Author: garth turner

Markets did not have a cow today when trading started. That was interesting. Because, as you know, everything is weird.

Last night Trump said Canada may face a withering new tariff of 35% on everything, plus sectoral levies, come August first. Well, so much for that July 21 deadline negotiators have been working on for a new mini-NAFTA. Poof… and just days after Ottawa caved on the Digital Services Tax when the orange guy threw his last fit.

So were we snookered? Like Trump’s press sweetie said, did Canada ‘cave to the President of the United States’, and get nothing but extra tariffs in return?

Dunno. But Mr. Market is counting on more TACO trade with Trump’s dissing of Canada and a score of other countries. The betting is his new deadline will come and go, or be paused, amended or ended. A Chinese government official said days ago that 47 changes his mind as often as his shoes. Seems about right. (By the way, those guys now have a lux EV that charges in five minutes. Suck that, Elon.)

There’s more.

The number of properties for sale in the GTA should hit 33,000 today or tomorrow. The long-term (17 years) average is just over 18,000. So, this is unprecedented. There’s a 5.5 month supply of resale houses, which compares with seven days in 2021.

The historic situation is linked to Tariff Man, of course, since everybody is expecting a recession. That saps consumer confidence, makes folks worry about household finances, and kicks realtors and retailers where it hurts. The guy selling me an area rug at Alexanian’s yesterday said the last two months had him and his wife wondering about survival. “Nobody is daring to buy even a carpet,” he said.

But wait. Look at the latest jobs stats in Canada. There were 83,100 new hires when economists had expected (almost) none. Yes, a whack of those were part-time positions, but it was enough to push the jobless rate to just below 7% (in the US it’s 4%). Private sector jobs accounted for about half, and ten thousand more people were hired in manufacturing. Wages increased just over 3% – so ahead of official inflation.

Whazzit mean?

Tariffs have not hit us yet in any meaningful, large, national fashion. “Given the uncertainty hanging over the Canadian economy, many (including us) will be skeptical of this report,” say the economists at BMO.

“Even so, it appears that the economy is hanging in there for now, pending the result of ongoing trade negotiations. Barring a sharp decline in underlying inflation in next week’s June CPI report (which looks unlikely), the strength in today’s jobs data and the recently heightened uncertainty on the trade front likely keep the BoC on the sidelines when it meets later this month.”

So, no rate drop at the end of July, the bank says. That means the next possible decline would not be until September 17th. And Dog only knows what kind of weirdness we’ll be living through then.

Meanwhile, the orange guy seems to be closing in on the Fed boss, Jerome Powell.

As reported days ago, the president has called him stupid and a numbskull. Trump now demands an unprecedented 3% drop in interest rates, which would torch the bond market, ignite equities, fuel inflation, suck off global capital and tatter the Fed’s reputation. Our CB would be thrust into an untenable position. Dropping rates like that would send housing ballistic. Resisting would swell the loonie and tank an economy also facing tariffs.

Well, Trump now says Powell is spending too much on a reno of his HQ, and it borders on criminality. Since a president can only remove a Fed chair for ‘cause’ we all know why this is happening. Mr. Market is nervous.

Oh, and speaking of having cows, the US wants us to dismantle the supply management system that keeps our farmers viable, and rely on American production for our food.

Hooves up!

About the picture: “I have been a reader since 1995 and receiving your newsletters via snail mail,” writes Rich, in Dundas, Ontario. “Have read your “RRSP” books in the 90s and now still look for wisdom (yes, the suck up) at the ripe old age of 56. Prada is 15 years young and loves sitting outside with us during warm July nights. Thank you for all the blogs you do.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source

The news just keeps getting worse for the Young & Houseless.

The CB has paused rate declines for months and months now, even as inflation fades. In a world of tariffs, uncertainty and rogue politicians the bankers are taking no chances of being caught with their pants around their ankles. Drop rates too much, then Trump ruins the economy? That would be a Bank of Canada disaster.

So, sorry kids. Mortgages stay stuck. There could be a snippet of relief at the end of this month, but don’t bank on it.

Then there’s the condo misery.

Sales are down 75% in Toronto and close to 40% in Vancouver over the past couple of years. Inventory has been stacking up. Rents are falling. Amateur landlords are freaking as negative cash flow grows and equity falls. Prices have declined by double-digits in the past two years. There are estimates of another 10% to peel off within the next six months. The number of new, unsold condos is record-setting at over 2,000 in YVR and 16,000 in the GTA.

So your poor daughter who climbed on the ‘property ladder’ with her 500-foot dog crate one-bedder is now underwater. She can’t sell without a loss. She can’t live there for long, either. Nobody can. Woof.

And now, this. No cliff.

