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It will take a while for fixed income to out do the tax advantaged dividend stream many people invest in even if the market continues to crash another stunning 1.4% tomorrow as well.
boink...heres how to sleep well at night...

Fortis (NYSE:FTS) declares CAD 0.535/share quarterly dividend, 5.9% increase from prior dividend of CAD 0.505.

routine....wonder if my GIC increases the 2.3% they were paying me?
 

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Discussion Starter · #222 ·
routine....wonder if my GIC increases the 2.3% they were paying me?
The GIC cannot fall 30% in the blink of an eye, as FTS did during the covid crash.

FTS had reached a high of $59.28 in early 2020, then swiftly crashed along with the market, reaching a low of $41.52 ... 30% decline in just one month.

The GICs are for capital preservation, obviously. They don't crash.

I hold tons of FTS myself too, but let's not forget they are equities and come with equity risk.
 

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The GIC cannot fall 30% in the blink of an eye, as FTS did during the covid crash.

FTS had reached a high of $59.28 in early 2020, then swiftly crashed along with the market, reaching a low of $41.52 ... 30% decline in just one month.

The GICs are for capital preservation, obviously. They don't crash.

I hold tons of FTS myself too, but let's not forget they are equities and come with equity risk.
Eder knows this. He's in it for the dividends, not the equity.

Also, GIC's have GUARANTEED risk. The risk being that you lose purchasing power on a consistent basis.
 
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Eder knows this. He's in it for the dividends, not the equity.

Also, GIC's have GUARANTEED risk. The risk being that you lose purchasing power on a consistent basis.
With stocks you can lose ten years worth of inflation in several days or months. Neither is perfect, investors should have both.
 

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Markets like S&P 500 are broadly down about 5% from highs. Halfway to an official correction of 10%. Commodities and cyclicals, though, are down less - energy, for example, has just been hitting post-COVID highs. Value and growth have been opposite sides of the performance curve and at the moment, value/cyclical is ahead and nosebleed technology has come down.

Energy is the best performer on both the S&P 500 and S&P TSX this year. Up 70% here and a solid 40%+ in the S&P 500. But it's still barely 2% of the S&P 500. It's very interesting, energy is rarely this strong in the weak season and is technically very strong at new recent highs. Energy is so under owned that there could be big moves if institutions move to the sector to avoid falling behind, and quantative / momentum strategies could also jump in given energy is hitting all time highs when the indexes are underperforming.

September has turned out to be the negative month it usually is. This negativity often continues into October before getting back on track.
 

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New highs.
While Statistics Canada estimates the consumer price index for food has risen 2.7 per cent over the past year, the Dalhousie University team says it has found the inflation rate is closer to five per cent.
Global food prices rose 30 per cent year-over-year in August, an index compiled by the UN Food and Agriculture Organisation shows.

How lucky we are, food prices increased only by 2.7% in Canada, while in the rest of the world it’s 30%.
Strong Canadian dollar vs weak all other hundred plus global currencies.
 

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Fish, vegetables, rolls, pasta, rice, and ice cream are cheaper in price. Some prices are flat and meat is the biggest jump in cost.

We shop the sales and stock up when it is cheap. People can control their own cost of living if they put some effort into it.

Our son and partner have 4 kids to feed, so he complains to me about it. I say......yea, but you get $1700 a month child benefits and we never got a dime.

So too bad.......so sad. Stop spending $70 on Chinese takeout and make Irish stew.......like your mom did and still does.
 
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The Statscan fudge factory produces what the government wants. They have to keep COLA down.
I think you have to look very carefully at what the definition of inflation is, and is not.

Statscan is pretty legitimate, and for most stats they do publish a full method.

The Dalhousie Report doesn't appear to show any methodology or be a peer reported study. Just a headline number.

It actually looks like they are publishing a report on peoples opinions and behaviors, which is very different from inflation, but in some ways actually more important.

Honestly you likely could come up with whatever inflation number you want.
Oat prices haven't changed much, if anything it's been on sale more. (I Buy the exact same box of Oats from Costco regularly)
Green onions and apples, oranges and a lot of in season produce are on sale for the same price as they've ben for the last year. Some other items seem more expensive.

Meat does seem more expensive.
 

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Inflation is an increase in the money supply.

What people are talking about are price increases, and that is a function of supply and demand.

Covid shut down manufacturers and disrupted supply chains. The government "printed" money to offset the lost wages.

An increase in the money supply should be offset by the loss in wages, but I haven't seen that comparison anywhere.

