Financial Markets Meltdown

[Dean2]

Originally Posted by whitetail Junkie

Or maybe we are already up the creek without a paddle and dont even know it and just like that we wake up one morning and its October 1929 all over again and our digital illusions of wealth are worthless

That is not impossible. Highly unlikely, but not impossible. It is why you NEVER keep 100% in one bucket. You need to have GICs/Bonds and real estate in addition to stocks. You have to make sure that if your stock portfolio went to zero, and the dividends stopped, you can still live until the prices recover. However, even in 1929, most of the quality companies did in fact survive just fine and the share prices came back up.

Those that worry about a 1929 style crash might find this interesting.

You may have heard that it took 25 years for the stock market to recover during the Great Depression. I’ve heard it and simply accepted it as truth, until today. It’s true that the Dow Jones Industrial Average (DJIA or just “Dow”) peaked at 381.17 on September 3rd, 1929. It is also true that the DJIA did not reach that level of 381.17 again until November 23rd, 1954. That is a span of over 25 years.

However, as this 2009 NY Times article by Mark Hulbert explains, that’s not the whole story when you dig a little deeper.

[…] a careful analysis of the record shows that the picture is more complex and, ultimately, far less daunting: An investor who invested a lump sum in the average stock at the market’s 1929 high would have been back to a break-even by late 1936 – less than four and a half years after the mid-1932 market low.

The truth is that it took about 7 years for an investor to recover (1929-1936), even if they invested all their money at the very peak. This came 4.5 years after the Dow hit its period low of 41.22 in the middle of 1932. Why?

Dividends. Back then, dividend yields were much higher. The absolute dividend payout did not drop nearly as severely as the prices. When the Dow hit a low of 41.22 on July 8, 1932 (that 90% drop you’ve read about), the dividend yield was close to 14%.
Deflation. “The Great Depression was a deflationary period. And because the Consumer Price Index in late 1936 was more than 18 percent lower than it was in the fall of 1929, stating market returns without accounting for deflation exaggerates the decline.” Every dollar actually bought significantly more in 1936 than in 1929.
Human misjudgment. The DJIA is composed of 30 stocks, which are picked by humans to represent the broad market. According to this article, a total of 18 companies were swapped in and out of the DJIA between 1929 to 1932. That was the highest number of changes to the Dow ever in such a short amount of time. This was a stressful time, and the Dow committee often “sold low” and “bought high” when picking companies to remove and add.

The Great Depression was still an extraordinarily painful time with minimal social safety nets, followed closely by World War II. I recommend reading The Great Depression: A Diary by Benjamin Roth for a vivid picture of what it felt like to live through the Great Depression.

In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy stocks and real estate. I see now how important it is for the professional man to build up a surplus in normal times.

Even today, how many are prepared for the stock market to go down for 2.5 years and then take another 4.5 years to get back to even?

[5/9/1932] Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds, etc. were not farsighted enough or patient enough to wait almost three years to re-invest. Most of them re-invested a year or more ago and now find stock prices have sagged to 1/3 of what they were when they thought they were buying bargains.

Still, 7 years is very different than 25 years. Imagine being 50 years old and your IRA contribution at 25 years old is still underwater! The worst time period for stock market returns was actually 1972-1982, when it took roughly 10 years to recover if you invested at the peak:

[…] according to a Hulbert Financial Digest study of down markets since 1900, the average recovery time is just over two years, when factors like inflation and dividends are taken into account. The longest was the recovery from the December 1974 low; it took more than eight years for the market to return to its previous peak, which was reached in late 1972.

[whitetail Junkie]

Originally Posted by Dean2

That is not impossible. Highly unlikely, but not impossible. It is why you NEVER keep 100% in one bucket. You need to have GICs/Bonds and real estate in addition to stocks. You have to make sure that if your stock portfolio went to zero, and the dividends stopped, you can still live until the prices recover. However, even in 1929, most of the quality companies did in fact survive just fine and the share prices came back up.

