a plan... lots of things which result in much worse returns than what Morningstar publishes.

If someone at CMF has a 5% return over the long term, that's a pretty good result. It doesn't sound high, but it probably is a pretty good return in the big scheme of things. It means they have mostly avoided the disastrous behavioural mistakes.


----------



## james4beach

Great posts @MarcoE



MarcoE said:


> Take a look at XBB today, a popular bond fund for Canadians. The YTM is only 1.93%. Pretty terrible, considering inflation


The yield might even be over 2% after today's drop.

Your point about the uncertain future is very important. If we knew exactly what would happen in the future, then investing is easy! If we have many years of inflation and economic boom coming, then you'd obviously go heavy into stocks.

In fact if you know exactly what is going to happen, then getting rich is super easy. You target the correct asset and leverage it up. Easy path to riches!

But sadly, *we don't know what the future will bring*. This is why we diversify with assets like bonds. We could end up with deflation. We could end up with an economy that fizzles out. We could get runaway commodity prices, initially super high inflation, which then cracks the economy (forcing higher interest rates and bankrupting consumers and corporations), followed by a brutal slowdown and downward spiral.

Here's the part that took me years to wrap my head around:

In a diversified portfolio, you're not supposed to see every asset in your portfolio perform spectacularly well. Sounds weird to @agent99 and @Jimmy I'm sure. Bonds are disappointing you say? Oh well... I guess this isn't the best environment for bonds, currently. Today is a good time for stocks. But it won't always be a good time for stocks; does anyone remember how US stocks were disappointing from 2000 - 2012?

You hold a diversified portfolio so that you get *decent* returns even as the market environment changes. You load up on assets that perform differently in different economic regimes (which is why I have some gold too). Your diversified portfolio is going to contain some underperforming assets. That's by design!

My assets are stocks, bonds, gold. The year is 2030. Which asset will be performing best at that time? Most likely, one or two assets will perform well, while another one does terribly.

_But which one?_


----------



## Jimmy

james4beach said:


> Great posts @MarcoE
> 
> 
> You hold a diversified portfolio so that you get *decent* returns even as the market environment changes. You load up on assets that perform differently in different economic regimes (which is why I have some gold too). Your diversified portfolio is going to contain some underperforming assets. That's by design!
> 
> My assets are stocks, bonds, gold. The year is 2030. Which asset will be performing best at that time? Most likely, one or two assets will perform well, while another one does terribly.
> 
> _But which one?_


Indexes are expected to have ~ 3.8%/yr real return going forward. Bonds .6% . Simplifying a 60/40 portfolio is expected to return 1.4% in real terms. If your goal is just to eke by then that is fine.





__





2021 Capital Market Assumptions for Major Asset Classes


We update our estimates of medium-term (5- to 10-year) expected returns for major asset classes. We also discuss what investors should expect from the stock-bond correlation in the coming decade.




www.aqr.com


----------



## james4beach

Jimmy said:


> Indexes are expected to have ~ 3.8%/yr real return going forward. Bonds .6% . Simplifying a 60/40 portfolio is expected to return 1.4% in real terms. If your goal is just to eke by then that is fine.


Those are short/mid range forecasts, and there are also massive "error bands" on those estimates. You're taking the forecasts too literally. Analysts have a very poor history with these kinds of stock forecasts.

The stock returns over short horizons are basically a wildcard. _Anything_ can happen. The bond returns can be more accurately predicted, because bonds have more predictable and reliable returns.

So Jimmy... instead of getting your +4% real return in stocks, what if you see something like a 20% or 40% drop over a few years instead? Is that going to be painful for you? Are you going to shrug and say "yup them's the breaks" or are you going to feel upset and stressed about losing money?


----------



## agent99

james4beach said:


> I'm not sure why you're surprised by anything I'm writing here.


I was just poking a little fun and am not surprised at all  It's what you do and at least you are more or less consistent. Mind you I do recall you buying some 'risky' stocks a while back! 

You said to me (I think) : "Maybe you should get out of the S&P 500 right now. The P/E ratio is through the roof! It could be a stupid holding." Just for the record, I hold zero of the S&P500. May appear a bad move on my part based on recent performance, but in my case, based on long past experience. I prefer to largely avoid currency risk and low yield S&P etfs don't appeal.

Where I could be critical, is about you (and others) deciding on a more or less fixed asset diversification. That way you may be safer, but your performance will be mediocre at best. Professionals wouldn't do that. Being a little quicker on your feet and changing asset allocation as the investment climate changes, might work out better (for some). But not for everyone.


----------



## agent99

james4beach said:


> If someone at CMF has a 5% return over the long term, that's a pretty good result. It doesn't sound high, but it probably is a pretty good return in the big scheme of things. It means they have mostly avoided the disastrous behavioural mistakes.


That prompted me to have a look at my records (again!). 

Our portfolio today is more than double what it was just before I retired and started keeping records 18 years ago. We have drawn whatever we need over and above CPP/OAS (~4%) and lived quite well. We could draw more, but have no need to. Rough average overall annual return comes to 6.3%. I try not to buy anything that won't beat the target inflation rate. Portfolio is "balanced" but as time goes by, % FI (but not $FI) goes down - now about 1/3 of total and at 82, still enough even if equity markets tank!


----------



## MarcoE

agent99 said:


> Where I could be critical, is about you (and others) deciding on a more or less fixed asset diversification. That way you may be safer, but your performance will be mediocre at best. Professionals wouldn't do that. Being a little quicker on your feet and changing asset allocation as the investment climate changes, might work out better (for some). But not for everyone.


If we knew how to time the markets, we'd all be trillionaires. We don't. And we're not.

Personally, I select an asset allocation that makes sense to me based on my life -- my personality and my financial needs. Then I just stick to it. Regardless of what happens. It's boring. It's "dumb." But it works for me. But YMMV. What suits me as an investor isn't for everyone.


----------



## james4beach

agent99 said:


> Our portfolio today is more than double what it was just before I retired and started keeping records 18 years ago. We have drawn whatever we need over and above CPP/OAS (~4%) and lived quite well. We could draw more, but have no need to. Rough average overall annual return comes to 6.3%. I try not to buy anything that won't beat the target inflation rate. Portfolio is "balanced" but as time goes by, % FI (but not $FI) goes down - now about 1/3 of total and at 82, still enough even if equity markets tank!


You've clearly done an excellent job managing your portfolio over the years. A long term 6.3% return is fantastic.

As @MarcoE mentioned, the investor's habits are also an important part of the picture. I want to be a mostly passive investor (minimizing adjustments) who dabbles a tiny bit in fun strategies. But I'm mostly a passive asset allocation guy. You may prefer to do it differently for sure.

And yes, I still do hold some very high risk stocks. The high flyers include WCN, FSV, WSP, TRI, CSU, DSG, and XIT. This is part of my Canadian stock allocation, and accounts for just 3.5% of my total portfolio. Obviously not a big deal, but it's fun, and might boost my returns a bit. At 3.5% exposure it won't do much of anything and that's intentional.


----------



## dotnet_nerd

I'm lovin' these new highs.

Today I took $40k off the table and rebalanced (Sold some VCN & XUU). I'm putting this into a HISA for some home projects. New fence, windows, furnace and whatever else the energy audit/rebate program suggests.


----------



## agent99

dotnet_nerd said:


> I'm lovin' these new highs.
> 
> Today I took $40k off the table and rebalanced (Sold some VCN & XUU). I'm putting this into a HISA for some home projects. New fence, windows, furnace and whatever else the energy audit/rebate program suggests.


 10 years ago, we had energy audit done and put $20k into home insulation, reduced envelope leakage and heating upgrade (to heat pump). Took 10 yrs to recover our investment, but well worth while, we think.


----------



## Jimmy

james4beach said:


> Those are short/mid range forecasts, and there are also massive "error bands" on those estimates. You're taking the forecasts too literally. Analysts have a very poor history with these kinds of stock forecasts.
> 
> The stock returns over short horizons are basically a wildcard. _Anything_ can happen. The bond returns can be more accurately predicted, because bonds have more predictable and reliable returns.
> 
> So Jimmy... instead of getting your +4% real return in stocks, what if you see something like a 20% or 40% drop over a few years instead? Is that going to be painful for you? Are you going to shrug and say "yup them's the breaks" or are you going to feel upset and stressed about losing money?


No all the professional studies and expert opinions aren't wrong, your amateur blogger views are. Almost any type of active management makes more than the cap weighted index and I'm not going to keep showing you their results Mr B and others have provided again and again. I know you like to argue this rhetorically all the time but it is ptless. Again making low risk meager returns is fine. Others invest to make better returns. Others don't share your eking out an existence approach and we'll leave it there.


----------



## agent99

james4beach said:


> You've clearly done an excellent job managing your portfolio over the years. A long term 6.3% return is fantastic.


My math might have been wrong. I should do it properly and use the actual annual withdrawal amounts that vary from year to year according to needs. Basically, portfolio balance has grown 2.09X (average of 4.18% pa). This after drawing 4% pa for living expenses. I don't know how I came up with the 6.3%. 

My concern is that one of these days I will have to pass this on to someone else to manage


----------



## MrBlackhill

agent99 said:


> Basically, portfolio balance has grown 2.09X (average of 4.18% pa). This after drawing 4% pa for living expenses.


I would estimate 8.5% CAGR growth to be able to withdraw 4% per year while growing 2X over 18 years.


----------



## agent99

MrBlackhill said:


> I would estimate 8.5% CAGR growth to be able to withdraw 4% per year while growing 2X over 18 years.


The 4% was just our target based on SWR. Using actual withdrawals, our return came out to 7% compound (or 7.5% simple average). First year although good, was just a part year so I left that out. I don't know if this was above or below average for that period, but regardless, good enough for us.

It may be hard to achieve similar numbers going forward with yields on FI so low.


----------



## james4beach

agent99 said:


> The 4% was just our target based on SWR. Using actual withdrawals, our return came out to 7% compound (or 7.5% simple average). First year although good, was just a part year so I left that out. I don't know if this was above or below average for that period, but regardless, good enough for us.
> 
> It may be hard to achieve similar numbers going forward with yields on FI so low.


Calculating the internal rate of return (XIRR) can get tricky when withdrawals are involved. For example, to use the XIRR spreadsheet function properly, you have to record every dividend as a withdrawal, unless you are reinvesting that dividend.

If you don't record every single withdrawal then XIRR won't give the correct result


----------



## agent99

james4beach said:


> Calculating the internal rate of return (XIRR) can get tricky when withdrawals are involved. For example, to use the XIRR spreadsheet function properly, you have to record every dividend as a withdrawal, unless you are reinvesting that dividend.
> 
> If you don't record every single withdrawal then XIRR won't give the correct result


I sure as heck don't record individual dividends or even think about using XIRR. What would the point be of doing that sort of detailed monitoring? Why would we need a "correct" result? Nothing we can really use it for anyway other than when wasting time on-line, like this  Time can be better spent elsewhere. I look at overall portfolio just a couple of times a year.

In January, I calculate previous year's annual return after allowing for total withdrawals. I don't care about monitoring overall long term return. I did it this time using the 17 year period I have complete data for, because of your comment about your portfolio doing "better than average" . I suspect that my returns are, at best, average for the period. If your's are better , good for you!


----------



## AltaRed

The benchmark average would be what I alluded to in a prior post, e.g. global neutral balanced... or if greater than 60/40, then using the Stingy Investor asset mixer. The average retail investor does more poorly than the benchmark given their propensity to be in high MER mutual funds AND their penchant for chasing performance... buy high and sell low more often than not. Various studies have been done on client accounts to prove exactly that (by at least a few percentage points if I recall correctly). The vast bulk of active managers also underperform over long periods of time as well.

I think the only reference point you can use to calculate performance for your own portfolio if you don't use spreadsheets with the XIRR function or something like Quicken, is to use the number the brokerage provides at the end of each year. Timing of money in and money out is a significant factor in doing the calculations. Those numbers are not perfect but they are pretty good.


----------



## Ukrainiandude

*Canadian propane prices surge 300% — and could climb higher as U.S. markets brace for 'Armageddon' *
Across North America, price of the fuel has risen faster than natural gas.

anyone enjoying new highs? Let’s see if natural gas and heating will follow. Producers may choose any price and the buyer has a choice to pay or stay cold.


----------



## Spudd

Jimmy said:


> No all the professional studies and expert opinions aren't wrong, your amateur blogger views are. Almost any type of active management makes more than the cap weighted index and I'm not going to keep showing you their results Mr B and others have provided again and again. I know you like to argue this rhetorically all the time but it is ptless. Again making low risk meager returns is fine. Others invest to make better returns. Others don't share your eking out an existence approach and we'll leave it there.


How can this be true if Sharpe's "Arithmetic of Active Management" is true (which it must be)?

If "active" and "passive" management styles are defined in sensible ways, it _must_ be the case that


> (1) before costs, the return on the average actively managed dollar will equal the return on the average passively managed dollar and
> (2) after costs, the return on the average actively managed dollar will be less than the return on the average passively managed dollar​


These assertions will hold for_ any _time period. Moreover, they depend _only_ on the laws of addition, subtraction, multiplication and division. Nothing else is required.


----------



## agent99

Spudd said:


> These assertions will hold for_ any _time period. Moreover, they depend _only_ on the laws of addition, subtraction, multiplication and division. Nothing else is required.


That would surely only be true if the holdings in the active and passive portfolios were identical. So why even consider active management if it's objective is not to do better than average passive?

Of course there will be costs in actively managing a portfolio but they would/should be offset by higher gains. That is how wealth management firms sell their services.

Are you saying that on average an actively managed portfolio doesn't do any better than a passive non-managed portfolio. I can't believe that, but if you do your own active management and don't beat the passive case, then you should be fired 

That article is maninly talking about professional investments. Not taking about individuals who don't own the whole market. Not really relevant to us DIY investors. Even author concedes that:



> It is perfectly possible for _some_ active managers to beat their passive brethren, even after costs. Such managers must, of course, manage a minority share of the actively managed dollars within the market in question.


----------



## AltaRed

There are outlier managers who can beat the index (including their fees) but they are not known in advance. Without contrarian thinking from the likes of Jimmy, we wouldn't have a lot to talk about. 😁 

As Spudd said, the total performance (before fees) of all investments is the market so by definition, a good many investors perform miserably, including many professional money managers. Just have to look at the actively managed mutual fund industry to see how few (about 15% based on studies) I think can beat the market over perhaps a 5 year period, and maybe almost zero on a 10 year basis. They have to beat their MERs in addition to beating the market. 

P.S. This data is available and has been quoted here before. I am just too lazy to look up the dismal record of active management. It is why many of us went DIY and why many have gone Couch Potato with low cost ETFs.


----------



## Spudd

agent99 said:


> That would surely only be true if the holdings in the active and passive portfolios were identical. So why even consider active management if it's objective is not to do better than average passive?


As you quoted from the article, yes, it is known that some active managers will beat the passive index. Some will not. This must be so, since the passive index is simply the sum of all active and passive investors. 

However, Jimmy said "Almost any type of active management makes more than the cap weighted index and I'm not going to keep showing you their results", which is clearly false. That is what I was responding to.

I completely agree that some will beat the index, however, some MUST lag the index. The index is just the sum of all investments. This is math.

The trouble is, you can't know in advance which ones will beat the index. And only the ones that beat the index get publicity for the most part - those who fail have their funds quietly taken off the market. Of course sometimes you read about a big blowup, like that Tiger Cub guy in Asia who blew up on Gamestop (?). But for the most part, good performance is trumpeted because people want to invest in things that are beating the market, so it's good marketing to trumpet those. Bad performance is swept under the rug.


----------



## MrBlackhill

Beating the market doesn't only depend on the fund manager, but also on the investor perception due to his entry point and exit point.

If a fund has 40 years of history, it has beaten the market the first 20 years then it has lagged the market the next 20 years, but overall it has beaten the market over the 40 years of existence, then an investor who bought that fund during the last 20 years has underperformed the market while being invested in a fund that has outperformed the market.

The window can change the picture.


----------



## agent99

For us DIY investors, we are not fund managers. What we do will have almost no affect on the index. So by managing our meager investments, we can strive to do better than the index which as you say is by definition average. Even with an ETF like XIU, you get the good with the bad. We could likely beat that passive ETF performance by investing, in say, just the top 1/3 of XIU's components. Or choosing higher yield fixed income than might be held in a typical balanced ETF or MF?

Maybe this is the kind of thing Jimmy was getting at? It is more or less what I have always done. Only time I ever bought whole market ETFs, was when we were in a strong bull market and it hardly mattered what you owned


----------



## agent99

MrBlackhill said:


> If a fund has 40 years of history, it has beaten the market the first 20 years then it has lagged the market the next 20 years, but overall it has beaten the market over the 40 years of existence, then an investor who bought that fund during the last 20 years has underperformed the market while being invested in a fund that has outperformed the market.


When we first started out investing in our RRSPs, etfs & discount brokerages didn't exist. We had the choice of buying individual stocks from a FS brokerage - at about $250/trade?? (I forget) or buying mutual funds or GICs usually from our bank. 

At that time, I had the bright idea, to look at the top 3 or 4 performing mutual funds and buy those. Invariably, they were not the top performers by the following year  Hindsight doesn't work well when investing


----------



## james4beach

Spudd said:


> How can this be true if Sharpe's "Arithmetic of Active Management" is true (which it must be)?
> 
> If "active" and "passive" management styles are defined in sensible ways, it _must_ be the case that
> 
> These assertions will hold for_ any _time period. Moreover, they depend _only_ on the laws of addition, subtraction, multiplication and division. Nothing else is required.


What Jimmy claims has been disproved countless times. Many studies have shown that there is no such thing as performance gain from active management, on average.

Among the millions of active managers out there, inevitably, some will beat the average but that's not really useful to anyone. There is no way to identify the skilled active managers.

This is the whole idea behind passive / index investing, and why it's so powerful.


----------



## Jimmy

Spudd said:


> How can this be true if Sharpe's "Arithmetic of Active Management" is true (which it must be)?
> 
> If "active" and "passive" management styles are defined in sensible ways, it _must_ be the case that
> 
> These assertions will hold for_ any _time period. Moreover, they depend _only_ on the laws of addition, subtraction, multiplication and division. Nothing else is required.


That is just some weirdo oddball blog post written 20 yrs ago. This has been resolved many x over. Here are the real studies See post 57. 1964-2012* Mkt cap weighted index return 9.66% , avg all non cap weight 11.75% *

As you can see all forms of active mgmt in that study beat the market cap index. We resolved this months ago whether some can accept they were wrong or not.









MrBlackhill's reckless fun and struggles


Here's more info about the status of my playground portfolio (in bold my biggest positions): 27.69% Tech 11.37% CSU 4.74% CTS 3.24% KXS 1.63% REAL 1.60% HAI 1.40% HBGD 1.39% BEW 1.17% TOI (from CSU) 1.16% RIWI 17.13% Consumer Cyclical 9.15% BYD 3.28% FOOD 3.22% RPI-UN 1.47% DOO 11.89%...




www.canadianmoneyforum.com


----------



## AltaRed

Jimmy can continue his train of thought as much as he wants. He can't get traction on it because the facts say otherwise on an all inclusive portfolio basis. Some actively managed portfolios can exceed the index some of the time. That is as far as that conversation can go.

Investors who deviate from broad market indices do so or their own specific reasons, e.g. income oriented portfolio, momentum, growth, etc. but from an equity perspective the MSCI World Index is the benchmark for global equities.


----------



## Eder

Its not hard for an informed individual investor to beat the TSX index...this is an old discussion. Those that do are berated by any that feel an index ETF is better. Best to just agree with them.


----------



## AltaRed

The market is a lot bigger than the TSX. It is only 3% cap weight. The reference point is the MSCI World Index. Stanley's 'Beat the TSX' is the classic on beating the TSX if one wants to focus on one part of the market. Dogs of the Dow is another strategy for beating the Dow. Those are simply slices of a market, not THE market and why few people actually invest that way exclusively. Anyone can cherry pick a segment of the global market.

I am quite aware of the thread Jimmy and Blackhill were involved in. It wasn't all that productive.

SPIVIA is the reference point for how professional money managers are more likely to under perform than to over perform.


----------



## agent99

james4beach said:


> What Jimmy claims has been disproved countless times. Many studies have shown that there is no such thing as performance gain from active management, on average.
> 
> Among the millions of active managers out there, inevitably, some will beat the average but that's not really useful to anyone. There is no way to identify the skilled active managers.
> 
> This is the whole idea behind passive / index investing, and why it's so powerful.


Regarding those many studies you mention - What was their basis? In order to actually get data for such studies, I presume they are based on performance of large, likely US based fund money managers. In that case you may be right. So if you buy an ETF or a MF, by all means buy an index based fund if you are satisfied with averages at best.

Most of us here are DIY investors. Some being very cautious like yourself, may very well put their money into index funds and be happy with average returns. Some want to do better than that. I know I do, so I manage my investments just like I used to manage my own businesses.

My advice whether wanted or not 

Never buy anything that is guaranteed to give you a negative real return.
Don't take unreasonable risks with tech, crypto, etc.
Invest in companies that you know and have a strong track record like dividend aristocrats.
Don't buy securities that have poor liquidity.
Look for opportunities and take advantage if you see fit
And so on.
This way, you can likely beat the indexes that, by definition, include the good with the bad performers. I try and avoid those bad performers and for that reason, seldom have owned index funds.


----------



## AltaRed

DIY investors still have to measure themselves against global benchmarks on a rolling average long term basis to see if their effort is worth it. The default alternative is the global market through ONE holding, or as I have mentioned previously, picking a benchmark based on Stingy Investor's Asset Mixer for something more tailored to one's view of the world.

I tend to default to VGRO type asset allocation and for a 20-30 year history of that, I use the Asset Mixer to replicate that.

Added later: The Cdn Dividend Aristocrat ETF CDZ has a good track record but I think you would agree it contains a fair bit of high yield trash. I wouldn't buy it, but would buy holdings out of it. Limiting oneself to it though misses some of the more attractive growth stocks in the TSX.... which is where XIU would come in.


----------



## Jimmy

AltaRed said:


> Jimmy can continue his train of thought as much as he wants. He can't get traction on it because the facts say otherwise on an all inclusive portfolio basis. Some actively managed portfolios can exceed the index some of the time. That is as far as that conversation can go.
> 
> Investors who deviate from broad market indices do so or their own specific reasons, e.g. income oriented portfolio, momentum, growth, etc. but from an equity perspective the MSCI World Index is the benchmark for global equities.


It isn't my train of thought. You can read the objective study. Again Mkt cap index 9.66% avg, active indexes 11.75 %. Sorry the facts don't agree w the lazy index views.


----------



## MrBlackhill

AltaRed said:


> Those are simply slices of a market, not THE market and why few people actually invest that way exclusively. Anyone can cherry pick a segment of the global market.


Then why not pick the slices of the market which beat the market? Small cap value, micro cap. $10k in the market, 50 years later you're at $1.6M. But $10k in small cap value, 50 years later you're at $6.6M.

Or why not weight the stocks in an optimal way, as the studies point out?


----------



## AltaRed

Putting one's entire portfolio into such a small segment of the global market is simply slicing and dicing. It is foolhardy to take that kind of risk on a forward basis (the future is unknown) and can't imagine an investor committing their net worth to what you just posted.


----------



## Eder

Why would I want to invest globally or wish to beat a global index? I don't know a thing about crooked companies in China or Brazil...I invest locally in things I know about, That's about 60 companies of which I own maybe 18 at any given time. Anyway I should take my own advice and keep mum on the subject.


----------



## MrBlackhill

AltaRed said:


> Putting one's entire portfolio into such a small segment of the global market is simply slicing and dicing. It is foolhardy and is not the market as I previously mentioned. I can't imagine an investor committing their net worth to what you just posted.


You realize that VT holds 9299 stocks from all around the world, yet its top 10 holdings make 14.4% of its weight? They means its top 0.1% stocks make 14.4% of the portfolio. And that 9 of those 10 stocks are based in the US. And that VT has 58.6% exposure to the US, the most overvalued country?

We'll come back to this once the next real market crash happen.

And you would see holding the 1000+ small cap value stocks from all around the world, equal weighted, as a risky decision?

Here's a graph of the past 90 years. How often was small cap value (SCV) the best performer? And the worst performer? Now what about large cap blend (LCB ~ S&P500)?


----------



## Ukrainiandude

MrBlackhill said:


> Small cap value,


Which ETFs do you favour?


----------



## MrBlackhill

Ukrainiandude said:


> Which ETFs do you favour?


AVUV & AVDV & AVES for highest expected returns but at a higher MER, otherwise lowest cost would be something like VBR if you believe Avantis isn't worth the extra fees.









The 12 Best Small Cap Value ETFs (3 From Vanguard) for 2022


Small-cap value stocks have outperformed every other segment of the market historically. Here we review the best small cap value ETFs.




www.optimizedportfolio.com


----------



## AltaRed

MrBlackhill said:


> You realize that VT holds 9299 stocks from all around the world, yet its top 10 holdings make 14.4% of its weight? They means its top 0.1% stocks make 14.4% of the portfolio. And that 9 of those 10 stocks are based on the US. And that VT has 58.6% exposure to the US, the most overvalued country?


Yes, yes, yes, and yes. I am fully aware of what VT holds.



> We'll come back to this once the next real market crash happen.


Most certainly.



> And you would see holding the 1000+ small cap value stocks from all around the world, equal weighted, as a risky decision?


Good god, yes. I'd never bet the family farm on small cap going forward. It's a dice roll of a bunch of unknowns.



> Here's a graph of the past 90 years. How often was small cap value (SCV) the best performer? And the worst performer? Now what about large cap blend (LCB ~ S&P500)?


The graphs tell only a fraction of the story. The amount of time a slice performed worst and performed best says nothing about how it actually performed. Seriously, the only graph that really means something in a historical sense would be that of actual CAGR performance in each of those boxes. I am not trying to be difficult. I'd never bet on anything other than broad market to always hedge my bets. It has served me extremely well over 30 years. It got me through the dotcom crisis, the collapse of the super commodity cycle, Asian flu, financial crisis, et al.. In each of those cases, different segments of the markets suffered relative to others, both in sector, capitalization and region. No one knows what or where the next 2-4 crises will be before I go horizontal.


----------



## james4beach

AltaRed said:


> Good god, yes. I'd never bet the family farm on small cap going forward. It's a dice roll of a bunch of unknowns.


Yes. First of all, even in the best case scenario (looking at historical US small cap) they are volatile! Big drawdowns.

Second, these historical studies of past small cap value performance don't offer any guarantees. We really have no idea if that performance advantage will persist or not. And even the experts who recommend small cap value (like Merriman) talks about how there have been long stretches of maybe 30 years where the asset class did poorly.

Merriman often talks about just how difficult it can be to stick with this volatile and poorly performing asset for 10 years ... 20 years.

It's not like this is as simple as buying small cap value, and then ending up rich. You will have to wait a VERY long time to potentially see that benefit, and even then, it's just a potential benefit. Not a guarantee.

In contrast, if you're really desperate for higher returns, you can leverage the market portfolio (VT or XAW) ... which @MrBlackhill I believe you are already doing using your mortgage ... and unlike small cap value, that's just about certain to outperform the market.


----------



## MrBlackhill

AltaRed said:


> actual CAGR performance


That's what I posted in post #380

50 years









Or what about this graph? Small cap value vs S&P500. The graph starts in 1930 and shows how many times richer if you've put your money in SCV vs S&P500.


----------



## AltaRed

You would bet the farm on SCV over a 30 year period going forward based on historical data? I'd never risk concentration over diversification with family net worth regardless of what historical data suggests. Basically means we have to agree to disagree on principle.


----------



## james4beach

AltaRed said:


> You would bet the farm on SCV over a 30 year period going forward based on historical data? I'd never risk concentration over diversification with family net worth regardless of what historical data suggests. Basically means we have to agree to disagree on principle.


I believe that @MrBlackhill takes historical data as quite meaningful, and as a guide for future expectations.

Personally I prefer good diversification and never focusing too much in any single area, as @AltaRed says. Perhaps it is a difference in philosophy, and how we use (and interpret) historical market data.

Notice that even experts who endorse small cap investing, like some (but not all) experts at PWL Capital, only encourage a "tilting" towards some small cap value. They have never said to concentrate into SCV but rather to sprinkle in a bit of it. That makes sense and the investor remains diversified, but I think it's important to recognize the reason they give that advice.


----------



## AltaRed

That is better said than I could put it. It is just simply that no matter how good the historical data is, and how much one may want to believe the trend will occur, betting more than a "slice" of one's portfolio in SCV for example is a high(er) risk play (risk is in the eyes of the beholder) that could have consequences.

The short answer is I'd never take a "large" gamble of that nature with a wife and kids to support on the family's net worth. Maybe while young and before kids, but after that, not a chance. Just like I'd never borrow on margin with a family to support. I, at one time, actually held VBR (small cap value) at about a 5-10% holding in my portfolio but it was far too volatile for my liking and I dumped it.

In any event, that is all I can/will say on the subject. It's gotten this thread quite off track.


----------



## MrBlackhill

james4beach said:


> Yes. First of all, even in the best case scenario (looking at historical US small cap) they are volatile! Big drawdowns.
> 
> Second, these historical studies of past small cap value performance don't offer any guarantees. We really have no idea if that performance advantage will persist or not. And even the experts who recommend small cap value (like Merriman) talks about how there have been long stretches of maybe 30 years where the asset class did poorly.
> 
> Merriman often talks about just how difficult it can be to stick with this volatile and poorly performing asset for 10 years ... 20 years.
> 
> It's not like this is as simple as buying small cap value, and then ending up rich. You will have to wait a VERY long time to potentially see that benefit, and even then, it's just a potential benefit. Not a guarantee.
> 
> In contrast, if you're really desperate for higher returns, you can leverage the market portfolio (VT or XAW) ... which @MrBlackhill I believe you are already doing using your mortgage ... and unlike small cap value, that's just about certain to outperform the market.


Small cap value stocks outperforms over the long run due to a simple fact: they are riskier.

Your post could be seen as a reply to a debate about bonds vs equities, where someone would say that equities are so risky, they aren't guaranteed to outperform, they could be decades underperforming bonds (actually you've often argued this!). Yet, here we are, investing in equities. And to the most conservatives out there who are used to go 100% bonds, one could give the advice to just make a little tilt by going 80% bonds, 20% equities, to just give it a try.

Same goes for small cap value stocks vs total stock market. Just go 80% total stock market and 20% small cap value and it'll give a little boost to your performance.



james4beach said:


> I believe that @MrBlackhill takes historical data as quite meaningful, and as a guide for future expectations.


Why do you even buy equities? As you said, it's just based on historical data and equities can also underperform for a very long time. It's because there's more to it than just historical data, there's a risk premium.

And yes, leverage comes first in the steps to easily increase expected returns. But once you already use leverage or if you are against using leverage, then a little tilt towards small cap value can be another way to increase expected returns.



james4beach said:


> And even the experts who recommend small cap value (like Merriman) talks about how there have been long stretches of maybe 30 years where the asset class did poorly.
> 
> Merriman often talks about just how difficult it can be to stick with this volatile and poorly performing asset for 10 years ... 20 years.


Yet, isn't this a video by Merriman? 







AltaRed said:


> You would bet the farm on SCV over a 30 year period going forward based on historical data? I'd never risk concentration over diversification with family net worth regardless of what historical data suggests. Basically means we have to agree to disagree on principle.





james4beach said:


> Personally I prefer good diversification and never focusing too much in any single area, as @AltaRed says.





james4beach said:


> They have never said to concentrate into SCV but rather to sprinkle in a bit of it. That makes sense and the investor remains diversified, but I think it's important to recognize the reason they give that advice.


I would bet on SCV going forward 30 years, but that's my risk profile. The same way that I'm 100% equities, but I wouldn't advice other people going 100% equities, I could go 100% SCV but I wouldn't advice other people going 100% SCV.

And, exactly, the point is actually *to increase diversification* by adding more SCV because going purely market cap weighted will underweight them.

The same way that the total market has too much exposure to US stocks (which is an increase in risk, a lack of diversification), it also has too much exposure to large caps and currently too much exposure to large cap growth especially. How can we call this "diversified"? (That's VT)










There's something which makes no sense to me. When managing risk, we all agree to fix weights to equities vs bonds exposure, say 60/40 rebalanced annually to avoid drift, yet we let the equity part make our geographic exposure, sector exposure and style exposure drift. What if you decided that you should have at least 5% exposure to every equity style box and no more than 20%? What if you decided to have at least 5% exposure to every sector and no more than 20%? What if you decided to have at least 15% exposure to the different markets (US/DM/EM) and no more than 50%?

If you believe it makes no sense, then why does it make sense to rebalance your equity/bonds exposure instead of letting it drift like every other exposure inside your equities?



AltaRed said:


> In any event, that is all I can/will say on the subject. It's gotten this thread quite off track.


Well, I could say that we're currently in all-time high due to the recent bubble euphoria happening in US Large Cap Growth stocks, a very specific and concentrated slice of the market that everyone one holding a market cap weighted index are currently overweighting. Good luck when that momentum will end. I give it no more than 3 years.


----------



## Spudd

Jimmy said:


> That is just some weirdo oddball blog post written 20 yrs ago. This has been resolved many x over. Here are the real studies See post 57. 1964-2012* Mkt cap weighted index return 9.66% , avg all non cap weight 11.75% *
> 
> As you can see all forms of active mgmt in that study beat the market cap index. We resolved this months ago whether some can accept they were wrong or not.
> 
> 
> 
> 
> 
> 
> 
> 
> 
> MrBlackhill's reckless fun and struggles
> 
> 
> Here's more info about the status of my playground portfolio (in bold my biggest positions): 27.69% Tech 11.37% CSU 4.74% CTS 3.24% KXS 1.63% REAL 1.60% HAI 1.40% HBGD 1.39% BEW 1.17% TOI (from CSU) 1.16% RIWI 17.13% Consumer Cyclical 9.15% BYD 3.28% FOOD 3.22% RPI-UN 1.47% DOO 11.89%...
> 
> 
> 
> 
> www.canadianmoneyforum.com


I can see that the strategies mentioned in that study beat the index. However, _in order for the index to be the index_ then there must conversely be some other strategies that didn't beat the index. The index is just the sum of all investments put together, both passive (the index itself) and active.


----------



## AltaRed

I disagree with those that don't accept that market cap weights are the market but that has been discussed to death for decades. One can argue both sides depending on where the market is at any particular time AND one's personal bias. Some will argue the big techs have disproportionately driven the market up until at least recently, as in SHOP on the TSX and FAANG in the USA, but at the same time, would you really want small cap commodities to now disproportionately drive the market up at this time while big tech falters a bit? Market cap indices have paved the way for a long time.

Those that wish to tweak as Mr Blackhill seems to think there is extra juice in, such as an extra dose of SCV, that is his call, but even he may not be willing to bet the family fortune on a 100% dose of SCV. Juicing slices are just tweaks around the edges and most of us do a bit of it in some form at some time. Some looking for a bit of CAGR juice, some for income (yield), some because they don't like Europe or the Far East, or Emerging Markets, or commodities, or BRIC, or FAANG, or whatever. Some of us will be right in tweaking and some of us won't be because we picked the wrong horse.


----------



## kcowan

agent99 said:


> When we first started out investing in our RRSPs, etfs & discount brokerages didn't exist. We had the choice of buying individual stocks from a FS brokerage - at about $250/trade?? (I forget) or buying mutual funds or GICs usually from our bank.


