The worried

                    Several years ago I watched a fellow investment advisor sit on a growing mountain of client cash. “Things are just too expensive,” he kept insisting. “The bond market tells me stocks are overvalued and the economy’s headed for recession.”

                    Over the course of two years his clients made about 2% holding cash, a mess of bonds and few growth assets. Stock markets steadily added more than 20%. He bet wrong. Naturally he suffered the consequences, abiding by his Old School broker beliefs.

                    Lately the old guys have been muttering similar dark things. Despite that the S&P 500 is ahead 12% so far in 2019. Bay Street has added 13% this year, and sits just 3% below its all-time high. B&D portfolios have been doing just ducky. Despite Trump. The trade wars. Inverted yield curves. Brexit. Iran. The Raptors.

                    The why is simple. Global growth continues. Central banks have done a fine job tweaking monetary policy. Not too hot. Not too cold. The US economy is flourishing. Europe is proving bigger than the populists and nationalists. Corporate profits have been fine. Consumer sentiment has bucked up. The fundamentals suggest no imminent recession, although a slowdown could be here in a year or two. But there’s no reason to buy gold, short the banks, wait for a 50% housing crash or move into the school bus buried in your yard.

                    Emily asked me in a note on Wednesday if she should invest the $50,000 she’s saved in her TFSA all at once or in hunks of ten grand every three or four months. The answer’s simple: when you have money, invest it. Trying to time the market with zero idea what’s coming in weeks or months is nuts. There’s a 50% chance things will cost more, not less. Over the course of decades the entry point is irrelevant, since you risk missing good days as well as bad ones – and the good ones dominate. Especially if you’re young, just buy stuff. Stiffen up.

                    I see my advisor buddy is calling for the eighty-fourth recession of his 40-year career. He’s back into cash. His clients just gave up a lot of growth they’d want to harvest later. Since fear, not greed, is the predominant investing emotion – and yet markets rise 70% of the time – those who manage other’s money need to be clear-eyed and realistic.

                    The biggest risk remains running out of money, not losing it. Especially prone are women, who tend to be more risk-averse and live longer lives. Not a good combo. Young Emily needs to get her fifty smacks into the right mix of ETFs, and PDQ.

                    $???? $???? $

                    How bad’s the mortgage business these days? Crappy enough that a major Ontario lender has brought back the 1.99% home loan in a heroic attempt to snatch business. DUCA credit union now owns the lowest rate in the nation, offering the sub-2% price on a term of two years.

                    That’s a big reduction over the competition, but only for insured borrowers – less than 20% down, no rentals, no 30-year amortization, no property over a million dollars and no refinancing. Plus you have to pass the stress test.

                    Is it a risk taking cheap money only for two years?

                    Nah, not really. Rates are on hold now. Thanks to the Tariff Man central banks might even be cutting the cost of money once or twice in the next year, before they creep back up. So the odds are a 1.99% rate will look just as sweet in 2021.

                    $???? $???? $

                    “I’ve been a big fan of your blog for a while ow, says Carson who obviously wants something.

                    I’m a 31 year old male living in Vancouver making over $100K per year. I’ve got close to a $100K in my TFSA, $125K in my RRSP and $110K in non-registered investments. On top of that, I have about $300K in cash and cash equivalents that I’ve reserved for purchasing real estate or investing into equities.

                    I’m single and don’t plan to start a family soon, but I’ve been looking around some condos in Vancouver and prices are certainly far more reasonable than they were a few years ago (although still not as cheap as I’d want them to be). Mortgage rates are also not that high. I wanted to get your opinion on whether I should continue to deploy my cash towards equities or buy a place. I suppose I could do both, but because I believe that equities are a superior long-term investment, I struggle to find a reason to allocate cash to buy a place. With that said, I do eventually want to own something rather than paying rent all my life.

                    First, Carson, the Van market is in freefall and there’s more to come. So only buy if you can stomach the thought of cascading equity for a while. Maybe a long while. Last month the year/year benchmark price was down 9%. Values are back to 2017 levels, and gaining downward momentum. Sales in May were the worst in about twenty years. Listings are piling up fast.