Those that worry about a 1929 style crash might find this interesting.

You may have heard that it took 25 years for the stock market to recover during the Great Depression. I’ve heard it and simply accepted it as truth, until today. It’s true that the Dow Jones Industrial Average (DJIA or just “Dow”) peaked at 381.17 on September 3rd, 1929. It is also true that the DJIA did not reach that level of 381.17 again until November 23rd, 1954. That is a span of over 25 years.

However, as this 2009 NY Times article by Mark Hulbert explains, that’s not the whole story when you dig a little deeper.

[…] a careful analysis of the record shows that the picture is more complex and, ultimately, far less daunting: An investor who invested a lump sum in the average stock at the market’s 1929 high would have been back to a break-even by late 1936 – less than four and a half years after the mid-1932 market low.

The truth is that it took about 7 years for an investor to recover (1929-1936), even if they invested all their money at the very peak. This came 4.5 years after the Dow hit its period low of 41.22 in the middle of 1932. Why?

Dividends. Back then, dividend yields were much higher. The absolute dividend payout did not drop nearly as severely as the prices. When the Dow hit a low of 41.22 on July 8, 1932 (that 90% drop you’ve read about), the dividend yield was close to 14%.
Deflation. “The Great Depression was a deflationary period. And because the Consumer Price Index in late 1936 was more than 18 percent lower than it was in the fall of 1929, stating market returns without accounting for deflation exaggerates the decline.” Every dollar actually bought significantly more in 1936 than in 1929.
Human misjudgment. The DJIA is composed of 30 stocks, which are picked by humans to represent the broad market. According to this article, a total of 18 companies were swapped in and out of the DJIA between 1929 to 1932. That was the highest number of changes to the Dow ever in such a short amount of time. This was a stressful time, and the Dow committee often “sold low” and “bought high” when picking companies to remove and add.

The Great Depression was still an extraordinarily painful time with minimal social safety nets, followed closely by World War II. I recommend reading The Great Depression: A Diary by Benjamin Roth for a vivid picture of what it felt like to live through the Great Depression.

In normal times the average professional man makes just a living and lives up to the limit of his income because he must dress well, etc. In times of depression he not only fails to make a living but has no surplus capital to buy stocks and real estate. I see now how important it is for the professional man to build up a surplus in normal times.

Even today, how many are prepared for the stock market to go down for 2.5 years and then take another 4.5 years to get back to even?

[5/9/1932] Those men who were wise enough to sell during the boom and then keep their funds liquid in the form of government bonds, etc. were not farsighted enough or patient enough to wait almost three years to re-invest. Most of them re-invested a year or more ago and now find stock prices have sagged to 1/3 of what they were when they thought they were buying bargains.

Still, 7 years is very different than 25 years. Imagine being 50 years old and your IRA contribution at 25 years old is still underwater! The worst time period for stock market returns was actually 1972-1982, when it took roughly 10 years to recover if you invested at the peak:

[…] according to a Hulbert Financial Digest study of down markets since 1900, the average recovery time is just over two years, when factors like inflation and dividends are taken into account. The longest was the recovery from the December 1974 low; it took more than eight years for the market to return to its previous peak, which was reached in late 1972.

Hopefully it doesnt come to it because most are'nt prepared for it mentally let alone financially...im a cup half empty kind of person and when I look at the economy and stock market right now its looking alot more than half empty.

[ab_hunter]

RY @ $114 this morning. Honestly didn't think it would drop this low.

[Dean2]

Originally Posted by ab_hunter

RY @ $114 this morning. Honestly didn't think it would drop this low.

Oct 2020 RY was at $89, it has gone as high as $145 since then, now trading at 113.50. Even the Bank stocks move in quite a wide range over a year. That is why I have always said, don't buy stocks with money you may need in 12 to 18 months, NO ONE can predict the price fluctuations well enough to make that a safe strategy.

