valueinvestor

@Peregrine You brought up a good point, I always thought it was inflation as from 1990 to 1998, where we had a decline of 37% but we've also experienced a correlation in unemployment.

There's really no way of knowing because the data regarding housing is biased and lacks transparency - even the home bidding process is opaque, as @Viking alluded. There's also a real sense of FOMO and that's due to a myriad of reasons. However the possibility of decline is real and can happen. When COVID hit, prices were down 10% off the bat. If the government didn't step in with mortgage deferrals - we would've seen a real decline. 2018 (Just four years ago) - we had months where one was down 15%. If you were a first-time home buyer, that means you had negative equity or possibly 2x your downpayment. Thankfully, there's no technical defaults or breach of covenant with most of those mortgages when your equity goes down - it needs to be replenished. Secondly, a third of homes (again this could be wrong) is owned by investors paying cap rates that are totally reliant on capital appreciation. Consequently, if rents go lower their ability to service the debt will degrade. Historically, rents has not kept pace with capital appreciation - hence many people are reliant on refinancing and purchasing additional real estate to increase their paper returns. To give people a picture, my friend was able to rent an apartment that's only 5% higher than 2010 rent prices in Midtown Toronto. As @SharperDingaan mentioned the banks will definitely not sell and CHMC insures all the homes, unfortunately that depends on speculator relying on bankruptcy versus selling. We should also consider that real estate prices are comped to last sold. A property on the block sold for higher? Great that raises the property value of that block, if not the entire neighbourhood. I assume the reverse is true. So it really takes one distressed seller on a block to trigger a cataclysmic decline. Especially with how the news in Canada reports on real estate, as often as the weather - it can scare speculators. It doesn't help that I don't have great faith in the underwriting of some of these mortgages. Again that's my simplistic analysis of the whole situation, but it doesn't mean that the entirety of Canada is overvalued. Kawartha lakes, cottage country has limited supply and even limited views - hence it's become an airbnb situation where one can get cap rates of 5-10%, even in today's real estate market. As @SharperDingaan mention there's a benefit borrowing in an inflationary environment, as it cuts both way in terms of increasing the value of the asset while decreasing the hard liability. P.S. It's also interesting to see that housing has become political in Canada. I really do not believe that the Government is going to artificially lower prices, as there's a lot of red tape and vested interested to keep it high. However, it is something to watch out for. On the other hand, there's a real path that Canada could be the next Hong Kong.

Thanks everyone! I didn't have a chance to go through your post, as I didn't want to skim it and respond, as my usual practice. However, I really do appreciate the support! It means a lot! If I had to say what's my best investment - it's spending $25 to be a member of this board. A huge honour!

Feel free to let me know if this has been discussed before, but thought I could get some advice in regards to the Toronto Real Estate market or Real Estate in general. I've provided context, but if you want to skip it, feel free to answer the question below. I live with my parents, and rent an office. Never really cared about owning a home, and performance has been pretty good, where I was able to edge out Toronto Real Estate prices with stocks even with the recent declines of some growth names. Matter of fact, my parent's stock portfolio that's less "risky" managed to also outperformed their own real estate portfolio that's on the outskirts of Toronto, where houses appreciated higher. If you were a young person (mid-twenties) looking to compound at high rates, what would you do? Divest some of your equities for real estate? Would you dabble in Canadian real estate? Would you look abroad? I was looking at Arizona, Florida, Cleveland, Rochester (NY), Detroit (MI), and more. I'm slightly interested because with real estate, one has access to tax (depreciation) and low-interest leverage advantages versus equities. However I have a hard time divesting, as I think there is a real opportunity to make money by just holding. As I don't think returns will be as stellar with Toronto real estate and even if I underperform slightly, I rather have that - then spend time maintaining a property or deal with tenants. My long term goal is to compound at high sustainable rates but so far, my assets are my tiny stock portfolio and tech business. However, my business also has an opportunity to get a 100% LTV through the owner-occupied commercial real estate loan, but I'm not sure if I want to put cash-flow towards real estate versus investing in the business and monetizing sometime later. Commercial rents, as you could imagine has been really dirt cheap at one point, and I was able to lock-in a good lease agreement with very low penalty for breaking it. My conclusion thus far is if I'm going to purchase a home, it should just be a home rather than an investment. I hear stories with mortgage brokers in Toronto, and the underwriting standards despite the higher "stress-test" for new mortgage applicants, however that's anecdotal. TLDR. I guess my question is if you just want to compound at high-rates for the next thirty years, where would you be looking? I'm flexible. It can be bonds, currency, art, crypto, NFT, etc. I'm also happy to work with very volatile investments that can produce large mark-to-market declines, as my needs are very little at this point.

Happy Holidays!