In the 80s, Canaccord used to charge $30 to buy or sell a stock. Encouraged buy and hold.


----------



## Jimmy

Spudd said:


> I can see that the strategies mentioned in that study beat the index. However, _in order for the index to be the index_ then there must conversely be some other strategies that didn't beat the index. The index is just the sum of all investments put together, both passive (the index itself) and active.


Not really. The index is market weighted.So you can beat the index by having different weightings(factor tilts) or selecting the best stocks or a combo. All you have to know is active mgmt is better as the study confirmed.


----------



## AltaRed

Jimmy said:


> Not really. The index is market weighted.So you can beat the index by having different weightings(factor tilts) or selecting the best stocks or a combo. All you have to know is active mgmt is better as the study confirmed.


It is not known in advance that "you can beat the index by having different weightings(factor tilts) or selecting the best stocks or a combo". No active manager of any portfolio will guarantee it with a financial back stop. Never have and never will. It is no more complex than that.


----------



## Jimmy

AltaRed said:


> It is not known in advance that "you can beat the index by having different weightings(factor tilts) or selecting the best stocks or a combo". No active manager of any portfolio will guarantee it with a financial back stop. Never have and never will. It is no more complex than that.


All you have to know is from the conclusive study anything beats the lazy mkt index. It is not guaranteed but nothing is. But if history holds the trend should continue.
The takeaway some seem resistant to accept is putting some thought into investing leads to better results.


----------



## agent99

kcowan said:


> In the 80s, Canaccord used to charge $30 to buy or sell a stock. Encouraged buy and hold.


I know nothing about Canaccord, but on-line discount brokerages run by RBC, BMO, and the like, initially charged $30-$40 per trade. The present day $0.00-$4.95-$9.95 commissions came later.

What I was referring to, were the commissions per trade charged by FS brokerages. I recall commissions of several hundred $$$ per trade. Even today, a FS brokerage like BMO Nesbit Burns charge fees in that range. For example, their commission for equity trades is the lesser of 10% of the trade value or $175. In the past, I believe that $175 was even higher.


----------



## Spudd

Jimmy said:


> All you have to know is from the conclusive study anything beats the lazy mkt index. It is not guaranteed but nothing is. But if history holds the trend should continue.
> The takeaway some seem resistant to accept is putting some thought into investing leads to better results.


Some seem resistant to understanding basic math. The index is literally the sum of all the investments in the world. Therefore, some MUST be beating the index, and some MUST be lagging the index.

Of course having different weightings/tilts can beat the index. But it could also lag the index. What if my stock portfolio right now was tilted toward Chinese equities?

I don't disagree at all that some strategies can beat the index. I have a fun money portfolio where I play around with different strategies myself. It entertains me and so far this year, I am beating the index. Where I take issue is when you say "ALL active management beats the index". This cannot be true due to basic math.


----------



## AltaRed

Spudd said:


> Where I take issue is when you say "ALL active management beats the index". This cannot be true due to basic math.


That is the bogus part but we know by now Jimmy (and others no doubt) are dug in. We tend to see this more in newbies who have been on a streak in the last few years with their decisions/picks, but rarely from anyone in the market for more than perhaps 10? years. Experiencing the negative side of bets can be quite humbling.


----------



## Jimmy

Spudd said:


> Some seem resistant to understanding basic math. The index is literally the sum of all the investments in the world. Therefore, some MUST be beating the index, and some MUST be lagging the index.
> 
> Of course having different weightings/tilts can beat the index. But it could also lag the index. What if my stock portfolio right now was tilted toward Chinese equities?
> 
> I don't disagree at all that some strategies can beat the index. I have a fun money portfolio where I play around with different strategies myself. It entertains me and so far this year, I am beating the index. Where I take issue is when you say "ALL active management beats the index". This cannot be true due to basic math.


Some seem to have a comprehension disability. I didn't say ALL active mgmt beats the index. I said ALL active mgmt in the study which covered most active factors.

For the last time the study shows active mgmt beats the lazy index over the long term is all you need to know . All the rest is just resistance, obfuscating and deflecting.


----------



## MrBlackhill

Spudd said:


> The index is literally the sum of all the investments in the world. Therefore, some MUST be beating the index, and some MUST be lagging the index.


Beating the market average return is a zero-sum game, yes. The market is the sum of every single stock out there in the world, which is market cap weighted by its nature.

Beating a market-cap weighted index using the same index components is a zero-sum game, yes. If the index is not market-cap weighted, then beating it is not a zero-sum game. If you use stocks which are not part of the index components, then it's not a zero-sum game.

For instance, the S&P500 is just a slice of the market. And during the last decade, anyone who bought the S&P500 has beaten the market.

And if you take the S&P500 index as the reference, then anyone who bought stocks which are not part of the S&P500 can have beaten that index without implying that someone has lagged that index.

Anyone who has bought XIU has beaten the Canadian market during the 2010s.

And "beating" is only defined when we know the starting point and the ending point, the window. Also, for us, mortals, MWRR is more important than TWRR.


----------



## Eder

The analogy is like calling the World Series a zero sum game with all the major league teams.


----------



## Spudd

Jimmy said:


> Some seem to have a comprehension disability. I didn't say ALL active mgmt beats the index. I said ALL active mgmt in the study which covered most active factors.
> 
> For the last time the study shows active mgmt beats the lazy index over the long term is all you need to know . All the rest is just resistance, obfuscating and deflecting.


My bad. I went back over your posts and indeed you said "almost all active management", not all. I still don't think that's true (because it should only be 50% of active management by the math), but let's leave it there.


----------



## Eder

The math only works if everyone has the same acumen.


----------



## Spudd

Eder said:


> The math only works if everyone has the same acumen.


Are we starting a new argument? The math always works. Explain to me how it cannot?


----------



## m3s

Sounds like Biden won't be able to increase corporate tax after all

Stonks go up


----------



## Eder

Spudd said:


> Are we starting a new argument? The math always works. Explain to me how it cannot?


Not trying to argue but if I have an edge over other investors, with a long enough horizon, I will outperform.


----------



## AltaRed

Eder said:


> Not trying to argue but if I have an edge over other investors, with a long enough horizon, I will outperform.


So will many others and so will many others under perform, perhaps for decades. That is not the point. 

Spudd is right in that the market is the market and for all investors in aggregate, it is a zero sum game. It cannot be any other way in total. Ultimately, none of us should care what anyone says their own "performance" is in an anonymous forum.


----------



## Ukrainiandude

If you invested $10,000 with founder Elon Musk 10 years ago, your stake would be worth $1.8 million now. That works out to a more than 68% average annual return. The same $10,000 put into the S&P 500 during that time grew just 272% to $37,115. That's just 14% compounded annually.


----------



## P_I

Ukrainiandude said:


> If you invested $10,000 with founder Elon Musk 10 years ago, your stake would be worth $1.8 million now. That works out to a more than 68% average annual return. The same $10,000 put into the S&P 500 during that time grew just 272% to $37,115. That's just 14% compounded annually.


Careful with data mining. For every possible outstanding return beating some index there also can be found examples where the index significantly outperformed other companies. 

The problem is we only know the winners and losers after the fact, not ten years ago. As they say, hindsight is 20/20. Making predictions is hard, especially about the future.


----------



## doctrine

Ukrainiandude said:


> If you invested $10,000 with founder Elon Musk 10 years ago, your stake would be worth $1.8 million now. That works out to a more than 68% average annual return. The same $10,000 put into the S&P 500 during that time grew just 272% to $37,115. That's just 14% compounded annually.


14% compounded annually is nothing to sneeze at. With those rates of returns, most people can achieve their retirement goals with ease. $10,000 in 2011 becomes $37,000 in 2021. Nice and well ahead of inflation in every category.


----------



## agent99

doctrine said:


> 14% compounded annually is nothing to sneeze at. With those rates of returns, most people can achieve their retirement goals with ease.* $10,000 in 2011 becomes $37,000 in 2021*. Nice and well ahead of inflation in every category.


Just in case CMFers think the S&P 500 is a no-brainer. (may suit accumulation better than retirement)

The actual average annual return since including 500 stocks in the index in 1957 is about 8%. After inflation, somewhat less. Not bad, but quite volatile.
Some years had large negative returns.
Dividend yield currently near historic low at 1.29%.
Another factor for us to consider, is the currency risk.

Here is a chart that includes cpi. (average return for period 2000-2010 doesn't look as great  ) Could that happen again?









Source: CPI: Bloomberg; S&P: Macrotrends.net


----------



## Ukrainiandude

Please remind me the dual listed stock like AQN (AQN.TO) nominated in USD and held in TFSA won’t be subject to 15% withholding dividend tax?


----------



## Numbersman61

AQN is a taxable Canadian corporation. There is no US withholding tax on dividends received by residents of Canada. Here is an extract from the recently filed prelinary prospectus:
”Dividends received or deemed to be received on a Common Share will be included in computing a Resident Holder’s income for purposes of the Tax Act. Dividends received by a Resident Holder who is an individual (other than certain trusts) will be subject to the gross-up and dividend tax credit rules normally applicable to taxable dividends paid by taxable Canadian corporations. To the extent that the Corporation designates the dividends as “eligible dividends” within the meaning of the Tax Act in the prescribed manner, such dividends will be eligible for the enhanced gross-up and dividend tax credit. Dividends received by individuals (other than certain trusts) may give rise to alternative minimum tax under the Tax Act, depending on the individual’s circumstances.”


----------



## AltaRed

agent99 said:


> Just in case CMFers think the S&P 500 is a no-brainer. (may suit accumulation better than retirement)
> 
> The actual average annual return since including 500 stocks in the index in 1957 is about 8%. After inflation, somewhat less. Not bad, but quite volatile.
> Some years had large negative returns.
> Dividend yield currently near historic low at 1.29%.
> Another factor for us to consider, is the currency risk.
> 
> Here is a chart that includes cpi. (average return for period 2000-2010 doesn't look that great  ) Could that happen again?


2000-2010 was the decade where the S&P500 went nowhere (while the TSX did). For 2011 to 2020, the inverse happened (S&P500 far outperformed the TSX). That is why one diversifies globally AND why one does not currency hedge.

I don't know the source of your data (no source quoted) BUT from the Stingy Investor Asset Mixer for 100% S&P500 for the 1970-2020 period, Canadians (CAD basis) achieved a 11.109% (Geometric) or 12.386% (Arithmetic) CAGR return on a nominal basis. About 1 percentage point higher if one uses the 1980-2020 period. That beat inflation by a country mile.


----------



## MrBlackhill




----------



## Jimmy

I think Agent's returns are the index then you have to add the div yield to get 9.29%.

From 1929 to 2020 the geometric avg (total incl div) is 9.79%. Real return 6.47%. from NYU. ' Historical returns by market" (2nd item down ) . Not bad but not great.





__





Useful Data Sets






pages.stern.nyu.edu


----------



## agent99

Jimmy said:


> I think Agent's returns are the index then you have to add the div yield to get 9.29%.


They are not mine  They were obtained here The 8% was for the period since 1957 when the index adopted it's current form with 500 stocks. Prior to that it had only 90 stocks so was quite a different thing. 

You are probably right about the dividend, but that is not clear from the data source:








S&P 500 Historical Annual Returns


Interactive chart showing the annual percentage change of the S&P 500 index back to 1927. Performance is calculated as the % change from the last trading day of each year from the last trading day of the previous year.




www.macrotrends.net





Regardless, quite a volatile performance.


----------



## Jimmy

I think 7-8% + the div yield is about standard


----------



## doctrine

agent99 said:


> They are not mine  They were obtained here The 8% was for the period since 1957 when the index adopted it's current form with 500 stocks. Prior to that it had only 90 stocks so was quite a different thing.
> 
> You are probably right about the dividend, but that is not clear from the data source:
> 
> 
> 
> 
> 
> 
> 
> 
> S&P 500 Historical Annual Returns
> 
> 
> Interactive chart showing the annual percentage change of the S&P 500 index back to 1927. Performance is calculated as the % change from the last trading day of each year from the last trading day of the previous year.
> 
> 
> 
> 
> www.macrotrends.net
> 
> 
> 
> 
> 
> Regardless, quite a volatile performance.


The nominal return since 1957 is approximately 10.5%. I don't know why Investopedia got that wrong, but multiple other sources are way above that 8% quote which also leads me to believe dividends are left out and it is based on the index value. Real returns are significantly lower of course. By my math, around 6.5% according to rough CPI numbers.

Jeremy Siegel proved that if you were able to buy each of the original S&P 500 stocks, your performance would be significantly higher, closer to 11.5% a year. I.e. the original buy and held outperforms the active management of the S&P 500 selection committee. Just food for thought. He wrote a book about it, Stocks for the Long Run.


----------



## Ukrainiandude

Numbersman61 said:


> AQN is a taxable Canadian corporation. There is no US withholding tax on dividends received by residents of Canada. Here is an extract from the recently filed prelinary prospectus:
> ”Dividends received or deemed to be received on a Common Share will be included in computing a Resident Holder’s income for purposes of the Tax Act. Dividends received by a Resident Holder who is an individual (other than certain trusts) will be subject to the gross-up and dividend tax credit rules normally applicable to taxable dividends paid by taxable Canadian corporations. To the extent that the Corporation designates the dividends as “eligible dividends” within the meaning of the Tax Act in the prescribed manner, such dividends will be eligible for the enhanced gross-up and dividend tax credit. Dividends received by individuals (other than certain trusts) may give rise to alternative minimum tax under the Tax Act, depending on the individual’s circumstances.”


Dividends from shares of Canadian public corporations that trade on a U.S. stock exchange will generally not be subject to U.S. non-resident withholding tax. Dividends from Canadian public corporations are considered Canadian dividends regardless of what stock exchange they trade on." - RBC


----------



## agent99

doctrine said:


> The nominal return since 1957 is approximately 10.5%.


Using the data from this link (includes dividends), I calculated an average annual return for S&P500 over 65 years of 10.548%. Pretty close!





__





S&P 500 Total Returns by Year Since 1926






www.slickcharts.com


----------



## Jimmy

agent99 said:


> Using the data from this link (includes dividends), I calculated an average annual return for S&P500 over 65 years of 10.548%. Pretty close!
> 
> 
> 
> 
> 
> __
> 
> 
> 
> 
> 
> S&P 500 Total Returns by Year Since 1926
> 
> 
> 
> 
> 
> 
> www.slickcharts.com


Hi Agent, Diversion to PS for a moment.

Looking at BOP.PR.C. It is a 6% min, spread 518, recall 6/30/2026 YTR 5.18% P3M. One of the better ytr of the group.

I know P3 is in the adequate range for risk but it is a Brookfield co.

Most of the RR I want are over par but this has a decent ytr. Is this ok?

Pls advise. Thx


----------



## agent99

Jimmy said:


> Looking at BOP.PR.C. It is a 6% min, spread 518, recall 6/30/2026 YTR 5.18% P3M. One of the better ytr of the group.
> 
> I know P3 is in the adequate range for risk but it is a Brookfield co.
> 
> Most of the RR I want are over par but this has a decent ytr. Is this ok?


You probably mean BPO.PR.C ? 

I am not the one to give advice! But I did have a look at this.

On the surface that pfd looks ok, but high yield probably reflects the risk. Dividends are cumulative, so no problem there. I see Prefblog has it in his scraps! Assuming it keeps paying and it gets called, then you get 5.18% for 5 years. Better than a GIC, but def. more risk!

I can't keep track of BAM and all it's divisions. I thought BPO went private? I just don't know enough about this to own it myself. Prospectus might be a place to start: https://bpy.brookfield.com/sites/br...d/bpo/preferred-shares/preferred-shares-2.pdf Seems OK. Danger seems to be that with central offices going out of favour, the office property division could fail or be sold?


----------



## Jimmy

agent99 said:


> You probably mean BPO.PR.C ?
> 
> I am not the one to give advice! But I did have a look at this.
> 
> On the surface that pfd looks ok, but high yield probably reflects the risk. Dividends are cumulative, so no problem there. I see Prefblog has it in his scraps! Assuming it keeps paying and it gets called, then you get 5.18% for 5 years. Better than a GIC, but def. more risk!
> 
> I can't keep track of BAM and all it's divisions. I thought BPO went private? I just don't know enough about this to own it myself. Prospectus might be a place to start: https://bpy.brookfield.com/sites/br...d/bpo/preferred-shares/preferred-shares-2.pdf Seems OK. Danger seems to be that with central offices going out of favour, the office property division could fail or be sold?


Thanks again for the help. They were bought by the parent. Being under the Brookfield umbrella they shouldn't be too risky. I am considering - like higher rated issues but they have too low ytr.


----------



## james4beach

Looks like some of the US large caps are having trouble (earnings related?)... US pre market hours

AMZN down nearly 5%
AAPL down nearly 4%


----------



## james4beach

agent99 said:


> Using the data from this link (includes dividends), I calculated an average annual return for S&P500 over 65 years of 10.548%. Pretty close!
> 
> 
> 
> 
> 
> __
> 
> 
> 
> 
> 
> S&P 500 Total Returns by Year Since 1926
> 
> 
> 
> 
> 
> 
> www.slickcharts.com


Yeah, hard to argue with the S&P 500 track record. I guess a big question is whether America will continue to survive and thrive as it did in the past. Back then, Europe was destroyed and America benefited, and became a world superpower.

You only become a world economic & military superpower once. They aren't going to rise again... it already happened. I have my doubts that this kind of performance can persist. The US is now a mature country, not all like the great rising power of last century. But who knows!

The Stingy Investor Asset Mixer is also a very helpful tool for looking at historical index returns in CAD currency.

Note that the TSX Composite and S&P 500 have had identical returns since the year 2000. After factoring in tax advantages, the TSX has outperformed so far this century.


----------



## MrBlackhill

I am pretty sure that the US will be a very bad performer this decade. Something like 0% CAGR between 2021 and 2030. Rise and burst.

Developed markets should beat US, but I think that emerging markets will be the best performers.


----------



## agent99

MrBlackhill said:


> I am pretty sure that the US will be a very bad performer this decade. Something like 0% CAGR between 2021 and 2030. Rise and burst.
> 
> Developed markets should beat US, but I think that emerging markets will be the best performers.


With a relatively short investment horizon, I don't invest in the US markets, but their performance has been impressive in the long term. However, shorter term there have been flat or even bad periods to be invested there so I prefer to invest mainly in Canada.

One thing the US does have, is very strong innovation capability. Look at Tesla, Apple, Facebook, Twitter, Google, Microsoft, IBM, medical (MRI, Drugs etc). The Americans are smart in many ways - not so much politically


----------



## MarcoE

james4beach said:


> I guess a big question is whether America will continue to survive and thrive as it did in the past. Back then, Europe was destroyed and America benefited, and became a world superpower.
> 
> You only become a world economic & military superpower once. They aren't going to rise again... it already happened. I have my doubts that this kind of performance can persist. The US is now a mature country, not all like the great rising power of last century. But who knows!


We have 10,000 years of human civilization to look at. Some civilizations (e.g. China) can last for 5,000 years. But global superpowers, wielding influence across the world (or known world before we discovered it all) don't tend to last anywhere near that long. Look at a bunch of previous empires / superpowers: the Hittites, the Babylonians, the Persians, the Greeks, the Romans, the Spanish, the Ottoman empire, the British, the Soviet Union, the Americans... None last forever. Some (like Rome) have a relatively long run of several centuries, but that seems to be rare. And today things change faster than back then. America has been a global superpower for about a century now. That's a good, long run. To me, it seems like America is currently in decline, while China rises to replace it as the world's premier superpower. THIS IS NORMAL. This happened over and over again throughout 10,000 years of human history. 

Will America's stock market continue to be amazing in the future? Maybe. Or maybe they've had an amazing "superpower bull run" and things will change.

Personally, about 25% of my stock equity is in American stocks. I like diversifying around the world.


----------



## MrBlackhill

I'm in agreement, as I expect this decade to be the decade of emerging markets.


----------



## MarcoE

MrBlackhill said:


> I'm in agreement, as I expect this decade to be the decade of emerging markets.


About 6% of my stock allocation is emerging markets. I'd have more, but... I keep about 50% of my stock allocation in Canadian companies. This is because I mostly invest in a corporate account, where anything non-Canadian is taxed very heavily. So keeping half my stocks in Canada really helps the company's tax burden. Otherwise I'd probably have more in EM.


----------



## m3s

Zillow is apparently dumping homes in the US

They were buying everything they could during the pandemic


----------



## Ukrainiandude

m3s said:


> Zillow is apparently dumping homes in the US
> 
> They were buying everything they could during the pandemic


It’s down another 12% after hours.


----------



## AltaRed

Zillow's home flipping business is a 3 year venture gone bad. Context is better than simple sound bites.


----------



## Ukrainiandude

AltaRed said:


> Zillow's home flipping business is a 3 year venture gone bad. Context is better than simple sound bites.


Z should have done that in Canada. Houses prices only go up in Canada.


----------



## m3s

AltaRed said:


> Context is better than simple sound bites.


Aint nobody got time for that

Been following this for awhile. Zillow probably has more RE data than most us plebs in the USA so this can be a major indicator

Rumour was they could manipulate RE prices if they owned enough. Guess that didn't work out


----------



## MrBlackhill

Will NASDAQ touch 16,000 this year?

Wow... 🎈


----------



## james4beach

MrBlackhill said:


> Will NASDAQ touch 16,000 this year?
> 
> Wow... 🎈


Federal Reserve announcement, and the US indices jumped to all time historic highs. Seems very likely NASDAQ will hit 16,000. That's only another 1.2%

Trailing 1 year returns are now, in CAD

32.3% in the S&P 500
35.7% in QQQ
38.7% in XIU ... the strongest performer!

ZQQ has been a real champ though, up 42.8% which is due to tracking QQQ but hedged to CAD. So really ZQQ was "long NASDAQ, short US$" -- a winning combo for now


----------



## Ukrainiandude

MrBlackhill said:


> Will NASDAQ touch 16,000 this year?
> 
> Wow... 🎈


The real question is when will it touch it again after this gigantic bubble bursts.


----------



## james4beach

Ukrainiandude said:


> The real question is when will it touch it again after this gigantic bubble bursts.


My guess would be, after this US stock bubble bursts, probably at least 10 to 15 years of underperformance follows. That's more or less what happened last time.

Very few people can tolerate that. Most people will sell after a few years of frustration, guaranteed "sell low".


----------



## AltaRed

It is not like the dotcom bubble where a brainphart.com domain would result in billions of market valuation without any real product. Anyone who was around for that bubble knows it was built on thin air, e.g. our cannabis industry times 1000 at the height of its euphoria. There is clearly a lot of stupid valuations in the NASDAQ right now but there are also many legitimate heavyweights. Perhaps a 50% kicking at most.


----------



## Ukrainiandude

AltaRed said:


> there are also many legitimate heavyweights.


The index has 100-102 companies, could you name 10 legitimate heavyweights?


----------



## MrBlackhill

AltaRed said:


> It is not like the dotcom bubble where a brainphart.com domain would result in billions of market valuation without any real product. Anyone who was around for that bubble knows it was built on thin air, e.g. our cannabis industry times 1000 at the height of its euphoria. There is clearly a lot of stupid valuations in the NASDAQ right now but there are also many legitimate heavyweights. Perhaps a 50% kicking at most.


Don't worry, as opposed to the dot-com bubble, we now have legitimate valuations for cryptocurrencies, meme coins, meme stocks, stonks, we also have Wall Street Bets, apes, retards, degenerates, diamond hands, finance YouTubers, Tesla fanboys, we also have bored people working from home who couldn't spend their money due to the pandemic, we have infinite money printing, etc.

Looking at S&P500 only, we're at 1998-1999 level but getting there in terms of forward P/E ratios.


----------



## m3s

.


----------



## MrBlackhill

m3s said:


> That chart doesn't look to be adjusted for inflation.


The chart is the ratios, the Forward P/E ratios, what inflation adjustment do you want on a ratio of dollars divided by dollars?

We could look at CAPE of you want adjustment for the past 10 years, but we know that the current CAPE ratio for the US is not depicting a great picture either.

Every single model tells us we're overvalued, we're just waiting for a yield curve inversion, which will come soon enough.









Data Driven US Stock Market Valuation and Analysis


Our evaluation of simple, fundamental valuation indicators suggests that the market is currently Overvalued.




www.currentmarketvaluation.com


----------



## james4beach

MrBlackhill said:


> Every single model tells us we're overvalued, we're just waiting for a yield curve inversion, which will come soon enough.


The Canadian yield curve flattened pretty dramatically recently. Short term rates shot up while the long term rates didn't even budge.


----------



## m3s

MrBlackhill said:


> The chart is the ratios, the Forward P/E ratios, what inflation adjustment do you want on a ratio of dollars divided by dollars?
> 
> Every single model tells us we're overvalued, we're just waiting for a yield curve inversion, which will come soon enough.


Yea I realized after I posted it was P/E

It's ok we can just print more money to fix this


----------



## Tostig

The Sept/Oct blahs seem to be over. The most my portfolios dropped is 2.5%.

If history is any indication, November and December are good months for the S&P500 with their 61 year averages of 1.56% and 1.39%.


----------



## AltaRed

Typically yes. Not something I would ever bet big on though. It is more important to understand it is simply a matter of probabilities that managers don't like to end the year with cash drag and they want to rid their funds of losers.

November/December is a great time to pick up 'value' stocks that have been pushed down further due to tax loss selling. I have occasionally picked up a beaten stock at value prices in late Nov through to about Dec 15th.


----------



## MrBlackhill

Tostig said:


> The Sept/Oct blahs seem to be over. The most my portfolios dropped is 2.5%.
> 
> If history is any indication, November and December are good months for the S&P500 with their 61 year averages of 1.56% and 1.39%.


Historically, November is the month with the highest rate of positive returns and the highest average return.

And 2020 made history twice. Once for the worst March returns. Once for the best April returns, obviously.
















ETF - Lazy Portfolio ETF


SPDR S&P 500 (SPY): which are the historical returns and the worst drawdowns? Is it a good choice for your portfolio?




www.lazyportfolioetf.com


----------



## m3s

End of Sept is the US fiscal year

End of Dec is the tax year


----------



## AltaRed

The US federal fiscal year is not the important criteria here. September is traditionally low because that is when portfolio managers are back from summer hiatus and start to re-focus on their holdings to commence the re-arrangement and re-packaging for December year end. Many US mutual funds also have a Sept year end. 

Much has been written and speculated on regarding this effect.


----------



## agent99

Mr. Blackhill - Don't you still have a job as an engineer? Do you create all those charts on your lunch breaks 

When I worked as an engineer, I figured rate of productivity in our office dropped in proportion to rate of adoption of computers! Working day seemed to be mostly filled with reading and writing emails, attending meetings and taking coffee breaks  Calculations were done with slide rules until we got those amazing electronic calculators. No more log tables. This one might work for those charts of yours!


----------



## MrBlackhill

agent99 said:


> Mr. Blackhill - Don't you still have a job as an engineer? Do you create all those charts on your lunch breaks
> 
> When I worked as an engineer, I figured rate of productivity in our office dropped in proportion to rate of adoption of computers! Working day seemed to be mostly filled with reading and writing emails, attending meetings and taking coffee breaks  Calculations were done with slide rules until we got those amazing electronic calculators. No more log tables. This one might work for those charts of yours!


Meetings are the burden these days. Most meetings are unproductive and most people are overwhelmed by meetings.


----------



## james4beach

MrBlackhill said:


> Meetings are the burden these days. Most meetings are unproductive and most people are overwhelmed by meetings.


After a few more years of experience you might consider doing what I've done, walk away and do consulting or contracting.

I had a client who wanted too many meetings last month, twice a week at 8:30 am. So I put a stop to it, told them I won't be doing that. If they had pushed stronger for them, I would have fired the client and I came pretty close to doing that.


----------



## james4beach

New highs in absolutely everything, again.

New all time highs on the TSX and S&P 500, with a particularly crazy jump in the NASDAQ


----------



## MrBlackhill

Top 10 stocks all moved +1% exception made for AAPL (and MSFT only +0.73%).
TSLA touching new highs every day.
NVDA jumped +12%.
Touching 16,000 tomorrow? Sure.


----------



## MrBlackhill

QQQ is 11% AAPL, 10% MSFT.
QQQ as 55% weight in its top 10 holdings.


----------



## m3s




----------



## james4beach

MrBlackhill said:


> Top 10 stocks all moved +1% exception made for AAPL (and MSFT only +0.73%).
> TSLA touching new highs every day.
> NVDA jumped +12%.
> Touching 16,000 tomorrow? Sure.


QQQ has a 5 year return of 29% per year.

I'm in XIT, and that a similar return, 33% over 5 years. Pure insanity in tech.


----------



## peterk

I mean - we've been saying this about tech forever though...

Geez I remember in 2011 in school - I was in traditional engineering, not technology. Lots of people thought a tech bust would happen soon. It was too late to get into that stuff - The App development ship has sailed, stocks would crash, careers in tech are too risky. etc.

Now tech co-op students are making triple other engineering students, from what i've gathered. And any one who pursued it in 2010 is some sorta Sr. person now at Microsoft making a $500k USD income and probably already cashed in $1M+ in stock options.


----------



## m3s

I think everyone underestimated the potential scale of tech. I was a self taught programmer in '90s and thought the market was looking meek early 2000s

An app that does 1 menial function can scale globally with very few employees. Ad revenue is micro but the scale is astronomical. Nobody could scale like that before. FinTech is happening right now in the US. This is real revenue with tech scale potential

Stripe, Square, SoFi, Chime, Affirm, Plaid and the list goes on. I've actually used all of these in the US. Not sure if Canadians have access to all of these or realize it's already happening in the US. Americans switched to Uber/Lyft and now they are switching to FinTech

A lot of people are comparing crypto to the '90s tech on steroids. Most of it is very nascent but the disruption potential is huge. A lot of FinTech are already integrating and benefitting from it


----------



## m3s

Lots of medical, AI, robotics tech coming as well. Covid seems to be speeding it all up

When I see a Dr in the US I have to Facetime them first now


----------



## Ukrainiandude

peterk said:


> in 2011 in school - I was in traditional engineering, not technology. Lots of people thought a tech bust would happen soon










In 2011 all time high from 2000 was not even reached.
here is the culprit for the growth this time


----------



## james4beach

peterk said:


> Now tech co-op students are making triple other engineering students, from what i've gathered. And any one who pursued it in 2010 is some sorta Sr. person now at Microsoft making a $500k USD income and probably already cashed in $1M+ in stock options.


It's not as extreme as you say. You are focusing only on the outlier, best-case outcomes.

I started working in the American tech industry around 2010, including for a very large corp, and my salary never got anywhere close to that high.

What happens with US tech employment is that you're playing in a casino, where your job may (or may not) give you stock options and RSUs. And the company stock may (or may not) fly high.

AMZN and MSFT are two examples of stocks which went crazy and I have heard of some people working there making obscene amounts of money

But the companies I worked at (same industry!) didn't experience that kind of insanity, and most of my friends didn't see it either. Intel is a very good example, because I know many Canadian engineers who relocated to the US to work at Intel. There was an exodus from Toronto around 2012-2015 and Intel was the destination.

Some were given generous stock grants, but as you can see from the INTC chart, the stock never went crazy. Still good compensation of course, but not at all like what you describe.

So it's a roll of the dice whether you get generous stock grants *and* the company stock goes nuts.

Land a job at Amazon (10 years ago) and you're rich.
Land a job at Intel, Qualcomm, etc ... and no, it's pretty average.


----------



## peterk

OK well maybe I was being a big sloppy with my words/ factious. Obviously not "anyone who went into tech 10 years ago" is a multi millionaire now... But it's a but a "reasonably common" example. And a far more common story to hear from tech than from any other industry, from what I can gather, including investment banking or energy - both high-paying industries.

I know at least 3-4 guys just like that and I only know a dozen. I wouldn't call that an outlier. An outlier is some person who's lucked/worked their way into a VP position at age 30 or a tech founder who IPOs. Genuine 1 in a 1000 fortunate people, not 1 in 10.


----------



## Ukrainiandude

The Big Short' investor Michael Burry says Elon Musk may want to sell Tesla stock to cover his personal debts - and compares the market to the Dutch tulip bubble.

Besides tweeting about Musk, Burry marked his return to Twitter with a new header image. His choice of "Satire of Tulip Mania," a painting by Jan Brueghel the Younger that ridicules the Dutch tulip bubble in the 1600s, was undoubtedly a warning about the current market mania.

The painting depicts tulip speculators as mindless monkeys and shows them weighing the bulbs, counting money, taking inventory, and going into debt, fighting over, and even dying for the flowers.

Burry has painted the immense hype around meme stocks and cryptocurrencies and the frantic buying of Tesla shares and other assets as clear signs of rampant speculation.


----------



## Ukrainiandude




----------



## MK7GTI

Anyone make some money of RIVN today?


----------



## KaeJS

MK7GTI said:


> Anyone make some money of RIVN today?


Wouldn't touch it with a 10 foot pole...


----------



## Ukrainiandude

New unseen since eighties highs.


----------



## Ukrainiandude




----------



## MrBlackhill

And now he waits for his fans to push the price higher before offloading more. He has to sell $20B+, not just $5B.


----------



## james4beach

MrBlackhill said:


> And now he waits for his fans to push the price higher before offloading more. He has to sell $20B+, not just $5B.


Why doesn't he just announce another rumour of a takeover or something like that?

At this point he can just make up some random lie or fake good news. Who's going to stop him?


----------



## m3s

SEC punished him last time

Some of his tweets now have double meaning to skirt this. The mass media and laymen interpret it very differently


__ https://twitter.com/i/web/status/1256239815256797184
This tweet referred to the 5:1 split. Many others refer to crypto that most wouldn't catch or even his profile and picture


----------



## KaeJS

He should be fined more.

I remember being short TSLA through lots of puts. Maybe it was back in 2017. I was short at like $380 when he tweeted that he was taking the company private at $420...

The guy is a d!ckhead.

He may be intelligent, but he's just as much of an a$$ as he is smart.


----------



## james4beach

Melt-up in stocks continues...

XIU up 1.2% today to another all time high, probably fuelled by Shopify (its largest holding!) *up 11.6%* today

XIU's 5 year performance is now 12% annualized, just insanely strong even throughout the pandemic.

iShares S&P/TSX 60 ETF (XIU) Performance - XTSE | Morningstar


----------



## Ukrainiandude

Oil change at dealership $79 in 2019, $94 in 2021
Thanks for all the money printed.


----------



## Eder

Oil change in driveway...2019 ~$29....2021 ~$29 (air filter extra $12)


----------



## nathan79

I used to get my oil changed at Mr. Lube in the late 90's for $29.99. I recall the price went up to $39.99 after a while and I decided to start doing my own oil changes. That was probably 20 years ago. I shudder to think what they charge now.


----------



## Thal81

🚀🚀🚀

Not that I'm complaining, but this all seems so unreal to me. We're still in pandemic times with massive shortages in various industries, which won't be going away anytime soon. The gap between the "have" and the "have nots" is growing wider thanks to inflation, and that will just compound if interest rates rise in 2022.

In the meantime, stocks are just blowing through all-time-highs, as if the future is looking honky dory... yeah right.


