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September 23rd, 2009 at 8:28 pm
48 stagnate
I agree:
Condo buyers will likely be the most vulnerable in a downturn for a number of reasons. One of them is that they are on the cusp of affordability for most buyers.
Condos that have not had an engineering report tp determine the degree of leaking ( Note: ALL condos leak to some degree) should be avoided.
The best condo buys re: value are those that have gone through a proper restoration with a building envelope specialist , other than those that were built correctly to start.
September 23rd, 2009 at 7:32 pm
@Jim:
Hi Jim,
Merger arbitrage is most easily explained with an example. Say Company X offers to buy Company Y at 10 bucks with the transaction expected to close in late November. Company Y agrees to the purchase. Company Y might trade for 9.80. The idea is to buy Company Y stock now, and collect 10bucks in November.
It is a measly 2 percent, but do that a few times a year, and you have serious returns. Also, with some luck you might see a deal “sweetened”, ie, the offer price increased. When that happens, it is very sweet indeed!
You have to exercise a lot of caution, since if a deal falls through you might lose your shirt.
Academic studies on merger arbitrage are all over the place in terms of how successful it is. All I can say is it isn’t for everyone, but so far it has worked well for me and I have been able to avoid the failed transactions (eg, BCE).
September 23rd, 2009 at 7:21 pm
for those with healthy cash reserves there is going to be big opportunities in leaky condos. with the government pulling the plug on the loan program there will be plenty of owners not be able to make the assessment and needing to liquidate. for a decent negotiator easy 40-50,000 dollar profit per pop. like taking candy from a baby. the globe article is spot on, for those with a mortgage the best investment is payments against the mortgage, hands down.
September 23rd, 2009 at 6:58 pm
I was hoping the DOW would get to 9999 before collapsing but I’ll settle for 9917.
Got gold?
September 23rd, 2009 at 6:39 pm
They just painted my 4,000 sq ft house as well … approx value c$10k
September 23rd, 2009 at 6:36 pm
My rent went down 10%
September 23rd, 2009 at 6:26 pm
@patriotz:
Rents are not falling.
September 23rd, 2009 at 5:03 pm
@RealPaul, #27…thanks for the excellent advice!
September 23rd, 2009 at 4:17 pm
The best investment? Paying off your mortgage
http://www.theglobeandmail.com.....le1297679/
September 23rd, 2009 at 3:53 pm
VHB used to have a great historical chart of Vancouver RE prices which he brought up-to-date from time to time. Does anyone have a similar chart? I though it was a perfect example of a picture telling more than a thousand words.
September 23rd, 2009 at 3:30 pm
From Kuntsler’s blog
http://kunstler.com/blog/2009/......html#more
It was also ironic, tragically so, that during this same period Wall Street began to seek some new way to make real money beyond stock and bond markets, which didn’t seem to produce wealth at all for more than a decade when inflation was factored in. By a fortuitous coincidence, the revolution in computers enabled Wall Street bankers to concoct abstruse new species of tradable paper securities based on bundles of debt that seemed to produce miraculous earnings. It had the added advantage of being inscrutable to both investors and financial regulators. Due diligence became impossible and moral hazard spread like ringworm in a dormitory. The bulk of the securitized debt originated in home mortgages and the larger result was a gigantic racket ramped up between Wall Street and the US government to conceal all the structural weaknesses of a de-industrialized US economy behind a hyperbolic commerce in the very thing that the American public cherished most: their houses, which, understandably, everybody had come to call “homes.” Wall Street might as easily have commoditized mother and apple pie – if you could sell each one for half a million dollars.
The banking fiasco still underway is at once a proxy for the larger failure of the American economy and the greatest fissure in it. Put as simply possible: we can’t service our debt, we can’t generate more debt, and the notional “capital” we thought we possessed is dissolving into nothingness. The federal government and Wall Street remain committed to supporting all the rackets associated with a suburban sprawl economy that has entered its own zone of remorseless failure. It is failing as a capital investment first, and is secondarily failing as a practical living arrangement. The two failures will continue in a close race toward terminal entropy.
