Hold cash or leverage up?

This article in the Globe and Mail asks ‘where is the smart money going‘?

Is a drop in oil prices good for the Canadian economy? Will interest rates stay low forever? Nobody knows, but that doesn’t keep us from asking.

Today’s situation amounts to a near total inversion of the markets of a generation ago. “If you look back to, say, 1981, stocks, bonds and real estate were all cheap,” says Jim Giles, chief investment officer at Foresters, a Toronto-based financial services provider with more than $20-billion in assets under management. “Now, the exact opposite is true.”

For investors, this poses a daunting challenge: What do you buy when there’s nothing left to buy – or at least nothing that appears to be a bargain?

For somepeople cash is trash, for others it’s king:

Tim McElvaine, one of Canada’s best-known value investors, has a similar viewpoint. The head of McElvaine Investment Management Ltd. in Victoria is holding about 25 per cent of his fund’s assets in cash, considerably higher than the normal level, as he awaits buying opportunities.

“People will tell you they don’t want to hold cash because it doesn’t yield anything,” he said in an interview. “But the real value of cash is its ability to buy things when prices become attractive.”

Among the reasons to worry about today’s market is that near-zero interest rates have failed to spark any widespread global recovery. The Organization for Economic Co-operation and Development trimmed its global growth forecast this week to 3.3 per cent for this year, reflecting the euro zone’s continuing woes and a slowing Chinese economy.

Read the full article here.

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Thom Swift
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Thom Swift

If you think cash is trash I’ll be happy to haul it away for you.

history
Guest
history

The smart money is aggregating these forums into actionable algo’s, packaging
And selling to internet advertising agencies. “BRENtwoOOD®” toot toot, get outta my way

Oracle
Guest
Oracle

Garrths blog now says dollar may go to 76 cents USD.

There you go.

30% correction in USD. That’s what matters to international investors.

It’s the locals who get screwed.

space889
Guest
space889

Problem with holding cash in this environment is that you got max 9 months before your investors/client fire you for underperformance. Most clients don’t care about “potential to buy stuff on the cheap”. They just want you to make $$ right now and lots of it. If you can’t then they will simply fire you and move on to someone who says they can. It’s that simple and that’s why most people chase performance and end up losing money.

In fact, in money mgmt, it is often better to be fully invested and lose money than to be left out of rally. You can always blame the market for the drop and you have lots of company. You can’t do the same for missing out a rally.

joe
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joe

@ Oracle

I remember being at a fast food restaurant just across the line that took our currency in past visits, back in the early 2000s when our dollar had fallen into the sixty cent range. I remember the look I got from the girl at the counter when I handed her our ten spot. I felt like I was from a third-world country.

paulb
Member

New Listings 184
Price Changes 87
Sold Listings 132
TI:14319

http://www.paulboenisch.com

Shut It Down Already
Guest
Shut It Down Already

#3, I never thought I’d see the day when Garth quoted a technical analyst. I find it mind-boggling how much cash is behind that ideology – maybe that’s exactly why it appears to work (sometimes).

Whistler or bust?
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Whistler or bust?

Sales up and listings 1/2 of what they were 24 months ago. I am a big Bear of Van RE but Whistler is showing strong signs of improvement.

@Whistler or bust?
Guest
@Whistler or bust?

“I am a big Bear of Van RE but Whistler is showing strong signs of improvement.”

Signs of Improvement to me in Whistler would be further declining prices. I agree Whistler has been improving for the past 6 years. I think we will see continued improvement for some time.

Joe Mainlander
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Joe Mainlander

Hmmm, what do developers believe about the future of the market?;

“B.C. leads Canada’s decline in October housing starts”

http://www.biv.com/article/2014/11/bc-leads-canadas-decline-october-housing-starts/

“A decline in housing starts across the country has hit B.C. the hardest as the Canada Mortgage and Housing Corporation (CMHC) says the pace of condo construction appears to be on the downward trend.”

LS in Arbutus
Guest
LS in Arbutus

Overheard in New West IHOP.

Wife to another woman, “I told Bob there would be no way I’d move to Surrey. When we bought 5 years ago I thought, we’ll eventually move to Richmond. Now 5 years later, Richmond has changed so much and we couldn’t afford it anyway.”

Livin’ the dream in Surrey, ’cause livin’ the dream in Richmond is too expensive. Imagine…… LOL!

