scorpioncapital

I'm not so sure this structure of claiming non-residence while your immediate family is here wil or can work for long, "The most important thing to consider when determining your residency status in Canada for income tax purposes is whether or not you maintain, or you establish, residential ties with Canada. Significant residential ties to Canada include: a home in Canada; a spouse or common-law partner in Canada; and dependants in Canada;" This is from the CRA website. Anyway I'm sure this and using shell corporations to buy/sell real estate to avoid taxes is a minor factor but one thing struck me as the world globalizes and people come and go EVERY country is having real problems integrating their benefits, social systems among people with various nebulous types of status. I hope this gets sorted out to make it easier, especially as cross-country mobility and trade expands.

If your personal circumstance allows that, I can see that makes sense. But the majority of people in Vancouver don't have that choice. This is because there is a border between Vancouver and California. Just two hours drive south of Vancouver, Seattle is cheaper in housing and almost everything else. It has more jobs and higher income. It has lower mortgage rates. But most Canadians cannot simply move there to live. This is why comparing housing prices across countries has limited practical value most of the time. And the Vancouver housing speculators know this too well. ;) Good point, I think you've hit on an essential aspect of globalization and even perhaps part of the Canadian real estate market flare. While it's true most citizens cannot easily be resident in another country on account of being born in Canada, a quite large proportion of people have dual residence/citizenship this almost creates a 2-tier system because while non-residents can invest and buy property here and while immigration is not as difficult as in some other countries, non-residents have some key benefits, namely usually low to no tax back home as well as being able to avoid capital gains, gst, and other major taxes here. Not sure at what % of non-resident immigration this can really heat up the market. But the stats are old (from 2006) showing ~20% of Canadians are foreign born. However this is *not* an accurate reflection of citizenship/residence issues. Many countries allow even Canadian born with parents or grandparents from another country to re-establish citizenship there very easily and thus I would put the % of residents who can in fact play "residence arbitrage" at much higher than 20%. We'll see when the census comes out but I'd say it's 50% if not higher at this point. Of many countries out there including UK & USA, I think Canada is one of the few that has really gone with the large foreign population policy, after all it's a newer country and with a small base to start from.

Yeah you really need a snowball event - and a major recession. Otherwise even a drop of 20 or 30% in house prices is not enough to really get the ball rolling downhill - although the media will probably be screaming at even a 10% drop.

I really don't understand how crashes occur in general. I don't even understand how the 2008 RE crash happened. I mean with stocks or RE, my first assumption is that nobody is obligated to sell anything ever. You can get much poorer based on "paper losses" and you may be uncomfortable but if they are excess savings or a house you live in , it is just a personal upset. The real problem is if you can't pay the financing cost and RE is almost always leveraged. To not be able to pay such cost you must lose your job or the payment must go up alot.

I can buy a house in California with an even more moderate climate than Vancouver in a country with overall somewhat lower taxes and lower cost of fuel, food, etc..and finance it with a 30 year mortgage. I am not convinced Vancouver is so great as to justify such high prices based on geography alone.

Some are saying tax evasion is causing some of these price gains, not sure it's possible: http://www.theglobeandmail.com/news/investigations/questionable-tactics-encourage-bc-homebuyers-to-avoid-taxes/article28758483/?utm_source=facebook.com http://www.theglobeandmail.com/report-on-business/economy/housing/the-real-estate-beat/foreign-investors-avoid-taxes-by-buying-real-estate-in-canada/article26683767/?utm_source=facebook.com http://www.vancouversun.com/touch/story.html?id=11720846

So we have: migration (30%?) - are the migrants coming in with lots of money as opposed to purchases from domestic wages and business? low interest rates (20%?) - are monthly mortgage costs low? limited space in a desirable location (40%?) - bylaws do not allow building up so even domestic and international buyers are competing for limited houses. bubble - mania above & beyond the above. Doesn't seem that it's more than 10-20% here unless we adjust the above say migration 20%, low interest rates 10%, good location 30%. Then speculation is still only about 40%. Maybe that's worthy of being called a bubble. As Buffett recently said in those regulatory filings, a bubble usually has a sound premise - in this case sound 50-60% or so, it's the other 40% with leverage that could be lethal. But I'm not convinced a bubble shouldn't be defined as something like 90% speculative, 10% fundamental. I mean is it a bubble when locals have the choice to emigrate from the region who can't afford it, thus leaving say a city with many upper middle class and everyone else moving to smaller cities or distant suburbs?