----------



## Ukrainiandude

Eder said:


> Oil change in driveway...2019 ~$29....2021 ~$29 (air filter extra $12)


regular price








I don’


----------



## Eder

Pretty pricey...heres what I paid couple years ago....bought 5x units. (USD)

Castrol 03111C GTX High Mileage 10W-40 Synthetic Blend Motor Oil, 5 Quart
Price:	
$19.32 ($0.12 / Fl Oz)


FRAM Extra Guard PH16, 10K Mile Change Interval Spin-On Oil Filter
Price:	
$3.88


PHILTOP Engine Air Filter, EAF059 (CA10348) Replacement for Wrangler V6 (2007-2018), Wrangler JK (2018), Improve Engine Performance
Price:	
$12.27



Here in Canada at Crappytire...even cheaper

Quaker State Motor Oil, 10W-30, 5-L

$18.99
+ $0.90 Env. Fee
IN-STORE

129 IN STOCK - Oil Rack
Burnaby South, BC (as of 8:29 AM)
Check other stores


MotoMaster Oil Filter

$7.29


Buy online, pick it up Burnaby South, BC by November 13 after 1:00pm


----------



## Ukrainiandude

Eder said:


> Here in Canada at Crappytire...even cheaper


Prices that I posted screenshots are from crappytire.

prices that you quoted are 
Quaker State 10W-30 *conventional* motor oil

I am talking synthetic good quality oil and adequate filter. You get what you pay for.


----------



## Eder

lol...oil is oil it should be changed every 6000 miles..,along with a new filter. Synthetic is marketing unless you have a turbo where it is useful.. Then it will cost about another $10... 

Quaker State Full Synthetic 5W-30 Motor Oil, 5-L
$29.99
+ $0.90 Env. Fee
IN-STORE

11 IN STOCK - Oil Rack
Burnaby South, BC (as of 10:23 AM)
Check other stores



I have a new Wrangler, old Wrangler , motorhome with a Cummin ISL 450 HP and a sailboat with a Yanmar...none use or need synthetic. I regularly change the oil and filters in them for next to nothing. You should learn how as well.


----------



## Ukrainiandude

Eder said:


> You should learn how as well.


I change my spark plugs and swap tires. 

what is the point of doing an oil? I change oil once a year, the oil cost $60 and filter $16
I pay $94 and don’t have to deal with the mess, plus I don’t have stands or garage car lift so I could lift a car and properly inspect it underneath as dealer does.


----------



## m3s

Eder said:


> lol...oil is oil it should be changed every 6000 miles..,along with a new filter. Synthetic is marketing unless you have a turbo where it is useful.. Then it will cost about another $10...
> 
> I have a new Wrangler, old Wrangler , motorhome with a Cummin ISL 450 HP and a sailboat with a Yanmar...none use or need synthetic. I regularly change the oil and filters in them for next to nothing. You should learn how as well.


Synthetic is not even useful or recommended for my turbo or motorbikes.

Good 5qt oil is under $20 and under $10 OEM filter delivered by amazon US

But if you do need/want synthetic Rotella T6 is as good if not better for $20


----------



## MK7GTI

Ukrainiandude said:


> Oil change at dealership $79 in 2019, $94 in 2021
> Thanks for all the money printed.


Oil change at Chevy dealer in Yellowknife $149 plus tax.


----------



## AltaRed

I thought this thread was about the state of equity market prices, but it looks like it is about getting 'highs' from oil change cost comparisons. I must admit to not caring about the cost of an oil change nor do I recollect exactly how much they cost. I just drive up to my local GCOC and have them do it while I surf on my phone. Quality of service will vary by franchisee but the one I use never tries to up-sell anything.


----------



## Benting

Arrrrg.... TD, RY and SHOP, my 3-pack, 95% of my portfolio


----------



## Ukrainiandude

New highs 
Thanks to forever low interest rates 
*Inflation rate jumps again to new 18-year high of 4.7%*








cbc.ca/news/b...


----------



## AltaRed

The two year YOY average is only ~2.7% (Oct 2020 YOY 0.7% and Oct 2021 YOY 4.7%). People, including media, cannot do grade school math.
2020/2012 is an aberration and a two year picture is necessary before hyperventilating. Now if we are still seeing 4+% YOY by Summer 2022, then inflation may not be just transitory and we actually have something to talk about.


----------



## james4beach

AltaRed said:


> The two year YOY average is only ~2.7% (Oct 2020 YOY 0.7% and Oct 2021 YOY 4.7%). People, including media, cannot do grade school math.
> 2020/2012 is an aberration and a two year picture is necessary before hyperventilating. Now if we are still seeing 4+% YOY by Summer 2022, then inflation may not be just transitory and we actually have something to talk about.


Yup. I calculated the inflation rate over the ~ 5 years I've tracked my current portfolio, and it's only a bit over 2% actually due to some lower inflation readings a couple years ago.

The current reading is high, but just like with investments, the figure of concern is the *annualized*, multi-year rate.


----------



## MrBlackhill

Yeah I agree with you, but people don't like to see inflation volatility acting like the stock market (I'm exaggerating, but still). Imagine if inflation would be -10% one year, then +13% the next year and we'd be like "well that's 2% over 2 years". Or if inflation was 0% during 3 years, then 4% during the next 3 years.

Obviously, a year with low inflation will be followed by a year with higher inflation, but over the past 29 years, calendar year inflation ranged between 0% and 3%, so if we get a near 5% this year it would be a shock, and anything over 4% is already much higher than usual.

Even that monthly YoY inflation is getting high.

We're about to reach highest inflation in 30 years.


















And I'm pretty sure we don't want to see inflation like in the 70s or 80s.


















But that likely won't happen because they'll raise the policy rate during 2022, and the market will likely crash by 2023-2024 as they continue to raise the policy rate. But then they save the rich, not the poor, so once the market crashes, the policy rate will be dropped back to 0%, and inflation will continue. Inflation in the next 5 years could average 3%, considering that they prefer saving the rich.






Canada Inflation Rate 1960-2022


Inflation as measured by the consumer price index reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specified intervals, such as yearly. The Laspeyres formula is generally used.




www.macrotrends.net










Canada Inflation Rate - November 2022 Data - 1915-2021 Historical - December Forecast


Canada's annual inflation rate was at 6.9% in October of 2022, remaining unchanged from the prior month and in line with market expectations, as accelerated price growth for motor fuel and mortgages offset the slower inflation for food. Consumer costs rose at a faster pace for transportation...




tradingeconomics.com


----------



## AltaRed

MrBlackhill said:


> But that likely won't happen because they'll raise the policy rate during 2022, and the market will likely crash by 2023-2024 as they continue to raise the policy rate. But then they save the rich, not the poor, so once the market crashes, the policy rate will be dropped back to 0%, and inflation will continue. Inflation in the next 5 years could average 3%, considering that they prefer saving the rich.


It has more to do with government pressure for higher employment and discounting accumulated debt than it is about 'saving the rich'. I am not liking BoC's musings (consideration) about tolerating slightly higher inflation in order to add more heat and jobs in the economy. Up to now, it has generally been an iron fist to keep inflation between 1-3%.

FWIW, any such new policy would actually serve to support job and wage growth JT style, so it has little to do about saving the rich.


----------



## Ukrainiandude

Anyone remember what was the split version of sp500 etf?


----------



## Spudd

Ukrainiandude said:


> Anyone remember what was the split version of sp500 etf?


What do you mean exactly? Are you talking about SPY?


----------



## MrBlackhill

AltaRed said:


> higher employment and discounting accumulated debt than it is about 'saving the rich'.


Discounting accumulated debt is also saving the rich (and the government debt).

Yes, I agree, higher employment... Higher employment of the poor who struggle to pay their bills due to inflation. Maybe it's better than not having a job, but still, high inflation harms the poor. The poor needs higher interests.


----------



## Ukrainiandude

Spudd said:


> What do you mean exactly? Are you talking about SPY?


Like SPY but at 1 tenth of the price.


----------



## james4beach

There was just an insane headline in real estate, saying that the average Canadian home price went up 9% in *one month* from Sept to Oct.

This isn't just an overheated real estate market but possibly some kind of absolute mania or blow-off top. Real estate is now rising at something like 20% a year, and it's all fuelled by leverage (low interest rates).

I'm becoming really scared that the BoC is going to sit by and just let this happen. The housing market is ENTIRELY about interest rates and government stimulus like CMHC and other mortgage supports.

Are these guys ever going to raise rates? Everyone in Canada loves inflating home prices, so unfortunately there's no public will or political will to raise rates.

Nobody wants to kill the party.


----------



## KaeJS

If you think raising rates is going to kill the party...

You're dreaming.


----------



## GL from QC

james4beach said:


> There was just an insane headline in real estate, saying that the average Canadian home price went up 9% in *one month* from Sept to Oct.
> 
> This isn't just an overheated real estate market but possibly some kind of absolute mania or blow-off top. Real estate is now rising at something like 20% a year, and it's all fuelled by leverage (low interest rates).


I used to work as a financial analyst just before retiring... And before that, I used to live in Nevada during (and after) the housing bubble in 2008. That was not pretty. I'm sensing the same bizarre irrational exuberance in Canada that I did back then in Nevada. (In Reno, to be precise.) In 2007, I was a 21-year-old idiot and broke as a joke, and even I knew that the end was near - because when my equally broke friend and I went to have some heavily discounted all-you-can-eat sushi during the off hours, the bartender/waiter dude tried to sell each of us a mortgage. 🤣

It was just like that scene from the Big Short movie where the stripper said she had several mortgages... I saw something very similar in Toronto, where they had actual TV news segments where they advised homeowners how to boost their home value even higher. Ditto for that post on Reddit that showed fliers and commercials *in Hong-Kong* that advertised Toronto condos that haven't even been built yet.  The same vibes, all over again.

That was my Nevadan perspective. My financial analyst perspective is that from what I understand (I moved here just ~2.5 years ago), average Canadians don't have many good paths to riches - it's pretty much just the real estate. If and when this bubble pops, it will be really, *really* bad for the economy. The mechanism won't be the same as in Nevada, of course: this time, it's not that mortgages are being given to McDonald's workers, it's that the supply/demand disparity is frankly insane. One interesting caveat is that in light of Evergrande, just about everyone in China will try even harder than before to park their money in foreign real estate, which will also mean Canada. (I'm rooting for my condo near Seattle to jump up in price too, but so far the increase has been only gradual.)

What you're seeing right now is definitely mania. At some point, it will implode, leaving a lot of wreckage all around it. There are only 2 key questions: when will it implode? how exactly will it implode? Meanwhile, I'm getting such strong Nevada circa 2008 echoes that I've decided to just be a renter forever LOL. Moved to Quebec City, the only province with rent control, and got a nice 1-bedroom apartment that costs me $550 a month, which includes hydro and fast internet. If y'all want to survive the fallout, follow my lead.


----------



## MrBlackhill

GL from QC said:


> rent control


Yeah, rent control... A tenant who stays for too long is the nightmare of a landlord because when the tenant leaves, he'll be able to significantly raise the rent and no one will dare to rightfully ask what was the rent of the previous tenant because even the boosted rent price will be seen as a discount.


----------



## james4beach

GL from QC said:


> What you're seeing right now is definitely mania. At some point, it will implode, leaving a lot of wreckage all around it. There are only 2 key questions: when will it implode? how exactly will it implode? Meanwhile, I'm getting such strong Nevada circa 2008 echoes that I've decided to just be a renter forever LOL. Moved to Quebec City, the only province with rent control, and got a nice 1-bedroom apartment that costs me $550 a month, which includes hydro and fast internet. If y'all want to survive the fallout, follow my lead.


I rent too, and am very happy renting.

Thanks for sharing these thoughts. I agree that the wreckage of an implosion will be horrendous. Something like 1/3 of our GDP is tied to real estate activity. Contractors, builders, home renos, financial activity of course with all the loans and everything... it's a giant party on the back of RE. Look at the stock chart of Goeasy for example, an example of the RE-linked lending which is going nuts lately.

Do you have a sense of how many basis points of BoC increase would be enough to kill this?

I would be shocked if the housing market could tolerate +100 bp. I think the first +25 bp would be harmless though.


----------



## wayward__son

a rate hike sufficient to impose austerity on the over-indebteded would be a political decision, since interest rates in our system are not determined by the free market but instead through an opaque bureaucracy. what is the incentive for politicians to impose austerity? noone knows the future, but personally i dont see it happening.


----------



## prisoner24601

james4beach said:


> Do you have a sense of how many basis points of BoC increase would be enough to kill this?
> 
> I would be shocked if the housing market could tolerate +100 bp. I think the first +25 bp would be harmless though.


That's an interesting question. I did some quick calculations based on the following assumptions. Median Household income in Ontario 75,000. Most people will spend on housing payments is 40% or 2,500 per month. So market will tolerate payments up to this amount. Based on the chart below, a $500,000 mortgage @ 1.5% could run another 200 basis points before hitting the affordability threshold. Above +200 bp you would see a price drop of about 10% for each additional 100 bp.

So feels like a ways to go if households are comfortable with this level of spending for a house


----------



## james4beach

prisoner24601 said:


> So feels like a ways to go if households are comfortable with this level of spending for a house


But there's also a psychological element. Rising interest rates are scary and cause people to deleverage.

Declining interest rates excite people and they feel an uncontrollable urge to borrow more money, even if they have no idea what to do with it. So there's a big psychological part to this.

Drops in interest rates are super fun. It excites people about buying homes.
Rising interest rates are scary and kill the mood.


----------



## londoncalling

Most homebuyers (especially new buyers) will have very little knowledge of how changes in interest rates actually impact affordability. they rely on their bank or mortgage broker to guide them through the process. Unfortunately, their desire to own will override sound financial decisions as well as FOMO. They will be told to get their mortgage before rates jump again over the next x years. They will be given a mortgage with a longer term and feel safe knowing their payment is X dollars biweekly. The real shock will come when it is time to renew if the rates have gone up significantly more than their wages. That is when we will see things unravel. warnings of this have been continuous since the 08 crisis in the US and yet we continue to keep rolling along. Thanks GL for the reminder! I could have taken a lesser aggressive mortgage repayment strat and dumped my money in the market. I certainly would have a larger portfolio had I done so. Should rates rise considerably I can lock in and lower the rate. That is the beauty of having 0 consumer debt and a great credit rating. sometimes it's about risk mitigation and being able to sleep at night, instead of knocking it out of the park each year. some would argue I could have cashed out those returns and killed the mortgage. Unfortunately, I would not have know when to leave the casino. Instead I will stay and play with money I can lose.


----------



## prisoner24601

It's been a long time since I've had a mortgage. But why would a rate increase worry someone if they are comfortable with payments for life similar to renting? They could just keep extending the amortization period on renewal to 25 years. Based on the CIBC calculator below my payments would only jump by 6.9% after 5 years and they are still building some equity. 6.9% increase in 5 years would be less than rent would go up.


----------



## agent99

prisoner24601 said:


> It's been a long time since I've had a mortgage. But why would a rate increase worry someone if they are comfortable with payments for life similar to renting?


One of the highlights for many families, is the day the mortgage is paid off! After that, unlike rentals, no more payments!

Buying a home, using the leverage that mortgages provide, is likely one of the best investments most people can make. We have a home that is now worth more than10x what we paid for it after about 40 years. We will likely stay here until we can't!  Great legacy for kids. 

Understand though, that in some areas, some homes may be out of reach for young families. Around here, a modest home can still be bought for $350k. A couple with $60k pa income should be able to afford that quite comfortably.


----------



## Ukrainiandude

Meanwhile in Ukraine, where interest rates are higher
you can buy a house for 3 thousands dollars with 2.5 acres of land.
Please don’t tell me that Canadian wages are hundred times higher.
Average wages in Ukraine are $500 month.


agent99 said:


> Around here, a modest home can still be bought for $350k.


----------



## james4beach

agent99 said:


> One of the highlights for many families, is the day the mortgage is paid off! After that, unlike rentals, no more payments!


Are you kidding or something?

Home ownership means constant payments. Constant property taxes, also constant maintenance. Replace the roof, fix the basement, fix the leaks, fix the electrical, fix the furnace, fix the HVAC, and then spend thousands of dollars renovating.

And in the case of condos, endless monthly maintenance fees, just like paying rent! Plus special assessments and extra surprise costs because the neighbours want to upgrade the balconies, or some damned thing.

Renters don't pay any of these extra costs. People dramatically underestimate how much home ownership is going to cost them, when they do these "rent vs mortgage" calculations.


----------



## AltaRed

Tenants don't pay these costs directly but much of it is embedded in the rent. That all said, I agree home ownership is a money pit. There is no end to it and I don't want to begin to add up the numbers over the past 9+ years.


----------



## GL from QC

MrBlackhill said:


> Yeah, rent control... A tenant who stays for too long is the nightmare of a landlord because when the tenant leaves, he'll be able to significantly raise the rent and no one will dare to rightfully ask what was the rent of the previous tenant because even the boosted rent price will be seen as a discount.


That's the plan! I hope to avoid the whole "lifestyle inflation" thing as my needs in life are pretty simple, so my plan is to just grow roots here and use this apartment as my home base for decades to come mwahaha. Seriously the rent is $595 and includes everything (and internet as well), and it's a 10-minute walk away from the tourist district. What's not to like? ¯\_(ツ)_/¯




james4beach said:


> Thanks for sharing these thoughts. I agree that the wreckage of an implosion will be horrendous. Something like 1/3 of our GDP is tied to real estate activity. Contractors, builders, home renos, financial activity of course with all the loans and everything... it's a giant party on the back of RE. Look at the stock chart of Goeasy for example, an example of the RE-linked lending which is going nuts lately.


Huh. It's a shame Goeasy's stock isn't on NYSE, because I would love to buy leap puts against that... Hard to say when this bubble will blow up - could be in 6 months, could be in 3 years. (As they say, the market can remain irrational much longer than you can remain solvent.) But just to give you some idea of what it was like... In 2008-09, the official unemployment level in Nevada was ~10%. The unofficial level was probably around 20-30%. It was bad. Really, really bad. There were former office workers lined up to interview for food-serving and dishwashing jobs at a new restaurant. I graduated from college in 2008, and the only friend in my cohort that got a relevant job was an engineer. The rest of us (even people with double majors in bio and organic chemistry) had to scramble for whatever was available. That's how I ended up as a warehouse temp packing boxes for Amazon hahaha

I love Canada, I really do, but as a Russian-American-Canadian, given the choice which currency to keep my life savings in, I had to go with USD. It's got a lot of flaws, yes, but their economy is more stable. I don't know just how big of a hit it will be to CAD when real estate, the sole driver of the economy (or so it seems), implodes, but it's gonna be really, really ugly.


----------



## Ukrainiandude

BMO believes the stock market will continue to ascend next year, though less vigorously, after the S&P 500 has soared 25% year to date, 16% in 2020 and 30% in 2019.

The bank’s Chief Investment Strategist Brian Belski predicts the index will hit 5,300 in 2022. That would represent a gain of 13% from the Friday’s recent level of 4,699.

My experience has been that, when we see many articles like this, it's right before the drop


----------



## MrBlackhill

Ukrainiandude said:


> BMO believes the stock market will continue to ascend next year, though less vigorously, after the S&P 500 has soared 25% year to date, 16% in 2020 and 30% in 2019.
> 
> The bank’s Chief Investment Strategist Brian Belski predicts the index will hit 5,300 in 2022. That would represent a gain of 13% from the Friday’s recent level of 4,699.
> 
> My experience has been that, when we see many articles like this, it's right before the drop


Not only did the yield curve inversion accurately predict the US crashes of the past 40+ years, but also there wasn't an instance where we had a crash *without* having a yield curve inversion.

So I would agree that the market will continue to go either up or sideways or maybe small corrections, but no crash in sight until the policy rates are increased and the yield curve inverts.

Policy rate should be increased gradually by mid-2022 and that's why the crash would most likely happen by 2023-2024. I bet before the end of 2023.


----------



## GL from QC

Ukrainiandude said:


> My experience has been that, when we see many articles like this, it's right before the drop


Yup. I was a bit too young to invest back in 2000, but everything happening right now sounds a lot like the headlines just before that crash. Just the EV insanity alone, with all those companies that haven't made anything other than a powerpoint getting gigantic valuations. 

I'm part of a private investing subreddit, and everyone's consensus there is that maybe going 100% cash is a good idea for the next 6 months or so. There are many potential catalysts: the US will resume student loan payments, the taxes for all the insane 2021 stock gains will be due, etc. (Remember that the dot-com bubble happened in spring, when people started liquidating their stocks to pay the tax man.) A lot of this sounds like the usual perma-bear scary stories, but things really do seem more bizarre than ever before...


----------



## agent99

AltaRed said:


> Tenants don't pay these costs directly but much of it is embedded in the rent. That all said, I agree home ownership is a money pit. There is no end to it and I don't want to begin to add up the numbers over the past 9+ years.


We have lived in our area (now in just second home) for almost 50 yrs. Our current property is now worth 350x the deposit we put down in 1972. That's a 12.4% pa return that we could monetize if need be. Or we could leave it as a legacy to our family. Try to do that while renting.

We have not spent anything near what it would have cost to rent even a basic property on maintenance, financing and taxes. Rentals would have to have cost less to come out ahead. They would not have. Besides, equivalent properties are just not available for rent. Apartments and condos may be available for rent, but not HOMES.

From a financial view, landlords don't rent properties out of the goodness of their hearts. They want to make a return. Renters have to pay for that return along with all the other property ownership costs that a homeowner would have. So rentals have to cost more than owned properties of exactly same type. 

Maybe the youngsters here that have no roots and want to be mobile are better suited to renting? We did when we were young. Others who favour renting perhaps just don't understand what a family HOME really is. Luckily most young Canadians aspire to home ownership.

Some light reading for ownership-deniers: 



https://www.crea.ca/wp-content/uploads/2021/04/Homeownership-White-Paper_2021_ENG_Mar-30-1.pdf











Net Worth Surges Among Homeowners as Renters Fall Behind


Despite a pandemic, Canadian net worth actually jumped in the first quarter of 2021 thanks to surging real estate values.




storeys.com













Is Buying A House A Good Investment?


The housing market is white hot—and neither a pandemic nor rising home prices can put out the flames. Mortgage applications to purchase a home have steadily increased year-over-year since May as real estate continues to get more expensive across the country. Balancing these growing price tags are




www.forbes.com


----------



## Ukrainiandude

agent99 said:


> Apartments and condos may be available for rent, but not HOMES.


You can always rent a house. You can make condo/apartment/cave a HOME too.
There’s really no need to worship a North American plywood huts/HOMES.
I understand your zeal, you and millions of baby boomers gotta sell their “treasure” one day. Don’t worry you will find your greater fool.


----------



## AltaRed

agent99 said:


> We have not spent anything near what it would have cost to rent even a basic property on maintenance, financing and taxes. Rentals would have to have cost less to come out ahead. They would not have. Besides, equivalent properties are just not available for rent. Apartments and condos may be available for rent, but not HOMES.
> 
> From a financial view, landlords don't rent properties out of the goodness of their hearts. They want to make a return. Renters have to pay for that return along with all the other property ownership costs that a homeowner would have. So rentals have to cost more than owned properties of exactly same type.


There are other threads on home ownership so we don't have to re-hash old ground here. There is plenty of evidence that says capital markets (on average) have appreciated more over time than real estate markets (on average), certain urban centres like GTA and GVR being obvious exceptions. One's view is influenced by their regional market.

Rentals don't necessarily cost more than home ownership. Landlords make a profit off tenants due to high leverage and write off of interest and operating expenses and CCA that is not available to owners of principal residences. Further, the opportunity cost of capital sunk in a house could otherwise be put to use in the capital markets and done well can result in long term CAGR of 8-9% net of MER. Owned homes have large MERs*. As an example, our neighbour's house of circa 4000 sq ft was rented for 5 years while they were overseas. For what the rent was, I could have made more in capital markets and paid the rent being asked than what I would have had to pay to buy the house outright along with its high MER, and still have money left over. It was not even close once the costs of ownership were fully factored in.

It really doesn't matter though since home ownership is an emotional subject more than a mathematical rational one. For the time being, we prefer to own as well. BTW, there are plenty of houses to rent in many regions of our country.

* property taxes, insurance, maintenance, replacement and renovations. We probably have spent about 3% of house FMV per year over the past 9 years on such items.


----------



## Ukrainiandude

GOLDMAN SACHS FORECASTS S&P 500 INDEX WILL CLIMB BY 9% TO 5100 AT YEAR-END 2022

The end is near?


----------



## m3s

Ukrainiandude said:


> GOLDMAN SACHS FORECASTS S&P 500 INDEX WILL CLIMB BY 9% TO 5100 AT YEAR-END 2022
> 
> The end is near?


Meh sounds like negative real returns


----------



## agent99

AltaRed said:


> There are other threads on home ownership so we don't have to re-hash old ground here.


You just did!


----------



## AltaRed

agent99 said:


> You just did!


I did to counter your 2nd and 3rd paragraphs which were assertions and opinion, not facts. You know that members here get called on such things. It is a tough crowd sometimes.


----------



## agent99

AltaRed said:


> *I did to counter *your 2nd and 3rd paragraphs which were assertions and opinion, not facts. You know that members here get called on such things. It is a tough crowd sometimes.


Yes you did.  Practice what you preach!


----------



## milhouse

Ukrainiandude said:


> GOLDMAN SACHS FORECASTS S&P 500 INDEX WILL CLIMB BY 9% TO 5100 AT YEAR-END 2022
> 
> The end is near?


FWIW, BMO is forecasting 5300 for the S&P500 and 24000 for the S&P TSX in 2022.


----------



## wayward__son

fwiw, I'm a lifelong renter and my returns (on capital freed up from not having to pay a downpayment etc) in financial markets are multiples of what i would have made plowing that same capital into home equity. my landlord's cap rate is barely better than a GIC and while there is obviously appreciation and strategies available to the RE investor as AR pointed out, I am very comfortable taking my side of the trade.

My guess is the economics will skew in favour of renting for the foreseeable. the low hanging fruit for politicians on housing affordability is to cap rents, and all of the FOMO money tends to go towards home buying, i.e., on average purchase decisions are more likely to be made emotionally than decisions to rent. This suggests to me a market inefficiency that could be exploited by people willing to make housing decisions for purely financial reasons (not for everyone, obviously).


----------



## AltaRed

milhouse said:


> FWIW, BMO is forecasting 5300 for the S&P500 and 24000 for the S&P TSX in 2022.


I do not know why any of these companies forecast returns for the year ahead. None of their crystal balls are any better than throwing darts at a board simply because there are far too many real life variables that throw curve balls.


----------



## GL from QC

AltaRed said:


> I do not know why any of these companies forecast returns for the year ahead. None of their crystal balls are any better than throwing darts at a board simply because there are far too many real life variables that throw curve balls.


Because they must. ¯\_(ツ)_/¯ Even a shoddy forecast is better than no forecast at all. (Source: used to work in Finance before retiring.) People's heads will more or less explode if some big publicly traded company, let alone a bank, sends "there be dragons" as their next-year prospectus hahahaha


----------



## james4beach

GL from QC said:


> Because they must. ¯\_(ツ)_/¯ Even a shoddy forecast is better than no forecast at all


Yeah, imagine they said the truth:

"We have absolutely no idea what the market will do in the short-term. But please pay us the 1% or 2% fee anyway."

I think these forecasts and newsletters are a way to demonstrate value to the customer. Here's what you're paying us for... we've got all these smart people doing research and coming up with strategy. Your money is in good hands, we're on top of things. LOL


----------



## Eclectic21

james4beach said:


> Are you kidding or something?
> 
> Home ownership means constant payments. Constant property taxes, also constant maintenance. Replace the roof, fix the basement, fix the leaks, fix the electrical, fix the furnace, fix the HVAC, and then spend thousands of dollars renovating ...


Some are definitely constant payments ... but like those who ignore the total costs - you seem to be under the impression maintenance happens more often then I have experienced.

Taking a look at your list:
1) replace the roof - one bundle of shingles to replace individual ones ripped in half by the wind and one roof replacement in over thirty years. A decade of replacing individual shingles left more than eighty percent of the bundle when the house was sold.

2) one basement fix - it was needed due to a problems one hundred feet outside the house. Insurance not only covered it but waived the deductible.

3) fix the leaks - one so far where the parts cost about thirty dollars.

4) fix the furnace - twice in thirty years with a total cost for both fixes of three hundred (i.e. no need for a furnace replacement).

5) fix the HVAC - isn't this the same as the furnace, just including more than the furnace? 
Expanding the category means adding an extra hundred for bathroom fan replacements but nothing for the central AC (over fifteen years).

6) thousands for renovations - the few I've done have been more like three hundred or so with my own work instead of hiring someone.


As for "Renters don't pay any of these extra costs", I guess you don't think your landlord is running a business then. Just because you don't see a line item, does not mean the landlord hasn't factored these costs into the rent. At least the landlords I rented from indicated they were doing so.


Cheers


----------



## kcowan

Eclectic21 said:


> Some are definitely constant payments ... but like those who ignore the total costs - you seem to be under the impression maintenance happens more often then I have experienced.
> 
> Taking a look at your list:
> 1) replace the roof - one bundle of shingles to replace individual ones ripped in half by the wind and one roof replacement in over thirty years. A decade of replacing individual shingles left more than eighty percent of the bundle when the house was sold.
> 
> 2) one basement fix - it was needed due to a problems one hundred feet outside the house. Insurance not only covered it but waived the deductible.
> 
> 3) fix the leaks - one so far where the parts cost about thirty dollars.
> 
> 4) fix the furnace - twice in thirty years with a total cost for both fixes of three hundred (i.e. no need for a furnace replacement).
> 
> 5) fix the HVAC - isn't this the same as the furnace, just including more than the furnace?
> Expanding the category means adding an extra hundred for bathroom fan replacements but nothing for the central AC (over fifteen years).
> 
> 6) thousands for renovations - the few I've done have been more like three hundred or so with my own work instead of hiring someone.
> 
> 
> As for "Renters don't pay any of these extra costs", I guess you don't think your landlord is running a business then. Just because you don't see a line item, does not mean the landlord hasn't factored these costs into the rent. At least the landlords I rented from indicated they were doing so.
> 
> 
> Cheers


These examples just mean that you had a second part-time job as a home handyman. There is nothing wrong with that but many are not capable.


----------



## londoncalling

I decided to take a different view on the home ownership/ renter discussion taking place. Try to put it in the context of those that do a a proper analysis of buying a rental and doing a cost analysis on cash flow. I have seen this discussed on several real estate threads here and elsewhere. Some do this with their other investments as well. If we factor out the non financial considerations (a home not an investment, preferring a certain location over another despite it being not as beneficial financially etc.) each property would provide a different cash flow percentage. Some owners will foolishly own property that provides negative cashflow with the speculation that the property will appreciate enough to compensate for that loss. If a tenant is able to find such a place it definitely would be cheaper than owning. Many landlords forget to include the time cost of being a landlord which is what I believe Keith is alluding to above. It is difficult to calculate the cost of one's time if it is not their regular job that their time is being allocated to. If I make $100 an hour at my place of employment does that mean an hour spent elsewhere is $100 as well? One typically prices it at what it would cost to have another person do that same task.


----------



## Gator13

james4beach said:


> Are you kidding or something?
> 
> Home ownership means constant payments. Constant property taxes, also constant maintenance. Replace the roof, fix the basement, fix the leaks, fix the electrical, fix the furnace, fix the HVAC, and then spend thousands of dollars renovating.
> 
> And in the case of condos, endless monthly maintenance fees, just like paying rent! Plus special assessments and extra surprise costs because the neighbours want to upgrade the balconies, or some damned thing.
> 
> Renters don't pay any of these extra costs. People dramatically underestimate how much home ownership is going to cost them, when they do these "rent vs mortgage" calculations.


James, first off, I will admit I have never kept track of what we have invested in our homes. (Interest payments, improvements, upkeep, sweat equity, etc). With that being said, living in the GTA for 30+ years, I know the sale price of our current home is substantial compared to what we paid for it. 

As for renting, I haven't followed the rental market so I can't say whether all those costs mentioned above are passed along in rental rates or not.

With that being said, I can share a few things which are solely from my perspective. 

Buying a home is pretty exciting as is making it a home for your family. Making your final mortgage payment is a life moment you don't soon forget. Also, owning your own home brings you some sense of security.

As much as enjoy managing my finances and creating wealth, I also want to enjoy life and work to do things that are important to my spouse. My motto has always been to manage my money instead of it manging me. Some of my decisions are financially silly, but they made me damn happy. Pick which path appeals to you and push forward. Cheers


----------



## MrMatt

james4beach said:


> Renters don't pay any of these extra costs. People dramatically underestimate how much home ownership is going to cost them, when they do these "rent vs mortgage" calculations.


Yes, and that's part of why renters feel they're getting screwed.
I can say, confidently that compared to a a nice 2/3 bedroom apartment I'm substantially ahead buying my house.


----------



## sags

Hmmm.....wasn't that pretty much what they said before the US housing crash ?


----------



## Gator13

sags said:


> Hmmm.....wasn't that pretty much what they said before the US housing crash ?


And where are the prices now compared to then?


----------



## Jimmy

sags said:


> Hmmm.....wasn't that pretty much what they said before the US housing crash ?


It is a Canadian study first of all and covered periods of both rising and falling housing markets.


----------



## wayward__son

The study was commissioned by Royal LePage, LOL


----------



## kcowan

londoncalling said:


> I decided to take a different view on the home ownership/ renter discussion taking place. Try to put it in the context of those that do a a proper analysis of buying a rental and doing a cost analysis on cash flow. I have seen this discussed on several real estate threads here and elsewhere. Some do this with their other investments as well. If we factor out the non financial considerations (a home not an investment, preferring a certain location over another despite it being not as beneficial financially etc.) each property would provide a different cash flow percentage. Some owners will foolishly own property that provides negative cashflow with the speculation that the property will appreciate enough to compensate for that loss. If a tenant is able to find such a place it definitely would be cheaper than owning. Many landlords forget to include the time cost of being a landlord which is what I believe Keith is alluding to above. It is difficult to calculate the cost of one's time if it is not their regular job that their time is being allocated to. If I make $100 an hour at my place of employment does that mean an hour spent elsewhere is $100 as well? One typically prices it at what it would cost to have another person do that same task.


When we owned an acreage north of Toronto, most owners hired gardiners to keep things nice while they drove to the Gym. We did the work but were well-aware that we were working well below our hourly rate. But we were getting exercise without gym fees. Same with electrical, drywall and plumbing.


----------



## agent99

wayward__son said:


> The study was commissioned by Royal LePage, LOL


It was commissioned by Royal Lepage. Why not? It is their business to know these things.

The study was carried out by a professional - economist and housing market analyst Will Dunning of Will Dunning Inc. Which specific parts of his study did you find inaccurate? Or are you implying that he was influenced?

Not sure why anyone would question the findings. Findings are what most Canadians would have expected.

Here are two links to the report findings:






Buying vs Renting study: Homeowners come out in front financially in more than 90% of scenarios analyzed | Royal LePage







www.royallepage.ca







https://marketing.rlpnetwork.com/Communications/Royal_LePage_Rent_vs_Buy_Report_Summary.pdf


----------



## MrBlackhill

Enjoying the new highs... Well, I have lost quite a good amount of money during November. And I guess I'll lose more during December.

But that's just a healthy correction due to news. No crash in sight.