A lot of kiddos were counting on wholesale slaughter of greedy, leveraged homeowners who bought with cheapo mortgages in the pandemic and now face a reckoning. After all, more than a million borrowers come to the end of their five-year terms this year and early into 2026. Covid home loans as low as 1.3% have blossomed into 4.5% ones, meaning a massive jump in monthly payments – leading (the Y&H hope) to misery, anguish, forced sales, ruined lives, trashed marriages and cheaper real estate.

Alas, says a new report from TD Economics, it ain’t happening. “Media headlines are raising alarm bells that the ongoing wave of mortgage renewals is a looming “shock”. So, it may come as a surprise to learn that aggregate mortgage payments in Canada are actually declining,” says the bank. Interest payments have actually declined in recent months, pushing overall mortgage costs into contraction. Yes, kiddos, real estate values may be softer but owners are better off.

How could this be?

Well, the cheapest pandemic rates were for variable-rate mortgages, and a lot of those have ticked lower over the past two years as the CB dropped its policy rate and inflation moderated. Says the bank: “We estimate that more than one-third of mortgages renewing between now and 2026 fall into this “early relief” group – characterized as those with variable-rates or short-term fixed mortgages that will be either renewing at lower rates or are benefitting from interest rate cuts. These borrowers tend to carry above-average balances, which magnifies their effect on the aggregate figures.”

So only about four in ten borrowers will face a higher cost for their mortgage upon renewal – folks who borrowed to buy during Peak House in late 2020 and early 2021. Those renewals will take place in the last quarter of this year and the first of 2026. By then, economists surmise, Canada will likely be in a mild recession and the Bank of Canada will have chopped rates at least a few times.

Finally, economists say there are three factors coddling those who were gripped with FOMO and won a bidding war back when we were all masked-up. First, houses are worth more now than in 2020, so they have equity growth that can be tapped into, if necessary. Second, household net worth has grown. “Assets are up 45%, including a 42% increase in more liquid deposits.” And, third, cash flows are higher. The bank says personal disposable income is higher by 27%.

This is not the media spin. It doesn’t hunt with the crew of doomers and nihilists who populate this pathetic site. And it does not foretell an inevitable real estate cratering. In fact, many econs believe  today’s tumble in resale levels and a virtual halt to new construction in major markets is setting us up for a rebound in buyer desire, competition and prices once the economy settles (and a certain orange person departs).

Conclusion: “Provided rates continue to decline, especially at the long end, national mortgage payments should remain manageable. Our forecast for the mortgage service ratio – a measure of how much income goes toward payments – maintains improvement through year-end, before hitting a plateau that will remain higher than before the pandemic,” says the bank, adding this renewal thing will be “a strain, but not an acute one.”

Do you believe it?

These days we have a buyer’s market. It will likely intensify as listings swell, prices melt and then a weaker economy takes rates south. That would put a floor into early 2026. Write it down.

About the picture: “Delylah is our pandemic foster fail, aged somewhere north of eleven,” writes Tim. “She is 100% not a pit bull; her adoption papers say “boxer mix” and that is my story and I am sticking to it.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source

Jeff and Lisa (real names) spend eight months trying to flog their spiffy rancher north of the city. Two price reductions, lots of showings, no cigar.

They wanted to downsize, stop worrying about three acres of lawn and turn equity into cash flow so they could retire, rent a lux condo in the city and enjoy urbanity without a lawn tractor or bug spray.

Finally, Barry (not his real name) showed up. The polar opposite. He wanted to escape the Big Smoke, get a couple of dogs, an F-150 and a Harley. He was ready to offer. They were primed to sell. But Barry couldn’t unload his city property and was a million short.

The solution?

J&L took a VTB. They sold and left. Barry moved in and promptly bought a female GSD. The vendors got income and security. The buyer took over the acreage with lots of time to sell his urban house. Win, win, win.

So let’s talk about vendor take-back mortgages. This is what Jeff and Lisa agreed to. They took Barry’s cash upon closing then extended a million-dollar loan at 6% with a three-year term. It was registered as a first mortgage, secured by the property with a conventional 25-year am, and completely open.

Now Barry could wait for the lousy city real estate market to recover. If a buyer came along soon, he could pay off the mortgage. If it took three years, so be it. Jeff and Lisa got a bunch of cash, could get on with their retirement, and had income of $60,000 – more than enough to cover rent. And they knew their million-dollar loan was fully secured by residential real estate.

VTBs were common in the bad old days when mortgages cost 8%, 10% or more (some of us remember 22%). Buyers couldn’t buy because the banks would not lend, while costs were prohibitive. So private deals flourished. Sellers with lots of equity could finance their buyers, and the market kept moving.

Today mortgages are cheap by comparison. But the banks have responded to Tariff Man and macroeconomic uncertainty by tightening their lending at the same time the real estate market is freezing over in the summer sun.

For example, BMO created mortgage broker panic some weeks ago when it announced new restrictions on lending to folks in the aluminum and steel industries. Yup, because of that crippling 50% tariff on US imports.