The dirty secret all along was that by 2005 there was no economy left in the USA beyond the suburban sprawl economy with its so-called “consumer” nexus — largely devoted to the outfitting of suburbia. More mortgage debt (and credit card and car loan debt) will go bad and the investment paper that represents it will go bad and it will eventually destroy our current system for accumulating, valuing, and deploying wealth. It will not destroy the function of capital — no matter how many angry intellectuals inveigh against the straw man of capital-ism, as if it were merely a belief system – but it will be a long long time before anything sturdy or credible in the way of banking will be reconstructed out of the wreckage.
==========
Kunstler makes good points re the growth in suburbia after WW II…
It was the worthlessness of the tradable securitized debt associated with all those overpriced (and overvalued) chipboard and vinyl houses, smeared recklessly over the American landscape, that started all the trouble in the first place. And it is our inability to come to grips with that underlying catastrophe that prolongs the resolution of the still-florid banking crisis — since the federal government is doing everything possible to prop up the failed capital equation of terminal suburbia, and to deny the obsolescence of that version of the American Dream and all the mechanisms for delivering it.
The suburban project was not a conspiracy by the likes of Robert Moses, Walt Disney, Frank Lloyd Wright, and President Eisenhower to produce a living arrangement with no future. It was the emergent, self-organizing result of special circumstances in a particular time and place: post World War Two America, with an immense supply of cheap oil, cheap land, and the industrial capacity to churn out all the necessary components for a car-dependent development pattern. Suburbia was spawned out of a couple of persistent themes in American cultural history: 1.) that cities and city life were no good; 2.) and that the romance of settling the wilderness could be reenacted, at great profit, in all that space beyond the towns and cities. It would be silly to deny the appeal of this arrangement at its inception. By the end of WW II, city life in the popular imagination was reduced to one potently awful image: Ralph Kramden’s apartment in “The Honeymooners” TV show.
=====
IMHO….Wall Street found and exploited its last bulk load greater fools. The SHTF sooner than later.
September 23rd, 2009 at 3:13 pm
From Mish’s blog
So how can the Dow be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they’re worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save.
Even more curious, how can the Dow be so far up when every business and Wall Street executive I come across tells me government is crushing the economy with its huge deficits, and its supposed “takeover” of health care, autos, housing, energy, and finance? Their anguished cries of “socialism” are almost drowning out all their cheering over the surging Dow.
The explanation is simple. The great consumer retreat from the market is being offset by government’s advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie’s paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.
Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in.
===
Gov’t is the people, yet Gov’t has decoupled and worked against the people.
Gov’t is that phantom investor.
September 23rd, 2009 at 3:07 pm
30 patriotz:
I agree, and I fail to see why the Gov’t wants to stick its nose in.
Stratas are supposedly a democracy, and many of them may be forced to change their bylaws to allow renters , or all it would take is a majority of non -residents to change the bylaw.
As you allude to and I agree with your point, it’s probably a lifeline, but I don’t think it will limit the supply, only encourage more, but that the Gov’t would even consider it is a cause for concern .
September 23rd, 2009 at 2:55 pm
Hovering Says:
September 23rd, 2009 at 11:40 am
face it supraboy you’re a tosser.
—————-
Fixed it for you.
September 23rd, 2009 at 2:27 pm
25
“So how’s that spike on the stock markets for all you bears feeling today? muhahahaa, up we go!”
Ummm Superlittleboy, the markets went down today. How’s that decline working for all you bulls.
Another day of last minute flash trading by institutions – you know, the ones “loading up”! Lol – too funny
Stay away from investment advice superlittleboy, and stick to dungeons and dragons in your “shared” house with your family.
September 23rd, 2009 at 2:20 pm
#3
“Put it into the stock markets. Anyone who puts it into GIC is plain stupid. Overload commodities on dips. Too bad this isn’t a stock forum.”
