Spooky

I've been following WFG a little bit here and there, is the price attractive now? It seems like they have a lot going for them in terms of the macro set-up: 1) shortage of housing that needs to be built; 2) increasing use / demand for timber in construction; 3) less competition from Russia; 4) alternative timber products as mentioned above; 5) ESG rules potentially limiting supply.

Ya this is where I ended up - I have simplified my portfolio significantly and have a big chunk of VOO and VIOO in my retirement account. The rest of my portfolio is pretty bomb proof with big positions in BRK and CSU. I could go to sleep for 10 years and feel comfortable with what I hold. I have been trying to check the market less and less and focus on doing something in the real world like start a business... try to find some other avenues to create wealth outside of the markets while my money compounds.

Ugh... I struggle with this myself. My rational brain tells me just to buy the S&P 500 and forget it. But the investing game is just too much fun.

Not sure if this is the right thread but it is related to Canadian real estate / interest rates. https://www.wsj.com/articles/whats-killing-productivity-some-think-its-the-banks-9d1d0c50 Came across this article in the WSJ today about the UK's productivity issue and the fact that the bank's there are not lending to businesses but rather most of their loans are going to finance mortgages which is possibly damaging / limiting their economy. A similar phenomenon is happening in Canada with 33 per cent (Bank of Montreal) to 53 per cent (CIBC) of the bank's loans tied up in mortgages and only about 13% of the bank's loan book going to business loans (https://www.theglobeandmail.com/opinion/editorials/article-the-big-banks-dependence-on-housing-undermines-canadas-prosperity/). Small businesses in the UK are relying on start-up loan providers with much higher interest rates. The article also referenced the McKinsey report below which shows that two-thirds of the western world's net wealth is in real estate and only a fifth is in productivity-boosting assets such as factories, equipment and infrastructure. https://www.mckinsey.com/~/media/mckinsey/industries/financial services/our insights/the rise and rise of the global balance sheet how productively are we using our wealth/mgi-the-rise-and-rise-of-the-global-balance-sheet-full-report-vf.pdf Does anyone else see this as a big problem for the future in Canada (and some other jurisdictions)? It seems to me that banks are loaning more / borrowers are borrowing more to finance home purchases, driving up the cost of homes but not having any productive impact on the economy and diverting capital which could go to more productive uses for society.

Damn, she should have sold out at the top. Would have been a legendary move.

It's true, the Bank of Canada announcing a pause led many to jump back into the real estate market in Toronto with renewed FOMO.

Raising interest rates is not going to solve the problems of higher inflation through geo political tensions / near shoring etc. How long are we going to outsource decision making to the central banks? It seems to me like we need to identify which parts of inflation are a problem and have a government policy response to address it. On housing, I find the Canadian government's policies to try and address the problem laughable.

Another factor with Canadian real estate is that it has become a global capital sponge - very common for Chinese and other foreign investors to park their capital in Canadian real estate looking to get around capital controls etc. Also, many immigrants coming from countries with weak banking systems don't trust the banks and put all of their money into real estate.

What do you think the best alternatives are SD? I am holding a more meaningful allocation in cash these days in case there is a good opportunity.

This is something I want to devote more time to - curating my news / information sources to only have high quality inputs. I pay for both the WSJ and FT and I've stopped getting my news through social media entirely. I've been poking around with Nikkei Asia and some German sources. What are people's go to publications / sources? I also truly believe in Charlie Munger's approach - read as widely as possible about as many topics as possible. Pick up Poor Charlie's almanack or get a copy of his book recommendations and start there. Lots of books about science, economics, etc. Understanding the world better is key. I'm always looking for insights which are counter-intuitive and go against accepted wisdom. I also have found that some of the great investors have an almost philosophical bent like Bill Miller and I have been reading a lot of books on Stoicism lately. My favourite line from Sam Zell: when everyone is going right, look left.

Also we just hit bull market territory on the S&P 500 again... up 20% since October.

I hope the Fed raises rates more aggressively, it will give me another bite of the apple.

Agreed. It seems like we are back into momentum / fomo for the big tech stocks / QQQ which could run for a while. Still looks like a stock pickers market to me - avoid the S&P 500 and new magnificent 7 (or whatever we want to call them). I have been adding to the S&P 600 in my retirement account but even that is starting to move upwards.

Amen. I hope to never retire but do something I enjoy as long as my health permits to have some kind of purpose. Now I just need to figure out what that is... I need to start some kind of small business.

Great thread. As a recently minted millionaire it certainly doesn't feel like a million goes that far anymore. The average home where I'm from in the Greater Toronto Area is now $1,196,101 in Canadian funny money. I also echo other people's sentiment that the money itself does not make me happy / improve my happiness. Looks like I need to move to a lower cost place to live and use the money for something that will have a real impact on my life.

Is there any credibility to this?

Things have unfolded pretty closely to how I predicted so far. Hard to say where things go from here but I'm being more cautious again now that sentiment has picked up.

I had a similar challenge. What I ended up doing is creating a custom report and then I run it and view the PDF. Not sure if there is a better way...

Exactly, it's hard to ignore the collective judgment / wisdom of all investors in the market. Sentiment has been tilting away from fear to greed for a while now.

My comment is on overall inflation / core inflation. I just don't see inflation going materially higher from here going forward and all the data is backwards looking. The tightness in the labor market is easing, layoffs have been occurring and immigration in the US has actually been surprisingly robust. Companies are not going to be giving 5+ percent salary increases this year. It is just a matter of time until the data catches up. I also agree with Greg that a 25-50 bps change in interest rates from here doesn't make any difference if you are taking a long term view. Doesn't really matter what the Fed does now and it looks like a Volker style double digit interest rate scenario is out of the window. Most likely scenario is that there is maybe one more raise and the Fed will hold rates steady for longer than required just to be safe.

Absurd was a harsh word choice on my end but it doesn’t really change the overall point. I also think looking at monthly inflation data makes no sense since it is noisy and volatile. This is from the WSJ a while back:

Greg is right. Most of the remaining inflation in the CPI / core data is related to real estate which is calculated in an absurd way which significantly lags actual data. It is just a matter of time until this works through the system and shows up in the official inflation data. If the Fed holds rates here we could soon be in a Goldilocks period for stocks again with inflation under 4%.

JPM had an interesting Eye on the Market talking about Japanese / US markets: https://am.jpmorgan.com/ca/en/asset-management/institutional/insights/market-insights/eye-on-the-market/too-long-at-the-fair/

AI is the new thing for the market to get fixated on. Run away from fads. My personal view is that this will probably lead to an increase in productivity across many companies / industries and the best play is probably just a total world index since it is likely impossible to pick the winners and losers at this stage.