That said, at today's price it yields 4.66% If you had bought Oct 2 years ago, your yield on cost is 6.1%, so your investment doubles in 12 years. Oct 2013 the stock sold for $65, so yield on cost 8.3%, money doubles in 9 years from dividend alone. (Jan 2013 it was $61)

No one that recently bought at $145 is happy the price is $114, but those that bought 2 to 10 years ago are laughing in the shade. The ones the bought at 145 are still collecting the dividend so as long as they are patient, the stock price will recover. If they have the drip program going, they are getting more shares at $113 that at $145 and thus using dollar cost averaging to reduce their original cost base.

The whole thing about investing SAFELY is picking a stock that isn't going to go broke, pays a good dividend and shows a steady upward sloping price curve over extended periods of 5, 10 and 20 years.

Despite all the latest downward price moves, overall portfolio is still up 4% over the past rolling 12 months, and that doesn't count dividends, which average about a 6.2% yield, based on current share prices, not cost of shares, so still up over 10% over 12 months. The dividends make a REALLY big difference to overall performance.

[HVA7mm]

Originally Posted by ab_hunter

RY @ $114 this morning. Honestly didn't think it would drop this low.

I picked some up a few days ago at $117. These (like the rest of my portfolio) are long term and I shouldn't need to touch anything for close to a decade, I'm not too worried. The volatility will continue for a while yet, so I'm just along for the ride.

[fishtank]

This is article on mortgage payment increased for the next couple of years …

Borrowers with fixed rates are expected to see an average payment increase of between 14 per cent and 25 per cent next year compared with early 2022 costs, according to the Bank of Canada. In 2025 and 2026, payments should rise between 20 per cent to 25 per cent.
Those with full variable rates have already taken on the burden of higher rates, seeing their payments rise an average of 49 per cent as of this year.
Borrowers with variable rates but fixed monthly payments will face the greatest increases ahead as some have had their payments only cover the interest costs, or not even that. People with these products face an expected 44 per cent average rise in payments by 2026 as their mortgages reset.
Peter Routledge, head of Canada's banking regulator, warned in September that this category of borrowers, which total about $369 billion of the $2.1 trillion of outstanding mortgage market, are "at risk of suffering a significant payment shock," and that he hopes to see the option offered less.
Given the steep rises in payments, banks and other lenders have been responding in part by stretching out amortizations to reduce monthly payments.
The Offer newsletter: Sign up for complete coverage of Canadian real estate news
More than 46 per cent of Canadian mortgages had payment schedules longer than 25 years as of the second quarter, according to the Bank of Canada, an amount that's been steadily rising from around 32 per cent in the summer of 2020.
Many mortgage amortizations at Canada's biggest banks now stretch past 30 years, from 24 per cent of mortgages at RBC to 30 per cent at BMO, with the vast majority going beyond 35 years. CIBC and TD Bank fall somewhere in between those two, while Scotiabank is notable for only having one per cent of mortgages run past 30 years.
The banking regulator has also been raising concerns about these extended mortgage terms, which slow how quickly people build equity in their home. Lenders in turn have also been looking to reduce lengthy mortgages, with most reporting last quarter that they had knocked a percentage point or two off their total of 30-year plus mortgages.

[Jim Blake]

I'm buying RY today. Not sure if it will go much lower but we are in it for some time to come anyway. Got it at the 113 buck level.

[ab_hunter]

Originally Posted by Dean2

Oct 2020 RY was at $89, it has gone as high as $145 since then, now trading at 113.50. Even the Bank stocks move in quite a wide range over a year. That is why I have always said, don't buy stocks with money you may need in 12 to 18 months, NO ONE can predict the price fluctuations well enough to make that a safe strategy.