Here’s how an industry publication (Canadian Mortgage Trends) described it:

Citing the tariffs and a “turbulent economic landscape,” BMO BrokerEdge released a memo to broker partners announcing that steel and aluminum are now part of BMO’s growing list of “Limited Appetite” industries, which already includes sectors like construction, transportation, retail, manufacturing, and entertainment. Self-employed borrowers in the affected industries now face tighter lending criteria, including a total debt service (TDS) ratio capped at 42% (from 44%), a gross debt service (GDS) ratio limited to 39%, and a requirement that at least one applicant have a minimum credit score of 750.

Yes, self-employed people, commissioned salesfolk, entrepreneurs, gig workers, business owners, contract employees and others – making up a big chunk of the labour force – have always faced more lender scrutiny. But now the industry or sector that borrowers work in seems just as crucial for getting credit. That list includes construction, transportation, entertainment, retail sales, banking and finance, manufacturing, natural resources, whole trading, utilities – and now steel and aluminum.

So once again, VTBs have emerged as one way to grease a deal. To get around the risk-averse trad lenders. To keep the market alive.

The stats confirm.

In just two years VTB volume swelled from $767 million to $3.5 billion. This is no coincidence, happening at the same time the banks tightened up. OSFI tells us new loan originations among the big guys has fallen 17% year/year. Yes, the housing market is slow, but lenders are also pulling in their horns as the Age of the Orange Guy unfolds. Private lending has shot ahead to fill the gap – up 14% recently. Non-traditional mortgages now account for 15% of all new lending in Ontario, for example.

So, should you consider this?

Of course. Any real estate lawyer can set up a VTB. Fast. Cheap. If you’re buying and need financing, make an offer with a VTB clause. If you’re selling and a potential buyer can’t get a bank to dance with her, consider taking back financing. There’s more risk all round, naturally, but there are ways of containing it. And your selling price can be higher.

Take-back financing, like commuting a work pension or grabbing early CPP payments, is not for everyone. But it could mean the buyer closes without fulfilling bank requirements or jumping over the stress test hurdle. The seller can reap a steady income with a decent yield. And if the property sold is not a PR, capital gains tax might well be deferred.

Be creative. The times demand it.

About the picture: “Just wanted to share a wonderful memory of my youth that was entwined with dogs,” writes Scott. “I spent 7 winters guiding dogsled trips into Algonquin Park in the early to mid 2000’s. This picture would probably be 2004/05…back when the world was sane, you probably didn’t write blogs and I was young and carefree.  I had no money, lived in my car but was generally very happy and had time to indulge things like dogsledding.  Now, I have money, a job and family which I love but time seems to be such a precious thing.

“I have nothing in particular for you to write about but really just wanted to introduce to you (starting from the front) Swift (my lead dog), Thumper (2nd row), Garth (beside Thumper that you can only see his black legs), Panther (3rd row behind Thumper), Dickson (3rd row), Micah (back row behind Panther) and Rudy (back row, red dog).  That was a powerhouse team that I loved to work with and was the product of many years of training.

“Unfortunately, the company is no longer, but if any blog dogs once enjoyed a trip with Chocpaw Adventures in South River, Ontario or were once guides there…this ones for you. RIP Paul.  And yes, this picture is so old it was taken on slide film and then printed on real paper.  I had to take a picture of it with my cell phone to share with you.  It proudly hangs in my office to remind me of what I once did.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source

.

The price of copper surged today after the rogue America president said he’s imposing a 50% tax on imports of the metal. Futures went up 17% in ten minutes.

Well, guess who gets whacked?

Yup. Us. Canada supplies a third of all the copper imported into the States. Of the $9 billion we dig up and ship every year, over half goes to the US – almost 500,000 tones of ore and refined metal. So this means, in a flash, Trump’s Treasury will collect close to $2.5 billion in annual tariffs on Canadian copper – unless the new taxes gut our industry.

Canada’s biggest producer is Teck Resources. Its stock was sent on a wild ride, first as copper prices jumped, then as the tariff reality set in. Once again, the White House has proven its capricious and wild cowboy unpredictability.

Well, that hit came hours after Trump chickened out on his 90-day reciprocity tariff pause (set for tomorrow) then announced a new deadline (August 1) plus a fresh set of tariffs on key trading partners like Japan. The White House said in April it wanted 90 trading agreements with as many nations in as many days. It got two of them. Both just provisional and sketchy. The jury is out on whether the July 21st deadline for a new deal with Canada can be met. Don’t wait up for it.

It would be hard to make this stuff up for a Netflix drama on how one man could ruin a global economy. Bu we’re living it. And the greatest threat could be yet to come.

Trump has called Jerome Powell, the calm and deliberate head of the American central bank a “disaster”. Actually he also called him “stupid” plus “dumb” and a “numbskull”. He started a fight with the guy during his first term, and has turned it into a major war. Trump wants interest rates slashed 2.5%, right back down to Covid levels. Powell has resisted, saying tariffs will bring inflation and there’s no way he wants to throw gas on the fire.