I cannot justify residential real estate as having higher avg annual gains over many years than most quality stocks/companies. Either the world is upside down due to something (low interest rates?) or BC is so exceptionally desirable that like a high PE stock it will grow into the valuations. But I'm not sure how regions and countries can be measured for value. Some criteria might be climate, space, social system, taxes, etc..

The keyword in that headline is , "the Spirit". Great companies may stay true to the spirit of their founder - if that spirit was great. By the same token, Poor companies also stay true to the spirit of their founders/leaders - if that spirit was not so good. To me, the moral is: people don't change so invest in good people. I know it's pessimistic but actually Buffett believes this too. I would say a major part of his success is that he goes with the good stuff and just ignores the bad stuff. Doesn't try to change it just stays away.

You know it's discussions like this that can really accelerate one's investment learning. This analysis of dividends runs from A to Z to what it means to invest in a company, what a management should do, what investing is, what business is. It's the opposite of the casino approach that is sometimes played in markets!

"Management are almost always 1) overconfident about their abilities to grow the company, 2) lousy at capital allocation or 3) don't really work for shareholders." Excellent points! The flip side argument might be why invest in said managements at all? Or an alternate theory: Can position/bet sizing of the stock have the same effect as dividend to guard against internal allocation risk?

If you have a smaller country in which domestic shareholders pay zero tax on certain domestic dividends up to a certain bracket, I can see some justification, although only a small one. (Canada comes to mind) But otherwise, the theory should be that 90 shares without a dividend will increase in dollar amount by at least the difference in the dividend not paid on 100 shares paying that dividend. But dividends have been the greatest long term psychological trick in markets, for some reason everyone cares about it. For me, dividends are for the old(er) who want their income now or for the leveraged with fixed expense (like Berkshire investment holdings actually) that can leverage up the return with less consequence than most retail investors.

"lso, Munger has said that the day Berkshire offers a dividend is a sad day - as it means the compounding machine is not working the way it used to" Every company should pay attention to this line as it reveals a cold hard truth. If you're paying dividends, unless there is some very specific tax reason, it almost certainly implies admitting a limitation on opportunity. Which is puzzling that some companies boast of dividend payouts for 50 or 100 years. To me this is a sign on your door that says we haven't been really hot for the better part of a century :)

Some sort of increase in capital gains taxes?

What currency are they using for that study? With US dollars, the major cities of Canada are relatively cheaper.

Apparently Toronto did have a bubble in the past - http://www.torontocondobubble.com/2013/02/toronto-housing-bubble-in-1980s.html A few notes - Rise of interest rates were one way it got pricked - hitting 12.7%. - There is a difference between inflation-adjusted and nominal house prices. "If you bought a condo in downtown Toronto in 1989 and you were to sold it today, you would likely still end up selling your house at a lose and that's not counting the closing costs of a sale. "

Just because management says a stock is undervalued does not mean they are sure. Obviously it's a two edged sword. If they are wrong, listening to their words can be expensive. Not saying this is the case at Berkshire - or rather, the risk is less, but just to people who feel talking up or down stocks is mathematically precise.

Just a quick question - are some of the positions like IBM marked to market? I know that Berkshire's investment in insurance subs are allowed to value at cost if they believe there is no permanent impairment? I thought this was a push and pull with regulators whether and when they have to mark something below cost.

Regardless of Brexit vote, England already has one foot out the door of the EU.

Yes! First filter is to see the big strategic picture about what to exclude from consideration before going any further. I'd say this is maybe 80% of the battle.

I have just one question - where is the money coming from?

I own just one - Liberty Ventures. I am considering a smaller position in Liberty Media after the tracker re-attributions. These two appear to be the main vehicles for future growth and deals. I've noticed they spin off once a business is consolidating or maturing, so one has to ask if the goal is to make money from the next investment opportunity or whether you want one of the steady cash-cows in a narrow field but that may be running off or slowing down.

Second this. A very good use for cash equivalents. But keep it simple and careful which you choose to go for. You don't have to have your hands in everything - or diversifty and try to put some thought to the deals you go for. This should result in a very good spread over cash interest and relatively safe.

Only problem with this example is try to live on $7200 per year or even $7200 investment + $7200 moonlighting + $7200 regular. That barely covers rent. And if you have 500k, you don't need any of the moonlighting. You can probably live off something like well chosen but slightly distressed bonds. Bottom line: most people will have to work full time or very extra part-time unless they are getting stellar investment returns.

So if inflation will be higher than expected, I read that companies with debt will get a kick (they are leveraged), gold and commodities should also get a kick. Does this mean the simple business with no debt and just cash-flow is actually going to be penalized for being careful? Not to mention savers?