----------



## Spudd

agent99 said:


> It was commissioned by Royal Lepage. Why not? It is their business to know these things.
> 
> The study was carried out by a professional - economist and housing market analyst Will Dunning of Will Dunning Inc. Which specific parts of his study did you find inaccurate? Or are you implying that he was influenced?
> 
> Not sure why anyone would question the findings. Findings are what most Canadians would have expected.
> 
> Here are two links to the report findings:
> 
> 
> 
> 
> 
> 
> Buying vs Renting study: Homeowners come out in front financially in more than 90% of scenarios analyzed | Royal LePage
> 
> 
> 
> 
> 
> 
> 
> www.royallepage.ca
> 
> 
> 
> 
> 
> 
> 
> https://marketing.rlpnetwork.com/Communications/Royal_LePage_Rent_vs_Buy_Report_Summary.pdf


The part that seems iffy to me is the $60/month on maintenance/repairs. Some years you might be able to get away with that, but others, not so much.

In general with the way the housing market has been, it would have been hard for renting to come out ahead. But just because the past has been that way is no guarantee that the future will be as well.


----------



## agent99

Spudd said:


> The part that seems iffy to me is the $60/month on maintenance/repairs.


I noticed that in the Globe report. I first guessed it may have been a mistake, but no, that is what he used. Maybe because it is an average, it includes homes that don't get maintained much over the 10yr period he studied? I know that today, we spend that much just on lawn care, bug spraying and snow removal. But, on the other hand, thinking back to our first home. It was 3yrs old when we moved in and almost as-new. Lawn & basic garden was in. We stayed there for about 10 years and can't recall having to do any maintenance other than lawn & garden and a bit of painting that we did ourselves. The maintenance number may be low, but even if it was $160, it wouldn't change the outcome.

The other thing to bear in mind about the report, was that it is strictly financial. It does not try to factor in other consideration such as location, schools, commuting etc that can affect living costs as well as enjoyment of lifestyle a home enables.

Perhaps the full report cover this better? I have only scanned the details:



https://marketing.rlpnetwork.com/Communications/Rent_vs_Buy_2021_Report.pdf




https://marketing.rlpnetwork.com/Communications/Rent_vs_Buy_2021_Appendix.pdf


----------



## Eder

When I owned a home I probably spent 20k/year on various things outside of mortgage,taxes,insurance. Now I spend more than that each year on my sailboat lol. No free rides.


----------



## latebuyer

Yes, 60.00/month isn’t accurate for a lot of people, i don’t think. I spent 15000 2 years ago on a special assessment for windows. I am sure there is a range. I wish my cost was that much. What i wonder is if they are including the cost of renovations. My understanding is that canadians spend an enormous amount on this and renters don’t have that cost at all.


----------



## wayward__son

agent99 said:


> It was commissioned by Royal Lepage. Why not? It is their business to know these things.
> 
> The study was carried out by a professional - economist and housing market analyst Will Dunning of Will Dunning Inc. Which specific parts of his study did you find inaccurate? Or are you implying that he was influenced?
> 
> Not sure why anyone would question the findings. Findings are what most Canadians would have expected.
> 
> Here are two links to the report findings:
> 
> 
> 
> 
> 
> 
> Buying vs Renting study: Homeowners come out in front financially in more than 90% of scenarios analyzed | Royal LePage
> 
> 
> 
> 
> 
> 
> 
> www.royallepage.ca
> 
> 
> 
> 
> 
> 
> 
> https://marketing.rlpnetwork.com/Communications/Royal_LePage_Rent_vs_Buy_Report_Summary.pdf


The main issue for me is the study doesn’t seem to analyse opportunity cost of the down payment and other principal payments, but that’s based on a quick scan.

I do think that the study could be influenced by the company commissioning it, yes


----------



## wayward__son

MrBlackhill said:


> Enjoying the new highs... Well, I have lost quite a good amount of money during November. And I guess I'll lose more during December.
> 
> But that's just a healthy correction due to news. No crash in sight.


Some March 2020 PTSD seems to be surfacing on social media. if Omicron is a big one I wonder if we get doom in markets or if participants will ‘discount’ the policy response and skip straight to melt up. Interesting times.


----------



## nathan79

latebuyer said:


> Yes, 60.00/month isn’t accurate for a lot of people, i don’t think. I spent 15000 2 years ago on a special assessment for windows. I am sure there is a range. I wish my cost was that much. What i wonder is if they are including the cost of renovations. My understanding is that canadians spend an enormous amount on this and *renters don’t have that cost at all*.


That's assuming they rent the same place for 25 years and the landlord never renovates, or doesn't increase the rent to recapture the cost of renovations. Each time a renter moves, they pay a new rent which is based partly on whatever renovations have been done by the landlord.


----------



## AltaRed

FWIW, we probably spend somewhere between $20k per year on home upgrades/replacement, perhaps more, over the past 10 years (our house was built in 2000) and that is likely on the low end of average for our neighbourhood. Our next door neighbours have probably spent $300k in the same time period. Houses date very fast if not 'renewed' every 10-15 years or so. Kitchens, bathrooms, door and cabinet hardware, light fixtures, window coverings, decks, roofs, landscaping, paint, pool equipment/liner, etc. A landlord wouldn't do anything other than what is necessary from a replacement perspective. 

That is why with the exception of high cost locations like the GTA, GVR and maybe a few other places, 3% of FMV per year is not out of range for ongoing operating costs, maintenance and renovations for owned housing. Any study that claims otherwise, such as the linked one by Royal LePage is highly self-serving and skewed towards investment real estate. It is like the wolf asking to be the shepherd.


----------



## doctrine

wayward__son said:


> Some March 2020 PTSD seems to be surfacing on social media. if Omicron is a big one I wonder if we get doom in markets or if participants will ‘discount’ the policy response and skip straight to melt up. Interesting times.


I doubt Omicron is the "big one". Beta, gamma, lambda, mu are all variants that did not stick in almost any country other than the original.

Of course, there is no counting on psychology. But I would not be surprised to see a big bounce back this week, and all time highs again before year end. Melt up is more likely than melt down.

Between the vaccines and the infections, this is becoming less of a 'novel' disease, and you can see that in the lower death rates with each subsequent wave or variant.


----------



## KaeJS

Not only that, but people are just over it.
Nobody cares anymore except for a select few.
Everyone just wants to live their life and forget about COVID.


----------



## AltaRed

I am not sure about this one. I think the travel restrictions and possible European shutdowns will depress the market this coming month to correction territory. Not like March 2020 but a pullback for sure. it will depend a lot on transmissibility and the shutdowns that go along with it.


----------



## wayward__son

By “big one” I really just meant to refer to whether it results in govt imposed lockdowns and the like. That is all I care about from a trading / investment point of view. Whether those measures make sense is a different question.


----------



## agent99

kcowan said:


> When we owned an acreage north of Toronto, most owners hired gardiners to keep things nice while they drove to the Gym. We did the work but were well-aware that we were working well below our hourly rate. But we were getting exercise without gym fees. Same with electrical, drywall and plumbing.


Where we are, most home owners just choose to have someone else do the work. Reason - many are aging and have money to spend. On the other hand, we often walk in a nearby subdivision where many young families families live when starting out. There, they seem do their own maintenance. As we did back when we bought our first home! I can't recall paying anyone to do anything on our first home in the 10 yrs or so we were there.

The amount of money spent on maintenance no doubt varies all over the map. Upgrades and renovations are not maintenance. These are discretional costs that hopefully add to the capital value of the home. Choosing to pay others to cut lawn etc is also discretionary and those with deeper pockets no doubt have more of what they consider maintenance.

Basically when quoting maintenance costs here not everyone is talking about the same thing.

Having said all that, I still think the $60/month seems way low! But looking at the kind of poor summary table, the cost of ownership also included a condo fee of $147/month. Normally that would include all exterior maintenance such as grounds, windows, roof etc. The $60 would just be for interior maintenance. $207/month would be $2485/yr. Still likely on low side. Trying to include all types of dwellings in one summary table adds confusion and just doesn't work.

I noticed that home owner's insurance was included, but not tennant's insurance. That could be about $20-25/month for rentals.

The Table I referred to,


----------



## nathan79

There's really no limit to what you could spend. I was raised lower middle class, so my idea of what is necessary probably differs greatly from that of someone who is upper middle class. We never had expensive renovations or high end finishes when I was growing up. Most "renovations" we did were just flooring, paint, and maybe a few very basic/cheap upgrades. My parents generally only replaced things that couldn't be repaired, cleaned up, or improved to an acceptable standard. I'm not quite as thrifty as my parents were, but my DIY skills are also far superior to theirs, so I can do a lot more with less money. That certainly is not the case for everyone. The individual needs to understand their own personality, needs, wants and capability. Some can't live with anything that is below a certain standard of repair/appearance. People who are extremely particular and want "modern" everything are bound to spend tons of money on renovations, as are those who are trying to keep up with peers. These are the ones who redo their kitchen/bath every 10-15 years just because it looks "dated". Whatever makes you happy.

I think $250 a month ($3000 a year) would be a reasonable estimate for general maintenance & repair for someone who can handle doing some things themselves.

$1800 for deferred major expenses (roof, windows, flooring)
$600 for regular maintenance (repair/replacement of appliances, plumbing, paint & supplies, etc).
$600 for seasonal expenses (lawn care, lawnmower gas, yard tools, snow/ice removal, furnace filter, pest control, etc.)

All of this assumes DIY for most basic things (such as painting, mowing the lawn, shovelling snow) and hiring a pro for anything technical. Many years will have no major expenses since appliances rarely break down -- maybe just a furnace tune-up every other year. Roof/windows should last 25 years, and don't all need to be replaced at the same time.


----------



## latebuyer

As waywardson pointed out they don't include the downpayment you can invest. I think with these huge down payments they have to make on million dollar homes to invest that money would make a difference. Condo fees of 147 are very low too. Mine is 400/month. Maybe the report should only be used if your situation matches the figures they give. Just to add lets not forget the interest being paidbon renovations as most are using helocs.


----------



## agent99

latebuyer said:


> As waywardson pointed out they don't include the downpayment you can invest. I think with these huge down payments they have to make on million dollar homes to invest that money would make a difference. Condo fees of 147 are very low too. Mine is 400/month. Maybe the report should only be used if your situation matches the figures they give. Just to add lets not forget the interest being paidbon renovations as most are using helocs.


Trying to have an all inclusive study summary as they had, makes little sense. As did mixing up condos and detached single owner homes. 
Buying a condo, having to pay condo fees and being subject to a condo associations decisions is not something I would contemplate. However, several friends of ours have. Some of their experiences, I would want to avoid!

My image of a family home for a family starting out, is a detached home, likely in a subdivision where other like minded families live. This is what many young Canadians aspire to. Very few equivalent homes are on the rental market, so it would be hard to do a proper comparison even on this small slice of the rental/own question. It might work for condos, but if so he should have stuck with that comparison.

This subthread may be a bit off-subject, but I imagine the question could equally apply to home owners as well as investors. Our home and our investments are both experience highs. Not excited about either really


----------



## Eder

I'd like to see a asphalt shingle roof last 15 years in most parts of Canada, much less 25.


----------



## AltaRed

Eder said:


> I'd like to see a asphalt shingle roof last 15 years in most parts of Canada, much less 25.


Too many people allow their homes to decay too long. One reason why so many resales are priced so much less than new builds of a similar type. That is personal choice of course how/where they wish to spend their money and/or maintain value. Different folks - different strokes but it may not ultimately be best value.

As an aside, cedar shake roofs were extremely popular here due to the dry climate, but the Okanagan Mountain fire in 2003 in which over 400 homes were lost was in large part due to embers catching homes on fire and the fire dept overwhelmed. Since then, cedar shake roofs were banned on new builds and homeowners have been slowly replacing them as we did circa 2015. Too many homes around here are continuing to patch those roofs with new shakes stuck in here and there to replace curled and split shakes rather than footing the bill to just replace the entire cedar shake roof at $15k or so. They will likely pay a price soon for being 'cheap'.


----------



## james4beach

AltaRed said:


> As an aside, cedar shake roofs were extremely popular here due to the dry climate, but the Okanagan Mountain fire in 2003 in which over 400 homes were lost was in large part due to embers catching homes on fire and the fire dept overwhelmed. Since then, cedar shake roofs were banned on new builds and homeowners have been slowly replacing them as we did circa 2015. Too many homes around here are continuing to patch those roofs with new shakes stuck in here and there to replace curled and split shakes rather than footing the bill to just replace the entire cedar shake roof at $15k or so. They will likely pay a price soon for being 'cheap'.


Wow, I had not heard about that.

Wouldn't the home insurer have something to say about this, considering the major fire risk?


----------



## AltaRed

I don't think any of the fire insurers charge extra for those that continue to hold on to their current cedar shake roofs, or if they do, we have not heard about it. Your comment actually reminds me to check on whether we advised our insurer back in 2015? about the change in our roof. I suspect, though, insurers are going to start asking more questions about 'wildland interfaces' and building materials used by folks in the boonies that are in the interfaces. Quite a few houses were lost around Okanagan Lake this past wildfire season because fire departments could not hose down them all from embers et al. It should be a development permit requirement to use fire resistant materials in such locations. A topic for a different thread......

Getting back on topic, market looks green this morning but I think the new Omnicron mutation is going to buffet markets for at least December until much more is known about this variant. Moderna says they have started work on a variant of mRNA vaccine to deal with the new variant and it would be early 2022 when they could mass produce. This kind of thing may well be what we are going to live with for some time (years) to come.


----------



## bgc_fan

AltaRed said:


> I don't think any of the fire insurers charge extra for those that continue to hold on to their current cedar shake roofs, or if they do, we have not heard about it. Your comment actually reminds me to check on whether we advised our insurer back in 2015? about the change in our roof.


FWW when we went with a metal roof, the insurance company gave us a small discount, so it is possible it may affect premiums. I think anything materially different in the house should be mentioned as it could affect rates.

As far as the highs are concerned and dip during Friday, even with the big "sell off" I didn't see much change in my portfolio outside of regular ups and downs.


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## nobleea

A couple more days at this rate and TSX will cross under the 200 DMA.
S&P is nowhere near.


----------



## MrBlackhill

Such a funny intraday. Started moving up nearly +2%, finished going down nearly -2%. (For NASDAQ)

But that's nothing, indices have barely lost between -4% and -6% from their peak.



MrBlackhill said:


> This end of year will be expected. Going down. Either flat from here to EOY or down by another -5%, maybe even -10%.


We have one last month to go down another -5%.


----------



## james4beach

nobleea said:


> A couple more days at this rate and TSX will cross under the 200 DMA.
> S&P is nowhere near.


But the Dow Jones index and Russell 2000 just fell below their 200 day average.

Same for the MSCI EAFE. So globally speaking it's looking like a rather bearish picture.

Of course I'm sure everyone has a well diversified portfolio including lots of bonds, so it shouldn't be a concern in any case.


----------



## MrBlackhill

james4beach said:


> Of course I'm sure everyone has a well diversified portfolio including lots of bonds, so it shouldn't be a concern in any case.


The market is not ready to crash. Correction maybe, but no crash.


----------



## Eclectic21

kcowan said:


> These examples just mean that you had a second part-time job as a home handyman. There is nothing wrong with that but many are not capable.


Where one considers jobs five years apart or more "part-time", I suppose so.

As I say - I haven't experienced the items that seemed to be lumped in with monthly payments at anywhere close to similar frequency.

Cheers


----------



## Gator13

james4beach said:


> .......Of course I'm sure everyone has a well diversified portfolio including lots of bonds, so it shouldn't be a concern in any case.


Not a lot of bonds in our portfolio, but the dividends and distributions were unaffected so no concern. The pullback has been a good opportunity to deploy some spare cash. Some great dividend increases this week as well.


----------



## kcowan2000

Eclectic21 said:


> Where one considers jobs five years apart or more "part-time", I suppose so.
> 
> As I say - I haven't experienced the items that seemed to be lumped in with monthly payments at anywhere close to similar frequency.
> 
> Cheers


YouTube goes a long way to deal with the delays of infrequent repairs for those with aptitude.

I have done both and DIY is about 60% cheaper. And you can just forget about the 40% that was not cash.


----------



## londoncalling

Gator13 said:


> Not a lot of bonds in our portfolio, but the dividends and distributions were unaffected so no concern. The pullback has been a good opportunity to deploy some spare cash. Some great dividend increases this week as well.


Did you find some deals?


----------



## Ukrainiandude

SPY is still 21% up YTD
unlikely that it will go into negative


----------



## Benting

james4beach said:


> Of course I'm sure everyone has a well diversified portfolio including lots of bonds, so it shouldn't be a concern in any case.


Not me. No bond ,not diversified and not too concern


----------



## londoncalling

Benting said:


> Not me. No bond ,not diversified and not too concern


But you did find a buyer for some TD shares.


----------



## Gator13

londoncalling said:


> Did you find some deals?


I am a dividend investor and and focus on those with A- or better credit rating. I have been primarily adding to existing holdings versus adding new ones. I set a minimum dollar amount threshold and then move up the threshold when there are no holdings below. (I do have a number of holdings that far exceed the minimum)


----------



## Benting

londoncalling said:


> But you did find a buyer for some TD shares.


Maybe the buyer is from TD ?


----------



## james4beach

Next week could get interesting. The Federal Reserve has a decision that everyone is watching, since they will talk about tapering and maybe about rate increases too.

It's possible next week could be volatile, not that it really matters. Sometimes it's just fun to watch.


----------



## AltaRed

They already have started the process as of Nov 4. The only question is whether it will be accelerated at various meetings, or if Omicron throws a wrench into the helicals, slown down due to a faltering economy. The current plan is to end tapering by mid-2022 with interest rate increases thereafter. I suspect they will be accelerated a bit for late Spring rate increases. Not betting any money on it though either way.


----------



## KaeJS

Does this chart not freak anyone out?


----------



## MrBlackhill

Put the chart settings to log and it won't freak you out. Draw a line and we're just a little bit above that line.


----------



## m3s

KaeJS said:


> Does this chart not freak anyone out?


No but the money printing chart freaks me out


----------



## Ukrainiandude

MrBlackhill said:


> Put the chart settings to log and it won't freak you out. Draw a line and we're just a little bit above that line.


I did that with Nikkei , and guess what there was no bubble in the 80th. Lol.


----------



## m3s




----------



## Ukrainiandude

m3s said:


>


Sky is the limit.


----------



## james4beach

Ukrainiandude said:


> Sky is the limit.


It really is, actually. So are you ready to join the party?

It's an interesting problem. Asset prices really can be pumped/inflated without limit. Some would argue that sitting in cash, or failing to invest in equities, is a huge mistake because cash is guaranteed to be devalued.

There also is the danger of some kind of "reversion to the mean" in central bank policy. One day, someone like Volcker could come back and normalize policy. It was a huge surprise to everyone when Volcker did this in 1980. And it could happen again.

Ray Dalio (who I think has the right idea) argues that one has to invest in a diversified basket of assets. There are only so many places that wealth can get stored. Things like stocks, bonds, commodities, real estate. Dalio says that wealth *must* be positioned into these assets because cash is guaranteed to erode. In other words there is simply no other choice than to hold the non-cash assets.

I largely follow that advice and hold a mix of stocks, bonds, and some commodities. Unfortunately I don't hold real estate.

One should also realize that in the Volcker tightening kind of scenario (which is possible) many of these assets might crash in the short term as cash bounces back in value. Impossible to predict what's going to happen. But nevertheless in the longer term, the "legitimate assets" seem to be where you want to be.

Some people insist on waiting in cash, holding out for that Volcker tightening scenario. It may come, or it may never come. I think it's very risky to *only* hold cash while you wait for "normalization".

ping @MarcoE


----------



## MrBlackhill

Ukrainiandude said:


> I did that with Nikkei , and guess what there was no bubble in the 80th. Lol.
> View attachment 22438


Well, in log you just have to pay attention to the slope of lines.

So I see that the early 50s were crazy, the early 60s also, the early 70s, so basically every beginning of a new decade was crazy and then there's that change in slope around 1980 which kept its pace until 1990 which is definitely a huge bubble and then the downward trend from 1990 to 2010 is concerning.

In the linear scale you would never be able to see all that information for that 70-year graph, the focus would mainly be on the 80s but actually the Nikkei from 1950 to 1960 was even crazier.


----------



## Ukrainiandude

Sibs: "BMO’s chief strategist reveals his top Canadian sectors and stock picks for 2022" https://theglobeandmail.com/investing/markets/inside-the-market/article-bmos-chief-strategist-reveals-his-top-canadian-sectors-and-stock-picks/…


----------



## Ukrainiandude

Anyone buying puts?
unusual_whales

@unusual_whales
BREAKING Today, a new record was placed for the number of puts traded in a single day.
1:30 PM · Dec 13, 2021
https://twitter.com/intent/like?ref...con^s1_&ref_url=&tweet_id=1470476113625464839


----------



## james4beach

Ukrainiandude said:


> Anyone buying puts?


Puts on what? Are you predicting that the market is going down soon?


----------



## Ukrainiandude




----------



## P_I

Ukrainiandude said:


> View attachment 22498


You might want to read The Market's Okay - The Irrelevant Investor as it discusses a similar chart. 


Michael Batnick said:


> This chart lit up the financial Twittersphere last week.
> 
> 
> 
> 
> 
> 
> 
> 
> Without the 5 biggest stocks, the Nasdaq Composite, allegedly, would have seen its 2021 return go from +15% to -20%.
> Being on the receiving end of a million aaaackshuallys is like being at a football game without any restrooms. That’s not where you want to be. So Gavin Baker, recipient of said aaaackshuallys, defended his honor and came up with some real and verified numbers below.


----------



## Eder

I'd be interested to see a similar chart of whats driving the TSX....I'm thinking its gains have come from a more diverse group of sectors.


----------



## james4beach

Eder said:


> I'd be interested to see a similar chart of whats driving the TSX....I'm thinking its gains have come from a more diverse group of sectors.


TSX has been a beast, lately. I'm wondering this too.

Even the tech sector (which has become significant) is helping quite a bit. But look at utilities, they are extremely strong as well.


----------



## MrBlackhill

TSX 60 ordered by YTD performance:


----------



## P_I

Eder said:


> I'd be interested to see a similar chart of whats driving the TSX....I'm thinking its gains have come from a more diverse group of sectors.


Not quite what you are asking but Rob Carrick: For index investors, the Canadian stock market looks better than ever - The Globe and Mail


Rob Carrick said:


> It’s a mark of success that the S&P/TSX Composite Index is no longer dominated by a sectoral Big Three.
> 
> Financials, energy and materials combined used to account for two-thirds of the index. Financials still rule the index, with a weighting of about one-third. But energy and materials now account for about 12.7 and 11.3 per cent, respectively. Industrials and information technology are right in that second tier as well, with weightings of 12.3 and almost 11 per cent.
> 
> The last couple of years have rounded out the S&P/TSX Composite nicely. In fact, it’s starting to look a little like the S&P 500 in terms of diversification. One or two dominant sectors, four or so secondary sectors and then a bunch of smaller sectors with a weighting of roughly 5 per cent or more.


----------



## Thal81

P_I said:


> Not quite what you are asking but Rob Carrick: For index investors, the Canadian stock market looks better than ever - The Globe and Mail


Nice find. One more thing I noticed is how the dominant and secondary sectors of the TSX Composite and the S&P500 are not the same, in fact they complement each other very well.


----------



## Ukrainiandude

*The liquidity threat looming over markets in 2022*
*A higher debt burden in the financial system has institutionalised instability
We calculate that global liquidity — the volume of cash and credit shifting around world financial markets — is testing $172tn. This figure is a stock of all sources of liquidity, including from central banks, traditional commercial banks and the so-called shadow banks that supply short-term debt and currency derivatives.*
Consider the importance of the dollar funding worldwide and the extension of lines of support between central banks to provide access to facilities backed by the US currency during the Covid-19 emergency. According to our calculations, these actions, together with a near-60 per cent jump in the size of central bank balance sheets to more than $30tn, have fuelled the 30 per cent rise in global liquidity since early 2020.

Yet these figures are still overshadowed by a huge debt pile that we now estimate exceeds $300tn — an eye-watering three times GDP — that burdens the world economy. 

The problem is that debt ultimately has to be repaid or, more likely, rolled over. Taking an average debt maturity of five years *implies a $60tn annual refinancing problem *that requires balance sheet capacity, or, in other words, liquidity.








The liquidity threat looming over markets in 2022


A higher debt burden in the financial system has institutionalised instability




www.ft.com


----------



## OptsyEagle

MrBlackhill said:


> TSX 60 ordered by YTD performance:
> View attachment 22500


Seriously. Every single stock in the TSX 60 made money last year. Every bloody one of them?

If that is not a signal to sell something then I have learned nothing over the 40 years I have been doing this. lol


----------



## Eder

Everyone thinks we will have a retraction/crash...me too....Most likely we will be proven right eventually but there may be more upside as well till then.
I do know if I sell anything not only do I pay taxes but I'll miss out on future dividend increases. I think as usual I'll do the same as the last 5 market crashes I have been thru...nothing.What goes down comes back up.
Of course it depends on the quality of ones portfolio.


----------



## m3s

OptsyEagle said:


> Seriously. Every single stock in the TSX 60 made money last year. Every bloody one of them?
> 
> If that is not a signal to sell something then I have learned nothing over the 40 years I have been doing this. lol


Did you learn to adjust for inflation is in those 40 years

The unit of account was expanded and the index used to measure inflation is flawed by design

We are measuring with a measuring stick that is not constant "lol"


----------



## m3s

Genius

Why spend less than you generate when you can print more than you borrow instead "lol"


----------



## MrBlackhill

OptsyEagle said:


> Seriously. Every single stock in the TSX 60 made money last year. Every bloody one of them?
> 
> If that is not a signal to sell something then I have learned nothing over the 40 years I have been doing this. lol


Not every stock, the list isn't complete in my screenshot.

In reverse order, we see there's only 11 of the 60 stocks which are in the negative YTD and then it quickly gets to performances above 15% YTD.


----------



## OptsyEagle

MrBlackhill said:


> Not every stock, the list isn't complete in my screenshot.
> 
> In reverse order, we see there's only 11 of the 60 stocks which are in the negative YTD and then it quickly gets to performances above 15% YTD.
> 
> View attachment 22506


Thanks. I did not count them. I assumed it was the full list of stocks. Your correction makes more sense. All 60 going up is unheard of.


----------



## Ukrainiandude

Eder said:


> What goes down comes back up.


Tell this to Nikkei 225 investors.


----------



## Jimmy

Ukrainiandude said:


> Tell this to Nikkei 225 investors.


You had to be wary when that index was rising 40%/yr in the 80s when all other markets were returning ~ 9%. Even still, if you were in Japan since 1950 for the long term you made 8.29% cagr.


----------



## Eder

Of course if you invested in the best Japanese companies you would have done just fine I think.
I just did a quick 6 pack of Nikkei blue chips over 10 years ...CAGR of 13.59%...just a random pick of their Nikkei 225 index. Pretty decent.


----------



## peterk

Could someone tell me - has there _ever_ been a market crash (however that is defined, - 20% or more?) that didn't ostensibly involve some unexpected shock to the system?

We / the talking heads talk so much about P/E's too high, stocks "overbought", profit taking, put buying at record highs, central bank intervention, the smart money moving out of stocks, bull run long-in-the-tooth, bond yields rising, etc. etc., reason after reason... but has it ever happened that any of these much discussed reasons is the actual cause of bad stock performance??

It seems to me it is _always_ something else. A liquidity crisis, a pandemic, etc. Stocks never go down just because the ought to... They only go down when there is a genuine surprise the freaks everyone out.


----------



## Ukrainiandude

Eder said:


> if you invested in the best Japanese companies


Which Japanese companies should Japanese investors invest now to be fine in the future?
Who will be the best in future?


----------



## Ukrainiandude

The irony is that when the Fed’s cash flows through the system, it often gets forced into a narrow list of often-illiquid securities and has an outsized effect on prices. It drives indices across asset classes substantially higher and compels other investors to chase prices upwards, which magnifies its impact.

Many of the largest investment managers now track these indices across both bonds and equities. About half the assets under management in US equity funds passively track indices such as the S&P 500, according to Bloomberg Intelligence. Traditional valuation metrics play no role in their decisions.
Unless the spiral is broken by higher interest rates, global liquidity will ultimately bound higher. At the same time, asset allocation has been put on a potentially self-destructive autopilot that ignores sensible investment criteria, so that money is focused on the largest stocks, driving their valuations and sometimes even their owners towards the moon.








The liquidity threat looming over markets in 2022


A higher debt burden in the financial system has institutionalised instability




www.ft.com


----------



## londoncalling

peterk said:


> Could someone tell me - has there _ever_ been a market crash (however that is defined, - 20% or more?) that didn't ostensibly involve some unexpected shock to the system?
> 
> We / the talking heads talk so much about P/E's too high, stocks "overbought", profit taking, put buying at record highs, central bank intervention, the smart money moving out of stocks, bull run long-in-the-tooth, bond yields rising, etc. etc., reason after reason... but has it ever happened that any of these much discussed reasons is the actual cause of bad stock performance??
> 
> It seems to me it is _always_ something else. A liquidity crisis, a pandemic, etc. Stocks never go down just because the ought to... They only go down when there is a genuine surprise the freaks everyone out.


Stocks do go down just because they ought to. It's called reversion to the mean. At a certain point the euphoria ends and the smart money moves on which causes panic selling. Analysts, the media and individual investors like to find the trigger and sometimes it is real but the market is much bigger and more complex than that. Everyday there is news that is the "reason" the market goes up or down. The money doesn't completely disappear,  It usually moves to other assets.


----------



## OptsyEagle

peterk said:


> Could someone tell me - has there _ever_ been a market crash (however that is defined, - 20% or more?) that didn't ostensibly involve some unexpected shock to the system?
> 
> We / the talking heads talk so much about P/E's too high, stocks "overbought", profit taking, put buying at record highs, central bank intervention, the smart money moving out of stocks, bull run long-in-the-tooth, bond yields rising, etc. etc., reason after reason... but has it ever happened that any of these much discussed reasons is the actual cause of bad stock performance??
> 
> It seems to me it is _always_ something else. A liquidity crisis, a pandemic, etc. Stocks never go down just because the ought to... They only go down when there is a genuine surprise the freaks everyone out.


The way I have noticed things is that declines, that constitute a drop of -20% or more, usually are due to something going on in the world that investors are having a hard time quantifying. In other words, it has never happened before or at least never happened in this way and they cannot quantify properly what the final cost will be.

It is rare that stocks go down considerably and quickly simply because they are too expensive. They may fluctuate in a narrow range with a slow downward bias, because of valuations, but for the most part the only time "over valuation" becomes a problem is when one of those new and never seen before problems comes along again. That is when owning overpriced stocks really, really hurts.


----------



## peterk

londoncalling said:


> Stocks do go down just because they ought to. *It's called reversion to the mean. At a certain point the euphoria ends and the smart money moves on which causes panic selling. * Analysts, the media and individual investors like to find the trigger and sometimes it is real but the market is much bigger and more complex than that. Everyday there is news that is the "reason" the market goes up or down. The money doesn't completely disappear, It usually moves to other assets.


Oh ya? So when did that happen, that "smart money moving on" caused a market crash? I don't remember that one, but I'm not that old...

Reversion to the mean isn't exactly a reason is it - just a post-event statistical description of what happened...


----------



## Ukrainiandude




----------



## james4beach

Ukrainiandude said:


> (inflows to equity)


Yes it's really nuts. I've seen this info published by Scotia Capital as well. There has been an unprecedented amount of money pumped into equity funds over the last year.

Definitely a mania of sorts. I hope everyone here has enough non-equity investments as well, because we've seen this story before. When something gets way too popular, it tends to do badly for a while.

Can always do something like XBAL which is a perfectly good way to invest, whether equities are hot or not.


----------



## james4beach

I see that the small cap index (Russell 2000) is plummeting again tonight while the USD strengthens.

Perhaps the year will end with some market weakness.


----------



## Ukrainiandude

Omicron, Chinese construction collapse, BBB failing, historic amounts of margin debt, central bank in a corner on monetary policy for next year, naked shorting fraud, take your pick.
The current stock market is a big house of cards.


----------



## OneSeat

james4beach said:


> Can always do something like XBAL which is a perfectly good way to invest, whether equities are hot or not.


I've gone one step further. Several months ago I split my equity monies 50/50 into XIU and XBAL Then just recently I sold most of my XIU and now have 10% XIU, 50% XBAL and 40% XCNS (which is only 44% Eqty). 

My reasoning being if the market drops then XCNS drops much less than XIU and somewhat less than XBAL. My intent being to watch the market and buy back XIU progressively at lower prices. Similarly with US equities.

Not everyone agrees but it is the way I think.


----------



## Ukrainiandude

OneSeat said:


> if the market drops then XCNS drops much less than XIU


In march 2020 xcns dropped pretty good. I would just keep some cash on HISA and some on brokerage account. But it’s just me.


----------



## Eder

Did my dividend flows get cut? Oh...lol.


----------



## OneSeat

Ukrainiandude said:


> In march 2020 xcns dropped pretty good.


Yes - but much less than XIU etc - so you could still buy back more.

added:
Just this morning XIU dropped 1.57% and XCNS gained 0.09%.
In the last month dropped 4.50% and gained 0.31%


----------



## Ukrainiandude

OneSeat said:


> Yes - but much less than XIU etc - so you could still buy back more.


Why not just hold cash for this purpose? Cash dropped zero.


----------



## londoncalling

peterk said:


> Oh ya? So when did that happen, that "smart money moving on" caused a market crash? I don't remember that one, but I'm not that old...
> 
> Reversion to the mean isn't exactly a reason is it - just a post-event statistical description of what happened...


Perhaps I didn't do a good job in clarifying my post. Stock market corrections happen when markets become severely overpriced. Mean Reversion or the smart money moving on isn't the reason and is in fact a post event description as you have indicated. If you use the 2000s tech bubble as an example, dot com stocks which had negative earnings were trading at ridiculous evaluations. For every buyer there is a seller and vice versa. Often isn't one thing that is the cause of the correction although we will try to find a single catalyst. Although the performance of the market today is certainly nowhere near crash or correction territory many will try to determine why it closed lower than it did last week. Was it Omicron? Infrastructure bill being defeated? Tax loss selling? other? To say that the market cannot be manipulated is foolish. Investment managers have thresholds which limit how much they can buy or sell at a time. Stocks can be halted by exchanges. A more recent and interesting event was the price manipulations of stocks like AMC and Gamestop. To get back to your original question about a shock to the system I would say there is always a reason attributed to the correction.


----------



## fireseeker

peterk said:


> Could someone tell me - has there _ever_ been a market crash (however that is defined, - 20% or more?) that didn't ostensibly involve some unexpected shock to the system?


I'm not sure 1929 had an obvious "unexpected shock." Certainly nothing like the arrival of Covid or 9/11.


----------



## MrBlackhill

5 Sure-Fire Signs Of A Stock Market Bubble | Bankrate


While stocks have shown a serious bounce since the pandemic’s start, this resilience is giving some investors pause. Could we be in a stock market bubble? Could stocks be priced so high that they’re not just overvalued but actually “hot-air-balloon-leaving-the-earth’s-atmosphere” overvalued?



www.bankrate.com


----------



## Ukrainiandude




----------



## KaeJS

Ukrainiandude said:


> View attachment 22525


Housing is not going to explode.
Unfortunately.