Shut It Down Already
Guest
Shut It Down Already

Housing starts up = future oversupply and hence lower prices.

Housing starts down = lack of developer confidence and hence lower prices.

Did I get that right?

@12
Guest
@12

“Did I get that right?”

Kinda. Starts up happens first on the way up, then starts down precedes the bust. It is called a market cycle. Can you guess which part of the cycle we are in?

Shut It Down Already
Guest
Shut It Down Already

Ok, so I missed one:

Housing starts flat = inflection point in market cycle and hence lower prices.

Bailing in BC
Member

#8 Whistler or Bust.

Interesting. Now there’s a line of thought that Whistler and Vancouver move in opposite directions. When one goes up the other goes down and vice versa.

Ulsterman
Member

Whister blackcomb stock up from 12 to 20 in the past year. That’s where the real whistler money’s been made so far. I wonder with the declining dollar if there’s more to come?

tedeastside
Member
tedeastside

at the end of the day vancouver is a dump with crappy weather, no attractions, no economic base, no jobs …vancouver looks grim

a poser wannabe city with an astonishing ego

George
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George
From the Vancouver Sun: Vancouver’s race for mayor neck and neck Insights West survey shows the following levels of support: Robertson: 47% LaPointe: 43% Wong: 9% Undecided: 27% http://www.vancouversun.com/news/Vancouver+race+mayor+neck+neck+poll+finds/10368928/story.html LaPointe can win this people! He’s only 4% behind Robertson (huge improvement for LaPointe considering he was mostly unknown to the public just a few months ago). Over a quarter of voters still undecided! Come on, Vancouverites. Robertson is a dictator in bed with developers who gives us some ill-conceived bike lanes and chicken coops to try to fool us to think he is progressive, left. Robertson is only interested in selling this city out to developers. How many times has he promised to end homelessness…what a joke! The only social housing he ever talks about is supportive housing for addicts and the mentally ill. How about some attention given to… Read more »
Many Franks
Member

George, I *live* in Vancouver in city-owned housing and I’m very happy to have it. I’m a working person with a young family and no addictions that aren’t socially acceptable. I don’t love everything Vision has done but I remember the dark days of Sam Sullivan, when civic government felt actively hostile to my interests (as the provincial and federal governments currently do).

I’ll be voting for a mix of Vision, COPE, and independents. That mix will include Gregor Robertson.

I agree that it was a mistake for Vision to promise to end homelessness. Fulfilling that promise is an impossibility and everyone knows it. But as for developer influence over city hall — do you really think the NPA will be an improvement? Do you really think COPE has a chance at the top seat?

crikey2
Guest
crikey2

@#12
Its not nearly as ridiculous as what used house salespeople say: “Its always a good time to buy or sell”

BTW for somebody that wants to ‘Shut it down already’ you sure do visit and contribute to this site a lot.

Your behaviour is like complaining to everyone that a restaurant has bad service and terrible food – but continuing to go for lunch there every day.

*You’re doing it wrong!* Lol!

living the Neptune
Guest
living the Neptune

Commuting the dream
Drinking and Sporting the dream
Flying to my holiday from the dream
Refinancing the dream
Panhandling the dream

oh, grow op!
Guest
oh, grow op!

@shutitdownalready: what does the ‘it’ in your handle refer to? Am I correct to assume it’s your internet connection since you obviously can’t stop yourself from coming to a site that drives you crazy?

Shut It Down Already
Guest
Shut It Down Already

Exactly. It’s like waiting 10+ years to buy a house in a city you’re constantly bitching about. Right, Ted?

rocknrolla
Member
rocknrolla

Cash is always a good allocation in any portfolio. It is the definitive asset class to attack all others with.

Buybacks on the TSX/DJ/S&P500 have been through the roof the last 18 months during any correction for one simple reason – corporations are very cash rich after all the layoffs and restructuring.

Watch the price of a one week vacation in Hawaii, or 4 nights in Las Vegas. It’s the highest i’ve seen it in 7 years. US is in full blown recovery and things are trending higher. It’s prudent to hold some cash for more dips (even if a giant one happens)

Also, whatever happened to https://vancouverpricedrop.wordpress.com ?

loved that web site

Son of Ponzi
Guest
Son of Ponzi

Cash is King in Cinese Restaurants in Richmond.

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