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April 4, 2017 | Speculative Fever Driving Canadians Over Financial Cliff

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel (www.venablepark.com) Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog: www.jugglingdynamite.com

We are living through a financially suicidal time. A time where people who sell risky financial products and collect commissions and fees on transactions, are revered as gurus and followed for investment recommendations.   This Royal LePage ad is textbook of madness masquerading as ‘strategy’ today.  Utter lunacy.

 

It should remind thinking people of similar tactics used by the broker/dealer/on line trading companies that urge viewers to ‘be brave’,aggressive’, ‘confident’ in trading one’s savings, ‘playing markets’ and all manner of other reckless disregard for untenable capital risks and negative return prospects.

The intelligent approach is not to take wild bets driven by greed or fear, but rather to make rational mathematical assessments, based on probable outcomes, full consideration of downside risks, yields and valuations, relative to previous cycles.  If we aren’t doing that, we’re gambling.  If we chose to gamble, the appropriate question as always, is how much of our savings can we afford to lose?  That should be the limit on our capital wagered.  Instead, the masses are running the table with their retirement savings and leveraging their homes to buy properties and financial assets at manic over-valuations.  This crazy, perilous time is likely to cost our nation for years to come.

As reiterated in a March report from Ryerson University, City Building Institute:

“…as housing bubbles are allowed to expand, many are hurt or drawn into unsustainable financial situations… When housing bubbles unwind, there is major collateral damage, and people are hurt through little or no fault of their own.  And the historical record is that they do unwind, essentially without fail.

As Mianand Sufi (2014; p. 9) put it: “Economic disasters are almost always preceded by a large increase in household debt. In fact, the correlation is so robust that it is as close to an empirical law as it gets in macroeconomics.”

While we are at see:  ‘Corrupt elite’ laundering money in Canadian housing:  Report

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April 4th, 2017

Posted In: Juggling Dynamite

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