----------



## james4beach

fireseeker said:


> I'm not sure 1929 had an obvious "unexpected shock." Certainly nothing like the arrival of Covid or 9/11.


I'm astounded by how stable markets have been, considering that we're in a pretty serious pandemic.

800,000 dead in the US


----------



## Ukrainiandude

james4beach said:


> I'm astounded by how stable markets have bee


This is all very encouraging.
However, the economy will not be affected by the fact that the virus has degenerated to the level of danger we are accustomed to (I really want to hope so), but how quickly mankind, which is characterized by megalomania, will decide to admit that this happened not because of their efforts, but by itself ... It is even more difficult to wind up a business that has developed due to a pandemic and refuse a wonderful opportunity to additionally control citizens.
The effect of interrupting the flow of vaccine money while restoring normal flows is also not fully understood. Changing the structure of the economy is always painful.
Too many unknowns are obtained to predict the impact of this factor on the monetary policy of the United States and other countries.


----------



## doctrine

Omicron is turning into a big nothingburger. COVID deaths right now haven't been lower since October 2020, despite daily case counts actually being at record levels. 

Thus, I think money is buying back in and also why the S&P 500 hit an all time high. Bodes very well for the TSX too.


----------



## Ukrainiandude

doctrine said:


> Thus, I think money is buying back in and also why the S&P 500 hit an all time high. Bodes very well for the TSX too.


You mean credit money? I wonder how credit money will feel when interest rates are raised on par with inflation. 
I anticipate we go back to pre covid level plus annual inflation if we are lucky. The thing is stocks got more expensive but productivity and companies profits remained unchanged.
just my two cents


----------



## james4beach

doctrine said:


> Omicron is turning into a big nothingburger. COVID deaths right now haven't been lower since October 2020, despite daily case counts actually being at record levels.


The omicron wave has only hit the north-east US so far and it's very early in the wave. Other states will start getting it in the coming weeks.

Hospitalizations are now rising, but hopefully they won't rise too much. *This is the big unknown at the moment*. Hospital cases could increase along with the omicron surge, or they might not.

We don't know how that will play out. It's too early to tell.


----------



## doctrine

Ukrainiandude said:


> You mean credit money? I wonder how credit money will feel when interest rates are raised on par with inflation.
> I anticipate we go back to pre covid level plus annual inflation if we are lucky. The thing is stocks got more expensive but productivity and companies profits remained unchanged.
> just my two cents


There is money for sure, but the earnings are way up on the S&P 500. 2021 earnings are tracking to be almost 30% higher than 2019, and 2022 earnings are almost certainly going to be higher, absent a major change in where world economies are going. I'm not saying it's cheap, but it is certainly growing at very good rates.



james4beach said:


> The omicron wave has only hit the north-east US so far and it's very early in the wave. Other states will start getting it in the coming weeks.
> 
> Hospitalizations are now rising, but hopefully they won't rise too much. *This is the big unknown at the moment*. Hospital cases could increase along with the omicron surge, or they might not.
> 
> We don't know how that will play out. It's too early to tell.


I know it's early, but there are billions of dollars looking to trade ahead of the news. There is enough Omnicron in the US and the UK that hospitals should be starting to see big influxes now. The fact that markets are going up suggests to me that all of the big money that is monitoring hospital admission rates in countries with outbreaks likes what they are seeing and are making big bets.


----------



## Ukrainiandude

doctrine said:


> the earnings are way up


Okay let’s check. The number one driver of sp 500 is Apple electronics.
2015 share price was $33
2021 share price is $180
that is six time increase.
earning per share in 2015 was $2.31
earning per share in 2021 is $5.61
that is 2.4 times increase

I blame the printers and subzero interest rates for this augmented reality

please show me “way up” here


----------



## MrBlackhill

doctrine said:


> There is money for sure, but the earnings are way up on the S&P 500. 2021 earnings are tracking to be almost 30% higher than 2019, and 2022 earnings are almost certainly going to be higher, absent a major change in where world economies are going. I'm not saying it's cheap, but it is certainly growing at very good rates.


Well the earnings are definitely not growing fast enough because S&P 500's P/E is currently as high as the peak of the dot-com bubble before it popped.










And what about the Shiller PE? Oops...




























The majority of the stocks that I hold have P/E around 10.


----------



## doctrine

CAPE as a tool has serious problems and is almost universally used by bear analysts or people who are never in the market - and I say this as primarily a value investor. Using CAPE, the market is always expensive and you should sell and wait for a once-in-a-generation market collapse. And while you are comparing P/Es with Dot-Com, also compare interest rates during that period of time. What happens to the value of a 10 year bond when interest rates move from 7% to 1.5%, and how does that impact market valuations?

Look, new market highs today. I am not saying it isn't expensive, to sell, to buy, or whatever. I am just pointing out that markets might not be making all time highs daily if Omicron was a serious threat. There is a ton of eyeballs and analysis on this, it's not like it is a surprise or something that would catch people unaware. Strong economic growth this year, and next year. You just typically do not see markets fall on such positive forward economic momentum.


----------



## MrBlackhill

doctrine said:


> What happens to the value of a 10 year bond when interest rates move from 7% to 1.5%


True, but when interest rates are so low, a slight increase is actually a huge increase. And what happens when you try to increase the policy rate but the 10-year yield is so low? You end up quickly inverting the yield curve. And a slight increase to the policy rate will both make the 10-year yield increase while the inflation decreases, making the real rate suddenly much higher and the ECY suddenly unattractive. See what happened in 2018, but now the situation is even worse and the effect will be even worse, obviously.



















We're in a very bad situation because:

Inflation is high due to both cost-push and demand- pull
Unemployment rate is low
Employment rate is also low
Interest rates are low
There's no doubt that we have to increase the policy rate to reduce inflation and market valuation.


----------



## MrBlackhill

And anyways just look at this one, simply based on investor behavior.


----------



## Ukrainiandude

doctrine said:


> new market highs today. I am not saying it isn't expensive, to sell, to buy, or whatever


Will the sp 500 bubble burst at 5000,6000 or 7000 and how long will it take to get back there? This is the question. It might go to 7000 then burst to 4000 and take another 15 years to reach 7000 again. 
Will be current investors thrilled about that, would they stick to the plan and keep buying? I doubt that, people‘s psychology tells me otherwise. Everyone wants to throw money in when it’s growing, but hardly anyone will buy depreciating assets.


----------



## MrBlackhill

We're in a situation of market timing because this is a bubble. Sure, the bubble can continue inflating, but how many bag holders back in 2000?


----------



## james4beach

MrBlackhill said:


> We're in a situation of market timing because this is a bubble. Sure, the bubble can continue inflating, but how many bag holders back in 2000?


I honestly am shocked that the S&P 500 is hitting new all time highs near the end of the year. Shows how bad I would be at market timing.


----------



## MrBlackhill

james4beach said:


> I honestly am shocked that the S&P 500 is hitting new all time highs near the end of the year. Shows how bad I would be at market timing.


I never thought the drops we've had during December would rebound.


----------



## Eder

I'm shocked there isn't pages of silly graphs posted just now
(maybe its just me)


----------



## james4beach

Eder said:


> I'm shocked there isn't pages of silly graphs posted just now
> (maybe its just me)


My favourite is the Elliot Wave technicals (I think it's silly). You draw these zig zag lines and then count the waves, 1, 2, 3, ... and I think you get rich at #7 or something!


----------



## Ukrainiandude

From vanguard‘s point of view.

Specifically, we are projecting the lowest 10-year annualized returns for global equities since the early 2000s. We expect the lowest ones in the U.S. (2.3%–4.3% per year), with more attractive expected returns for non-U.S. developed markets (5.3%–7.3%) and, to a lesser degree, emerging markets (4.2%–6.2%). The outlook for the global equity risk premium is still positive but lower than we expected last year, with total returns expected in the range of 2 to 4 percentage points over bond returns.


----------



## P_I

Ukrainiandude said:


> From vanguard‘s point of view.
> 
> Specifically, we are projecting the lowest 10-year annualized returns for global equities since the early 2000s. We expect the lowest ones in the U.S. (2.3%–4.3% per year), with more attractive expected returns for non-U.S. developed markets (5.3%–7.3%) and, to a lesser degree, emerging markets (4.2%–6.2%). The outlook for the global equity risk premium is still positive but lower than we expected last year, with total returns expected in the range of 2 to 4 percentage points over bond returns.


Before you accept Vanguard's, or anyone else's, ability to predict the future (it's hard), have you checked the track record?

How did their 2021 projection pan out against what actually happened?

Better still since you are referencing Vanguard's 10-year projection, how did their *2011* 10-year projection track against the reality of what has happened? Does that give you confidence in their 2022 projection?


----------



## Ukrainiandude

P_I said:


> How did their 2021 projection pan out against what actually happened?





https://www.vanguardcanada.ca/documents/vemo-2021-approaching-the-dawn.pdf


----------



## Eder

Most talking heads are predicting pullbacks...Rosenberg is sure -30% is the ticket....most investors I talk to are expecting a down year. Surely this is the year for financial Armageddon as this bull market is closing in on 2 years old already!

Personally I don't much care but anyone under 50 should rejoice.


----------



## m3s

Eder said:


> Surely this is the year for financial Armageddon as this bull market is closing in on 2 years old already!


Nancy Pelosi is loading up with millions in GOOG, DIS, RBLX, MU options

What does she know? Lockdown 2.0? More easy money?

The proverbial sky is falling and she's betting on youtube, cartoons and video games


----------



## londoncalling

m3s said:


> Nancy Pelosi is loading up with millions in GOOG, DIS, RBLX, MU options
> 
> What does she know? Lockdown 2.0? More easy money?
> 
> The proverbial sky is falling and she's betting on youtube, cartoons and video games


Be better if she was buying companies that will benefit from infrastructure spending as at least the US tax payers would get a road, a school or a hospital. Like most gifts people would prefer cash.


----------



## Ukrainiandude

When I hear“efficient market”, I say BS. Market is a one big scam.

IN FEBRUARY , Michigan-based entrepreneur Robert Simpson decided to see what would happen if he bought the entire stock of one company. Using a single broker, within a couple of days Simpson had paid a little over $5,000 for 1,285,050 shares in OTC bulletin board property-development company Global Links. According to Simpson, these shares were delivered into his account shortly afterwards. Yet the following day 37,044,500 Global Links shares were traded on the bulletin board. The next day, 22,471,000 shares were traded. On neither day had Simpson traded a single Global Link share, he insists.

And events surrounding Simpson's investments became yet more confusing. Global Links had only ever issued 1,158,064 shares. Simpson had managed to acquire 126,986 shares that did not exist. How he had managed to be sold more shares than were in issuance is exactly the question Simpson hoped his foray would raise.

Simpson is CEO of OTC bulletin board company Zann Corp, a provider of advanced technology products for niche markets, and has experienced an inexplicable excess shares situation over the past two-and-a-half years. Since November 2003, Zann's stock price has plummeted over 98%. This, Simpson claims, makes no sense since his company has performed relatively well. The reason for this extreme underperformance, Simpson believes, is that his company has been subject to severe naked short selling – where stocks are short sold without having been borrowed before the time of settlement, if at all.

*Law suits pending






Naked shorting: The curious incident of the shares that didn't exist


Shareholders and executives in some of the US's smallest listed companies believe their share prices have been forced down by illegal naked shorting. This has led to a number of lawsuits, claiming unscrupulous behaviour by brokers and market-makers exploiting loopholes in the central clearing…




www.euromoney.com





I would like to hear some explanations of the situation. 




*


----------



## Ukrainiandude

*"Predicting macroeconomics is challenging, to say the least. My gut feel is maybe around spring or summer 2022, but not later than 2023”*
_Elon Musk, December 30th, 2021_


----------



## wayward__son

m3s said:


> Nancy Pelosi is loading up with millions in GOOG, DIS, RBLX, MU options
> 
> What does she know? Lockdown 2.0? More easy money?
> 
> The proverbial sky is falling and she's betting on youtube, cartoons and video games


Public officials running side hustles as prop traders slinging millions in stocks and YOLO calls while making policy that impacts markets -- and noone really caring (although we did have a couple of fed officials quietly resign over the summer) -- is one of my low key crazy stories of 2021.


----------



## m3s

Working age population in the US has rounded off and will start to decline

We are 1995 Japan unless we open the flood gates to immigrants


----------



## Ukrainiandude

Talk of the day: Turkish Finance Minister Nebati believes US Federal Reserve isn’t independent and publicly owned. “It belongs to five families”

__ https://twitter.com/i/web/status/1476441097454952452


----------



## m3s

In Turkey when you borrow Turkish Lira you have to sign and promise you won't use it to buy crypto.

Turkish Lira is collapsing and crypto adoption is booming in Turkey. Erdogan is telling the Turks that everything is under control and volatility is just temporary and transitory. He is urging the citizens to keep their savings in Turkish Lira. I wonder if their GICs rates are increasing thanks to this inflation like beav says will happen

These Turks should learn from sags how to manage inflation by shopping on black friday and goodwill so that it becomes deflation.


----------



## doctrine

P_I said:


> Before you accept Vanguard's, or anyone else's, ability to predict the future (it's hard), have you checked the track record?
> 
> How did their 2021 projection pan out against what actually happened?
> 
> Better still since you are referencing Vanguard's 10-year projection, how did their *2011* 10-year projection track against the reality of what has happened? Does that give you confidence in their 2022 projection?


In 2011 timeframe, Vanguard was predicting 6-9% real return on stocks over the next 10 years, including US equities.

Adjusted for inflation, the actual 10 year real return on the S&P 500 was about 11.8% - significantly above their estimate.

2010-2012 was a special time to be investing - no one wanted to do it, especially in the US. Big debt crisis in Europe, Greece bankrupt, US government default risk and credit rating drop, etc etc. US equities had gone nowhere in 10 years. Vanguard was probably more optimistic than average with a 6-9% call.


----------



## Eder

It has been a nice kick in the pants for us old farts but I feel sorry for the younger generation...this government has screwed them for most likely decades...not a happy new year for them.


----------



## KaeJS

Eder said:


> It has been a nice kick in the pants for us old farts but I feel sorry for the younger generation...this government has screwed them for most likely decades...not a happy new year for them.


The only boomer that understands.
I wish more of them were like you, Eder.


----------



## m3s

I can't imagine starting out as a first time home buyer now

Maybe the "Minister of Middle Class Prosperity" will save them. Looks like he is laughing at their situation behind the mask


----------



## KaeJS

All I think about when I see this stuff is when Kanye said "George Bush does not care about Black people."

Only... The Canadian version is:

"The Canadian Government does not care about young people."


----------



## m3s




----------



## KaeJS

m3s said:


>


He's such a tit.
With the most punchable face I've ever seen.


----------



## Ukrainiandude

Eder said:


> It has been a nice kick in the pants for us old farts but I feel sorry for the younger generation...this government has screwed them for most likely decades...not a happy new year for them.


 You should be the governor of BofC.


----------



## Ukrainiandude

Pelosi’s husband bought Google, Disney call options that would pay off if bull market continues

Pelosi, owner and operator of a San Francisco–based real estate and venture capital investment and consulting firm, purchased between $500,000 and $1 million in call options in Alphabet stock with a strike price of $2,000 and an expiration date of Sept. 16, 2022, about 30% below the closing price of the stock on Dec. 17, 2021, the day of the transaction, according to FactSet. He bought between $250,000 and $500,000 in call options in Micron shares with a strike price of $50 and an identical expiration date, about 45% below the closing price on Dec. 21, the day of the transaction.

The speaker’s husband also bought between $600,000 and $1.25 million in call options in Salesforce with a strike price of $210 and an expiration date of Jan. 20, 2023, about 15% below the stock’s closing price of $247.21 on the day of the transaction, Dec. 20. He bought between $100,000 and $250,000 in call options in Walt Disney shares with a strike price of $130 and an expiration date of Sept. 16, 2022, roughly 13% below the stock’s closing price of $148.76 on the day of the transaction, Dec. 17.

Link to the full story- Pelosi's husband bought Google, Disney call options that would pay off if bull market continues


----------



## MrMatt

KaeJS said:


> "The Canadian Government does not care about young people."


Trudeau only cares about votes, he doesn't care about people, or fairness.
As long as Canadians keep pushing for bad policy, we'll end up with bad policy and bad results.

Young people today are pushing for more bad policy, they've got to smarten up and push for better policies if they want things to get better.
Really there only a few legitimate concerns are 

1. The cost of housing, which is simply politicians listening to NIMBY protestors.
People want to build housing, the governments keep blocking development, and putting in obstacles to investment.
2. Institutional racism and discrimination in the name of "equity". The young people today are totally for racism and discrimination. They refuse to even accept that it's racist to treat people differently because of the colour of their skin.


----------



## KaeJS

MrMatt said:


> Young people today are pushing for more bad policy


This blows my mind.

I work with young people and they vote NDP. All of them. You know what they call me? Hitler. 

They think that voting NDP will somehow benefit them because they get free handouts.

I actually don't understand anything in the world anymore. The only thing that is true and certain is that everyone and everything is effed. =)


----------



## MrMatt

KaeJS said:


> MrMatt said:
> 
> 
> 
> Young people today are pushing for more bad policy, they've got to smarten up and push for better policies if they want things to get better.
> 
> 
> 
> This blows my mind.
> 
> I work with young people and they vote NDP. All of them. You know what they call me? Hitler.
Click to expand...

Well yeah, they're voting for bad policy.
Maybe they'll smarten up with age. The old saying is that as you get older you become more conservative. 
I think it's just that as you gain experience, perspective and context, you realize things are a bit more complicated than you initially thought.

It's almost humorous how they display their ignorance by calling everyone a Nazi, it just goes to show how ignorant they really are.


----------



## KaeJS

I've never been anything but conservative or right.
But definitely the older I get, the more right wing I become.

I voted PPC.

Simply because even the CPC is now a left wing party. Was it a wasted vote? Sure. And I knew that beforehand.

But drastic times call for drastic measures. "settling" is never a solution.


----------



## Eder

The last time things were this pathetic the Reform Party became a reality & a few years later the Liberals got the boot. Looks like it will have to happen again...I'll be supporting Max, as The Toole has been pretty much complicit with Junior & Marge Simpson in the current gutting of Canada. They should all be ashamed.


----------



## MrMatt

KaeJS said:


> I've never been anything but conservative or right.
> But definitely the older I get, the more right wing I become.
> 
> I voted PPC.


PPC isn't very "right wing", they're just not a bunch of racist authoritarians, or the CPC pandering for the socialist vote.


----------



## KaeJS

MrMatt said:


> PPC isn't very "right wing", they're just not a bunch of racist authoritarians, or the CPC pandering for the socialist vote.


Well, thank you.


----------



## Ukrainiandude

KaeJS said:


> I voted PPC


If I knew they had a chance, i would’ve voted them too. Next time I guess. This country needs to be saved.


----------



## KaeJS

Ukrainiandude said:


> If I knew they had a chance, i would’ve voted them too. Next time I guess. This country needs to be saved.


I voted so that there will be a next time.


----------



## MrMatt

Ukrainiandude said:


> If I knew they had a chance, i would’ve voted them too. Next time I guess. This country needs to be saved.


There is no way Trudeau will put out ranked ballot.

Unless he gets angry and wants to torpedo the Liberal party on his way out.


----------



## sags

*No worries....Captain Canada is on the job !*


----------



## james4beach

Eder said:


> I'll be supporting Max


Yeah that fits your MO pretty well


----------



## AltaRed

MrMatt said:


> PPC isn't very "right wing", they're just not a bunch of racist authoritarians, or the CPC pandering for the socialist vote.


I think Wiki has got it about right. Populist, libertarian and selfish. A non-starter fringe element, not at all Canadian mainstream.


----------



## Spudd

May I suggest that a moderator move the latest series of posts to the Politics thread? It's pretty off-topic for this thread.


----------



## m3s

Spudd said:


> May I suggest that a moderator move the latest series of posts to the Politics thread? It's pretty off-topic for this thread.


If you don't think government and central bankster policy have anything to do with the topic of all time highs during a pandemic when everyone was staying at home.. I got news for you


----------



## MrMatt

AltaRed said:


> I think Wiki has got it about right. Populist, libertarian and selfish. A non-starter fringe element, not at all Canadian mainstream.


I'd unfortunately mostly agree.









Liberalism is being increasingly perceived as a "far-right" ideology.


I also unfortunately agree they're the only party listed as "Canadian Nationalism", which is a really sad state.
*Canadian nationalism* seeks to promote the unity, independence, and well-being of Canada and the Canadian people.


----------



## Eder

I think that the PPC may do better than the support of 5% of voting Canadians next time. Many like me voted strategically rather than vote for the economy. At any rate that is for a future election...we have to survive 3 more years of steaming piles of Liberal generated debt first.


----------



## KaeJS

Eder said:


> I think that the PPC may do better than the support of 5% of voting Canadians next time. Many like me voted strategically rather than vote for the economy. At any rate that is for a future election...we have to survive 3 more years of steaming piles of Liberal generated debt first.


Survive 3 more years?

We're already pretty much dead.


----------



## wayward__son

I am a lifelong leftie but never much liked Trudeau and think "You'll forgive me if i don't think about monetary policy" should have been an immediately fireable offense given how important monetary policy is to the lives of Canadians in so many ways. As an aside, being a leftie I am no free market fundamentalist, but I am still baffled that the price (interest rates) of the most important economic commodity (money) is still set by a few old guys in suits. That is soviet politburo type stuff and no, i am not that much of a leftie that this would make sense to me. Chrystia Freeland referring to Canadians' savings as "preloaded stimulus" to be unlocked by the federal government was equally repugnant to me for other reasons.

Anyway, there is no need to be upset. Just take steps to protect yourself if you can. Indeed, those with nimbleness of mind and spirit may even be able to profit from the dislocations and general chaos of our age, although it probably takes a bit of luck too.


----------



## sags

Are you sure you want the PM to dictate to the BOC what the monetary policy should be ?

Trump tried that in the US....demanding the Fed lower interest rates to goose the economy and increase his re-election chances.


----------



## wayward__son

sags said:


> Are you sure you want the PM to dictate to the BOC what the monetary policy should be ?


is that what i said?


----------



## Ukrainiandude

People don’t remember 
The SP500 was at 1400 in 2000 and it was still at 1400 in 2012

Even in the USA from about 1966 to about 1982 the market was down for over 15 years.

Also from 1932 to about 1954 - 22 years.

SP500 , 2021 4800, and 2032 4800 ??? It’s possible isn’t it.


----------



## MrBlackhill

Ukrainiandude said:


> SP500 , 2021 4800, and 2032 4800 ??? It’s possible isn’t it.


Not only is it possible, it's actually very likely to happen.


----------



## Eder

If the TSX is flat for the next 15 years I’ll be just fine
One nice thing about living on dividends


----------



## KaeJS

Ukrainiandude said:


> People don’t remember
> The SP500 was at 1400 in 2000 and it was still at 1400 in 2012
> 
> Even in the USA from about 1966 to about 1982 the market was down for over 15 years.
> 
> Also from 1932 to about 1954 - 22 years.
> 
> SP500 , 2021 4800, and 2032 4800 ??? It’s possible isn’t it.


I have a business newspaper from 2011, I believe.

And yes, the SPX was 1400. I refuse to throw it out.


----------



## doctrine

Ukrainiandude said:


> People don’t remember
> The SP500 was at 1400 in 2000 and it was still at 1400 in 2012
> 
> Even in the USA from about 1966 to about 1982 the market was down for over 15 years.
> 
> Also from 1932 to about 1954 - 22 years.
> 
> SP500 , 2021 4800, and 2032 4800 ??? It’s possible isn’t it.


Yes, I remember the investing climate in 2011 quite well. The S&P 500 had no return for a decade. Don't forget to survey the market climate from that time when considering it. Many were concluding that the US was "done", that you could not make money in US stocks, and that the US stock market was past its prime, and that the future was elsewhere. So, to actually invest and take advantage of the jump from 1400 to 4800, well, easier said than done. 

Maybe the S&P 500 will still be 4800 in 2032. I wouldn't necessarily bet against it. But I wouldn't bet on it being 1400 in 2032 either.


----------



## Ukrainiandude

*Samsung made the OLED display, NAND flash, and DRAM chips in the iPhone*. It's currently the only company capable of manufacturing these items at the volume that Apple needs.
Samsung Electro-Mechanics will be supplying the lenses for the iPhone 12 cameras, more specifically 6P lenses, while next year it will provide 5P to 7P ones for the iPhone 13 series. Famed Apple analyst Ming-Chi Kuo already tipped that it will be an iPhone 14 model that will get periscope zoom lenses at the earliest, and the Korean report confirms that they will be provided by Samsung, too.

now interesting part, Samsung makes more money (16 PE plus 4% dividend) than apple by Samsung shareholders don’t feel it (share price lost almost 10% last year). 
market cap of the Apple hit 3 trillion dollar today, while Samsung, company that makes iPhones only 0.5 t

that how “efficient market“ works. 
no index in the world got this much advertisement as American


----------



## james4beach

doctrine said:


> Yes, I remember the investing climate in 2011 quite well. The S&P 500 had no return for a decade. Don't forget to survey the market climate from that time when considering it. Many were concluding that the US was "done", that you could not make money in US stocks, and that the US stock market was past its prime, and that the future was elsewhere. So, to actually invest and take advantage of the jump from 1400 to 4800, well, easier said than done.


It's funny how the mood of the day changes, and how it's quickly forgotten as well.

It wasn't too long ago, and there are many threads on this at CMF, when the Canadian index looked like it was going nowhere. People posted about how the Canadian index was broken and there was no point investing in Canadian equities.

But now the 3 year return of XIC is 18% per year, and the 10 year return is a pretty amazing 9%.

It's just human nature. People give up, abandon (and sell) an asset when it's disappointing, and then miss out.


----------



## Ukrainiandude

james4beach said:


> how the mood of the day changes


Could not agree more. Last year January, everyone was talking green energy, ICLN, and how oil is dirty and going to disappear (overnight)
now the mood changed, now everyone is talking about selling all and going into SPY, VOO etc.
I would be surprised if we going to finish 2022 with negative returns (SPY,) and people will be bashing them up in one year.
Everyone wants to buy what Is going up. No one wants to buy depreciating assets.


----------



## Eder

Some of us haven't changed their mood in the last 14 years.


----------



## james4beach

Eder said:


> Some of us haven't changed their mood in the last 14 years.


That's the best way to invest. Stick with an existing plan and don't keep responding to themes or hypes of the day.


----------



## Ponderling

The same routine for me every 6 months. 

Look at the 11 sub indices we hold individual positions in. Each sub has 5-6 different stock holdings. 

Sub indices bigger than 9% get hair cut, either from the tallest poppies, or sell the weakest runt wholesale. 

Then take that cash and reinforce groups running well under 9%. 

Here do we buy more of ex holdings or look for a new position that has been beat down that looks to have some sun in the wings. That is one of the harder steps.

Then we look at how we are over all balanced. 

I aim about 16% int'l 16% usa, and 16% maple. Then rest is bonds, reits and preferreds, and the mix there is also adjusted. 

Keeping the overall boat even means you you are best ready for waves regardless of what direction they come from.


----------



## Ukrainiandude

Today’s FOMC minutes make clear that discussions about more than three rate hikes and outright quantitative tightening this year are on the table,"

I am surprised that “efficient market” still reacts to blablabla.

NASDAQ -3.34%
SPY -2%
Dow -400 points (1%)


----------



## MrBlackhill

Yup. As I keep saying, growth stocks will be riskier than ever this year and in 2023.


----------



## Ukrainiandude

How much of growth stocks are in SP500? 


MrBlackhill said:


> growth stocks


----------



## MrBlackhill

Ukrainiandude said:


> How much of growth stocks are in SP500?


That's SPY









And that's QQQ


----------



## doctrine

New ATH for me, so yes still enjoying the highs, as I am very heavily weighted to value, a.k.a. energy, financials, and materials/cyclicals. Also of note these areas did pretty well after the dot com bust; energy went on a tear for 6 years.


----------



## MrBlackhill

MrBlackhill said:


> Yup. As I keep saying, growth stocks will be riskier than ever this year and in 2023.
> 
> View attachment 22616













And NASDAQ is now at -8% YTD on the 6th day of the year. And currently on a -10% drawdown from all-time high.


----------



## Ukrainiandude

Growth stocks. Some of them even make money.

BABA -60% from ATH
BYND -70% from ATH
NIO -53% from ATH
SNAP -55% from ATH
SPCE -83% from ATH
SPOT -43% from ATH
SQ -55% from ATH
PLTR -65% from ATH
PLUG -70% from ATH
PTON -82% from ATH
PYPL -42% from ATH
ZM -65% from ATH


----------



## m3s

Ok

Let's make this guy the Finance Minister already.


__ https://twitter.com/i/web/status/1482697895774076930
The first MP that speaks something besides hand waving boomer economics


----------



## Ukrainiandude

m3s said:


> Let's make this guy the Finance Minister already.


The money should be something that can only be increased by the amount of GDP growth. 
Current PM is as disastrous and dangerous for the economy as his father was. Probably even more oblivious to economic laws.


----------



## KaeJS

I'm surprised someone hasn't punched him in the face yet.


----------



## Tostig

KaeJS said:


> I'm surprised someone hasn't punched him in the face yet.


Throwing pebbles at him isn't enough for you? This is the kind of Canada you want?


----------



## Ukrainiandude

Anyone is taking some profits in financials? Bank stocks are insane. More than doubled in the last 2 years. Unhealthy? Or banks are now making double money? I doubt that.


----------



## Benting

Ukrainiandude said:


> Anyone is taking some profits in financials? Bank stocks are insane. More than doubled in the last 2 years. Unhealthy? Or banks are now making double money? I doubt that.


Well, people have been calling me nuts when I told them I have more than 90% bank stocks in my portfolio....,,


----------



## Ukrainiandude

Benting said:


> Well, people have been calling me nuts when I told them I have more than 90% bank stocks in my portfolio....,,


You could ask Germans what they think of Deutsche bank shares as an investment.


----------



## m3s

Canadian banks are very lucrative because they are a protected oligarchy running on archaic mainframes and can lend magic money that doesn't actually exist

Eventually Canadians will want access to the same innovation that is blooming in other countries. SHOP will be a shorter flash in the pan than Nortel and Blackberry if we don't learn from our ignorance

Pierre sees this coming. He is setting up for a long term career in politics unlike the boomers who will fade away into luxurious LTC facilities


----------



## doctrine

Ukrainiandude said:


> Anyone is taking some profits in financials? Bank stocks are insane. More than doubled in the last 2 years. Unhealthy? Or banks are now making double money? I doubt that.


As always, it's hard to predict. I prefer to hold bank stocks when they are more expensive, and buy them when they are on sale, which comes around every couple of years. My last bank purchases were in 2020; BMO at $63, BNS at $50, CIBC at $78, RY at $87. So while I might not buy BNS at $93 today, I am not really interested in selling, because you just never know when to get back in. What if it drops to $80, and you think "I'll wait for $75", and it goes to $100? Whoops.


----------



## milhouse

Ukrainiandude said:


> Anyone is taking some profits in financials? Bank stocks are insane. More than doubled in the last 2 years. Unhealthy? Or banks are now making double money? I doubt that.


Just to nitpick, if you are going to ask if banks are making double earnings because their share price has doubled from their lows during the pandemic, you also need to ask if banks made 40% less when their share price dropped correspondingly from their pre-pandemic price levels.

Instead, I think the more fair numbers to use are pre-pandemic to now which show more like a 50% gain. That said, I don't think you'll see that earning have grown 50% from 2019 to today. However, IIRC, pre-pandemic, bank share prices had stalled for a couple of years. Steve Eisman of the Big Short fame was shorting the Canadian bank stocks in 2019 expecting a normalization of the credit credit cycle with earnings needing to be allocated to reserves to account for bad loans. With OFSI imposing its dividend and share buyback restrictions on financial institutions to build up capital reserves for pandemic armageddon, government stimulus, and then the worst not happening, banks are now flush with cash and don't need to allocate more earnings to bad loans which is now the opposite of what Eisman was basing his short on.
And no, I am not advocating buying bank stocks based on this.


----------



## Eder

They seem crazy pricey for new money but I’m not selling any either as long as they continue spewing more and more dividends my way

My kids will be happy executors and sell them once I croak


----------



## AltaRed

I suspect my Executor will do the same thing.


----------



## KaeJS

Tostig said:


> Throwing pebbles at him isn't enough for you? This is the kind of Canada you want?


I'll tell what Canada I don't want; the one we have right now.


----------



## KaeJS

I have been nibbling on some banks here and there, but am finding it difficult to justify these prices. I last bought some BMO at $131 and RY at $141... 

I tried to get CM at $159 but it ran away from me and I don't want to pay over 160.

Honestly, the best deal right now looks like National Bank. I'm overweight BNS so won't be adding anymore for a while.


----------



## Tostig

KaeJS said:


> I'll tell what Canada I don't want; the one we have right now.


Are you trying to get a regime change?

Would you be organizing a coalition of international forces to invade Canada or just a group of domestic terrorists to throw stones, throw punches or to vandalize constituency offices?


----------



## Ukrainiandude

Everyone is fleeing to safety of DLR 
Hopefully we going to get back soon to normal pre covid valuation.


----------



## MrBlackhill

A bit of reading about bubbles:









Let The Wild Rumpus Begin*


Today in the U.S. we are in the fourth superbubble of the last hundred years, and for the first time in the U.S. we have simultaneous bubbles across all major asset classes.



www.gmo.com





Note: He has been bearish many times in the past. Though I believe he might be right this time... I also believe in a crash within the next 2 years. But maybe I'm as wrong as he has been in the past.


----------



## Ukrainiandude




----------



## MrMatt

Just to keep it on topic, yes I'm loving these highs.
I'm still WAY up on my portfolio even with the relatively poor YTD performance.


----------



## KaeJS

I'm hoping shyt bleeds.

But I think we will see the bleeding stop this week.


----------



## m3s

MrMatt said:


> I'm still WAY up on my portfolio even with the relatively poor YTD performance.


Yup



KaeJS said:


> But I think we will see the bleeding stop this week.


This happened leading up to the Fed meetings before just not as pronounced


----------



## Eder

I'm happy with a 20% correction if we can get there...at least then there would be a few reasonable dividends to buy...its crazy how fast my net worth has increased. Of course I said that when the TSX hit 16k as well.


----------



## Ukrainiandude

Eder said:


> I'm happy with a 20% correction if we can get there...at least then there would be a few reasonable dividends to buy...its crazy how fast my net worth has increased. Of course I said that when the TSX hit 16k as well.


Let’s hope for 30-40% and then ten plus years to reach 2021 highs.


----------



## MrBlackhill

NASDAQ approaching bear market territory (-20% drop). Currently at -18%. If NASDAQ drops below 13,000, it'll be going into bear market.

S&P 500 now in correction territory (-10% drop). Currently at -11%.


----------



## doctrine

Corrections are usually good places to look at rebalancing. If nothing is too out of whack, you can wait to see if a bear market comes. Corrections are typical every 1-2 years so this one was definitely due and looks like a solid one too.


----------



## Ukrainiandude

doctrine said:


> Corrections are typical every 1-2 years so this one was definitely due and looks like a solid one too.


Let’s hope this will take at least ten years to get back to 2021 highs


----------



## Jimmy

I wonder if now is a good time to add or wait? I think the market is pricing in a war w Ukraine after Biden's recent moves. I think this is all sabre rattling and cooler heads will prevail.