Prices will decline as the supply chain improves. Prices for used vehicles increased due to a lack of computer chips for new models.

Foreign supply of steel chassis for trucks and vehicles is very low.

Currently, the on time arrivals for the supply chain is very low and the supply chain system is struggling to get going.

Demand is outstripping the supply and companies are re-thinking the "just in time" inventory business model.

Some companies may transfer to a domestic supply chain.

Analysts say the backup in the supply chains may not be resolved until mid to late 2022 at the earliest.
 

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I spent a lot of time with the Statscan inflation number including a debate with an expert in Ottawa and concluded that it has no bearing on my life whatsoever. CPP amd OAS are insigniificant so I use my own assumptions. And they are quite high today.

I also have rented for 26 years and I apppreciate their low numbers for that! I am getting the deal of a lifetime for my 3300 sq.ft. penthouse. That more than compensates for their underestimates on everything else.
 

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Discussion Starter · #234 ·
I also have rented for 26 years and I apppreciate their low numbers for that! I am getting the deal of a lifetime for my 3300 sq.ft. penthouse. That more than compensates for their underestimates on everything else.
Wow that must be pretty sweet... congrats on not giving that one up earlier!

My rent is going up by at most, 1.5% next year. It did not increase at all in 2021.

So if I get the max 1.5% increase, that will mean my housing cost has increased by 0.75% annually. Not everyone is seeing skyrocketing housing costs.
 

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Inflation is an increase in the money supply.
Inflation is a result of an increase in the money supply

Increasing the money supply debases its value. It benefits those who get to spend it first

Hence a country like El Salvador is screwed for using USD
 

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Discussion Starter · #238 · (Edited)
Unless you intend to rent for life, you're just deferring the inflation until you buy.
What's to stop me from renting for the rest of my life? I've already been renting for 17 years, and I think it's been pretty nice.

And money I saved (by not having a house) during that time has been invested. Market investments typically have higher returns than homes. Even a market like Vancouver, which many people think of as super high performing, has only had like 6% CAGR long term price appreciation (for condos).

And many markets in Canada have, over the long term, performed worse than equity & bond investments. Regression analysis on real estate shows that investing in RE is roughly equivalent to 50/50 equity and fixed income. There's nothing particularly special about holding real estate.

The only reasons people talk about RE being fabulous for wealth creation is (a) the massive leverage they are using, and (b) the fact it forces them to buy and hold, rather than trading in & out like they do with stocks. Something I've discussed off line with @MarcoE quite a bit.

@nathan79 my point is that you aren't missing out by not owning a home. If you save and invest the same money, you can always swap it back (into a home) later on, and you're not missing anything along the way... assuming you are a disciplined investor. You are getting the same price inflation in your market investments (say a balanced fund) as you would have had in a home.
 

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Glad you're happy renting. I don't mind renting temporarily, but I do aspire to own. I know it's not for everyone, though.

I would agree that condos don't typically outperform the markets. Condo units are an artificially scarce commodity, unlike land. You can always make more condos by building higher, but you can't make more land. Condos also have high fixed carrying costs and restrictions that make them different and less desirable than houses.

I would argue that suburban detached homes have generally outperformed the markets, but of course that depends on the location.

Leverage is the key component that allows for high returns on housing. Where can you buy stocks at 5x or 20x (CMHC) leverage? If you do buy stocks on leverage, they could drop and you may get a margin call, but you can't get a margin call on your house unless you stop making payments. The government will also do whatever it takes to support the housing market, which is more than you can say about the stock market.
 

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Discussion Starter · #240 ·
I would argue that suburban detached homes have generally outperformed the markets, but of course that depends on the location.

Leverage is the key component that allows for high returns on housing. Where can you buy stocks at 5x or 20x (CMHC) leverage? If you do buy stocks on leverage, they could drop and you may get a margin call, but you can't get a margin call on your house unless you stop making payments. The government will also do whatever it takes to support the housing market, which is more than you can say about the stock market.
I agree with you there. The government gives unfair advantages to real estate people with the leverage.

Even if someone totally screws up their mortgage, there are given plenty of second and third chances before they are ultimately foreclosed. It takes a long time. Look at how mortgage payments were forgiven during covid and banks were given subsidies to give leeway on payments.

Did brokerages also give leeway on margin loans and relax their stock lending? I'm guessing "no".

As you point out, we don't have access to the same leverage with our stock portfolios. One quick margin call and we're done.
 
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