Superlittleboy, nobody wants investment advice from someone that plays the imaginary stock market. Nor does anyone want advice from someone who gets it from their mommy and daddy, all the while waiting for them to pass on, so you can switch from “sharing” your parents home to “owning it.”
September 23rd, 2009 at 2:07 pm
patriotz
Corp bonds took a beating last fall b/c hedge funds had leveraged up to take the 150 bpts out of the spread … like the VCR RE market works great as long as mkts going your way … unwind was painful but it is over … I wouldn’t own pref’s unless they’re adjustable as inflation risk will kill you owning what really is a perpetual bond. Corp bonds in the the trip b to single a are your best bet and try to keep your duration below 5 years. GIC’s should only be a small portion of your net worth – illiquidity scares me. On the equity front stick to highest quality high yielding stocks and as much as I hate the gold “loons” I don’t think you can ignore the commodity.
I’m almost all cash again but that will change after October.
September 23rd, 2009 at 1:46 pm
As well as GIC’s I have some money in corporate bonds and preferred shares. The latter can be volatile and you must know what you are doing. Corporate bonds and preferreds took a big beating during the crisis of last winter and I bought a lot more on margin, and took profits later and paid off the margin.
Yes that’s risky, but that’s the way you make money. And no I don’t recommend it to anyone without a lot of experience in stock market investing.
One more thing – I’m not buying now.
September 23rd, 2009 at 1:40 pm
@Anonymous:
That’s like trying to predict the year of Michael Jackson’s premature death. Every year it seemed more likely, but there was just no way of knowing until it happened.
September 23rd, 2009 at 1:36 pm
@NO -LYMPICS:
No. There is no shortage of rental condos, because condo rents are falling. And it doesn’t matter to supply whether a condo (or house) is rented out or not, as long at someone lives there.
So what’s the real motive? I think it’s to try to give strapped condo specuvestors and FB’s a lifeline by letting them rent out their condos, instead of having to sell them or having them foreclosed. It’s an attempt to limit the number of condos on the market and avert a price collapse.
But it won’t work anyway.
September 23rd, 2009 at 1:19 pm
Mostly into cash right now, about 60% in GICs (short term, in case interest rates every go up-looks doubtful at this point).
I do have a few shares, though they have not yet recovered to their book value. Shares are those like XFN (still at less than peak price) and a couple mining penny stocks (kind of my way of playing the lotto…hey, ya never know!)
Waiting…waiting….that’s right, if houses in my neighborhood keep selling for $700k (the last one sold in a week!) I’ll never buy!
September 23rd, 2009 at 1:15 pm
I’m currently out of the equity markets, I feel they are a mug’s game at this point. I have some cash spread around in “high” interest savings accounts at various financial institutions. Just remember to stay under the $100K insurable limit with each account in your name though. Also I think it’s a good idea to purchase some gold because it’s good insurance against a potential currency crisis (it could happen…). I know there are better strategies for greater returns, but I’m just not comfortable enough with the whole economic situation at this point to jump into anything more risky; but maybe next year…
For me, the plan is to buy sometime after Summer 2010, but not any sooner than that.
September 23rd, 2009 at 11:54 am
@pundit bandit:
#24 PB, there should be no fee for a self administered RESP through TD Waterhouse, the discount brokerage arm of TD Canada Trust. You can set up an account at any branch.
If you are looking for a vehicle for a very young child and have a 15 to 18 year time horizon you can afford a considerable latitude of speculation ie: resource, energy and precious metal mutual funds. The outlook long term for commodities is positive.
Consider the Dividend fund ( for example as an anchor) which will continue to show value with a lower beta. The delta on bonds will not get you where you want to go. These fund types are typically low MER and have zero front or back loads. This is also an easy structure to manage as you can set up pre authorised debits from a personal account and the paperwork is set up to auto quailfy you for the governments grant.