Read in a cash management article, when the market falls by 15% every 2 years or so use ~ 20% of your available cash.


----------



## londoncalling

doctrine said:


> Corrections are usually good places to look at rebalancing. If nothing is too out of whack, you can wait to see if a bear market comes. Corrections are typical every 1-2 years so this one was definitely due and looks like a solid one too.


I did some portfolio shifts in December January but also reduced my cash position a bit early. This is a habit that I have developed over the years. In order to combat this I have increased my target cash weighting from 5 to 10% over the years. Always a conundrum in dealing with cash drag vs. being fully invested. Today's red in the market helps increase that cash weighting so that I can buy more and my portfolio has a higher yield as well.  Being facetious with that last comment as it is total return that matters. 

I am still amazed that the possibility of a .25% increase can move markets this much in the short term (perhaps 1 - 1.5% this year). Will this scare off the B of C from raising this week? I still want them to raise in January as I think longer term it is the right move. If they don't raise rates now what tools will they have to use when the next recession hits.

Like Jimmy, the dilemma now is to add or wait. I am going to spend today on the sidelines as I think there will be more panic selling leading up to Wednesday. May make a purchase or two tomorrow. I have some cash to deploy in February. Looking at adding to MFC and starting a position ATD. Would like to get into MSFT or APPL but at a price much lower than here. Same with Industrials.


----------



## wayward__son

londoncalling said:


> I am still amazed that the possibility of a .25% increase can move markets this much in the short term (perhaps 1 - 1.5% this year).


same. Guess it’s just a sign of how levered to the gills we are. Should be an interesting year.


----------



## m3s

Every time central banks try to raise rates there is a taper tantrum. If you zoom out several decades the rates just drop then never regain again

0.25% is nothing but over reacting means rates will stay rock bottom


----------



## Ukrainiandude

Added to VT VOO QQQM XEQT 
I like this game. Keep it cheap, don’t recover next ten years, let weed out boomers out of stocks.


----------



## MrBlackhill

0.25% may be nothing, but it's doubling the Policy Interest Rate, lol...

And when 10-year yields are not even at 2%, then increasing the Policy Interest Rate by only 0.25% is huge. A Policy Interest Rate rising by more than 10% of the current 10-year yield, lol...

I'm not arguing that they shouldn't raise rates, they should, I'm just pointing that with rates so low, we are in deep sh*t.

Will we ever see 10-year yields back above 5%? HAHAHAHAHA, hilarious!

The rich controls this world and won't allow such a thing to happen.


----------



## MrBlackhill

MrBlackhill said:


> MrBlackhill said:
> 
> 
> 
> Yup. As I keep saying, growth stocks will be riskier than ever this year and in 2023.
> 
> View attachment 22616
> 
> 
> 
> 
> View attachment 22650
> 
> 
> 
> And NASDAQ is now at -8% YTD on the 6th day of the year. And currently on a -10% drawdown from all-time high.
Click to expand...

You can't say that I haven't told you enough times to get out of Large Cap Growth.










Just saw NASDAQ down by... -4.90%

This is going to end bad.


----------



## m3s

Taper Tantrum 2.0

Your move JPow


----------



## londoncalling

MrBlackhill said:


> 0.25% may be nothing, but it's doubling the Policy Interest Rate, lol...
> 
> And when 10-year yields are not even at 2%, then increasing the Policy Interest Rate by only 0.25% is huge. A Policy Interest Rate rising by more than 10% of the current 10-year yield, lol...
> 
> I'm not arguing that they shouldn't raise rates, they should, I'm just pointing that with rates so low, we are in deep sh*t.
> 
> Will we ever see 10-year yields back above 5%? HAHAHAHAHA, hilarious!
> 
> The rich controls this world and won't allow such a thing to happen.


Valid point. 

Are we headed into a correction, a crash or a long term recession? 

In some ways the economy is doing well aside from Covid disruption. However, I think there is a lot of possibility for the smallest disruption to result in big trouble. If we look at the charts prices for most stocks are not much below where they were 6 months ago. If people are freaking out now. what happens when they get to where we were in 2020 and the BOC and FED have no room to cut. Just keep printing and let inflation run wild while wage growth (real or nominal) remain flat?

If one searches the forum they will find threads going back 5-10 years talking about NA moving to a no growth market like Japan experienced. A lot of this was due to demographics, shift in economic policy etc. A generation were unable to find good jobs, invest, buy real estate etc. and its market returned next to nothing.


----------



## Ukrainiandude

m3s said:


> Taper Tantrum 2.0
> 
> Your move JPow


I think he won’t do anything. The majority of equities in the USA are concentrated in small number of wealth individuals, mostly republicans supporters.
Vs inflation affects mild and poor class, who traditionally vote democrats. 
current government interested in targeting the inflation more that market sell off. 
just my opinion.


----------



## wayward__son

Ukrainiandude said:


> I think he won’t do anything. The majority of equities in the USA are concentrated in small number of wealth individuals, mostly republicans supporters.
> Vs inflation affects mild and poor class, who traditionally vote democrats.
> current government interested in targeting the inflation more that market sell off.
> just my opinion.


The team at Pelosi Capital Management does not support this plan, haha


----------



## Ukrainiandude

wayward__son said:


> The team at Pelosi Capital Management does not support this plan, haha


Neither does my grandma.


----------



## Jimmy

Didn't want to add much today as I think waiting to hear what Jerome Powell says makes the most sense. If it is bad news, stocks may fall a little more and a better time to add.

If it is good news stocks will rise but still be oversold and good values. Win win situation. The market really calmed down in the afternoon, Nasdaq only down .6%


----------



## londoncalling

I am trying to find if there was any rotation in the market or just a fun ride down and back up. So far looks like a brief dip across the board.


----------



## doctrine

There is no fundamental reason for a drop, which means this is emotional trading and definitely should be bought. Even if Russia invades Ukraine and there is a ton of sanctions, I don't see economic recession. COVID mandates are dropping like flies, the world is opening up, at least for now. I would not be surprised to see new highs before spring is over. 

Interest rate hikes cause short term fear but in the long run they are good for economic growth and markets will realize this, just like in every other taper tantrum.


----------



## MrBlackhill

doctrine said:


> There is no fundamental reason for a drop, which means this is emotional trading and definitely should be bought. Even if Russia invades Ukraine and there is a ton of sanctions, I don't see economic recession. COVID mandates are dropping like flies, the world is opening up, at least for now. I would not be surprised to see new highs before spring is over.
> 
> Interest rate hikes cause short term fear but in the long run they are good for economic growth and markets will realize this, just like in every other taper tantrum.


I also believe that this is just a big correction, and it'll be short-lived. We need much more than just a first interest rate hike to cause a real market crash and recession. When the policy rate will be back around 1.5%, now that could be truly dangerous for the market, depending how fast it gets there.


----------



## m3s

You've heard of buy the rumour sell the news? What if the expected news is bad?

How about sell the rumour buy the news? If the news isn't as bad as expected the market can climb on "bad" news

JPow looks sternly at the elephant as he loads another pellet


----------



## Eder

doctrine said:


> Even if Russia invades Ukraine and there is a ton of sanctions,


Dr Oil says theres no chance of this.


----------



## Ukrainiandude

doctrine said:


> There is no fundamental reason for a drop


Those fundamental are called margin calls, reduction of stimulus money and more expensive to invest on borrowed money very soon. It all adds up.


----------



## Jimmy

I think the market had priced in all the interest rate hikes for this year w the drops last week. It showed up in 10 yr bond yields rising to ~ 1.8%.

I think the market fell today because of the Ukraine activities over the weekend and fear of what J Powell will do w the tapering. Tapering is the Fed reducing the bond purchasing or even selling bonds AFAIK, which will send prices down more and yields up higher. I think the new fear is yields getting into the ~ 2.2 -2.5 % range soon.

Either way, there maybe a little more downside w the worst being absorbed then we should hopefully have a good run for the rest of the year. News can't get any worse than interest rate hikes and a threat of war.


----------



## Ukrainiandude




----------



## Ukrainiandude

Today’s end of the day “recovery” was mostly brought by little guys buying, no institutional interest , plus Unusually High volume aftermarket activity (smart money selling?), probably gonna be another red day tomorrow or Wednesday. We will see.


----------



## AltaRed

I see 2022 is a consolidation of the large gains in 2021 with 1 or 2 corrections. I don't think there is any real chance of a recession but there is a real chance the broad market ends lower this year. I don't really care given the size of 2021 gains. Most boomers would still be looking for market gains with median age about 65. Oldest boomers will be 76 this year and likely the only ones shedding equities to any significant degree.


----------



## james4beach

AltaRed said:


> I see 2022 is a consolidation of the large gains in 2021 with 1 or 2 corrections.


Yes that would make sense. We didn't have any corrections in 2021, the market just went straight up.

It would be totally normal to get a couple drops of a few %. It will be enough to spook people, which is good. Investors have been soothed for the last two years with very calm moves and no volatility. That lulls people into a false sense of security and (from what I've seen in the past) also tends to make them more skittish when volatility emerges again.

Slapping investors with some volatility is healthy. It should deter people from greedy, excessive risk-taking.

I suspect that stocks will be positive by the end of this year, or maybe somewhere in the -5% / +5% band.


----------



## afulldeck

Ukrainiandude said:


> Let’s hope for 30-40% and then ten plus years to reach 2021 highs.


Why? 

In any case unlikely to take 10 years...


----------



## Ukrainiandude

afulldeck said:


> Why?


we could buy cheaper 


afulldeck said:


> In any case unlikely to take 10 years...


Yeah, that is what they said in 2001.


----------



## afulldeck

Ukrainiandude said:


> we could buy cheaper
> 
> Yeah, that is what they said in 2001.


I get the buy cheaper, but why would you wish it to stay down for 10 years. It hurt those 55-65, maybe even younger and does not bode well for a recovery.


----------



## Ukrainiandude

afulldeck said:


> those 55-65


Should keep money in GIC and HISAs.


----------



## MrBlackhill

Ukrainiandude said:


> Yeah, that is what they said in 2001.


People who were diversified never experienced such a drawdown (10+ years) over the past 50 years, only those who held NASDAQ. If you held S&P500 the longest was 6 years. Fun fact, if you held US Small Cap Value then you never experienced even a 4-year drawdown, meanwhile you generated the best long-term returns.


----------



## AltaRed

Markets have always trended to the northeast and that has been true for a number of decades on a global basis, even if the USA had a rough decade after the dotcom bust. The market isn't always about the USA. Norm's Asset Mixer proves that point. The key is to accept there will be corrections and even bears in the equity markets along the way. Take advantage of them when they occur but forget the nonsense on trying to predict when and where and how deep.


----------



## Ukrainiandude

MrBlackhill said:


> US Small Cap Value


 Aye aye captain, avuv is on my watch list. Will add if/when it gets lower to the price I am willing to pay.


----------



## james4beach

MrBlackhill said:


> People who were diversified never experienced such a drawdown (10+ years) over the past 50 years, only those who held NASDAQ. If you held S&P500 the longest was 6 years. Fun fact, if you held US Small Cap Value then you never experienced even a 4-year drawdown, meanwhile you generated the best long-term returns.


And holding both the S&P 500 and TSX would have really made the 2000 bear market easier to handle.

Counting from the 2000 peak,
2001 return -10.8%
2002 return -18.5%
2003 return +15.2%
2004 return +7.9%
2005 return +13.4% at this point the investor is back to positive

I think anyone investing in stocks should be able to handle 5 years of red.


----------



## Ukrainiandude

Based on this SP500 is likely to underperform this year. Any HISA will do better in this environment.


----------



## MrMatt

The current market is a great reminder on time horizon and volatility.

While short of my all time high, I'm still very nicely up, and ahead of the comparable indexes.

Anyone who thinks a 10% drop is concerning, particularly since the 5yr performance has been pretty good.
Admittedly the TSX has been weaker than the US exchanges, but still not too bad IMO.


----------



## james4beach

MrMatt said:


> Anyone who thinks a 10% drop is concerning, particularly since the 5yr performance has been pretty good.
> Admittedly the TSX has been weaker than the US exchanges, but still not too bad IMO.


The TSX hasn't been that weak. For the last 1 year, XIC is up 21% which outperforms the S&P 500 priced in CAD, up 18%


----------



## MrMatt

james4beach said:


> The TSX hasn't been that weak. For the last 1 year, XIC is up 21% which outperforms the S&P 500 priced in CAD, up 18%


34% over 5 years isn't very strong.
I think 1yr performance is an inappropriate timeframe for an equity portfolio.


----------



## james4beach

MrMatt said:


> 34% over 5 years isn't very strong.
> I think 1yr performance is an inappropriate timeframe for an equity portfolio.


You're right, we should look at longer periods like at least 5 years. But I still think the TSX performance is quite strong in the global context. The US is the outlier.

Here's 5 year annualized return:

ZSP (S&P 500 index) 15.11%
*XIC (TSX Composite) 9.15%*
ZEM (emerging mkts) 7.45%
XEF (MSCI EAFE) 7.03%


----------



## AltaRed

The S&P500 is the outlier due to its technology stock component. Those sorts of double digit returns are not sustainable. A decent broad index CAGR going forward will be single digit.


----------



## marina628

I am up 168.89% in past 11 years but last month lost 11% .As many of you know we sold our business for a huge chunk a few years ago and it was a slow process investing the cash after taxes in the stock market .Everyone around me said I should get professional advise for managing the assets but I am a gambler at heart .BTW I am not as active here as I started a new business and that one is probably going to be sold for $1.5 million or so in a year or two .I will be 55 next week and my plan is to work until I am 60 then I will start drawing down some money but I have been able to earn more than we need so it is likely going to be something the kids get to enjoy lol.


----------



## james4beach

marina628 said:


> BTW I am not as active here as I started a new business and that one is probably going to be sold for $1.5 million or so in a year or two


You seem to do some amazing stuff as an entrepreneur. Can you give us any hints about what this business involves? What kind of product or service?


----------



## marina628

james4beach said:


> You seem to do some amazing stuff as an entrepreneur. Can you give us any hints about what this business involves? What kind of product or service?


James my business has a couple components to it but affiliate marketing is one of them ,for instance for this time of year I earn quite a bit off software like Quicktax as we rank for these keywords in search engines. I also have 400+ websites all with mailing lists so if you want proactive solution and buy from us , we send you mailers on other relatable products ,some times i get a % of the sale up to as much as 45% and other times it is a CPA (Cost per acquisition) .We also do media buying for larger companies ,they give us their monthly budget we place their ads and we get paid a fixed fee on this .It is not a quick and easy way to make money my average monthly spending on ads are around $40,000 USD ,which is just for my websites not for my clients .


----------



## james4beach

marina628 said:


> James my business has a couple components to it but affiliate marketing is one of them ,for instance for this time of year I earn quite a bit off software like Quicktax as we rank for these keywords in search engines


Interesting. Back around 2003-2008, I used to make a lot of money off web advertising through my own network of web sites. It was a few thousand $ a month at times, almost became a full time income. But then something happened around 2008-2009, and this income plummeted and I found people weren't willing to pay me for web advertising any more.


----------



## Ukrainiandude

james4beach said:


> web advertising


I am not sure, who’s still watching internet advertisements, simply installing UBlock Origin in your favourite web browser or switch to Brave browser, completely eliminates annoying ads, including those on YouTube.


----------



## james4beach

Ukrainiandude said:


> I am not sure, who’s still watching internet advertisements, simply installing UBlock Origin in your favourite web browser or switch to Brave browser, completely eliminates annoying ads, including those on YouTube.


Yeah I'm the same way, I never see web ads. Anywhere. And I really am astounded that people still browse and see ads!

I use Adblock Plus with Chrome and have found it to be reliable. Youtube is extremely pleasant without ads.


----------



## fstamand

What are your strategies during this volatility and uncertainty?

Sometimes it baffles me that markets can keep up with these highs.


----------



## Thal81

fstamand said:


> What are your strategies during this volatility and uncertainty?


Stay the course. It seems the only bad news are coming out of the tech sector (FB, SHOP, etc), but the rest are doing fine. I see fat dividend increases everywhere, Covid restrictions are going away, so people will go out and spend more. I'm quite optimistic for the rest of 2022.


----------



## james4beach

Wow some stock markets are down really hard right now as Russia invades Ukraine

*Thursday February 24*
Germany and France both down 4.5%
Russia down about 40% (yes forty percent)
American futures are only down 2% so far

Looks like Putin may have destroyed the wealth of the Russian middle class.

I suspect that the Canadian index won't be down too much today. We are very lucky to be naturally "hedged" due to commodities. Oil and miners both make up a hefty amount of the Canadian stock market and both appear to be strong. Additionally, as global money flees Russian capital markets, they may choose Canadian and Australian replacements. We are safe and stable countries.


----------



## fstamand

I wonder if we'll see circuit breakers today.


----------



## MrBlackhill

james4beach said:


> Russia down about 40% (yes forty percent)


----------



## james4beach

lol, it looks like SHOP is one of the bright spots in the Canadian market today. If it wasn't for SHOP's 3% gain, the Canadian index would be down pretty hard.


----------



## Tostig

james4beach said:


> lol, it looks like SHOP is one of the bright spots in the Canadian market today. If it wasn't for SHOP's 3% gain, the Canadian index would be down pretty hard.


Giving XIT a boost of 1.8%.


----------



## james4beach

Wow look at tech stocks go, QQQ up 3% today!

I guess the outbreak of war in Europe is great for stocks. Nothing can stop the stock market, ever!

SHOP +6%
ROKU +14%
RIVN +10%
RBLX +10%


----------



## doctrine

War is typically not bad for stocks, even if it causes some short term blips, the algos have almost certainly figured out its a buying opportunity too.


----------



## Thal81

doctrine said:


> War is typically not bad for stocks, even if it causes some short term blips, the algos have almost certainly figured out its a buying opportunity too.


Wars are not bad for stocks unless you're on the losing side...


----------



## james4beach

It seems to me that European and Emerging markets are really tanking hard now. When I look at the chart, I see big selloffs in MSCI EAFE as well as emerging.

The US and Canada are holding up much better than other global markets. My guess is there's a flight-to-safety from European and emerging equities into the US (due to European war), and Canadian equities are supported by commodities.

Here's the MSCI EAFE for example, ouch. This is approaching a 20% decline.


----------



## MrBlackhill

james4beach said:


> Canadian equities are supported by commodities.


Yes, Canada is standing strong with Energy, Materials and Financials.

US is down something like -12% but that's due to their growth overvaluation
EAFE is down something like -15%
EM is down something like -10%

I'm trying to find a market which is not down by -10% YTD... Oh, found it! Canada is up +1%! Hehehe!


----------



## doctrine

EAFE is also far more exposed to the energy crisis. Europe and Asian countries almost exclusively rely on imports of energy. Europe Nat Gas hit $600 a barrel energy equivalent today. Still, they are paying it, rather than letting the power go out.

The US would have been exposed in the past but remains the world's largest producer of oil, and is about to become the world's largest exporter of LNG.


----------



## james4beach

MrBlackhill said:


> I'm trying to find a market which is not down by -10% YTD... Oh, found it! Canada is up +1%! Hehehe!


Thought I'd post some stats on the drawdowns on a CAD basis. From best to worse / most severe drawdown. This is from the peak price, not YTD.

Canada, XIC .... -1.1%
US, the ZSP .... -11.5%
*World, XAW .... -12.4%*
EAFE, ZEA .... -16.3%
EMs, ZEM ...... -17.2%

Nice position there for world, which is US-heavy.


----------



## KaeJS

I actually bought some MSCI EAFE today.

Picked up some more XIN.


----------



## GreatLaker

KaeJS said:


> I actually bought some MSCI EAFE today.
> 
> Picked up some more XIN.


Interesting comment from Ben Felix in the Rational Reminder podcast, about foreign stock markets. He is speaking about a tweet from Meb Faber:
Episode 191: Emerging Markets: Diversifying Asset or a Reverse Lottery? — Rational Reminder 



Rational Reminder said:


> *Ben Felix: *Yeah. Meb Faber tweeted, I didn't go in reverse engineer his data point to make sure it was true, but I'm sure it is. He tweeted that over the past 70 years the US stock market has outperformed foreign stocks by 1% per year, so that $10,000 invested in US stocks 1950 turned into 14 million versus only 8 million in foreign stocks. Big compounding difference. *But all of that outperformance has come since 2009*. That's wild.


I'd like to see more detailed numbers, but Ben and Meb are scrupulous regarding data.

So the US market has been very strong since 2009 as we all know. A lot of that comes from growth & tech stocks. But the question going forward is whether and how long that may continue. Grizzled veteran investors will say it cannot continue and will end up a historical blip as regression to the mean will eventually rear its bearish head. Growth investors may say tech and crypto are fundamentally changing the economy and the growth will continue. Then there is the "good company = good investment fallacy" which says even if the businesses continue to grow, much of that growth is already priced in so eventually the stock performance will return to average or below, as has happened many times in the past.

❔


----------



## james4beach

GreatLaker said:


> So the US market has been very strong since 2009 as we all know


Everyone likes to chase returns. Canadian and US stocks have had very similar long term returns and actually have the *same* performance since 2000. And yet I've seen many investors over the last couple years lean into the US, thinking that Canada is a poor performer.

You can even find countless threads at CMF about how the Canadian index sucks, how it's broken, how it's just fundamentally flawed some how. It only takes a few years of underperformance (relative to the US in this case) for people to jump to conclusions like that.

All the more reason an investor needs to stick to their asset allocation plan, and not try "dynamically" adapting the portfolio all the time. It requires a ton of patience to reap these long term returns!!


----------



## Jimmy

james4beach said:


> Everyone likes to chase returns. Canadian and US stocks have had very similar long term returns and actually have the *same* performance since 2000. And yet I've seen many investors over the last couple years lean into the US, thinking that Canada is a poor performer.
> 
> You can even find countless threads at CMF about how the Canadian index sucks, how it's broken, how it's just fundamentally flawed some how. It only takes a few years of underperformance (relative to the US in this case) for people to jump to conclusions like that.
> 
> All the more reason an investor needs to stick to their asset allocation plan, and not try "dynamically" adapting the portfolio all the time. It requires a ton of patience to reap these long term returns!!



They don't have similar long term returns though. The US mkt returned 10.79%/yr vs to 8.73 % for the TSX over 30 yrs. It is similar if you go back 50 or 70 yrs. The Cdn index is mainly 55% in volatile boom and bust resource stocks and banks is no mystery. The US economy is more productive due to better diversification to more growth areas like tech and healthcare. 

Market Statistics - Statistiques de marché (pwlcapital.com)


----------



## MrBlackhill

NASDAQ reaching new lows. Currently at -22.5% from ATH.


----------



## scorpion_ca

MrBlackhill said:


> NASDAQ reaching new lows. Currently at -22.5% from ATH.


Will it go lower from here? My wild guess is that it would drop another 10% to 15% in the next couple of months?


----------



## MrMatt

Yawn, I'm still up nicely. I always find it funny how people overreact to these minor (<40%) short term (<3 year) variations


----------



## james4beach

Adjusted for dividends, the TSX seems to have hit a new all time high today (see chart below).

And here are annualized returns I have calculated back to the start of 2000, but using XIU since that's the only ETF which existed back then.

Since 2000, over 21 years
*TSX (using XIU) ... 6.8% CAGR*
S&P 500 (in CAD) ... 6.6% CAGR
MSCI EAFE has done much worse

The dumb old Canadian index has been the global champ in this millennium, even outperforming the S&P 500.


----------



## fstamand

I started to clean my portfolio, selling the greens (except my core holdings).

It's my opinion that we won't see these highs for very long.

Where's a good spot to park some liquidity?


----------



## Thal81

My 25% TSX allocation is why I'm not doing so bad during this downturn  My bonds hurt though, I think bonds are greatly undervalued right now. They've priced-in way too many hikes way too fast. As usual, markets are overreacting...


----------



## AltaRed

I think the bond yield curve is just right. Borrowing this link from PrefBlog Bond yield curve 

It is likely to get flatter as short term rates increase.


----------



## m3s

Bond market is negative real return before taxes and not risk free....

I haven't heard a single person say anything good about bonds and that includes 30-year career bond investors

I think the only people buying bonds nowadays are blindly following outdated advice


----------



## AltaRed

Bonds are needed by insurance companies and pension funds to backstop a good portion of the annuity and insurance business. Failure to undertake appropriate risk management results in the kind of 'value destruction' Manulife went through during the financial crisis, an inappropriate risk management policy which they still are in the process of unwinding (paying for). Pre-financial crisis, Manulife and Sun Life were approximately similar in intrinsic value, but with Manulife showing higher returns. Shareholders learned why the hard way.

It is not dissimilar to what a retail investor must consider to avoid being a day and dollar short. A significant haircut in equities for a protracted multi-year period would change the mood entirely for those approaching, or into, retirement. It is not very palatable that bond real returns today are so negative but beyond a GIC ladder, the alternatives can carry serious consequences.

It is NOT different this time but it IS a tougher row to hoe (stay the course) with lower yields vs inflation. Stick with GICs and HISAs or move to RRBs if the state of nominal bonds is not palatable.


----------



## james4beach

Humans are return-chasing creatures by nature, so of course, once bond prices fall people start having doubts about what they're doing.

The reality is, nothing has changed as far as portfolio design. Diversifying by holding both stocks and bonds is still a great idea. Especially *today*, where bonds have already had such a drawdown, they are even more likely to provide a good cushion to a portfolio during times of volatility.

Nobody can predict inflation or interest rates more than a few months out. The world is unpredictable and there are millions of forces influencing all of these things.


----------



## londoncalling

The question of whether or not to hold bonds or fixed income does need to be given consideration. Unlike a pension fund or an insurer, individual investors should consider the rationale for owning these tools. There are some that have amassed great fortunes in growth equities that have switch to bonds because they have enough. There are also those that need to hold bonds and fixed income to reduce volatility. I do not hold bonds personally but do through my pension funds. I guess the question remains whether bonds actually reduce portfolio volatility and what is there correlation to equities. I haven't looked to closely but I think bond etfs and bond trading do not achieve the same function as holding bonds to maturation. I do agree that they are not without risk including negative real return.


----------



## m3s

james4beach said:


> Nobody can predict inflation or interest rates more than a few months out. The world is unpredictable and there are millions of forces influencing all of these things.


So then why do we have central banks trying to predict inflation and set interest rates to manipulate our money with monetary policies

Both have been quite predictable if you read the central bankers forward guidance. Markets dislike uncertainty more than anything so the last thing you want is a central bank surprise

Central banks tell us what they plan to do because they have a responsibility to be predictable


----------



## MrMatt

m3s said:


> Bond market is negative real return before taxes and not risk free....
> 
> I haven't heard a single person say anything good about bonds and that includes 30-year career bond investors
> 
> I think the only people buying bonds nowadays are blindly following outdated advice


Bonds have their place in a portfolio, a proper allocation will significantly reduce risk.

You have a a very rigid and narrow perspective on finance, and a lot of other things. Just because in your current situation, a significant bond allocation might not be desirable, that doesn't mean they aren't appropriate in other circumstances.


----------



## m3s

MrMatt said:


> You have a a very rigid and narrow perspective on finance, and a lot of other things. Just because in your current situation, a significant bond allocation might not be desirable, that doesn't mean they aren't appropriate in other circumstances.


Quite the opposite

I adapt to the current circumstances and also cross check what many people with decades of success are doing now. Bonds have been falling out of favour for quite some time and especially now. I agree there is a purpose for bonds but there are much better ways to achieve that purpose today.

When bonds were new people were very skeptical of them. Now people buy them because "everyone" knows you should always have 40-60% bonds. If you are 75 and have a bond allocation plan then fine.. why bother reading the forums for what do do now if your plan was set in stone decades ago.

THAT is a rigid and narrow view. I'm quite open to hear how bonds are worth any risk for negative real returns before taxes. But you're not showing me that.


----------



## bigmoneytalks

james4beach said:


> Everyone likes to chase returns. Canadian and US stocks have had very similar long term returns and actually have the *same* performance since 2000. And yet I've seen many investors over the last couple years lean into the US, thinking that Canada is a poor performer.
> 
> You can even find countless threads at CMF about how the Canadian index sucks, how it's broken, how it's just fundamentally flawed some how. It only takes a few years of underperformance (relative to the US in this case) for people to jump to conclusions like that.
> 
> All the more reason an investor needs to stick to their asset allocation plan, and not try "dynamically" adapting the portfolio all the time. It requires a ton of patience to reap these long term returns!!


Canadian market represents what 3percent of the global Market? Mind it is less diversify than the us too


----------



## MrMatt

m3s said:


> Quite the opposite
> 
> I adapt to the current circumstances and also cross check what many people with decades of success are doing now. Bonds have been falling out of favour for quite some time and especially now. I agree there is a purpose for bonds but there are much better ways to achieve that purpose today.


People said the same stuff during the tech boom & crash.

What is the better way to achieve the "purpose" of bonds/fixed income, without buying them? 



> When bonds were new people were very skeptical of them. Now people buy them because "everyone" knows you should always have 40-60% bonds.


Never heard that from a reputable source. I actually think 40-60% bonds is wrong for many portfolios. However it is a good allocation for a simple lower risk, no thinking required portfolio.


----------



## m3s

MrMatt said:


> no thinking required portfolio


I agree


----------



## Gator13

m3s said:


> ........I adapt to the current circumstances and also cross check what many people with decades of success are doing now. Bonds have been falling out of favour for quite some time and especially now. I agree there is a purpose for bonds but there are much better ways to achieve that purpose today.


I am curious what your investment portfolio looks like. Would you mind sharing? Always interested and open to new ideas. Cheers.


----------



## m3s

Gator13 said:


> I am curious what your investment portfolio looks like. Would you mind sharing? Always interested and open to new ideas. Cheers.


It's not a rigid allocation since the pandemic gave me more time to be active. I don't have any leverage or debt at the moment and I have stable income so I don't mind risk.

10-20% speculation/commodity
60-80% equity/income producing
10-20% dry powder pegged to fiat

Dry powder is valuable to me to be able to buy/sell volatility as the March 2020 liquidity crisis. I lend the dry powder at some risk for yield while waiting. Bonds didn't work for me as dry powder in a March 2020 liquidity crisis and they don't reward me at all yet they carry some risk. I have GICs left but not buying anymore

Algorithmic stablecoins are my favourite form of dry powder at the moment. Yes they are new and yes everyone is skeptical of them just like they were skeptical of bonds when they were new. The market rewards you for things people think is risky based on supply and demand. Not all stablecoins are the same just like not all bonds are the same.

There was a time when bonds were new and people were more skeptical so they rewarded you. Now most have 40-60% bonds and central banks buy them so of course the free market does not reward you for buying something everyone buys. Everyone forgets they do have risk so why take risk without the return. Again it's supply and demand.

Rigid and narrow minded would be stubbornly sticking to something that is not rewarding you at all for your risk imo


----------



## james4beach

You know, central banks have flooded the world with liquidity and some of that has found its way into crypto koinz. So your koinz are sadly also under the influence of central banks too.

If they really do drain liquidity out of the system, it will force liquidation of a lot of koinz as well. The evidence seems to show they are being treated as a "risk asset" which means, as with growth equities and other speculative assets (IPOs, SPACs etc), they are sensitive to central bank liquidity and stimulus.

What makes you think that crypto koinz will survive central bank tightening? My guess is that they're actually far more sensitive to central bank interventions than other things like bonds.

I suspect that you have loaded up on "call options" on central bank liquidity. Not a position I would want to be in, personally.

@m3s you should keep an open mind that your mental model about this could be wrong. Consider my model for example. It could expose you to a ton of losses.


----------



## Gator13

m3s said:


> It's not a rigid allocation since the pandemic gave me more time to be active. I don't have any leverage or debt at the moment and I have stable income so I don't mind risk.
> 
> .......Rigid and narrow minded would be stubbornly sticking to something that is not rewarding you at all for your risk imo


A good income makes taking on some risk a lot easier.

I ran +90% equity (but not speculative) for decades and only now as I get within a couple years of retirement, am I going to move to 70/30 or 70/25. Probably with a mixture of cash & GIC's to start.

I would like to understand krypto. No idea where to start.


----------



## m3s

james4beach said:


> @m3s you should keep an open mind that your mental model about this could be wrong. Consider my model for example. It could expose you to a ton of losses.


Maybe you should take your own advice. I'm talking about algorithmic stablecoins that are pegged to fiat. Not all crypto is the same at all

I've said many times that I de-risked in September last year specifically because of global liquidity concerns (Evergrande etc)



james4beach said:


> So your koinz are sadly also under the influence of central banks too.


Sad would be 40-60% in an asset that yields negative real returns before taxes and assuming it has no risk in a world full of debt and economic sanctions

I have far more assets than crypto so saying I am the closed minded one when all the major financial players are adding crypto is just mental gymnastics


----------



## m3s

Gator13 said:


> I would like to understand krypto. No idea where to start.


Maybe look at Celsius or Kraken.

I've made a thread on Celsius (currently pays for example 7-9% on TCAD) and their reserve are public. Celsius will eventually have insurance. Kraken is safer but lower yields. I can earn much higher yields on DeFi but I also followed it since it started and understand the risks

What critics and haters here don't understand is most of my crypto take advantage of the gamblers, volatility and borrowers. I earn fees from providing liquidity for people to trade and for processing the transactions. I lend to people who want to leverage or borrow against their assets

I give up. There's no use discussing here because people only seem to want validation for their decisions. Enjoy your bonds CMF


----------



## AltaRed

Bonds have been around since about 2400 BC. Bonds issued by 12th century Venice were the first tradable bonds and the first sovereign bonds were issued by Bank of England in 1693. America issued bonds to finance its WW1 effort. Bonds are still the underpinnings of financial markets and the global market exceeds $100 trillion today.

The bond yield curve is the key driver and reference point for almost everything that happens in the financial markets, and business world for that matter. It is what risk premiums for other instruments are calculated against. I don't see anything changing that in any century soon.

Whether and why a retail investor buys bonds or not is a different question. FWIW, I have less than 5% of my portfolio in bonds and GICs and that includes the fixed income component of VCNS in my RRIF. My overall fixed income component is a fixed sum, not percentage, of my portfolio, designed to be a backstop to equity market instability.


----------



## m3s

AltaRed said:


> Bonds have been around since about 2400 BC.


What was the central bank's monetary policy like in 2400 BC? How did they control inflation on sea shells used as currency?

Quantitative easing, yield curve control and fiat without a gold standard are relatively short experiments in the grand scheme.

Do you think fiat backed by nothing but insane debt will last the test of time? Things always change. What could be next?


----------



## james4beach

m3s said:


> I've said many times that I de-risked in September last year specifically because of global liquidity concerns (Evergrande etc)


Nice! That's a good move


----------



## AltaRed

m3s said:


> Do you think fiat backed by nothing but insane debt will last the test of time? Things always change. What could be next?


Until something better comes along, about the only thing that could be more reliable than a paper IOU such as a bond is internationally recognized bartered goods. Perhaps back to gold or a barrel of oil? It doubt it is a black box.

Conspiracy theories abound in internet forums including CMF. They can be entertaining to some but not much to lose sleep over.


----------



## m3s

AltaRed said:


> They can be entertaining to some but not much to lose sleep over.