That said, at today's price it yields 4.66% If you had bought Oct 2 years ago, your yield on cost is 6.1%, so your investment doubles in 12 years. Oct 2013 the stock sold for $65, so yield on cost 8.3%, money doubles in 9 years from dividend alone. (Jan 2013 it was $61)

No one that recently bought at $145 is happy the price is $114, but those that bought 2 to 10 years ago are laughing in the shade. The ones the bought at 145 are still collecting the dividend so as long as they are patient, the stock price will recover. If they have the drip program going, they are getting more shares at $113 that at $145 and thus using dollar cost averaging to reduce their original cost base.

The whole thing about investing SAFELY is picking a stock that isn't going to go broke, pays a good dividend and shows a steady upward sloping price curve over extended periods of 5, 10 and 20 years.

Despite all the latest downward price moves, overall portfolio is still up 4% over the past rolling 12 months, and that doesn't count dividends, which average about a 6.2% yield, based on current share prices, not cost of shares, so still up over 10% over 12 months. The dividends make a REALLY big difference to overall performance.

Well said Dean. If they continue to increase interest rates, I feel as though the bank stocks will continue to decrease. Will be interesting to see what happens at the next interest rate announcement.

[Dean2]

For you guys looking at picking up some RY, TD, TRP, PPL etc. I am not selling any of those that I hold but, I am sitting on cash and I am going to start legging into these stocks. I won't start doing that till this big downdraft seems to have bottomed. It is really hard to pick a bottom but at the rate the share prices are dropping the last couple of weeks, there is more downward pressure than upward right now, so might as well try to get them as cheap as possible. All of these stocks are negatively correlated to interest rates so as long as the long bonds are selling off, means long rates are rising and the yield curve is heading back to a normal slope where long rates are higher than short rates. Also, short rates are still rising because inflation is still running hard. Might as well sit on the sidelines and start legging in once that long rate momentum abates.

Anyone that bought at 117 or 113, I would not be worried longer term. If I was I would have sold down my positions already.

[Dean2]

I know from reading a few posts on here, like the grocery one, that there are a lot of people struggling with the high cost of everything these days. I wanted to plant a seed or two. Hard to invest when you are spending more than you make just to live, so the answer has to be, how do I make more money.

Moved the rest of the comments to a separate thread so as not to derail this one that is focused on investing.

[Glion]

RBC down at 110 today, I went in more a bit ago at 112. Canadian stocks seem to be taking a bit of a hit. Oh well just means I get more on anything I am dripping.

[Dean2]

For those of you still interested, ZIM was trading at $88 U.S. March 2022. Today it is at $8.20. Container shipping rates have dropped over 90% from their peak and are at the lowest levels in 14 years. All the shipping capacity added over the pandemic is creating a surplus. Onshoring is also affecting the demand for shipping.

ARM did follow the typical IPO pattern, opened strong, rose above the issue price of $51, now trades in the $47 dollar range and is trending down.

Laurentian Bank shot up to $44 on speculation it would be bought and at somewhere close to its book value of $52. Turns out, as I excepted, no interested buyers for it as an operating entity. Only interest was in buying the loans and deposits. Took a big drop to $30 when it was announced no buyer after strategic review. New CEO sourced 3 years ago from TD Bank fired, Board chair resigned in protest. New chair and CEO, longtime LB folks, not a good sign for turning this Bank around. Stock trading in the $25 range and still dropping.

Algonquin Power - after a disastrous failed attempt to Acquire Coal fired power plants in Kentucky, this stock has dropped from the $20s a little over a year ago to $6 bucks. Proof that lousy leadership can screw up even a regulated utility. Another example, think Alta Gas a couple of years ago, has since recovered nicely. Between way too much debt, investing in renewable energy projects that aren't paying off and poor Board, CEO Bankosta was recently fired, this place needs a big house cleaning.

Ensign - finally got a debt structure organised for its existing debt, actually pretty good terms. Ran up to the $3.90 range recently but has now retreated again to the $2.70 range. Drilling and servicing is the most volatile part of an already volatile industry.