Aside from the Muts ( at CIBC or wherever ) which are basically similar in holdings with the exception of TD precious metals which for some reason out performs many of its peers, you can also use ETF’s to addmix your self directed RESP, but this takes a bit more research on your part and you’ll get the grant all the same, so no real issue there. I don’t suggest you go to Soupy for advice.
Start early, stay at it, time and compound intrest is a good thing. I used a high beta mix and it payed off for me, but markets cycle differantly in differant time frames. But I’m still a big believer in the commodity super cycle for a variety of reasons, but the fundamentals make more sense than real estate, so I still hold resource muts fot the kids although on the short term I have gold in the kids accounts which will terminate with graduation ( two in post grad)and The stocks are lagging the physical ergo there may be more legs to the equity side.
$150-200 p/m ( over 15 years) should produce the results you want if you’re planning a residential program ( Your kids may want to go east or south, for ex) that will increase your costs above basic tuition.
Next…. strange coincidence that Bernake and Carney are touting the rise in intrest rates in synch.
http://news.yahoo.com/s/ap/200.....rest_rates
http://www.reuters.com/article.....5420090923
Is this a big trial balloon painted red and filled with explosives. It seems pretty clear what they have in mind.
September 23rd, 2009 at 11:40 am
face it supraboy you’re a gambler.
few if any make money over the long term by jumping in and out of stocks (unless you’re a broker and you do it with other people’s $ for a cut)
September 23rd, 2009 at 11:36 am
So how’s that spike on the stock markets for all you bears feeling today? muhahahaa, up we go!
September 23rd, 2009 at 11:24 am
On similar topic, trying to save up for my kid’s education taking advantage of the govt grants offered. Anyone know a good RESP provider? Went to a few mainstream banks and they all charge high fees for the RESP product. It just feels wrong to me to give fees to a bank when i already give them money to play with. Any good RESP products out there without fees?
thx
September 23rd, 2009 at 10:36 am
If gold keeps on going up, USD keeps on going down, that would mean oil will continue to run higher. Some good energy names include CLR, WLT, MEE, SU on the NYSE. These stocks made the best trades. I’m going to funnel some money into a coal name today since it’s being beaten down on an dumb analyst downgrade. Steel names are also good. I’d recommend MTL for wild swings. Why sit on cash when the markets are flipping and flopping like a dumb blonde who can’t up her mind.
September 23rd, 2009 at 9:45 am
Some good investments are gold etfs.
Inverse USD funds.
And when the stock market starts going south, and it will sooner then later load up on inverse etfs like DRV (a 3x bear RE fund). I don’t suggest buying it until the direction of the markets change. And thats unlikely to happen if the USD keeps dropping, thats why you’ll make money on the inverse USD funds, and gold will keep going up with USD going down and will also go up more with any drop in the markets.
September 23rd, 2009 at 9:18 am
Yes, Mish’s post is a reminder of the overall picture. Overpriced with regard to fundamentals; will fall.
September 23rd, 2009 at 9:10 am
Check out my site, I talk about how I am investing my money
http://oitb.blogspot.com/
September 23rd, 2009 at 8:55 am
Somewhat off topic.
Michael Shedlock “Mish” comments on the Canadian real estate bubble and makes some common sense observations: http://tinyurl.com/d8q6j
September 23rd, 2009 at 8:55 am
14, nope, Nasdaq is not a commodity.
I’m waiting to load up on dips. The markets right now is an awesome money accumulating mechanism. I love the wild swings especially in coal stocks. Up and down 5-10% per day. We’re talking big cap coal stocks. Check out MEE Massey Energy and WLT Walter Resources on the NYSE, up and down we go!
18, everyone is fearful of a crash, everytime the markets pull back, fools like Roubini come out and say there’s going to be a double dip recession, when people like him come out and cry, you load up the boat on call options.
September 23rd, 2009 at 8:31 am
Be fearful when people are greedy, be greedy when people are fearful. What is the interpretation for the current run-up in the realty market?