                    Now a research firm (Eitel Insights) says prices will continue to erode for another couple of years, plus: “You’re going to see the cannibalization of the condo market where there’s a flood of new, built properties available to move in today and they’re going to be at relatively attractive prices.” More supply plus weak demand = lower prices.

                    Besides, Carson, you have more than $600,000 liquid at age 31. Invest it and at 60 you could be sitting on almost $5 million. Or, you can buy a condo now and at 60 you’ll have… an old condo.

                    Renting rocks, kid. Stay the course. No worries.

                    The campaign

                    So how, an anxious nation asks, have things been in Tranna lately? Aside from some guys running around in shorts making millions… pretty tepid.

                    Not that you’d know it from the media, of course. “Sales come storming back,” was the real estate message broadcast to six million souls. And that made the agents happy. They need all the joy they can get, since the majority of them have been slowly but steadily starving.

                    The stats reported by the property cartel this week showed an 18% increase in deals done during May over the same time last year, and a 3% gain in overall prices. That sounds good. And compared to the dismal rutting season of 2018, it’s definitely an improvement. We know why, of course. Mortgage rates have tumbled along with bond yields, and five-year money is now available to everyone except reprobates for 3% or less. Close to historic lows.

                    Second, we’re another year past the market-cooling measures of the now-defunct Wynn government. Over time people learn to cope with their disabilities. Third, the moisters are a year older and house-hornier, and since first-timers make up about half the entire market more activity’s not a surprise. And fourth, governments are pimping again.? The federal budget of a few weeks ago increased the RRSP home buyer’s plan to $35,000 a head, and we just heard about the shared-equity mortgage. Yay! Justin’s buying me a house…

                    Meanwhile prices are still lower than they were two years ago. Condo sales in the core have actually dropped and if you have cash and swagger, there are great deals to be had picking up a 905 particleboard McMansion.

                    In terms of the gold standard – a detached house in the 416 – the average price in the spring of 2017 was $1,503,868. Now the same place sells for $1,384,993 (virtually unchanged from last year). That’s an 8% drop. But because houses cost a lot of buy (land transfer tax) and sell (commission), the decline has been more like 16% over the last 24 months, or a loss of $248,125. Since people buy houses with after-tax dollars that’s a nasty ouch. Apparently real state does not always go up. Who knew?

                    Having said all of that, it’s worth remembering real estate values in demand areas like the inner GTA are highly unlikely to see a collapse. So good luck waiting for one. This pathetic blog has said so for a few years, and we’re stickin’ with it. Demand remains robust, the demos favour housing, money’s remained cheap and the costs of building/renovating/developing are crazy. (The same would apply to Vancouver/Victoria, of course, if it weren’t for the Dipper anti-real estate campaign and taxation orgy.)

                    So should an eager little cabbage charge off and buy in Toronto, taking advantage of these low mortgage rates and slightly-reduced prices?

                    Sorry, but there’s no blanket answer. Renting (yes, even at these lease rates) is still far cheaper than owning. Without annual capital appreciation there’s just no reason to take the plunge into debt, condo fees, property taxes, insurance and utilities. Get over it.

                    So, as always, buy if you can afford it and becoming an owner doesn’t gut your liquid assets or put all your oeufs in one basket. The big change now is that real estate? – even in dribble-crazed Toronto – isn’t a slam-dunk investment the way it was for your parents. If the most in-demand houses in the entire country can fall in value for two years, then they can flatline for ten. Mr. Market doesn’t care about your finances, instead being molded by the economy, the cost of money, consumer sentiment, supply and politics. Just look what a bunch of stupid taxes have done to home equity in YVR.

                    While sales in the GTA have improved from the pit of 2018, they remain below the 10-year average. There are tens of thousands of new condo units in the pipeline which will be hitting the market in the next three years. And while the Trumpster’s antics have crashed bond yields and helped make home loans cheaper, you might be shocked at how that will change in 2020. Meanwhile Ontario is the most indebted sub-sovereign state on the planet, so guess which way taxes are ultimately headed?

                    In short, kids, don’t gamble. Do not be swayed by the realtor-media ‘the market’s hot’ campaign. Goebbels would be pleased with it. Even Sarah Hucksterby Sanders.

                    Remember that rent = freedom. There’ll be plenty enough time later for entrapment. Trust me.