Depends entirely on your time horizon

If you're +60 then stick your head in the sand and tell yourself the inflation if good for your bonds and GICs

I'm not convinced by the boomer rhetoric


----------



## AltaRed

Whether "inflation is good for bonds and GICs" is not the debate. That is a fixation of your own making you seemingly repeat over and over. The discussion is the role of bonds as component of the portfolio and their function in the financial world. Whether one owns bonds or not as a portion of their portfolio depends on how they want to diversify and fortify their portfolio for robustness over a range of business cycles. If you don't like bonds nor GICs, don't hold any. Hold gold, cash or something else that will survive black swan events. Black box stuff like financially engineered products will simply vapourize in a global financial crisis of the 2008 kind (or worse). It was that 'voodoo' stuff that sunk some banks.


----------



## m3s

AltaRed said:


> Black box stuff like financially engineered products will simply vapourize in a global financial crisis of the 2008 kind (or worse). It was that 'voodoo' stuff that sunk some banks.


Everything will vapourize in a liquidity crisis. It's what markets do.

After the dust settles some things bounce back faster. Solid investments were scooped up at extremely rare prices. I got some massive gains out of those opportunities

I remember 75 year olds in the '90s thinking the internet was 'voodoo' stuff. If you're 75 and criticizing things that didn't exist in your lifetime.. you might be a boomer


----------



## Eclectic21

m3s said:


> ... Bonds have been falling out of favour for quite some time and especially now. I agree there is a purpose for bonds but there are much better ways to achieve that purpose today.


For those with the time to stay on top of it and disciple to avoid mistakes ... maybe.
I've had co-workers regret skipping them, like being high equity while the markets dropped in 2008/2009.




m3s said:


> ... When bonds were new people were very skeptical of them ...


When was this?

I can recall four decades ago people being worried about which ones to buy (i.e. avoid junk or soon to be bankrupt company bonds) but no reluctance.

Or maybe you are referring to the bonds from the BC era? 


Cheers


*PS*



m3s said:


> ... There was a time when bonds were new and people were more skeptical so they rewarded you.


This reads to me that you are confusing the higher rates for particular company/gov't bonds with bonds in general.

This sounds so similar to my parents limiting how much they put into high paying GICs with companies they weren't familiar with or confident in to limit default risks despite having no concerns about GICs in general.


----------



## Eclectic21

m3s said:


> Everything will vapourize in a liquidity crisis. It's what markets do ...


Meh ... some of my stocks increased in 2008/2009 while a majority dropped.

What I wanted to sell and buy had no issues either.




m3s said:


> After the dust settles some things bounce back faster. Solid investments were scooped up at extremely rare prices ...


Yes ... it was a great time to use my HELOC.
I particularly liked the one that paid me 60% of the purchase price over the next two years while the share price climbed 200+%. Too bad I though didn't buy more. 




m3s said:


> .. I remember 75 year olds in the '90s thinking the internet was 'voodoo' stuff. If you're 75 and criticizing things that didn't exist in your lifetime.. you might be a boomer.


And that's any different than my parents remember their parents making similar statements in the '20's?

Or grandma remembering similar from her parents?


Cheers


----------



## james4beach

An elderly person dismissing tech stocks in the 90s would have actually made a far better money manager than one who embraced tech stocks.

Say you had one of these 75 year olds who chose "traditional" blue chip stocks (maybe MMM, BA, MCD, CAT, JNJ, PG, KO) in 1995. This portfolio would have performed at 12.6% per year for the next 27 years, an excellent performance that beat both the S&P 500 and NASDAQ.

The point being, one doesn't have to get into every new thing that comes along. There isn't a single tech stock in this listing and yet it's outperformed the tech-heavy S&P 500.


----------



## Jimmy

An elderly person dismissing tech stocks for blue chip value would have made almost 3%/yr less cagr over the past 20 years in reality

The S&P has only recently become a tech index w the rise of Apple, Amazon, Google, Facebook etc. The S&P is also really a 'blue chip index' in reality. 
For a real comparison Compare QQQ to the S&P value index IVE. QQQ 9.5% cagr ,IVE 6.6%


----------



## AltaRed

You are both data mining to make a point. The real comparison of any 'tilt' is with the total stock market as represented by VTI (or your favourite pick).


----------



## MrBlackhill

Turns out that over the last 25 years, the best place to be if you dumped a lump sum 25 years ago was... right in the middle of the equity styles. Mid Cap Blend.










Large Cap Growth went parabolic mostly recently, otherwise on the long term the picture is different.










If we compare Small Cap Value (SCV) to Mid Cap Blend (MCB) to Large Cap Growth (LCG), we get:

SCV had the highest average return for periods of 15 years over the past 50 years. It has been decreasing, but its worse is still 5% CAGR and most 15-year returns are between 8% CAGR and 21% CAGR.









MCB is effectively well balanced with the highest worst return of nearly 7% CAGR and the majority of its 15-year returns between 8% CAGR and 18% CAGR.










LCG is more of a rollercoaster since it's more like a momentum trade with the lowest average return and the outcomes spread all over the place between 3% CAGR and 21% CAGR.









And when it comes to market timing, we saw that:

Growth was the best place to be in the 90s
Value was the best place to be in the 00s
Growth was the best place to be in the 10s
Now guess what could be the best place to be in the 20s














__





US Small/Large Caps - Value/Growth Returns


Small vs Large caps, Growth vs Value investing: which is the best investment theme? Find out and build your perfect lazy portfolio with ETFs.




www.lazyportfolioetf.com


----------



## doctrine

It is telling that Warren Buffet, the king of boring stocks investing, would be the world's richest man still and by a good margin, had he not sold off half or more of his holdings in the last few years for his estate and charity. That is a snapshot of results over 5 decades.


----------



## wayward__son

Im as much a fan of Buffett's letters to shareholders and Poor Charlie's Almanack as anyone but their alpha was their structural advantage in taking leverage using insurance float. Retail plebs like us won’t be getting rich investing in Coca Cola and such


----------



## MrMatt

m3s said:


> I remember 75 year olds in the '90s thinking the internet was 'voodoo' stuff. If you're 75 and criticizing things that didn't exist in your lifetime.. you might be a boomer


If you're 75, you're a boomer, because that's what the word means.

If you think things are "different this time", or you're a neophilic investor, well I think you've got other issues.

There is a balance between neophilia and neophobia, both extremes are bad.


----------



## m3s

MrMatt said:


> If you think things are "different this time", or you're a neophilic investor, well I think you've got other issues.
> 
> There is a balance between neophilia and neophobia, both extremes are bad.


One thing that is factually different this time is that you don't need to be an accredited investor with exclusive insider golf course connections like you did in the 90s.

I'm a huge tech fan but I mostly invested in traditional blue chip stocks because tech stocks typically went public after 10-15 years of making the insiders extremely rich. They were often very good at going public went the growth numbers looked amazing but they knew the future was cooling off. Now I can get in on early seed rounds and it's very very lucrative before it hits major exchanges and awareness. I've also had a lot of time to learn to separate the signal from noise and get rewarded well for that time spent.

The point is you shouldn't criticize new technology that you have zero experience or knowledge of. The media is good at keeping people ignorant as long as possible.


----------



## james4beach

AltaRed said:


> You are both data mining to make a point. The real comparison of any 'tilt' is with the total stock market as represented by VTI (or your favourite pick).


If you want a more methodical demonstration of my point, look at the RSP fund (equal weighted market index). It has a lot less tech than the broad index because it isn't cap weighted, so doesn't heavily weight those mega cap techs.

RSP performance

This has virtually the same performance as the S&P 500 over the last 10 years and 15 years, while it never was heavy in tech. US investors who didn't emphasize tech have done just fine, and RSP (which is methodical) proves that it isn't data mining.


----------



## AltaRed

Fair enough but I still the most fair representation of a market is its broad market market capitalization even if a certain sector like tech is oversized. It should be the base reference point for everything else. The issue I have with the S&P500 vs total market was/is the exclusion of some stocks like TSLA for some time.


----------



## OneSeat

In mid 2020 I split my sp500 holdings 50/50 between VOO and the equally weighted RSP - never regretted it.


----------



## Ukrainiandude

Lets see how far it will go down. 
Rate increase will really show who was swimming naked.


----------



## gardner

5% down in a week. And it's not just the TSX -- US, Europe, ASX all down proportionately in the same period.


----------



## cainvest

gardner said:


> 5% down in a week.


Might have to start looking for some value buys soon.


----------



## AltaRed

Expect another significant decline over the next 3-4 months. 2+ more consecutive 50 bp moves by central bankers will clearly continue the system flush. Anyone still on margin should be getting margin calls in the not too distant future.


----------



## cainvest

AltaRed said:


> Expect another significant decline over the next 3-4 months. 2+ more consecutive 50 bp moves by central bankers will clearly continue the system flush.


Quite likely it'll run longer than 4 months IMO. Many things going on in the world right now, rising rates, inflation, supply chain, political issues/war, covid. A real drawn out recession could be on the horizon.


----------



## AltaRed

cainvest said:


> Quite likely it'll run longer than 4 months IMO. Many things going on in the world right now, rising rates, inflation, supply chain, political issues/war, covid. A real drawn out recession could be on the horizon.


Well, yes I agree a recession is likely in the works but if so, it is still several months away from a GDP measurement perspective. Market declines typically precede actual recession occurrences and the worst of it is usually front ended...which is why I said 'significant declines'. The actual decline could last through the end of 2022 or beyond.


----------



## james4beach

It will be interesting to see if we get a broader global slowdown. Already it's looking like Europe and emerging markets are slowing down. China might already be in recession, as they are undergoing a pretty dramatic housing crash.


----------



## doctrine

Remember markets trade off changes in rate expectations, not the hikes themselves. Over the last 4-6 weeks, there has been a marketed increase in the rate and number of interest rate hikes; now it is likely 3 x 0.50% hikes are in the cards, and total increases are maybe 0.5% to 1% more. 

So the next hikes of 0.50% will not be a surprise or a shock to anyone. It's already put the NASDAQ into a bear market, and the S&P 500 well into correction. Markets are pretty good at anticipating economic slowdowns, and price them in 6-9 months in advance. They also recover fast - sometimes, they recover before even the 1st quarter of negative economic growth is in, because the market already sees a path out.


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## nathan79

I would agree that most of the interest rates hikes are already priced in. The markets usually do the opposite of what people expect.

I topped up my RRSP today. Even if it's not the market bottom, it's still a significant discount from the highs.


----------



## Ukrainiandude

New reverse one year high today.


----------



## MrMatt

meh, I've made a killing over the last few years. 
You make money with time in the market, not timing the marking.


----------



## marina628

MrMatt said:


> meh, I've made a killing over the last few years.
> You make money with time in the market, not timing the marking.


This is true ,even though i lost 7.8% in past 30 days I am still up 1.11% in past 12 months and up over 40% excluding dividends in 4 years and 146.15% in past 10 years .I have not sold anything in my registered accounts in past 10 years as I only have 9 stocks that are my core holdings .


----------



## james4beach

There is still a lot of "froth" in the economy so I think the central banks will have to tighten a lot more, before they get the slowdown they want.

For example today I heard through colleagues that someone I know sold his tech venture for around $10 million. This was another one of these early stage ventures that didn't really have a product, certainly didn't have sales. The founder is a business guy who's mostly just been talking a big game... aggressive salesmanship and big fluffy promises.

The fact someone is still buying those [basically worthless] companies for many $ millions shows the euphoria still hasn't been totally stomped out. I believe we're only in an early phase of this story (slowdown). So far, the SPAC bubble has crashed and IPOs have slowed down.

Eventually all the silliness will be stomped out and there will be a very foul mood around tech and ventures. That's the bottom. We're not anywhere close to it.


----------



## marina628

james4beach said:


> There is still a lot of "froth" in the economy so I think the central banks will have to tighten a lot more, before they get the slowdown they want.
> 
> For example today I heard through colleagues that someone I know sold his tech venture for around $10 million. This was another one of these early stage ventures that didn't really have a product, certainly didn't have sales. The founder is a business guy who's mostly just been talking a big game... aggressive salesmanship and big fluffy promises.
> 
> The fact someone is still buying those [basically worthless] companies for many $ millions shows the euphoria still hasn't been totally stomped out. I believe we're only in an early phase of this story (slowdown). So far, the SPAC bubble has crashed and IPOs have slowed down.
> 
> Eventually all the silliness will be stomped out and there will be a very foul mood around tech and ventures. That's the bottom. We're not anywhere close to it.


My friend sold his biz for 8.1 Million usd ,In the press release it mentioned it was for 6 years revenue ,know the size of his overhead I think it was more like 20 years net revenue lol
There are some insane shoppers out there , now my friend is one of them trying to burn off some of the capital on his books .


----------



## TomB16

marina628 said:


> My friend sold his biz for 8.1 Million usd ,In the press release it mentioned it was for 6 years revenue ,know the size of his overhead I think it was more like 20 years net revenue lol
> There are some insane shoppers out there , now my friend is one of them trying to burn off some of the capital on his books .


20 years ago, the rule of thumb when valuing a business was 4~5 years of revenue, depending on the industry. Yeah, it's ridiculous now.


----------



## Ukrainiandude

What a nice reverse high again. Enjoy guys.


----------



## Ukrainiandude

Anazon or Amazon ?


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## james4beach

That's a market suffering from the punch bowl being taken away.

And quantitative tightening hasn't even started yet. The Federal Reserve pumped liquidity into the whole world and drove assets to insane heights.


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## marina628

Time for DCA again ,active wars ,a few months from the KKK in USA maybe gaining control of the house ,rising interest rates so many things going on right now .Definitely you need 5-10 years in this market so don't be putting in your down payments in this market.


----------



## james4beach

I think the big question is how serious the Federal Reserve is, when it comes to yanking liquidity.

It could all be a giant bluff. They could be talking a big game to cool off the market, and perhaps they really won't ever raise the overnight rate above 2% to 3%. And they'd still intervene to rescue a falling stock and real estate market, as they have done for the last 30 years.

Or it could be for real. Perhaps there really will be 50 basis point hikes at every following meeting, along with no "Fed put" whatsoever, and they might keep hiking rates as long as inflation persists.


----------



## marina628

james4beach said:


> I think the big question is how serious the Federal Reserve is, when it comes to yanking liquidity.
> 
> It could all be a giant bluff. They could be talking a big game to cool off the market, and perhaps they really won't ever raise the overnight rate above 2% to 3%. And they'd still intervene to rescue a falling stock and real estate market, as they have done for the last 30 years.
> 
> Or it could be for real. Perhaps there really will be 50 basis point hikes at every following meeting, along with no "Fed put" whatsoever, and they might keep hiking rates as long as inflation persists.


James my first mortgage was 11% interest and 25 year amortization ,my friend bought a house last year after her divorce for $650,000 and put down $320,000 ,she was sensitive to the rates so she locked in for 5 years at 2% .When her mortgage comes up a 1-2% bump in the rate probably means she will do another 30 year mortgage. People like my parents mortgage free sitting on cash will love a higher interest rate. People buy cars now with 8 year loans maybe the next step will be 50 year mortgages who knows.


----------



## james4beach

marina628 said:


> People like my parents mortgage free sitting on cash will love a higher interest rate


Yes those of us who don't rely on debt will enjoy higher interest rates.

But it's an open question whether Fed & BoC really want interest rates to go higher. Consumer debt levels in Canada are off the charts. We're going to have severe economic pain if interest rates really go higher, so I'm really skeptical that the BoC has the balls to raise rates above 3%.


----------



## milhouse

Along the lines of J4B's post 850 re: froth and profitability, I found this article in the G&M interesting and apropos. In a nutshell, it argues that cheap money allowed reckless behaviour and froth in venture capital and public markets and such the current crash/turmoil is necessary and unavoidable. Also referenced an interesting quote by Bill Gurley: "Previous ‘all-time highs’ are completely irrelevant. It’s not ‘cheap’ because it is down 70%. Forget those prices happened."

For me, it echos of the 2000 tech wreck where profitability and valuation eventually become front of mind again. Fantastic run the last few years though.


----------



## james4beach

milhouse said:


> For me, it echos of the 2000 tech wreck where profitability and valuation eventually become front of mind again. Fantastic run the last few years though.


Very neat milhouse, thanks for sharing. Yeah it was a fantastic run. Amazing how euphoric one feels during boom years where accounts are rocketing up in value. I'm a conservative investor but even I felt the "highs" of those sky high prices. Unfortunately the corrections and bear markets are never fun. I don't know if we'll get a crash, but it's probably going to be unpleasant.

The good news is that disciplined, well diversified investors can weather these storms and markets will bounce back eventually. In the long term, the market will reward those of us who have good plans... as long as we stick with our plans!


----------



## Eclectic21

YMMV ... I've pretty much always loved what I bought during corrections and bear markets. 


Cheers


----------



## Ukrainiandude

Where’s all cheer and joy? Everyone should enjoy reverse new highs while it lasts.


----------



## Ukrainiandude

Any one see the main North American index reaching five years reverse high by fall?


----------



## KaeJS

Ukrainiandude said:


> Any one see the main North American index reaching five years reverse high by fall?


You mean like SPX 2400?

Not gonna happen lol.


----------



## MrBlackhill

Ukrainiandude said:


> Where’s all cheer and joy? Everyone should enjoy reverse new highs while it lasts.


I'm still in the accumulating stage, so I'm always happy. When stocks go up, I'm happy to see my portfolio growing in value. When stocks go down, I'm happy buying cheap shares which means higher expected return.


----------



## Ukrainiandude

KaeJS said:


> You mean like SPX 2400?
> 
> Not gonna happen lol.


That is what they said in 2007 (SPX1400), 700 is not going to happen.


----------



## londoncalling

Ukrainiandude said:


> Where’s all cheer and joy? Everyone should enjoy reverse new highs while it lasts.


My only concern at this time surrounding the general market is we had such a large run upwards and now that it's starting to fall we could have quite a ways to go. I was content to buy during the past few months and am content to buy over the next few as well. Since I have to buy when cash hits a certain percentage of allocation I will likely be buying into this declining market. I still haven't locked in my fixed income portion as I am waiting for the June announcement and rate increases in July. I may take a chunk of that and put it into stocks if they hit bear territory. As most of the market decline has come from speculative tech I have been fairly shielded from the 50-60% declines. That being said I am looking at making a couple purchases in May. Canadian banks are starting to look attractive. RY is my lowest position of those I currently hold and may look to adding to that one. Some tech plays are starting to look like opportunities as well but are only at levels they were 2 years ago.


----------



## Ukrainiandude

londoncalling said:


> the general market is we had such a large run upwards


Are you referring to North American market now? Let’s hope S&P 500 won’t become another Nikkei 225.


----------



## londoncalling

I was indeed referring to the NA markets. I would not want to see any countries exchange see the perfromance of the Nikkei 225 but it is possible for the S&P to become stagnant. Demographics play a large role in a nations growth and the US is getting old and slow. I doubt it will be the global leader it was in years past.


----------



## TomB16

I believe retail traders are a significant market driver, these days. They influence the price without long term holding.

I have a couple of small sized companies that are well up but I'm confident that if I wanted to sell down more than a few hundred shares, I would burn off the traders pretty quick and find out what the adults in the room are prepared to pay.

BTW, a long term investor is unaffected by this sort of market volatility. I was happy owning some great companies yesterday. I'm just as happy owning the same great companies today. If distributions are cut significantly, I will crab like housewife being told she has to buy the magazine after tearing tear the recipe out of McClean's but until that day, I remain content.


----------



## james4beach

TomB16 said:


> BTW, a long term investor is unaffected by this sort of market volatility.


It's true, and I also only try to care about my long term returns... but (as per the thread topic) I really was enjoying and having more fun at the all time highs.

It's human nature. The big numbers and high wealth figures are fun. Not as fun when you see thousands of dollars "disappearing" daily.


----------



## james4beach

If anyone thinks the NASDAQ is returning to its highs any time soon, you could speculate on TQQQ. If the NASDAQ bounces back you couple *triple* your money. Extremely risky proposition obviously (not my kind of thing).

Or if you think the S&P 500 will bounce back, you could buy UPRO and roughly double your money.

I wouldn't do any of this myself but then again, people tell me that I invest like an old man.


----------



## TomB16

james4beach said:


> It's true, and I also only try to care about my long term returns... but (as per the thread topic) I really was enjoying and having more fun at the all time highs.


ATH is good for traders but not good for income investors. A company with DRIP will compound more slowly when the stock is high.


----------



## james4beach

TomB16 said:


> ATH is good for traders but not good for income investors. A company with DRIP will compound more slowly when the stock is high.


This is what's so awesome about the drop in bond ETFs. Now every interest payment (coupon) we get is re-invested at much higher interest rates.

These are great conditions for long term bond investors. The yield keeps going up = future returns are rising. Short term pain and long term gain.


----------



## MrMatt

Just wandered back to this thread.
yes I'm enjoying these highs.


----------



## Ukrainiandude

Another beautiful day of reverse highs. Where is your excitement?
QT and rate hike just started, more to come. Enjoy while it last. GL to HELOC equities “home made investors” and TQQQ buddies.


----------



## james4beach

Ukrainiandude said:


> QT and rate hike just started, more to come.


Buddy, it hasn't even started yet! The Federal Reserve starts QT in June. The Bank of Canada is a small player. It's really the Federal Reserve's QE liquidity that drives global assets.

I'm really curious what's going to happen when the Fed starts QT. I'm not even sure they will go ahead with it, or the rate hikes through this year.


----------



## londoncalling

I think they will still deliver on promised hikes and QT to maintain credibility. The extent of which may be muted if we see inflation wane and the market fall. My fear is that they cannot curb inflation as some profess the major causes are beyond the Fed (and BoC)'s reach. If that occurs we may see a a major collapse akin to 2008 or worse. A sharp crash and reversal would be better than a decade of slow decline. I think it would shake out a lot of non investors. I can't predict the future so I just hold my nose and try to steer into the skid. I placed some orders on a:beautiful reverse high day such as this. My portfolio was down just under .5% today. VEQT 1.25% Tomorrow it could be the inverse. I am not ecstatic about the YTD returns but understand that 10 and 20 percent declines are normal market action.


----------



## Ukrainiandude

james4beach said:


> Buddy, it hasn't even started yet!


It probably has started already, but as with everything will get to know after the fact.
All I would like to wish good sleep for “self made investors“ who believed stocks only go up and invested arm and leg on margin.


----------



## AltaRed

londoncalling said:


> I think they will still deliver on promised hikes and QT to maintain credibility. The extent of which may be muted if we see inflation wane and the market fall. My fear is that they cannot curb inflation as some profess the major causes are beyond the Fed (and BoC)'s reach. If that occurs we may see a a major collapse akin to 2008 or worse. A sharp crash and reversal would be better than a decade of slow decline. I think it would shake out a lot of non investors. I can't predict the future so I just hold my nose and try to steer into the skid. I placed some orders on a:beautiful reverse high day such as this. My portfolio was down just under .5% today. VEQT 1.25% Tomorrow it could be the inverse. I am not ecstatic about the YTD returns but understand that 10 and 20 percent declines are normal market action.


If central bankers continue with interest rate hikes, a lot of money will have to go to debt payments taking cash out of the system. That cannot help but reduce consumer demand for a lot of commodities and a lot of consumables. It wouldn't take much at the margin, e.g. a reduction of 3-5 million barrels per day of oil to send oil prices back down to $70 or more. Imagine the drop in demand (and used car prices) for vehicles when financing costs rise to 8% or more. That is standard recession type stuff so many of the causes of current inflation will indeed vanish.


----------



## MrMatt

AltaRed said:


> If central bankers continue with interest rate hikes, a lot of money will have to go to debt payments taking cash out of the system. That cannot help but reduce consumer demand for a lot of commodities and a lot of consumables. It wouldn't take much at the margin, e.g. a reduction of 3-5 million barrels per day of oil to send oil prices back down to $70 or more. Imagine the drop in demand (and used car prices) for vehicles when financing costs rise to 8% or more. That is standard recession type stuff so many of the causes of current inflation will indeed vanish.


Stalling the economy isn't a great way to deal with inflation.


----------



## james4beach

Ukrainiandude said:


> All I would like to wish good sleep for “self made investors“ who believed stocks only go up and invested arm and leg on margin.


I wish them well too.

Investing is hard. I've been investing for a couple decades and this is still hard for me.


----------



## AltaRed

MrMatt said:


> Stalling the economy isn't a great way to deal with inflation.


If supply cannot meet demand, and if one is not into the sorry world of price controls aka the late '70s and early '80s, then demand must be constrained via debt servicing costs to take excess out of the system. That is kind of how it has always been done to reduce consumption and there is little doubt in my mind, that is what is going to play out again.


----------



## MrMatt

AltaRed said:


> If supply cannot meet demand, and if one is not into the sorry world of price controls aka the late '70s and early '80s, then demand must be constrained via debt servicing costs to take excess out of the system. That is kind of how it has always been done to reduce consumption and there is little doubt in my mind, that is what is going to play out again.


And done wrong cutting demand will cut sales and supply and make it worse.

The problem is we've stimulated for so long we have a lot of catchup to do to fix.


----------



## m3s

How long before the JPow Pivot?


----------



## james4beach

m3s said:


> How long before the JPow Pivot?


Yeah I wonder too. We should create a poll. How long until the Fed pauses and doesn't hike rates at one of their meetings?

Economists unanimously think the Fed is going to hike 50 basis points at every meeting from now on.


----------



## Thal81

I think they'll keep on hiking by 50 bps until we hit a technical recession, then they'll hold until it gets resolved (no cut!). It might happen sooner in the US than in Canada given their negative Q1 GDP, and in that case the BoC might still hold because they wouldn't want our rate to diverge too much from the Fed.

edit: My best guess is we'll get to 2% then we'll hold for a while, and probably resume hikes in 2023 if the war, supply chain issues and food shortage get resolved. We'll see!


----------



## AltaRed

MrMatt said:


> And done wrong cutting demand will cut sales and supply and make it worse.
> 
> The problem is we've stimulated for so long we have a lot of catchup to do to fix.


Not really. It is important to bring supply and demand back into balance to reduce price increases. That is macro Econ 101. Hiking rates cuts indebted consumer demand more than provide headwinds to supply. From The perfect storm this quote


> Some of you will say that is all well and good, but couldn’t we see stagflation appear in the coming year or so? Isn’t growth going to slow as the Bank of Canada raises policy rates? Yes, growth will slow—the goal of higher rates is to reduce excess demand and bring it more in balance with supply. That should reduce inflation, undercutting the inflation part of stagflation. For example, there is a lot of excess demand for interest-sensitive goods and for housing, some of the key contributors to inflation pressures. Supply and demand should come more into balance in these segments as policy rates rise, reducing inflationary pressures.


----------



## m3s

Thal81 said:


> edit: My best guess is we'll get to 2% then we'll hold for a while, and probably resume hikes in 2023 if the war, supply chain issues and food shortage get resolved. We'll see!


Yea don't disagree with the 2% but I don't see the war/supply/economy getting resolved that fast

Russia is hitting a major port city Odesa with hypersonic missiles and the first gas line through Ukraine was shut down. Supply line infrastructure and labour takes a long time to establish. Things are escalating with Finland as well

Young american colleagues have stretched for +$500k USD homes uninspected and sight unseen. They don't even realize how f'd they are if planned rate hikes go through but they are also tired of landlords kicking them out to cash out

Rates have been trending down for decades to the point that I don't think we can handle above 2% even without a war


----------



## MrMatt

MrMatt said:


> And done wrong cutting demand will cut sales and supply and make it worse.





AltaRed said:


> Not really. It is important to bring supply and demand back into balance to reduce price increases. That is macro Econ 101. Hiking rates cuts indebted consumer demand more than provide headwinds to supply.


And *DONE WRONG*, will make it worse.
So they hike rates or gas prices and everyone stops buying cars, so they slow/shut down the auto production, which puts people out of work, which lowers demand even more..
Or crash the housing market etc, which will slow construction, causing even mroe long term problems in housing.

It really shouldn't be a point of contention that if they do this wrong there could be significant negative reprecussions.


----------



## AltaRed

I really should not continue arguing with you. Long before there is an 'overshoot' which is the essence of your argument of 'done wrong', there will/should be a taming of current inflation. Hiking interest rates leaves less cash to buy both gas and cars. Both gas and cars are in major supply shortage so reduced demand will bring the prices of both gas and cars (especially used vehicles) down, and thus inflation down. There is currently a large gap between supply and demand of both. There is virtually no fear of an 'overshoot' in either case given the size of the current gap.

Housing is no different. We need to substantially reduce the appetite for house buying to bring house prices down 20-30% to allow new buyers into a balanced market. It will also wash out the speculators in the system and there is no better group of folk to hand their heads back too. Land speculators, speculative buyers including those who are greedy buying investment housing, and realtors all need to be flushed from the system to bring some sanity back into the RE market. There is already a labour shortage servicing land and building homes so there is plenty of margin for error. 

Trouble is..... BoC is already cautioning about balancing the need to tame inflation with housing market impacts. They are in effect giving themselves room to blink. That could turn out to be a major error.

You were not likely around in the '70s and '80s when excesses just about collapsed the system. Trust some of the older and wiser folks around here who know we have excesses in the system today that must be flushed out very soon before further expectation of continued inflation becomes a popular mindset and we have the risk of systemic structural inflation In my opinion, an overshoot is far less dangerous than not doing enough to body slam what is going on today. Central banker wishes for a soft landing may be possible but it is likely wishful thinking.


----------



## MrMatt

AltaRed said:


> I really should not continue arguing with you. Long before there is an 'overshoot' which is the essence of your argument of 'done wrong', there will/should be a taming of current inflation. Hiking interest rates leaves less cash to buy both gas and cars. Both gas and cars are in major supply shortage so reduced demand will bring the prices of both gas and cars (especially used vehicles) down, and thus inflation down. There is currently a large gap between supply and demand of both. There is virtually no fear of an 'overshoot' in either case given the size of the current gap.
> 
> Housing is no different. We need to substantially reduce the appetite for house buying to bring house prices down 20-30% to allow new buyers into a balanced market. It will also wash out the speculators in the system and there is no better group of folk to hand their heads back too. Land speculators, speculative buyers including those who are greedy buying investment housing, and realtors all need to be flushed from the system to bring some sanity back into the RE market. There is already a labour shortage servicing land and building homes so there is plenty of margin for error.
> 
> Trouble is..... BoC is already cautioning about balancing the need to tame inflation with housing market impacts. They are in effect giving themselves room to blink. That could turn out to be a major error.
> 
> You were not likely around in the '70s and '80s when excesses just about collapsed the system. Trust some of the older and wiser folks around here who know we have excesses in the system today that must be flushed out very soon before further expectation of continued inflation becomes a popular mindset and we have the risk of systemic structural inflation In my opinion, an overshoot is far less dangerous than not doing enough to body slam what is going on today. Central banker wishes for a soft landing may be possible but it is likely wishful thinking.


I've been saying for years to to tame the excesses, because I understand the excesses, and overreaction in the 70s & 80s, which is why I'm concerned about repeating the exact same mistakes.

I guess I'm at that wonderful age, were old people assume I don't have the experience or knowledge or exposure, and young people think I'm a boomer, who just think I don't "get it"

I think this attitude "*There is virtually no fear of an 'overshoot' *in either case given the size of the current gap." is exactly the problem I see. You don't even seem to accept that there is a problem there.
When you assume something isn't a problem, and overlook the risk is EXACTLY when you screw things up.


----------



## AltaRed

There is a lot of space between where we are and overshoot. I repeat - there is no fear of an overshoot especially since a Deputy Governor of BoC just said the rate and ultimate size of interest rate increases will be tempered by BoC wringing their hands over how the housing market corrects. IOW, taming inflation will ultimately take the back seat to an excessive concern of increased mortgage rates. The wimps are scared to death of overreach. Your fear is misplaced.


----------



## james4beach

AltaRed said:


> You were not likely around in the '70s and '80s when excesses just about collapsed the system. Trust some of the older and wiser folks around here who know we have excesses in the system today that must be flushed out very soon before further expectation of continued inflation becomes a popular mindset


I'm with you, and I really hope the central banks don't drop the ball on inflation.

The thing that scares me the most right now is that the BoC and Fed will "chicken out" once asset prices and mortgage rates start to hurt. If they give up on rate hikes, inflation could become disastrous.


----------



## londoncalling

They are already starting to hint at lesser increases going forward and inflation is nowhere near target. I guess CPI is not an issue if you don't need to use transportation, eat, or have a roof over your head. Keeping things will require some nimble moves but I think it is doable. I don't expect the FED and BoC to be so forward in hinting where rates are headed as they were with the most recent announcements. If they are unable to curb inflation it will be tempered by changes in consumer behaviour. Perhaps people will realize that certain produce is just not affordable at certain times of the year. Eating more locally and seasonally may return if it is the more affordable option. New phone and car every year or two? Not a necessity. Inflation has been hurting the poor for quite some time but now the middle class is aware that this may affect them too. Will this impact business? Absolutely. I think the more immediate threat is escalating input costs. I truly hope the bulk of inflation will dissipate when the transitory supply chain issues are resolved.  end rant


----------



## Gator13

OPEC increasing output would be a step in the right direction to taming inflation. It would help at the pumps and help reduce the cost to transport goods by truck, rail & airline not to mention all the other industries that are sensitive to fuel costs.


----------



## m3s

Live view of the central banksters fighting inflation


----------



## MrMatt

james4beach said:


> I'm with you, and I really hope the central banks don't drop the ball on inflation.
> 
> The thing that scares me the most right now is that the BoC and Fed will "chicken out" once asset prices and mortgage rates start to hurt. If they give up on rate hikes, inflation could become disastrous.


I think they kept things too low, and were way late to hike, and combined with the perception that they were loathe to increase rates caused massive overleveraging across the economy.

I think it will be nearly impossible to time the ending properly. Based on their failure by overstimulating, I think they're going to mess it up again, because they mess it up every time. Some posters have complained that their overstimulation was basically a handout to investors and businesses. 

I also think that the various factors will create a problem, I am concerned they'll hike rates enough to cause chaos in one market, but not enough to fix the problems in others. Playing with interest rates is a very broad tool, it's really not nuanced enough to effectively fix the problems, but the artificial manipulations are definately capable of causing problems.

When I say markets, they might slow housing prices enough to cause trouble, but not address inflation in other areas. There is also a risk that if investors see a fall in RE values, they'll leave the market irrespective of the mortgage rates, and then the BoC will pause the hikes too early.

Secondly higher rates will really hurt some people, and there will be political pressure to "do something", that something is basically give them so much money that it increases inflation pressure again.


Basically they screw up monetary policy time and time again, I think they'll screw it up this time, because they haven't shown themselves to be particularly competent/capable.


----------



## MrMatt

FWIW, I'm STILL enjoying these highs


----------



## james4beach

MrMatt said:


> FWIW, I'm STILL enjoying these highs


Are you referring to how the market is, relatively speaking, quite high compared to previous years?


----------



## Gator13

MrMatt said:


> FWIW, I'm STILL enjoying these highs


I am also curious. What highs are you referring to?

Your all time high as of today? 6 weeks go???


----------



## MrMatt

Gator13 said:


> I am also curious. What highs are you referring to?
> 
> Your all time high as of today? 6 weeks go???


My 1year return is okay, my 5 year return is phenomenal.

As the stocks were flying up like rockets, I fully anticipated and expected period of lower performance. I like to take a broader bigger picture view, and it drives me crazy how people look at stocks over such a short time period.