September 23rd, 2009 at 8:24 am
@MrBear: Yeah, plan B is to just live comfortably anyway. Either way, I’m good.
September 23rd, 2009 at 8:17 am
You cannot time the market. I work for a living and have neither the time nor the interest in digging for the latest hot stock.
Save 10 % of your gross paycheque (a barber told me). Once you have a round number ($1000, perhaps $500, perhaps $10,000 depending on your situation) invest it in index funds. motleyfool.com has a good article somewhere on their site about the historical performance of index funds versus “professionally managed funds”.
I am currently investing in low cost exchange traded funds such as Vanguard total market index (US) (about 45%), Ishares MSCI eafe (about 40%), IUnits capped tsx index (10% ish) and Ishares emerging market index. I have also dabbled in some India and China index funds and watched them soar and plummet and soar.. I should try not to dabble..
September 23rd, 2009 at 8:02 am
I’m still waiting for the market to recover on my beanie baby collection.
September 23rd, 2009 at 8:00 am
@Supraboy: Are you calling the Nasdaq a commodity?
@realpaul: So your investment strategy is betting on the outcome of the Braidwood inquiry, or are you just way off topic?
@Anonymous: Your investment strategy is based on levels of shinyness? Were you raised by magpies?
I’ve got about 70% of my cash in savings and GICs, the rest in equities. I’m selling some of those now and taking profit where it exists because I don’t have faith that this stock market ralley is going to hold up much longer.
September 23rd, 2009 at 7:56 am
You could buy some Altria. It’s currently paying 7.6% dividends. And with the US dollar at the low end of it’s historical range, you could easily make another 20% off of the exchange rate.
September 23rd, 2009 at 7:15 am
@VultureBoy: Can you explain what merger arbitrage is?
September 23rd, 2009 at 6:45 am
My downpayment got over 10% this year so far, but I spread it through carefully chosen merger arbitrage opportunities. Definitely not a shotgun approach, and not for everyone. And you have to be willing to accept and take into account that some day you’ll be wrong.
BTW, little known fact, Buffett made better returns on merger arbitrage than on value stock picking.
September 23rd, 2009 at 5:12 am
Gold baby. Got physical gold and silver and am just waiting…
September 23rd, 2009 at 1:25 am
The arrogance of power .
http://www.vancouversun.com/Mo.....story.html
September 23rd, 2009 at 12:55 am
I’m thinking about going back to school for a year or two. That should take care of most of it.
September 23rd, 2009 at 12:39 am
@mino3: Down payment money? What’s that?
I don’t have down payment money. I have a comfortable amount of money, but I don’t consider it down payment money. If Vancouver is never affordable to me, I won’t buy. Voila, no need for a down payment.
September 23rd, 2009 at 12:32 am
My down payment money is in safe investments like savings accounts and GICs. I think it would be foolish to gamble with it on the stock market.
September 23rd, 2009 at 12:17 am
yawn. and now for the serious answers?
September 22nd, 2009 at 11:54 pm
btw, the stock markets are usually a forward indicator of 6-10 months. The overall economy is bound to rise. Volume on the DJI and TSX has been picking up and institutions have been reloading.
September 22nd, 2009 at 11:53 pm
Put it into the stock markets. Anyone who puts it into GIC is plain stupid. Overload commodities on dips. Too bad this isn’t a stock forum. Most of the people here are newbies and are clueless about the stock markets. There has been only one distribution day on the Nasdaq in the past month. You’ll need 5 distribution day to make it collapse. The next resistance for the Nasdaq is at 2200 and you got at least another 60 point move to the upside before you see some massive profit taking. Buy on the dips and thank me next month.
September 22nd, 2009 at 11:29 pm
my buying window is 2012, due to my work and leave schedule over the next three years. so i’m pumping cash into safe GICs that will mature in early 012. wont gain much, but short term it is safe.
rrsps etc are still long term mix of stocks and bonds, but through a fund.
September 22nd, 2009 at 11:23 pm
$2 a week on 6-49. you never know…