Cruise lines - took on a ton of debt over the pandemic. Most still not making money despite full boats due to high labour, fuel and food costs. Share prices are way down. Has turned out these highly vaunted "Re-opening plays" haven't worked out at all. Most airline stocks aren't doing well either.

Cannabis stocks have been an unmitigated disaster all round.

What can I say about Crypto that hasn't already been said.

I provide the above as examples of stocks that have ALL been variously praised and recommended by the experts on T.V. and Blogs. If you watch BNN for a couple of days there will be folks with completely different views on the same subject, within hours of each other. These shows are about getting clicks, doesn't matter if the guests have no idea what the hell they are talking about. Same holds true for a lot of "Investment Advisers"

Always do you own research. Long term laws of investing and finance do NOT change. The oft sited "New Paradigm", it is different this time, never is. Too much debt you go broke, don't adapt you go broke, jump into new unproven areas too fast and too hard, you go broke.

You don't have to be brilliant to make money. To consistently make money you need to be patient, and understand what you are investing in. If you look at it as gambling and are trying for the 3 to 10 bagger, you will lose money far more often than not. The times you make money will NOT pay for all the ones you lose money on.

All the best and Happy Halloween.

P.S. To answer a couple of PMs; Long rates, as well as short rates are still rising. I do not think the market has bottomed yet, particularity the interest sensitive stocks like REITS, Utilities, Banks, etc.

The larger the debt being carried by any company the riskier they are as rates rise. Cruise lines and Airlines are carrying huge amounts of debt, anyone who has more than $1 of debt for every $2 of hard assets is going to feel the effect of higher for longer rates. (In the case of Banks, higher rates are good for margins, but rates that are too high start to cause loan defaults, so they are a double edged sword.)

[Sledhead71]

^^^ Thanks Dean for always taking the time to explain your thoughts and share the expertise as to market conditions and futures.

[roper1]

Originally Posted by Sledhead71

^^^ Thanks Dean for always taking the time to explain your thoughts and share the expertise as to market conditions and futures.

I'll second that!! Thanks Dean!

[Drewski Canuck]

What Dean says about "Fashion Investing" is very true.

The reality is that if BNN could be crystalized and put into soil, plants would grow very big. The smell is reminiscent of a feedlot though.

Quick trivia for everyone. What industry is buying back its shares? What industry is paying dividends? What industry is experiencing profit to record profits?

The oil Industry. But that is not fashionable. You in fact are a planet killing sociopath if you discuss investing in the oil industry. Oil industry investments are forbidden by many Sovereign Funds because of backlash from the Green Energy protesters.

But Green Energy investments do not make money or break even. A sensible investment if you listen to CBC / BBC.

Money Managers have this nagging problem. They have to make money.

But the Money Managers don't want the backlash of some interest group that has hijacked the advisory board of a Government Pension Fund screaming about a "dirty oil" investment.

Therein is the problem for an oil industry investment. So much Pension and Sovereign fund money is barred from being invested in the oil industry, regardless of economics.

Drewski

[ehrgeiz]

Originally Posted by Dean2

What can I say about Crypto that hasn't already been said.

Orange coin is on the rise again...the halvening awaits.

[eric2381]

Everything is related to everything else in a way. It’s just rotation after rotation after rotation. The key is to be in the right place at the right time. And always always always manage risk.

[Jim Blake]

Thanks Dean for your insight!! We've been buying RY again for the last two days and TD yesterday. In my opinion a great opportunity. Dean what is your opinion on the Royal takeover of HSBC?

[Dean2]

Originally Posted by Jim Blake

Thanks Dean for your insight!! We've been buying RY again for the last two days and TD yesterday. In my opinion a great opportunity. Dean what is your opinion on the Royal takeover of HSBC?

HSBC wanted to sell their Canadian operations and leave the Canadian market. They decided growth opportunities here were limited and margins here are very tight compared to other markets and very heavily regulated. Thus, this isn't a Core market and would never become big enough to be a Core market for them. Many International Banks have come to Canada over the past 30 years, only to find out the same thing.