My hold time is DECADES, why would I care about 6 week performance? If 6wk performance mattered, I'd be in a 45day GIC.


----------



## Ukrainiandude

james4beach said:


> Are you referring to how the market is, relatively speaking, quite high compared to previous years?


Unless it’s five year low, it’s still high.


----------



## Gator13

MrMatt said:


> My 1year return is okay, my 5 year return is phenomenal.
> 
> As the stocks were flying up like rockets, I fully anticipated and expected period of lower performance. I like to take a broader bigger picture view, and it drives me crazy how people look at stocks over such a short time period.
> 
> My hold time is DECADES, why would I care about 6 week performance? If 6wk performance mattered, I'd be in a 45day GIC.


Ahhhh. Okay. Thanks for clarifying. I was curious what your reference was.

2021 was a gimme so I would think most on this forum have a positive 1 year return. I mentioned 6 week because I peaked at about +6.5% ytd in late March, but am now now +/- break even ytd after the bump today.

I am close to retirement and more focused on the dividends and distributions for our source of income. Now in my 50s, I can only hope I have decades to spend it. Haha Thanks for responding.


----------



## bigmoneytalks

Gator13 said:


> Ahhhh. Okay. Thanks for clarifying. I was curious what your reference was.
> 
> 2021 was a gimme so I would think most on this forum have a positive 1 year return. I mentioned 6 week because I peaked at about +6.5% ytd in late March, but am now now +/- break even ytd after the bump today.
> 
> I am close to retirement and more focused on the dividends and distributions for our source of income. Now in my 50s, I can only hope I have decades to spend it. Haha Thanks for responding.


Down 6 percent YTD but last year I ended with 14 percent... can't complain and over 15 years I hope to average 6 percent to hit my goals...so these short term bumps I try to ignore


----------



## MrMatt

Gator13 said:


> Ahhhh. Okay. Thanks for clarifying. I was curious what your reference was.
> 
> 2021 was a gimme so I would think most on this forum have a positive 1 year return. I mentioned 6 week because I peaked at about +6.5% ytd in late March, but am now now +/- break even ytd after the bump today.
> 
> I am close to retirement and more focused on the dividends and distributions for our source of income. Now in my 50s, I can only hope I have decades to spend it. Haha Thanks for responding.


I think that's an important point, it really matters what your reference is, and I think most people are using the wrong reference.

FYI, since you're in your 50's, I'd build out my retirement financing plan and start moving accordingly. I don't think you should lock it all into GICs the day you enter retirement.
I worked with a guy and we talked finances a LOT.
In 2006 we talked about asset allocation and it was time for him to transition for retirement, but he held on in 2007 hoping to squeak out a little bit more. 2008 was a tough year for his equities.
He retired in 2009.... He really regretted not following his plan.

That dramatically impacted my perception/opinion of volitility and the importance of having a plan.


----------



## nathan79

Gator13 said:


> Ahhhh. Okay. Thanks for clarifying. I was curious what your reference was.
> 
> 2021 was a gimme so I would think most on this forum have a positive 1 year return. I mentioned 6 week because I peaked at about +6.5% ytd in late March, but am now now +/- break even ytd after the bump today.


If you're in S&P 500 index funds you'd be down year over year. You would have to go back 13.5 months (to April 1st 2021) to get a positive return. If you're stock picking you could be up, down, or sideways.

On the other hand most of my Canadian picks are still up year over year. XIU is also up more than 5%.


----------



## Ukrainiandude

Nice day of new reverse highs. Should get a nice correction by fall. Cheer up margin and heloc Investors.


----------



## james4beach

I don't really see the big deal with the market in the big picture.

Stocks increased an incredible *+60%* from 2019 to the 2021 high.

And so far stocks are only down 15% from the all time high. Even if they fell another 30% (very possible) we just end up back at the 2019 level.


----------



## MrMatt

james4beach said:


> I don't really see the big deal with the market in the big picture.
> 
> Stocks increased an incredible *+60%* from 2019 to the 2021 high.
> 
> And so far stocks are only down 15% from the all time high. Even if they fell another 30% (very possible) we just end up back at the 2019 level.


Yup, it's like people don't look at a graph showing volitility, then wonder why stocks swing up and down.

It's important to note that people on this board are self-selected, and some of them are talking about crashes and other nonsense.

Somewhat tech comfortable.
Interested in finance/money
Many claim some level of financial knowledge.

The general population is even less knowledgable and informed... scary thought.


----------



## Ukrainiandude

james4beach said:


> I don't really see the big deal with the market in the big picture.
> 
> Stocks increased an incredible *+60%* from 2019 to the 2021 high.
> 
> And so far stocks are only down 15% from the all time high. Even if they fell another 30% (very possible) we just end up back at the 2019 level.


Hopefully we will see five years low by fall end. Then another five to ten years to reach all time highs. That would do a good job.


----------



## afulldeck

james4beach said:


> If anyone thinks the NASDAQ is returning to its highs any time soon, you could speculate on TQQQ. If the NASDAQ bounces back you couple *triple* your money. Extremely risky proposition obviously (not my kind of thing).


Nope. I've already taken the other side of that trade. I have a 10 year bet that SVC will out preform QQQ starting Dec 6 2020. Must say its looking in my favor in the early rounds.


----------



## Gator13

MrMatt said:


> I think that's an important point, it really matters what your reference is, and I think most people are using the wrong reference.
> 
> FYI, since you're in your 50's, I'd build out my retirement financing plan and start moving accordingly. I don't think you should lock it all into GICs the day you enter retirement.
> I worked with a guy and we talked finances a LOT.
> In 2006 we talked about asset allocation and it was time for him to transition for retirement, but he held on in 2007 hoping to squeak out a little bit more. 2008 was a tough year for his equities.
> He retired in 2009.... He really regretted not following his plan.
> 
> That dramatically impacted my perception/opinion of volitility and the importance of having a plan.


Our retirement plan is pretty much done. We have stopped buying more equities and we're now focused on building up a large cash reserve that will become a GIC ladder at retirement.


----------



## MrMatt

Gator13 said:


> Our retirement plan is pretty much done. We have stopped buying more equities and we're now focused on building up a large cash reserve that will become a GIC ladder at retirement.


I'd just question if over 20 years of retirement if all GIC makes sense.
I'd say for the first 5-10 years at least I'd keep some in stocks. But of course my plan isn't your plan.


----------



## Gator13

MrMatt said:


> I'd just question if over 20 years of retirement if all GIC makes sense.
> I'd say for the first 5-10 years at least I'd keep some in stocks. But of course my plan isn't your plan.


 We are currently ~85 percent in stocks (mostly individual stocks, but also a couple ETF's). The dividends & distributions from our equity will provide us with a comfortable retirement. We have now started keeping the dividends and distributions in cash as opposed to buying more stocks. This coupled with savings from our employment income between now and retirement and a couple large one off payments I will receive from work, should get us closer to 70/30 when we start retirement. We will use the interest from the GIC ladder for additional spending/gifting/donating.


----------



## Ukrainiandude

What a nice start of the day. Let’s get to five years reverse highs by fall.


----------



## londoncalling

Ukrainiandude said:


> What a nice start of the day. Let’s get to five years reverse highs by fall.


Are you acting on the current market trend? By this I mean are you shorting, playing options, or buying? Not all sectors are experiencing reverse highs. In fact some are at 52 week highs. Are you rotating sectors in any way? Or are you waiting for fall or a certain percentage drop? You seem to be certain we are going to hit 5 year lows. I think the current correction is healthy to take out some of the hype, but 5 year lows would have larger impacts on the overall economy. For that reason I hope that you are wrong on your forecast. I apologize for so many questions but I am trying to understand if you have a plan as to what you will buy and when.


----------



## Ukrainiandude

Microsoft's (MSFT) earnings/revenue/margins were growing year after year for more than 15 years, the stock price didn't get past the dot-com peak UNTIL 2016.


----------



## Ukrainiandude

Nice day, hope everyone enjoy new reverse highs.


----------



## Ukrainiandude

Canadian banks are near its 52 weeks low, where are all those smart arses, telling that raising rates are good for banks?


----------



## james4beach

Ukrainiandude said:


> Canadian banks are near its 52 weeks low, where are all those smart arses, telling that raising rates are good for banks?


Rising rates aren't good for banks. Consumers will struggle under higher rates, so the loans are going to deteriorate. There will be more non-performing loans and more losses.

Remember as well that Canadian banks are _very leveraged_ institutions. This works great during credit expansion but the reverse is true during credit contraction. They will have leveraged declines and losses, as all their assets decline in value.

The typical large Canadian bank is like a hedge fund. They have a balance sheet holding a mix of assets (loans, bonds, and risky assets) and the whole thing is leveraged. Their assets have been *highly inflated* due to central bank stimulus and zero interest rates. With their leverage, this has worked out tremendously well for them. But just like any other leveraged hedge fund, the reverse happens when asset prices decline.

It's not a disaster, but I would expect bank equities to decline sharply due to the inherent leverage in those companies. Same is true for REITs of course, which are leveraged RE holdings.


----------



## londoncalling

Banks have room for more decline. If one thinks rate hikes are bad for banks wait to see what foreclosures and bankruptcies do to their balance sheets. This doesn't mean we will see a RE crash. Even if we do the banks will survive but some real estate investors and home owners won't. For the most part anyone who didn't over extend or over leverage will be fine. I shudder to think what it would be like if we had high unemployment added to the current mix. Canadian banks have better regulations and loan provision than other countries. Being an oligopoly helps as well. Anyone remember the phrase "Too big to fail"? Banks will be saved come hell or high water.

I want to add to RY as it is my smallest holding of the big 5 (don't own CM) but am waiting for a better share price.


----------



## Ukrainiandude

Interesting reaction was yesterday. Sobering today.


----------



## londoncalling

Volatility reigns.


----------



## james4beach

Hope everyone really enjoyed those highs from last year. Man what good times... inflated asset prices are fun!


----------



## londoncalling

Investment returns saw in 2021 are not typical and one should not expect similar yoy returns on a long term basis. I haven't heard much from the FIRE fanboys and girls as of late. I am not talking about semi retired, or folks like yourself @james4beach who have ran worst case scenario plans and are prepared to adjust as necessary. I am referring to those that professed you can work and save for 5-7 years and then spend the next 40 or 50 doing whatever you wish. To be honest I believe most FIRE talkers were just trying to change the definition of retirement to better address a change in work life balance. Most had side hustles or blogs or books to peddle. A lot of it was well intended fin porn. Will FIRE be sent out to pasture like the Freedom 55 marketed in the 80s? Yes it is possible to achieve Freedom 55 or FIRE but for the majority it is not feasible. I believe many FIRE folk failed in their planning by using the assumption of steady market returns(no volatility or possibility of a bear) and RE prices going to infinity. I don't blame them. Basically, from 08 onward was a pretty good run in stocks with quick rebounds and RE values saw increases typically made over years or decades on a monthly basis.


----------



## james4beach

londoncalling said:


> I am not talking about semi retired, or folks like yourself @james4beach who have ran worst case scenario plans and are prepared to adjust as necessary.


Well to be clear though, I still work (just not full time). I'm currently trying to line up more contracts.


----------



## Thal81

londoncalling said:


> I haven't heard much from the FIRE fanboys and girls as of late.


I am a FIRE fanboy, even though I don't talk about it much on this board. I was actually going to leave the workforce this year. I'm still considering it despite the ~15% drop in my portfolio (so far!), but it seems it would make more sense to stay employed for the duration of the (possible) recession. This stock/bond market downturn is an opportunity to make substantial gains in the long term which would make a big difference when I'm older, so I feel like I should take advantage of it. It's a really tough decision though, because mentally I was done with work...


----------



## MrBlackhill

I personally don't like the FIRE movement because it's not inclusive. FIRE movement is a rich people's movement with the aim to retire early, as per the acronym. And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce.


----------



## KaeJS

MrBlackhill said:


> And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce.


... So what? 

People should just continue to work instead of retiring if they have the means just to fill those positions? Lol


----------



## sags

My wife went back to part time work for something to do, but basically we were FIRE at age 55.

We both worked for employers with DB pensions. We both paid the maximum into CPP since 1967.

We both lived in Canada for more than 40 years to collect full OAS. We basically hit all the right notes in the retirement melody.

Without the above, which is basically due to luck, persistence, and being born in Canada,........we would still be working full time.


----------



## sags

People without DB pension plans, haven't paid the max into CPP for enough years, or haven't lived in Canada for 40 years, have some holes to fill in.


----------



## sags

I know a couple who emigrated to Canada 15 years ago.

The husband started a renovation business, mostly for cash under the table and I am pretty sure he didn't pay into CPP.

His wife worked at a part time low income job and didn't pay a lot into CPP. Neither of them would get enough years in Canada to collect full OAS.

As they got older, it suddenly dawned on them their future retirement in Canada looked rather bleak........like collecting partial OAS/GIS level of bleak.

So they sold their house at the peak price and off to Spain they went with the proceeds to retire.

There is something to be said for staying in one place, working for one decent employer, contributing the max to CPP, and living in Canada for 30 or 40 years.

That deeply tanned, golden haired young man combing the beaches and enjoying life today, has a good chance of becoming that leather skinned old man living in a run down apartment while subsisting on government welfare in the future.


----------



## milhouse

londoncalling said:


> To be honest I believe most FIRE talkers were just trying to change the definition of retirement to better address a change in work life balance. Most had side hustles or blogs or books to peddle.


I also kind find it annoying and _somewhat_ disingenuous when FIRE talkers are _dependent_ on side hustles, blog income, book sales, etc. On the otherhand, I also find it understandable that some early retirees will end up doing something for fun or stimulating that will generate income. 
IMO, it's really about being in a position to be able to make decisions where generating income isn't a primary factor. 


londoncalling said:


> Will FIRE be sent out to pasture like the Freedom 55 marketed in the 80s? Yes it is possible to achieve Freedom 55 or FIRE but for the majority it is not feasible.


I know there's a lot of stinkeye thrown at the Freedom 55 stuff but I've got to admit that it was one of the things that initially got me thinking about retirement planning and take basic steps in my mid 20's in the 90's. But agree that Freedom 55 / FIRE will be difficult to achieve for most for a variety of reasons. 



MrBlackhill said:


> FIRE movement is a rich people's movement with the aim to retire early, as per the acronym.


I find that the FIRE movement has so many different flavours. No doubt that chasing down FIRE with what is considered a middle class lifestyle generally requires a high income, particularly in areas with high housing costs. However, I've met quite a few folks who are happy living a very simple lifestyle and have little wants and thus don't need lot of income to build a large enough nest egg.



Thal81 said:


> I am a FIRE fanboy, even though I don't talk about it much on this board. I was actually going to leave the workforce this year. I'm still considering it despite the ~15% drop in my portfolio (so far!), but it seems it would make more sense to stay employed for the duration of the (possible) recession. This stock/bond market downturn is an opportunity to make substantial gains in the long term which would make a big difference when I'm older, so I feel like I should take advantage of it. It's a really tough decision though, because mentally I was done with work...


Yeah, my present regret is not having income now to throw at all the discounts in the markets. But you've read my thread and I was pretty mentally done too.


----------



## milhouse

sags said:


> There is something to be said for staying in one place, working for one decent employer,


That's so hard nowadays in the corporate world. There's little loyalty from employers and correspondingly employees. At my megacorp, I saw a lot of good people let go because of business decisions that made financial sense at the time. I then discuss with my boss at the time that it's ridiculous for our company to have these employee engagement surveys asking questions like "It would take a lot for me to leave the company." with a 5 point answer scale when it's basically quid pro quo. However, I also realize these engagement surveys just serve to give the company a snapshot of turnover risk so might as well just game the answers to try to angle for better pay and benefits.


----------



## milhouse

Ukrainiandude said:


> Canadian banks are near its 52 weeks low, where are all those smart arses, telling that raising rates are good for banks?


No doubt the bank share prices are getting hit, and hit, and hit. 
What's kind of surprising though is CM's CEO giving a presentation yesterday (Thu) which shows some pretty ambitious CAGR's (mid/high single digits, low double digits) in most of their divisions through 2025 in light of current and forecasted economic conditions. Yeah, they still have to execute and deliver but it would be pretty bad to give such guidance and miss it.

EDIT: Typo


----------



## james4beach

MrBlackhill said:


> And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce.


Don't worry. I think very few highly paid professionals would do FIRE.

Most get hooked on expensive lifestyles and get trapped in a big mortgage. I don't think that many of my coworkers can just walk away from their high salaries, they really need their jobs to pay all their bills.

FIRE requires frugality and probably some rejection of consumerism. Most Canadians are not frugal, but quite the opposite: they are hooked on luxury lifestyles. Consumerism forces people to keep working.


----------



## Gator13

MrBlackhill said:


> I personally don't like the FIRE movement because it's not inclusive. FIRE movement is a rich people's movement with the aim to retire early, as per the acronym. And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce.


I don't agree. 

I know a few young couples following Fire Agile type lifestyles. In all cases, they have invested heavily in themselves so they can earn a good income, they are very selective on how they spend their money, they are non-materialistic and they have clearly defined goals.

Some will do better than me, some will be similar and some may have less. I enjoy hearing and seeing others achieve their goals. There are some great diary stories on this forum. Also, someone like @james4beach often mentions his modified semi-retirement lifestyle while still being young. It might not be a lifestyle choice for everyone, but I applaud him for chasing his goals.

I definitely don't agree with this either: "And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce."


----------



## MarcoE

MrBlackhill said:


> I personally don't like the FIRE movement because it's not inclusive. FIRE movement is a rich people's movement with the aim to retire early, as per the acronym. And if everybody with a high-paid specialised job which are highly in demand end up retiring early, it puts a pressure on the workforce.


I wonder if many of them, once they actually do retire early, will find themselves bored and go work again.


----------



## KaeJS

MarcoE said:


> I wonder if many of them, once they actually do retire early, will find themselves bored and go work again.


I can't understand how anyone could ever get bored.

I mean, I know people do. But it just seems like it would never be a possibility for me to get bored. I can't find ENOUGH TIME to do things. I have to cross things off I'll never be able to do just because time doesn't allow for it!


----------



## MrBlackhill

MarcoE said:


> I wonder if many of them, once they actually do retire early, will find themselves bored and go work again.


Same comment as @KaeJS 

Give me even 10 lives living 100 years each without ever working and I still wouldn't get bored.

People who get bored with their free time doesn't understand what it is to live. Or have absolutely no curiosity and openness to new interests, knowledge, people, locations, cultures, etc.


----------



## Thal81

It's why I believe so much in FIRE. I want the time do to everything and anythign I want. And not just the time, but the physical and mental energy. Work takes most of that away from me. To be fair, work has also made me a better human being, but I find it has diminishing returns. At some point you need to move on and do better things with your life.


----------



## MrBlackhill

Thal81 said:


> It's why I believe so much in FIRE. I want the time do to everything and anythign I want. And not just the time, but the physical and mental energy.


Ok, then why not work 4 days a week instead so you can have more free time while you are young and full of energy? It would also help your mental health and physical health. Why retire early? Why not take that extra money to have more time *now*?

I agree way more with people who either shift right away to fewer working hours, or work part time than with people who race for the retirement, as if life started when retirement started. Life is happening here and now, so you need more time here and now.


----------



## Gator13

MrBlackhill said:


> Ok, then why not work 4 days a week instead so you can have more free time while you are young and full of energy? It would also help your mental health and physical health. Why retire early? Why not take that extra money to have more time *now*?
> 
> I agree way more with people who either shift right away to fewer working hours, or work part time than with people who race for the retirement, as if life started when retirement started. Life is happening here and now, so you need more time here and now.


This is a very solid point. 

Unfortunately, a lot of jobs don't allow for this flexibility. I like the idea that some companies are trying a 4 day work week and having good success with it.


----------



## scorpion_ca

MrBlackhill said:


> Ok, then why not work 4 days a week instead so you can have more free time while you are young and full of energy? It would also help your mental health and physical health. Why retire early? Why not take that extra money to have more time *now*?


4 days a week doesn't mean you do 4 days worth of work. It means to me that 5 days worth of work needs to be completed within 4 days.


----------



## Thal81

scorpion_ca said:


> 4 days a week doesn't mean you do 4 days worth of work. It means to me that 5 days worth of work needs to be completed within 4 days.


It would also mean missing meetings on your day off and often have to play catch up with coworkers. That kind of arrangement doesn't work for most jobs where team work is required, unless the whole organisation does it.


----------



## MrBlackhill

No but hopefully soon the jobs will become 4-day weeks. In the past, people worked 6-day weeks. Yet here we are today working 5-day weeks.

I agree that working 4 days while most people at your job still work 5 days may lead to some issues, but I've seen colleagues make that deal and they are super happy with it.

Lots of studies say that the benefits of a 4-day week can make you almost as productive as when you worked 5 days, so you don't really have to rush and squeeze more job in fewer days.

People also complain having too many meetings and some do a 1-day no meeting per week. No issue if that's your day off.


----------



## MrMatt

scorpion_ca said:


> 4 days a week doesn't mean you do 4 days worth of work. It means to me that 5 days worth of work needs to be completed within 4 days.


That's the entire premise behind the book The 4 hour week.

Honestly watching organizations, good management can do a lot to move to more efficient work.

Back in my early career everyone had to take an effective meetings course (it was short), and if people violated the rules, it was expected to be raised as an issue.

So we always had stuff like.
1. Agendas and decisions to be made.
2. Ideally most background data provided in advance etc.

Almost no organizations do that.
The one REALLY easy thing to do in a meeting, is to set the time of the next meeting while everyone is in there.

I was shocked how many groups did meetings without agendas, or without providing background info in advance, or people not reading the background info.
Then the "we'll meet in month", then in a month the scramble to find time.

Those types of problems are a management failure.

The best thing about one place was that the meetings were planned so well, we just had department reps go through and basically checklist the agenda, 80% of the people who did the work for the meeting didn't even have to show up. FYI, the reps weren't necessarily managers.


----------



## james4beach

milhouse said:


> I also kind find it annoying and _somewhat_ disingenuous when FIRE talkers are _dependent_ on side hustles, blog income, book sales, etc.


Very true. One of my coworkers was in the news a few years ago when he decided to retire at age 30, or maybe it was 35. I can't remember the details.

The article made it sound like the couple had done FIRE and completely retired. But in fact, they still had minor sources of income through side hussles. Another great example is Mr Money Mustache himself, who has published some rather popular books (and he's been at conferences too, so I'm sure he's paid to appear).

Kind of ironic actually, because FIRE people may think of Mr Money Mustache as a template for retiring early, but I would argue he isn't retired. He's not just living off his portfolio... he's still working!


----------



## james4beach

MrBlackhill said:


> Ok, then why not work 4 days a week instead so you can have more free time while you are young and full of energy?


Before I quit my full time job, I went to my employer with exactly this request. I had asked to work either 3 or 4 days a week (based on total hours in a month). At the time I decided that I need more leisure time so that I can improve my health, get exercise, and see my friends & family.

For a while, they let me do it (using unpaid time off) and this was an absolutely amazing time for me. I can't explain how happy I was. My income was still rather high, but I also had free time. For example, I went skiing in the middle of the week. Or I stayed in Las Vegas for a week, doing a bit of work from my laptop by the pool.

I loved that setup of about 60% to 80% workload. But then, management crunched some numbers and determined the company can't allow this. So they told me I can't do that any more.

That's when I quit.


----------



## m3s

m3s said:


> Nancy Pelosi is loading up with millions in GOOG, DIS, RBLX, MU options
> 
> What does she know? Lockdown 2.0? More easy money?
> 
> The proverbial sky is falling and she's betting on youtube, cartoons and video games


Nancy Insider Pelosi just made $600k on NVDA trade in a month


----------



## Covariance

m3s said:


> Nancy Insider Pelosi just made $600k on NVDA trade in a month


Her partner's option trade?


----------



## Eclectic21

KaeJS said:


> I can't understand how anyone could ever get bored.
> 
> I mean, I know people do. But it just seems like it would never be a possibility for me to get bored. I can't find ENOUGH TIME to do things. I have to cross things off I'll never be able to do just because time doesn't allow for it!


Agreed ... though from observation, a sole focus on work without developing other interests seems to be a key driver for "I'm bored in retirement ... back to work I go".


Cheers


----------



## Eclectic21

MrBlackhill said:


> Ok, then why not work 4 days a week instead so you can have more free time while you are young and full of energy? It would also help your mental health and physical health. Why retire early? Why not take that extra money to have more time *now*?


Likely the same reason why WFH was viable for me for three decades plus but lightly used.

Too long WFH without a big project or other acceptable justification would result in the manager ignoring what was being accomplished, panic that WFH was hiding that I was goofing off and demand I be back in the office. 

I always found it ironic as it was easier to goof off at work than WFH. 


There's the case the employee can make, the metrics the employee can prove it works with but ultimately, if the levels of management are steeped in something else - they'll limit or kill it.


Cheers


----------



## MrBlackhill

Eclectic21 said:


> There's the case the employee can make, the metrics the employee can prove it works with but ultimately, if the levels of management are steeped in something else - they'll limit or kill it.


I find ironic that at my job, one of my colleagues asked for 4-day workweek and the management panicked as if it was unacceptable to allow it. They ended-up agreeing given the family situation she exposed, but with a drop in salary as they would not even allow her to do all of her hours within those 4 days. Here comes the irony: many of my colleagues are assigned to projects where they don't even have to work 37.5h to reach their goals, their managers are aware and the company has nothing else to give them. Some could work only 4 days, 3 days or even only 2 days a week. Yet those people have their full pay for their "presence". I've even seen people with no projects for months but still on the payroll because of labour shortage as they want to make sure they have people available when they end up getting new projects.


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## james4beach

MrBlackhill said:


> I've even seen people with no projects for months but still on the payroll because of labour shortage as they want to make sure they have people available when they end up getting new projects.


This is a very legit concern of management. My old employer lost people (and also laid off) during the pandemic, but now is extremely under-staffed and desperate for people. It actually is preventing them from earning income.

So there's definitely value in keeping staff ready to go, even if they are idle at the moment. You can't always find people the moment you need them.


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## m3s

Eclectic21 said:


> Likely the same reason why WFH was viable for me for three decades plus but lightly used.
> 
> Too long WFH without a big project or other acceptable justification would result in the manager ignoring what was being accomplished, panic that WFH was hiding that I was goofing off and demand I be back in the office.
> 
> I always found it ironic as it was easier to goof off at work than WFH.
> 
> There's the case the employee can make, the metrics the employee can prove it works with but ultimately, if the levels of management are steeped in something else - they'll limit or kill it.


Read an article that managers don't like WFH because it makes them irrelevant

With the right people I believe you could cut out a lot of manager and easily do a blend of WFH and on site

Some work is just more efficient without office distractions


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## james4beach

m3s said:


> Read an article that managers don't like WFH because it makes them irrelevant
> 
> With the right people I believe you could cut out a lot of manager and easily do a blend of WFH and on site
> 
> Some work is just more efficient without office distractions


Depends a lot on the type of work. I've been doing (entirely remote) work as a Project Manager and I can also tell you that many people do need some guidance and management, even if it's virtual. I'm working with a very sharp guy, he's absolutely brilliant, but does need some direction. If he was left entirely on his own without any checks on timelines, priorities, etc he wouldn't be very efficient.

On the other hand, the "management" sector has ballooned ever since the 1980s and many big companies now have layers upon layers of managers who do very little. They have become a power structure which grasp onto power and find ways to make themselves relevant.


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## MrBlackhill

m3s said:


> Read an article that managers don't like WFH because it makes them irrelevant





james4beach said:


> On the other hand, the "management" sector has ballooned ever since the 1980s and many big companies now have layers upon layers of managers who do very little. They have become a power structure which grasp onto power and find ways to make themselves relevant.


Agreed and even before WFH there is much irrelevant mid-managers. Bullsh*t jobs.

I used to work in small organizations where people would have multiple hats and had to be polyvalent. Now I work in a big organization and there's about 6 different types of managers who overview a project consisting of a team of... 6 people. It would not require more than 2 and I'm being very generous.



m3s said:


> Some work is just more efficient without office distractions


My wife has to go back to the office a few days a week. When she WFH, she starts at 8h and stops at 17h, she's highly focused and efficient. When she goes at the office, she gets there at 9h, leaves at 16h, she wastes lots of time trying to get the secured connection because the installations at her office are so bad, then she has a hard time focusing with all the noise from the people in the open space who all end up being in videoconferences all day long... with the people who WFH.


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## m3s

MrBlackhill said:


> Now I work in a big organization and there's about 6 different types of managers who overview a project consisting of a team of... 6 people. It would not require more than 2 and I'm being very generous.


You mean like this? Oh and due to difficult economic environment we're gonna have to let Jose go











MrBlackhill said:


> My wife has to go back to the office a few days a week. When she WFH, she starts at 8h and stops at 17h, she's highly focused and efficient. When she goes at the office, she gets there at 9h, leaves at 16h, she wastes lots of time trying to get the secured connection because the installations at her office are so bad, then she has a hard time focusing with all the noise from the people in the open space who all end up being in videoconferences all day long... with the people who WFH.


Yea our work computers and connections are also horrible. Sometimes I look at the task manager and it's like 99% MacAfee which I'm convinced is China downloading all my work. Then you spend half the time small talking and "networking" with everybody or waiting for meeting to start/end


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## Eclectic21

MrBlackhill said:


> ... Now I work in a big organization and there's about 6 different types of managers who overview a project consisting of a team of... 6 people. It would not require more than 2 and I'm being very generous.


I thought that was only supposed to happen only in gov't and not in the private sector? 

Never had the misfortune to work anywhere that inefficient. 

The closest was a client that did not go with setup. Since the client typically had not experience with the software nor planning such a large software change - the consulting firm's project manager (PM) was supposed to pair with a client PM. At the start, the firm's PM did most and over time, everything would shift to the client PM.

For some reason, despite signing all the contracts - the client added a different consulting firm's PM who had experience with the software. Lots of finger pointing about which PM had the "right" path forward. Also gamesmanship like the three PMs disagreeing as to whether the test system performance was "as expected", "crap" or "so-so" or calling the technical team for an update on the fix for issues that had not been reported to the tech team but had been reported as the roadblock for a week to other teams.


The other one that I shook my head at was the digital key update plan from the vendor. Four hours of work for the technical guy and fourteen hours for the PM to manage the one technical resource. Guess which one of the two had a significantly higher billing rate? 


Cheers


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## Eclectic21

m3s said:


> .... Yea our work computers and connections are also horrible. Sometimes I look at the task manager and it's like 99% MacAfee which I'm convinced is China downloading all my work.


LOL ... maybe it is someone at work sending their tasks to China. 








Outsourced: Employee Sends Own Job To China; Surfs Web


What began as a company's suspicion that its infrastructure was being hacked turned into a case of a worker outsourcing his own job to a Chinese consulting firm, according to reports that cite an investigation by Verizon's security team. The man was earning a six-figure salary.




www.npr.org





Cheers


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## m3s

Naw in this case it would be China degrading or monitoring

Relying on Taiwan for all computer processors was as intelligent as Germany relying on Russia for energy

Might as well use Huawei, TikTok and zoom


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## Ukrainiandude

New reverse highs.


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## m3s

Ukrainiandude said:


> New reverse highs.
> View attachment 23637


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## james4beach

Ukrainiandude said:


> New reverse highs.


The S&P 500 (total return) is back to where it was in April 2021.

Stocks have barely declined. The market is still *way above* its pre-COVID high.


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## londoncalling

Anyone who got into the market in the last 18 months will likely not be pleased with their performance. For those who bought before 2021 have done alright. Like most charts up and to the right is the goal and likely inevitable outcome over the long term. I see 2022 as a year to keep buying. It is also a good year to check your true risk tolerance whether in accumulation or drawdown.


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## m3s

FedEx crashing after hours as shipment volumes are down

Closing locations, cancelling flights and projects


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## londoncalling

Oh my! Down 16.5% in after hours.

added later: UPS also down 8.5% in aftermarket.


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## m3s

It's expected that tech and speculative bubbles would have to crash. I sold a lot of them even before the top

But FedEx is different to me than speculative assets. That signals to me demand has been destroyed as intended by the rate hikes.

Maybe now we get some deflation? Vote for JT he can print lots of fiat to save us


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## londoncalling

FDX down 21% today.


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## m3s

londoncalling said:


> FDX down 21% today.


Sounds like nothing but it's not exactly a meme stock


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## londoncalling

I was hoping that AMZN would tumble as an after effect so that I could initiate a position. However, the quality Nasdaq stocks have found a floor. AMZN is not just a retail company anymore. This has already been discussed elsewhere on this forum about that companies strengths.


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## m3s

londoncalling said:


> I was hoping that AMZN would tumble as an after effect so that I could initiate a position. However, the quality Nasdaq stocks have found a floor. AMZN is not just a retail company anymore. This has already been discussed elsewhere on this forum about that companies strengths.


AMZN was recently chosen among a few companies to prototype e-payment UI/UX with the incoming digital Euro

"The European Central Bank (ECB) said it will collaborate with five companies to develop potential user interfaces for the digital euro: CaixaBank and Worldline will be working on peer-to-peer online payments, EPI and NEXI on point of sale payments initiated by the payer, and Amazon on e-commerce payments. The aim of this prototyping exercise is to test how well the technology behind a digital euro integrates with prototypes developed by companies. It is expected to be completed in the first quarter of 2023 when the ECB will also publish its findings."

AMZN was providing cloud services to the US govt until Trump took it personal to switch it to Microsoft (amazon service was far better)


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## Ukrainiandude

m3s said:


> digital euro


Aren’t all major currencies already digital ? Don’t remember the last time I used cash payment.


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## m3s

Ukrainiandude said:


> Aren’t all major currencies already digital ? Don’t remember the last time I used cash payment.


That's just a layer 2 that settles a month later. You pay about 4-5% merchant fees for that

Then you get some free "pts" if you have a good social credit score that are basically memecoins for being a good sheep or maybe 2% cash back

Digital euro would not run on insecure centralized private company skimming 3% from the entire economy


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## sags

Countries adopting central bank digital currencies is one step towards a fee on all transactions, which will pay the cost of a Universal Basic Income.

The master plan is in place and the "great reset" has begun.


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## Ukrainiandude

m3s said:


> That's just a layer 2 that settles a month later. You pay about 4-5% merchant fees for that
> 
> Then you get some free "pts" if you have a good social credit score that are basically memecoins for being a good sheep or maybe 2% cash back
> 
> Digital euro would not run on insecure centralized private company skimming 3% from the entire economy


Everything will become 4-5% cheaper at once and MC and Visa will go belly up? Do you believe that?


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## m3s

Ukrainiandude said:


> Everything will become 4-5% cheaper at once and MC and Visa will go belly up? Do you believe that?


No because MC and Visa have already acquired the talent and capabilities to integrate

They aren't so dumb to think the gravy train would last forever and that things don't change

Especially when the status quo is based on obsolete code and mainframes and not secure


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## m3s

sags said:


> Countries adopting central bank digital currencies is one step towards a fee on all transactions, which will pay the cost of a Universal Basic Income.
> 
> The master plan is in place and the "great reset" has begun.
> 
> View attachment 23649


Personally I would much rather the "tx fees" go to public goods than to private financial services

We have the tech to cut out all the greedy suits in sky scrapers (oh ya post-covid they are working from home or the bahamas)

No need for private banks. In Lebanon people are robbing the banks just to get their own money


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