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January 22, 2016 | Opportunity

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.


What just happened?

Relief, in a word. After the worst yearly start ever for markets, billions of people came to this pathetic blog, read about the cauliflower scare, moist Millennials, marital angst, hormonal overloads, Vancouver specials and realtor math, and decided their lives compare fabulously. And so, they said, let there be buying.

Also playing a role was news the dudes controlling China will rescue stocks there, that the European Central Bank will pony up piles more stimulus money and that a lot of people thought crude at twenty-six bucks was a joke.

Oil, said Citibank in a big report, is the trade of the year. Forget all that stuff about drowning in supply and no-nuke Iranians pumping their little hearts out. “There will be an initial wave of supply from Iran, but once that’s done, it will be flat and I think that’s when you start seeing opportunities for oil to turn,” the firm’s analyst told Bloomberg. “Part of the reason oil is the trade of the year is because it’s going to have such a broad affect, it’s going to take a lot of asset classes up with it.”

Oil lost 17% of its value in less than three weeks and slid to a 12-year low, as commodities in general plunged to 1999 levels. This, logic tells us, was nuts. In the past decade and a half the global economy has expanded, energy consumption increased, plus there are 1.5 billion more people along with untold numbers of new cars and energy-sucking devices. The world still needs copper, aluminum, grains and oil. We have not been in a general recession, and yet the price of stuff we use continuously cratered. Canada, as well.

So on Thursday Bay Street’s main index shot higher by 3% with big advances in New York, too, while oil literally exploded – ahead the better part of 9%. So where from here?

Citibank says the bottom will emerge in a month or two – “when investors should be looking for the opportunity to get in.” Of course, trying to time the market for a volatile commodity like oil is nothing short of gambling. Long-term investors won’t actually care if they bought into the ailing TSX today, next month or in July.

But I did hear from Jen’s advisor after the closing bell. Because she freaked out and went to cash in order to avoid losses, she lost $6,000 on Friday.

“I tried to tell her,” he said. “And she accused me of self-interest. Some days I hate this job.”

$ $ $

Let’s finish a tumultuous week by making me feel better, which I sorely need since my faithful Bandit went under the knife yesterday. He and I both now have a fine collection of titanium screws and plates in our legs.

Well, here’s Emil who credits this feminist blog (T2 would be so proud) with quelling his babe-inspired house lust.

“I recently almost purchased a 400k house in a move that would have wiped away my 65,000$ savings and put me into deep debt with the possibility of a leaky roof at any time. My dearly (pregnant) beloved girlfriend is 25 year old and can certainly put loins on fire. Which isn’t conductive to rational thinking.

“However, the second I set foot in the house upon our first visit, your bearded face appeared in the clouds, just like Mufasa’s in the Lion King. I heard your words resonate in my head… “What are you doing here, you moron? You read the pathetic blog. You know better, Simba.” I shook the agent’s and as I tallied the renovations I’d have to put in the first five years: at least 25,000$. I thanked her and said good luck.”

And in YVR, Paul’s a nice guy even if he has a thing for cats.

“I e-mailed you last year about being a Vancouver couple with 2 good incomes and a moldy rental suite looking to live a better lifestyle by spending more on housing and wondering if purchasing is the way to do it. Understandably we’ve declined to buy in favour of finding a better rental and padding those savings accounts like crazy.

“The true love of my life are the furry little cats we have. Today we got the bad news that the youngest one needs surgery. Other that the sadness about his well-being and suffering it also comes with a $3000 price tag. Not that I could ever put a dollar amount on their lives, it was still a kick to the gut. However living within ones means allows me to have more than enough in a cash emergency account. I hate to think what this situation would feel like if we were making $3K payments against a mortgage and had little to no cash savings, as would have been the case if we bought last summer.

“We still intend to own a place sometime if a time presents itself when it’s a good financial decision but for right now the importance of having enough liquidity to manage emergencies is not lost on me. Not that you need to hear it, but your message does reach people and does tangible good.”

Bandit’s new bionic leg cost three grand, too. And a big, sore hunk of my heart.


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January 22nd, 2016

Posted In: The Greater Fool

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