But Trump craves flames. Big, beautiful ones. He wishes to ignite the economy with cheap money and thereby pave over deficits, debt and disruption. The other day he sent Powell a tally of bank rates from around the world and scrawled instructions on it. Powell shrugged, so the president had his flack hold it up for media and say the CB is hurting America.

Wow. Here she be.

By law the prez can’t fire the Fed boss, except for ‘cause’. (The latest silliness is accusing him of a bad reno job at the Fed HQ. Seriously.) That’s not happening. So Trump is expected to name Powell’s successor early (the term is up in May of 2026). The new guy will probably acquiesce to the president’s wishes, and act as a ‘shadow’ governor after being appointed. This may pressure the Fed to ease off on its rate policy, along with undermining the creds of the bank itself.

There’s a reason monetary policy is not handed over to politicians. At least in democratic, stable western nations. Central bankers need to be independent of the electoral process so they don’t do stupid things like try to inflate away debts instead of spending responsibly, or flood the system with money, destroying the national currency. If interest rates and money supply were the responsibility of people who only focus on being popular and winning electios then loans would be dirt cheap, asset values rising, equity markets in party mode and the population soon dealing with hyper-inflation.

Like in Venezuela. The CB there was directed to increase the money supply to paper over runway government spending at a time when oil revenues sagged. Inflation his 50% – per month. The economy contracted by more than 60%. The country is now a basket case, after being one the best on the planet – thanks in part to the political destruction of central bank independence.

Powell sees inflation flowing from Trump’s embrace of 19th Century tariff economics. Like today’s 50% levy on copper. In fact he told lawmakers a few days ago that rates would have come down already in 2025, had the tariff thing not happened.

Now there’s a new fly backstroking through the soup. Trump’s Big Beautiful Bill – signed into law on Friday – will add at least $3.5 trillion to the national debt, already at $36 trillion. Paying the interest on that pile takes more tax revenue than financing the entire American war machine – and the heap’s about to grow larger. Trump wants lower rates to drop the servicing charges.

Oh, and did we mention the immigrants?

US society is being ripped apart in places (like LA) by an aggressive arrest/deportation program. ICE (Immigration & Customs Enforcement) has been told to snatch at least 3,000 people a day and ship them off somewhere. Ultimately, eleven million could be removed, which economists warn will be a serious cause of inflation. About 40% of American agri workers are immigrants – many undocumented. They form a large part of the homebuilding and construction industry, plus the hospitality sector.

If the work is undone leading to shortages, prices will go up. If employers have to rase wages to attract non-immigrants, overhead will rise. Costs will increase. Consumer prices augment.

So add it up. Tariffs on imports raising the cost of stuff in Walmart. Produce and meat more expensive in grocery stores, thanks to labour disruption. Debt service charges increasing because of corporate tax cuts and larger deficits. Currency devaluation making imports more expensive. And if the Fed were to slash rates, kindling more borrowing, debt and asset growth, well, Trump’s legacy could be one of economic ash.

Recently Powell was asked if he’d step down if Trump ordered him to.

“No,” he said.

Courage lives on.

About the picture: “I thought I was a cat person. Until Kate came to live at our Saskatchewan farm,” writes Leeann. “On this day, Kate was on gopher patrol. Thank you for your blog. I’ve never commented, but I have been reading for a long time, and I find your advice to be very useful. We’re hoping a slow erosion in real estate prices will match up with our plan to pass the farm on to our son and live somewhere else. But as you’ve pointed out — nothing wrong with renting.

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source

Twenty-one years ago the prime minister was Paul Martin (remember him?), Canada had a federal budget surplus of more than a billion dollars (this year the red ink will surpass $70 billion) and the average Toronto property cost $315,300.

So, 2004 might as well have been a faery tale. We ain’t going back.

No surprise then that CHMC has abandoned that year as the benchmark for housing affordability. Recently it picked 2019 instead as the holy grail it will strive to recapture – when average families could almost afford average homes, but not (of course) in the GTA or Lower Mainland.

Six years ago T2 was PM. The federal deficit was the largest in eleven years, at $25 billion. That Toronto property now cost $819,100. And people had no idea of the crapstorm that was about to hit in the spring of 2020.

As we all know, and this pathetic blog documented daily, Covid brought 1% mortgages, urban flight, bidding wars, cocooning, seller greed, buyer FOMO, mayhem in Bunnypatch and a price explosion. Today the average property is miles beyond the grasp of most families – and CMHC maintains that can be reversed by doubling annual new house construction.

False, of course.

Housing starts have stalled out at half that level and collapsed in Toronto and Vancouver. New houses actually cost more than resale ones, so building a slew of them is no solution to affordability. Demand has crashed amid economic concerns. Mortgage rates are stuck at almost twice the rate of inflation.