Why CNTWW as opposed to NYSE: AMR? I was in contura before they changed the name. This is so strange, I'm sure there's a reason?

I recant my statement of implying it's not broken, but not accurately saying this board gets better and you're right, the freeloaders can complain about not having a free lunch, when lunch is right in front of them, well we can't do anything about that!

Exactly! I thought so too, but a few people whine and gripe about the quality of the posts. I don't really see a decline, but an increase, especially in terms of how people think and view investments. For example, I learned a bit by reading your posts beyond idea generation. IMO, if one really wants more investable viable ideas, they should pay for it or hire an analyst. At the same time, I also realize that some are dropping off because there's not a lot of new "ideas." I think that's not a benefit, as it's in my experience, they have businesses or are execs of businesses and can provide real insight on the topic at hand. I'm fine either way, but I don't think we lose much by crowdfunding a monthly award and awarding it to the best idea of the month. One it may attract new users, and provide new ideas, which will bring about new discussion. Sometimes I feel this forum is a bit insular, and I can effectively predict how particular users will respond to a specific posts. It's kind of comedic and fun in its own way haha. Anyways, it seems that many are not passionate about this (neither am I) - I guess why fix something that's not broken right?

Some say they would want to buy a beer or treat people to a meal on this forum. This allows that.

Sure

I think that's different. I think this should be an open forum, and there shouldn't be a paywall. I don't think people are necessarily here to be paid for their research. It's work to develop a following - I'm saying let's remove the friction. Just as twitch streamers get paid for great streams, maybe we should start not necessarily paying but "donating" for a single post or awarding an idea from a crowdsource fund. That way great content brings great contributors, or vice versa.

A friend of mine, a frequenter of the forum remarks that my posts are sometimes reminiscent of a 10 year old's book report. I laugh because I agree, but I always thought it was not my "duty" to do the work, but rather provide insight on a topic that can lead one to the right direction. I never really used this forum for idea generation, probably only got one or two ideas from the forum. Also my investment research less calculative but involves more thinking and doing (such as trying out the products), hence I can't easily copy/paste my notes. However, I seen really good posts that has a lot of research backed, but I don't necessarily agree with their conclusion. Either way, if there's a way where I can contribute to a fund, where we can award the best topic or directly "donate" to a contributor to really show my appreciation of them as a contributor, I see no reason not to do it. Hell, it may be a greater investment than some of my posts/contribution. We can even have a part of that fund or donation towards the website to subsidize the operation and if it's big enough, improve it. I know that I spend a lot researching investments, and whenever I think of posting my entire research, it's easy 10 pages going from business to comps to unit economics. This is coming from a person who doesn't believe that they're research oriented, so it means complete research for anyone one of you could easily go passed that and I'm willing to pay for it. This doesn't mean that I expect going forward that many posters will rush at a change to monetize on their posts, hell, I wouldn't as I have other priorities. However, I'm sure that there are other posters who has constraints from time and money, and may post more, if those constraints were loosen. If not, I'm sure it will attract more posters from varying backgrounds with hopefully wacky ideas. So yes or no? Any reason not to do it?

Criticize his performance, but criticizing an individual is just poor taste.

Did it make you feel better to write that? Apology accepted but to call him washed up versus his performance is poor is... worst than being washed up. You're not the only one to say that and many others posted on the board too - hence this post is not to single you out. I don't often or really care to come to anyone defence, unless they're truly defenceless and Francis Chou is not defenceless. There's a reason why people stick with him regardless of his multi-year underperformance and I suspect it's due to his character - not many refund fees when the world is melting and facing massive redemptions. Do I see why he made those investments? Yes. Do I necessarily agree with it? No, in fact, I wholeheartedly disagreed relative to other opportunities. The very reason why RFP, Exco, etc. went up this year, could also be the reason why it goes down. Does that mean he's washed-up? Far from it. I think he's getting started. Not many can double down, let alone stick with an investment after repeatedly being bitten from it. Many espouses Benjamin's and Warren's philosophies' but few practice it - myself included. Reading his letters during his underperformance was a treat and I respect his conviction. The only fault that he has in my book is his love for bargains, and as he's admitted and I paraphrase, there were stocks that were priced at 100 cents/dollar but truly were worth 150 cents/dollar and others priced 100 cents/dollar but were really worth 70 cents/dollar. Frankly, I've seen people rave about RFP @ $28, BB @ $50, Valeant @ $200 (I bought it at $200) but many not raving it when it's at a 10th of it's all-time high price, and this would be fine if they admitted they were wrong or be sympathetic when other share the same fate. I really hope the numbers Prasad put out is true, because it probably meant he averaged down over a long period and multiple times. That's alone is what I believe 99% on this board, even the world do not have the wherewithal/fortitude to replicate.

Ahh.. makes sense! Thought there was a particular metric but it seems it was a confluence of them.