I currently sit on an advisory board that oversees millions of dollars of investments for an insurance company. The rate of return on our investments has gone up 4.1% since the beginning of the year, even considering that the market average of the world’s stock indexes have gone down 20 – 30% in the last few weeks.
This brought me to my thought de jour. The Long Play.
Have you ever played chess with a partner of equal ability and you come to a point in the game where you go could go one way of the other? This used to happen to me playing risk as a kid as well. What do you do? You take a little longer to figure out which way you are going to go.
The markets are like that right now. I know at first I was like “damm, that’s a lot off my RRSP’s!” But then it started to dawn on me that there are opportunities available to me that I haven’t seen before, with very high quality companies.
So then I started to think about what’s next? Inflation, deflation and other variables. So it’s taking me longer to make some moves in terms of total adjustment. But the big picture is my horizon – I am in this for the lon term. That makes the world of difference and now I know what my play is.
This does relate to real estate:
- Go for quality and value. Realize that like the stock market not all stocks are good investments and not all of them are bad.
- Plan ahead. If you’re thinking about buying your first or next home, start planning ahead so that you know what your options are and what its going to take to accomplish your goals.
- Get expert advice. Just like the advisory board I’m on – We have a professional fund manager who gives us advice and helps guide us with their expert knowledge. The same goes for real estate.
How about this for the long play???
Canada’s housing mirrors troubled U.S. market with two year delay:
TORONTO – Canada’s housing market is following the same troubled path that eventually led the United States market into a major downturn, suggests Merrill Lynch economist David Wolf in a new report.
Wolf, who is known for his bearish view of Canada’s housing market, said the trend is unravelling with a two year lag, but the similarities are prominent.
“Why the two-year lag? It may be because the Canadian market had more room to run, having remained weaker for longer than the U.S. market through the 1990s,” he said in the report released Tuesday.
The report notes that U.S. resale home prices accelerated through 2005, peaked in early 2006 and have declined ever since.
Meanwhile, Canadian resale home prices accelerated through 2007, peaked in early 2008 and have been falling.
The report said new home construction has soared in Canada, but many of the new units remain empty.
In August there were 34,635 units under construction in Toronto and 19,973 units in Vancouver. A decade earlier, the entire country produced a total of 19,965 units.
***I see things from a different perspective.
First of all I don’t believe the Canadian housing market will go to the same depths as the U.S. market.
1. The extent of subprime lending in Canada is significantly lower. Estimates I’ve seen are less than 5%.
2. Mortgages for homeowners are not tax deductible (exempting the Smith manuever – which is probably not even statistically relevant) so people are not as encourage to keep their primary residence leveraged to the nuts.
3.The majority of the housing market is far from being underwater from an equity perspective.
4. The Canadian banks are in far better shape. Consider this. For the past 10 – 15 years the Canadian banks have been able to clean up their balance sheets and buy bank significant amounts of their equity.
5. The majority of mortgages in Canada are insured by CMHC in Canada. They are very well positioned and have been substantially more responsible then companies like AIG. CMHC has a war chest of money to handle foreclosures. In addition while foreclosures will increase the market won’t be flooded with foreclosures as CMHC has a track record of trickling their inventory onto the market so they don’t negatively affect market value.
Anyways that’s just a few of my thoughts.
Sheldon
Why didn’t you print the whole article Josh? Are you afraid of the truth? David Wolf is a cry baby who is just mad that Canada is emerging as a better Country than the screwed up corrupt USA. David Wolf coundn’t organize a one person line up to two out houses! But as long as he supports your negative thoughts I guess you will just keep lov’n him right?!
Hey, what is the Smith manuever? And do you recommend it?
JO,
Sorry about the delay. Gord McCallum of First foundation introduced me to the Smith Manuever. While I don’t recommend it to everybody if you want more information he has some on his home page at http://www.firstfoundation.ca
p.s. Let the music play.
Real estate is dead money. Why tie up an absurd amount of money that isn’t making you Jack and has a high risk of losing you money. You want to play real estate, short home builder stocks.