Thus, building four million homes in a decade won’t make real estate cost less and, more importantly, it’s not going to happen. It looks like 2019 pricing is also a fantasy.

Unless, of course, there’s deflation and a recession that feels like a depression. In that case – an economic emergency – the CB will drop interest rates enough to ignite buyer interest, as it did during the pandemic. But we know what thosecrazy rates did to prices. That’s how we got here.

Well, there are zero signs of deflation at the moment. A recession is certainly possible if Trump and Carney fail to write a new trade deal and we get tariffed to death – but that’s also unlikely. American protectionism will not endure. Trump will not last. The US dollar has been falling, the country’s stature eroding globally and its citizens now face higher prices while watching their president become a king.

So, the likely outcome? In 2028?

Dunno. But it won’t be 2019.

The largest number of homes for sale – ever

Source: Toronto Regional Real Estate Board

Last month real estate sales went down in most major markets, like Toronto, Calgary and Vancouver. Inventories went up. Never before in history have we seen more than 31,000 properties for sale at a single time in a single city. Construction levels have fallen to the lowest in decades. Prices have declined, but not significantly, which is why demand for real estate has waned, months of inventory swollen and the amount of time required to sell a place jump wildly.

Realtors say a trade deal with the States will change the public mood and help stop the slide. They want the Bank of Canada to cut interest rates twice this summer and fall to boost mortgage demand. In the meantime the new Carney government is gearing up to dump more than $25 billion into a build-baby-build program of cheap developer financing and pre-fab construction.

CMHC officially says real estate prices need to fall about 30% from current levels. Combined with lower mortgage prices, that will allow average families to buy typical homes and carry them for a third of their gross household income. But not in the GTA or Lower Mainland. To achieve this, as stated, we need an economic crash or a construction bonanza.

Neither is in the cards. But a slow melt is. We have that now. It will continue this year.

And then, everything changes.

About the picture: “Attached is a picture of two Cairn Terriers that actually visited your office in Lunenburg a few years ago,” writes Don. “Thanks for all your good work. I’ve been reading the blog for many years (and have even recommended that you delete the comments section for the good of your health once or twice).”

To be in touch or send a picture of your beast, email to ”garth@garth.ca’.

Source

.

  By Guest Blogger Doug Rowat

.

We’ve all made bad investments. We can recognize this as a normal part of the process, likely to be more than offset over time by our other, better investments, and simply move on.

Or we can go other routes.

One route, of course, is to become so traumatized by the poor outcome that future risk-taking is curtailed. Occasionally, we may even become conservative in the extreme. MIT’s 2022 study of panic selling, for instance, showed that once investors panic sold and locked in their losses 31% of them never returned to the market. Ever.

But there’s another, equally destructive route that money-losing investors often take: the route of mindlessly excessive risk-taking designed to erase those losses as quickly as possible. In poker, this is called playing ‘on tilt’. Here’s a good example:

However, before discussing on-tilt investing, let me briefly highlight where all this poor investing behaviour comes from in the first place: loss aversion.

We had a client recently who requested a y-t-d performance breakdown of each and every one of their ETF holdings. Despite the spectre of a global trade war, the threat of rising inflation and a deteriorating corporate earnings outlook, our client portfolios have actually performed well this year. However, as you can imagine, the client focused not on the overwhelming number of positions that were positive (many with double-digit gains) but on the few positions that were negative.

Are these positions cause for concern over the long term in an otherwise well-diversified portfolio? Of course not. But this is how loss aversion always works. Losses occupy far more of our attention and energy than they should and certainly command far more of our focus than the wins.

So, it’s this strong desire to wipe away the emotional discomfort of a loss that often drives us to subsequently take abnormally high levels of risk. But this, of course, is a doomed strategy.

First, here’s proof that we’re susceptible to transitioning from loss aversion to excessive risk-taking.

In the 1970s, Mukhtar Ali, an economics professor at the University of Kentucky, looked at the results of more than 20,000 harness horse races and noted that bettors take bigger risks during the later races as their capital dwindles. In other words, when the odds still suggest prudently betting on the favourites to make modest gains, bettors were instead, to their detriment, favouring the longshots in order to win their money back fast.  ?

But this strategy is doomed because of the mathematics of losses. The more you lose, the greater the gains that are required to breakeven—exponentially so. If you lose 10% of a $1,000 investment, you now need an 11% gain to breakeven. Not ideal, but not catastrophically long odds of a recovery. However, the chances of breakeven massively diminish as the loss percentage amplifies. An 80% loss on $1,000 now requires a 400% gain to breakeven. A 90% loss, a 900% gain! This leads, of course, to investors behaving recklessly and attempting to ‘swing for the fences’ to eliminate the loss. Like the poker player in the above example, investors may, figuratively speaking, resort to pushing all-in without even bothering to look at their hold cards.