When HSBC went looking for a buyer, the pool of interested parties was pretty small. RBC paid them a very fair price for their operations and the assets RBC acquired is a nice tuck-in to existing operations. RBC and HSBC had always had a friendly and cooperative relationship in many markets over many years, so this helped HSBC a lot in actually finding a buyer. Realistically, if no one bought them, the customers would have had to find a new bank on their own because HSBC was leaving one way or the other.

Just as an aside, the big drop in RBC yesterday was because it went ex-dividend on the 25th. The dividend of $1.35 about matches the drop. It typically recovers a bunch of the drop on the next day as the share sales are driven by auto trading platforms that feed off each other and these tend to overdue ex-div drops.

Also, nice to hear that folks find the posts useful. Appreciate the kind feedback.

[Dean2]

Tax Tip as so many on here are over 65, and it twigged when I saw the threads on Hip Surgery, back surgery etc.

Many of you may not know about the renovation tax credit. Basically up to $20,000 a year can be claimed for renos that make the home more accessible for anyone that qualifies for the Disability tax credit OR is over 65 years of age. Things like putting in a walk in Shower or tub, changing hallway width and a ton more. Even changing driveways etc fit.

The plan is pretty simple and pretty much anything can be fit in under the definitions.

https://www.canada.ca/en/revenue-age...-expenses.html

As an added bonus, there are a ton of things that can be claimed under the above program, and ALSO claimed as a medical expense. A great many things people would never think to class as Medical expense are actually allowed. Things like a furnace or AC actually qualify. On top of that, private surgery, travel costs etc are also deductible, which could make what was not an affordable option for some into one that is.

https://www.canada.ca/en/revenue-age...html#mdcl_xpns

These deductions can get you back almost $9,000 on a $20,000 renovation that qualifies for both deductions, and $3,000 Tax credit even if it isn't a medical expense also.

There is also a new tax deduction available starting in 2023, for making a home into an inter-generational home, up to $50,000 per qualifying renovation, there is no specified limit for a year, so as an example, if you spend $100K, break it up into two projects..

https://www.canada.ca/en/revenue-age...enovation.html

Hope this helps you guys and pass the info on to those you know, as these deductions are not well known. You probably won't get them if you use H&R Block, unless you know to ask for it. All the best.

[Dean2]

As i sit here happily recovering from a virtually pain free hip replacment yesterday, I am watching stuuff go by and waiting to be discharged about 1 today. I have lots of time to watch the markets.

Bank stocks had been heavily beaten up in anticipation of really poor earnings results. Most of the bigs have now reported. RY as it usually does exceeded expectations and is up over 2 bucks today. Even bns, that reported quite poor results, and below expectations has recovered from the beat down of the past few days. Real mixed bag of results but 3 have announce dividend increases so you can tell they are not worried about near term fluctations and think results will improve. Loan loss provisions have been large and likely, as is their habit, well above what they will experiwnce. This means their will be rwcovery of these provisions down the road, which will further boost earnings.

Hope anyone that was holding ZIM got out, it is now trading around 6 bucks. ARM seems to be holding at or just above it issue price but that is still based on a huge multiple. They need to show GREAT growth or that multiple is going to shrink and so will the share price. Most of the market is trading sideways so the dividend income means we get paid to wait, which is always a good thing. Good fortune to all.

[cowmanbob]

Thanks for the info.

[Jim Blake]

Merry Christmas Dean and glad to hear you had a trouble free replacement!! I hope you were able to get in some hunting before the surgery. Thanks for your updates. We are very happy having followed your strategy. Glad to see you posting on this thread again!!!

[tranq78]

Originally Posted by Dean2

As i sit here happily recovering from a virtually pain free hip replacment yesterday, I am watching stuuff go by and waiting to be discharged about 1 today. I have lots of time to watch the markets.

Your health is the most valuable thing in the world. You will be richer than the richest man (or woman) if you have good health. Stay well.