Laws of recovery

Source: Fraim Cawley & Company

So, losses suck. But they happen to the best of us. Giving up and abandoning the market entirely isn’t the solution. But neither is attempting a moonshot.

Never play the game on tilt. Be patient. Play to win.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.

Source

He’s a blog dog, a vice-president of the NHL and works in Manhattan. Life’s grand. It would be better if he didn’t have to vex over his sister.

“I’m sure you get a million of these, but it’s the typical story I read about on your blog all the time,” he says, “and this time it’s about my sister in the GTA.”

She’s forty, in sales, and five years ago had the bright idea (like all of us during the pandemic) of buying a pre-con condo. Eight hundred thousand. The building was to be ready in two years, but that didn’t happen (of course). In the meantime, life rolled on. She married, got a dog, tired of renting and they bought a townhouse in the east end.

“Life is good until the long delayed condo comes knocking 5 years later,” Mr. Puck says, “and the bank says they won’t lend her the money – and by the way, the condo is being appraised way below your contract price from 5 years ago. They’re showing her below water even after counting her pre-con deposit.

Is there anyone you know she can talk to about this? The bank is saying she needs to find a co-signer – not much luck with parents and in-laws who are (guess what) in their 70s/80s and also over-leveraged on their own slices of the outer GTA. I live in the lovely USA (11th Province?) so they won’t look at my assets either.

I think what she really needs is a good lawyer/adviser to help her through all of this – I’m happy to cover their fees too if it means she can get out of this mess. She was told (not sure by who) that if she doesn’t close on the condo, the builder could also come after the townhouse as well. No idea how accurate that is but she needs to talk to someone who knows about this ASAP.

Yes, a mess. The condo market in Toronto, like that in Calgary and Vancouver, is a swamp. Resale listings at record levels. Over 16,000 unsold new apartments. Developers burning the furniture to stay alive (borrowing against their own units). Construction halted. Prices fading. Rents falling. The assignment market exploding. Months and months and months of inventory.

What to do?

First, sis must understand she has a contractual obligation to close the deal. It’s legal. It’s not going away. She can’t just walk off, kiss her deposit adios and get on with life. If she does not close, the developer will commence an action against her and the ultimate costs could be substantial.

For example, if the unit is taken back by the builder and ultimately sells for $650,000 sis will be on the hook for the difference between her contracted price and the sale price. That’s $150,000, plus legal fees and additional closing expense, which might include many months of carrying costs as the developer waits for a new buyer. (Additionally, she lost the use of her deposit for five long years.)

So, she has to close or face the certainty of a suit – which could even impact her employment status. But now the bank says it won’t pony up the funds to finance closing, which is why her wealthy American brother is writing to a pathetic Canadian financial blog.

Well, there’s no path out of this quagmire that does not involve her losing money. Like, a lot of it. Failure to close will delay the day she has to pay (until a new buyer is found) but end up costing the most. Bad choice. Finding an alternative, subprime lender who will provide financing, rather than the bank, is a viable (but costly) option. The mortgage rate could range between 7% and 12% – or up to three times what the Big Six charge. Ouch.

Of course, she could talk the oldies into taking a reverse mortgage on their house to give her the money to close on a condo unit she can’t likely rent for enough, won’t live in, will have a negative cash flow and possibly blow up the family while cruelly stealing parental equity. Not so hot. She could try for a second mortgage on her new townhouse, but it’s doubtful that would yield enough for closing. No go.

There’s always the assignment market, assuming she has that clause in her condo agreement. Then she can try to offload the unit at a discounted price to some other schmuck, hopefully on the same closing day. She’ll still need to bring a fat cheque to cover the loss. By the way, there are currently just over 5,000 condo assignments on the market in the GTA. Good luck with that.

Of course, sis can always contact the developer, cry a lot, drop to her knees and beg. But, face it, nobody has any sympathy for a Covid-era condo specuvestor, especially within the company that financed the building based on her contractual commitment.

Nope, sis needs a lawyer. He can tell her all these things and bill her for doing so. Her existing matrimonial home is not at risk, even if she decides on personal bankruptcy to escape payment. But the personal, reputational, professional and financial costs of that move are immense. Plus, it’s an ethical failure.

Face it, bro. You gotta send money. But she knew that.

About the picture: “Thought I’d submit a photo of our recently departed “Zeus,” a rescue we got from the mean streets of Taber, Alberta, nearly 18 years ago,” writes Bradley. “He might disagree, but Zeus was super dog like, and followed us around, chatted to us, fetched, and regularly served as a pet visitor to people in a local nursing home – bringing lots of joy and cuddles to elderly residents there. Even confused and demented people would light up, smile and tell Zeus they loved him when he would sit purring on their laps.  This is him hanging out and sunning on our deck, one of his favorite places.  We’ll miss our handsome boy terribly, but are so lucky to have had him in our lives for so long.  Hope you have space for him on your blog.  Thanks Garth.”

To be in touch or send a picture of yor beast, email to ‘garth@garth.ca’.

Source

.

  By Guest Blogger Sinan Terzioglu

.

When markets are on the rise, the allure of individual stocks can become especially hard to resist. Seeing certain names dominate headlines and deliver eye-popping returns can stir a powerful urge to jump in. This emotional pull—often driven by FOMO (Fear of Missing Out)—can tempt even the most disciplined investors to stray from their long-term strategies in pursuit of larger gains.

I was recently asked:

With the S&P 500 and Nasdaq recently hitting new record highs, and the big potential of AI continuing to drive investor enthusiasm, I’ve been thinking about whether it makes sense to allocate a portion of my portfolio — say 10–15% — to individual stocks with strong growth potential. Companies like Amazon, Meta, and NVIDIA have rebounded sharply since their April lows, with Amazon up over 30%, Meta over 40%, and NVIDIA up more than 60%. It’s hard not to feel like I might be missing out on opportunities that could meaningfully enhance my overall returns.

Allocating a small portion — say 2–3% per stock — doesn’t seem like it would significantly increase my overall risk, especially if I take the time to thoroughly research each company and maintain a well-diversified, balanced portfolio. What are your thoughts on this approach?

I completely understand the appeal. When I first started investing over 25 years ago, I watched the internet boom of the late ’90s and early 2000s unfold — and I felt that same rush of excitement around the headline-making stocks of the time. But over the years, I’ve come to realize just how challenging picking stocks really is. If anything, it’s only become more difficult in today’s fast-moving, hyper-competitive market landscape.

In many areas of life, time and effort lead to improvement—but picking individual stocks is a different story. Deep research and dedication often don’t translate into better results. The unpredictable nature of markets and the constantly evolving business landscape can quickly undermine even the most well-informed decisions. Many investors spend countless hours analyzing companies, only to be blindsided by factors no model or forecast can predict. That’s what makes long-term success in picking individual stocks so challenging.

In his recent Morgan Stanley report, Drawdowns and Recoveries, Michael Mauboussin analyzed the performance of more than 6,500 U.S.-listed stocks from 1985 to 2024, focusing on how they fared after reaching their maximum drawdowns. The analysis excluded companies that were delisted due to bankruptcy or other reasons, as well as American Depository Receipts (ADRs) representing foreign companies. It also filtered out stocks that failed to maintain an inflation adjusted market capitalization of at least $1 million at the end of any given month.

As with other research on individual securities, Mauboussin’s findings were very insightful. Here are five key insights that underscore just how challenging it is to outperform the market by picking individual stocks.

1. Most stocks suffer enormous drawdowns
The median drawdown for individual U.S. stocks from 1985 to 2024 was 85%, with the average drawdown not far behind at 81%. That means if you bought the typical stock at its peak, you would have seen its price fall by more than 80% before it hit bottom.
 
2. Close to a third of all U.S. stocks dropped by 95%-100%
28% of the over 6,500 U.S. stocks analyzed experienced a drawdown of 95-100% at some point in their trading history. This statistic highlights just how common and severe large losses can be, even among large and widely known companies.

3. More than half of all stocks never fully recovered 
54% of stocks never returned to their previous highs after suffering a major drawdown. For those that lost 95% or more, only 16% ever made it back to their peak. This means that, statistically, most stocks that crash stay down, and waiting for a full recovery is usually a losing bet.

4. Recoveries take years—if they happen at all
The typical time from peak to trough was 2.5 years, and if a stock did recover, it took another 2.5 years on average to get back to its previous high. For the hardest-hit stocks, the round trip from peak to trough and back to par averaged 15 years—6.7 years down, 8 years back up.

5. Averages are skewed by rare winners
The average recovery from the bottom was 340% of the previous peak — but that figure is misleading. It’s heavily skewed by a small number of exceptional performers. While most stocks never fully recovered, a few standout names like NVIDIA and Amazon rebounded dramatically, inflating the overall average. The challenge, of course, is that identifying these rare outliers in advance is incredibly difficult.

In summary, even allocating just 10-15% of your portfolio to carefully researched individual stocks might appear low risk, but it can quietly demand more of your time and focus than expected. It also opens the door to potentially harmful investing habits that often come with picking individual stocks. The reality is, you don’t need to take on that kind of risk to achieve your financial goals. A balanced and globally diversified portfolio provides a more reliable path forward and helps preserve your mental energy for what truly matters.

Sinan Terzioglu, CFA, CIM, is a financial advisor with Turner Investments, Private Client Group, Raymond James Ltd.  He served as vice-president of RBC Capital markets in New York City and VP with Credit Suisse in Toronto.