[badbrass]

The truth has been spoken!

Originally Posted by tranq78

Your health is the most valuable thing in the world. You will be richer than the richest man (or woman) if you have good health. Stay well.

[Dean2]

Originally Posted by tranq78

Your health is the most valuable thing in the world. You will be richer than the richest man (or woman) if you have good health. Stay well.

There is great truth to this. I have never been operated on or in a hospital before this, so I was definitely apprehensive. My concern is for the thousands on waiting list for even life saving procedures. As we get older, even if we take great care od ourselves, we need more from health care. Alberta alone is spending 28 billion a year, and Canada wide we spend 370 billion, or 8,600 for every man women and child. This does not count the billions spent on private care every year.

Despite the huge spend, in so many cases the health care is attrocious and Canada ranks 10th out of the 11 richest countries. Norway, Netherlands and Australia are the top three, are all public health jurisdictions, and they also spend about 9000 per capita, but for MUCH superior results. .

[fishtank]

Originally Posted by Dean2

There is great truth to this. I have never been operated on or in a hospital before this, so I was definitely apprehensive. My concern is for the thousands on waiting list for even life saving procedures. As we get older, even if we take great care od ourselves, we need more from health care. Alberta alone is spending 28 billion a year, and Canada wide we spend 370 billion, or 8,600 for every man women and child. This does not count the billions spent on private care every year.

Despite the huge spend, in so many cases the health care is attrocious and Canada ranks 10th out of the 11 richest countries. Norway, Netherlands and Australia are the top three, are all public health jurisdictions, and they also spend about 9000 per capita, but for MUCH superior results. .

There are just too many things needed to sort out in the health care system the money is not spend on where it needed and throwing more money at it will not fix it , it will get worse as the population gets bigger.

[Dean2]

Bit of an update. Markets are reacting favourably to the U.S. Fed starting to talk about easing rates in 2024. Even if it is only a small amount, this at least signals an end to the rate increases for now. Fixed rate mortgages are currently priced with a larger spread to wholesale rates than normal. Hopefully, rates stabilizing will cause that spread to shrink. Anyone with a mortgage coming up for renewal in the next 12 months may want to weigh taking a variable for a short time, or a short term fixed, to see if they can catch a lower rate 12 to 18 months from now.

Biggest issue is still inflation running well above the U.S. and Canada target rates. Inflation is not showing any real signs of abating as quickly as both Central Banks claim it will. Once again, the Bank's seem to think that if they wish something and talk about it it will happen. Hasn't so far. Spending by all levels of government is still massively out of control, and this will continue to drive inflation. In Canada the average worker loses more than 50% of his income to taxes. Taxes are the single largest expense for all households. That is simply wrong.

On the good news side, the large dividend paying companies are all raising their dividends, some by very significant amounts. Since dividends get better tax treatment in investors hands than rental, interest and other income, this makes the dividends an attractive option. Most of the dividend paying stocks are doing well share price wise as well.

Merry Christmas to all.

[Jim Blake]

Merry Christmas Dean!!! Thank you for the update. Your insight is very much appreciated.

[Dean2]

Thanks Jim.

Speaking of tax, Alberta is talking about putting the 14 cents per litre gas tax back in place as the price of gas has dropped below the threshold. Just for interest sake, taxes in cents per litre, Federal Fuel and Carbon tax is 24.31 on gas, 21.38 on diesel, B.C. adds 23.51 on gas and 31.85 Diesel, Sask 15 cents on both. Then there is 6 to 7 cents a litre GST and in all provinces with a sales tax you have to add that too. That means in Alberta, with the gas tax back on, 45% of the cost of a litre of gas is tax, and as usual the Feds account forthe majority of it. In other provinces taxes are 52 to 56%. Yet politicians LOVE to blame the greedy Oil Companies.

I guess that is their version of Merry Christmas from the Government, along with all the other tax increase set to come in 2024.