Source

If you own a ETF holding the Canadian market (and you should), you’re ahead more than 7% this year. And it’s only July. That beats the Dow. It bests the S&P. For that you can thank Bay Street’s overweighting in financials (TD is up 30%) and golds (bullion gained 35%).

The loonie? Not bad.

The currency sat at 69.5 US pennies in January, and today is worth 73.2. That’s a gain of almost 5.5% during a time when Canada-bashers said we were headed for fifty cents. For that you can thank a big dump taken by the American dollar.

Source: New York Times

The country’s doing well, considering our largest trading partner went rogue. Yes, we have troubles, but everybody should be holding maple in their portfolio because we might just end up being the most fetching end of North America.

In case you missed it, there’s been a ‘sell America’ vibe since shortly after the orange guy came to power. At first, yes, Trump looked like a load of gas for the USA fire. Tax cuts, reindustrialization, deregulation, protectionism – all feeding a pro-business, pro-growth that energized the stock market.

But, alas, that didn’t last. Stocks wobbled. The dollar declined. So far this year it’s lost over 10% of its value while ours has gained. It’s the worst showing in half a century.

What about Trump’s policies has investors’ shorts in a twist?

Lots, as it turns out.

Like the Big Beautiful Bill now back in the House for ratification before going to the prez for his signature – perhaps tomorrow. It chops taxes, removes heath care for a lot of irrelevant poor people, rewards wealthy corporations and, most importantly, will add between $3 and $5 trillion to the national debt – already a staggering $36 trillion. Mr. Market is unhappy with that. It suggests a budget crisis and higher interest rates to come.

Then there’s that attack on the Fed and its boss, Jerome Powell. A nation’s central bank is supposed to be above political influence, but not in Trump’s America. He is constantly belittling Powell, telling him to crash interest rates by a massive 2.5%, and appears ready to name a replacement months earlier than the expiration of his term, a year from now. This threat to the CB’s independence and the possibility of Trump controlling rates is chilling the world.

Meanwhile the economy under Trump has stopped growing. The latest private forecast for the labour market (published this morning) shows payrolls dropping last month and job gains dwindling. Inflation is stuck at too-high levels, unlike in Canada where it has plopped to just 1.7%.

Of course, there are those tariffs. Nobody ever imagined the absurd spectacle of ‘Liberation Day’ when he held up a chart of ridiculous levies on most of the planet’s nations. Markets crashed. Then he chickened out and called a pause. Markets rallied. Now he’s reversing course again – erratic, unpredictable behaviour rendering it impossible for businesses to plan or trading partners to respond.

So a crazy 19th Century economic strategy, a runaway increase in government debt, persistent inflation, slower growth, fears for monetary policy, growing American isolationism (punctuated by some recreational bomb-dropping), mass deportations hitting farming and hospitality and the capricious, unreliable tenor of American governance has brought us here. Dump America. It’s a thing.

What’s it mean for you?

The sell America trade is unlikely to stop anytime soon. Across the world there’s been a movement to unload US assets and move capital into home markets. European equities have benefitted. South Korea is hot. Bay Street is on a roll. As stated, against a basket of currencies including the loonie and the euro, the greenback has tanked. Trump is scary. He’s wild. He constitutes risk now, not opportunity.

Having said that, maintaining a third of your equity exposure to the US remains wise. This is the world’s largest, richest economy. Nine of the ten greatest companies on the planet are America-based. Don’t bet against Apple.

The other two-thirds of growth assets should be in Canadian and international ETFs. Own the TSX, plus maybe a dividend fund – and some REITs. Internationally, hold a broad equity fund, a dividend fund, plus emerging markets. Europe. Korea. India.

America will survive Trump. Make sure you do.

About the picture: “Grateful for this day, and this Blog!” writes JVD, in BC.  “We woke up this Canada Day to see one of our neighbors looking in the bedroom window. (Shot him! Evidence Attached). Nosy neighbors are increasingly poking around, their homes on the mountain behind us burnt to the ground. Trust we are not breaking any CRA rules letting our regular summer visitors use the ‘cabin’ rent free in exchange for the pest control they provide. Sometimes it’s wise to remember we don’t know what we don’t know.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source

“The world needs more Canada.”

And we have it.

Recent changes have made more people appreciate living here.

Cody may again preside over the tallest flag on our street (go big or go home, he says), but it’s just one of many. Places all over Canada are festooned with them this year. We’re proud. We don’t want to be anybody’s 51st state. We’ve rejected the politics of polarization. We’re okay with immigrants, women soldiers and Pride parades. We don’t bomb people. We like science, disallow mines and logging in national parks, permit students to be outraged when they feel like it and give everybody health care.

It’s not perfect. But it works.

Sure, houses cost too much – like everywhere. We’re still getting over the pandemic – like everybody. The economy could be better, mortgages lower, taxes less and groceries cheaper. Like everyplace else. But in comparison, it’s bucolic.

Strong and free.

Source