cwericb

It is exactly two years since this thread started and back then ago the consensus was that Canada was in a housing bubble about to pop. Yet not only has there been no pop, but prices have continued to rise. I am not saying that there are no serious concerns nor am I suggesting that there may not be a pricing correction in the Canadian housing market. However, the Canadian market is not quite the same as in the U.S. and many other countries. A lot of people here have a reasonable amount of equity in their homes above their mortgages and many mortgages are insured by the Canadian Government (CMHC). In the past we have seen CMHC step in to help stabilize prices during a correction and when prices dropped in the past they rebounded fairly promptly. Remember the law of supply and demand. At one time we used to have nuclear families where 2, 3 generations would live in the same house. Now it seems everyone has their own house or condo. In general our population is well educated and many singles live in their own homes and condos. Today’s high divorce rates means you now need two houses where previously only one was needed. Immigration also drives our housing industry. Here is something else that seems to be overlooked. Our houses are more expensive to build and probably last longer because of that. They have to meet high snow load criteria, withstand high winds and very cold temperatures. That means a high quality level and makes them more expensive to build. Materials are also expensive because they must travel greater distances to and service smaller markets in many cases. Our houses must be very well insulated, require much more expensive heating systems, and because our houses are built tight we often require air exchange systems to keep the air fresh and humidity levels in check. So perhaps our housing is expensive, but there may be more value in them as well. Just my opinions.

Just thought I would re-post the original link that predicts participant's expected lifespan since some may have missed it http://gosset.wharton.upenn.edu/mortality/perl/CalcForm.html?utm_medium=Newsletter&utm_source=Personal%20Finance%20Reader&utm_type=text&utm_content=PersonalFinanceReader&utm_campaign=123555881

I hate to be pessimistic but you guys that think you may live to see 150 or 200 are really, really optimistic. Aside from that I wonder what the odds are of being hit by an asteroid, a tsunami, a massive earthquake, a new disease, a major war or the deadly repercussions of global warming? And if we are talking about the next 100 years what about the after effects of the collapse of our financial system.

Here's a thought... Longer life span will effect retirement age, retirement savings, pensions and government programs like social or old age security which are going to need to be addressed quickly. Not that many years ago, sixty was considered “old”. Anyone living beyond one hundred was a real rarity. Now most industrialized countries see a rate above 20 per 100,000 living beyond age one hundred. In Japan that number is fifty-six! If my math is correct, with a Japanese population of 127.3 million, that means there is over 71,000 people in Japan alone who are over one hundred. People in this age bracket could have well been retired for at least 40 years. How many present pension plans/savings/social programs are geared to support this? How many here are saving for a retirement that may last up to or beyond 40 years?

Hope you're saving your money tombgrt because you have a 25% chance of living beyond 94 years ! :)

This is pretty detailed. If a person knew just how long you were going to live, saving for retirement would be easy. Of course if you knew when you were going to die you would probably worry yourself into an early grave as you got closer to the date - invalidating the whole process. http://gosset.wharton.upenn.edu/mortality/perl/CalcForm.html?utm_medium=Newsletter&utm_source=Personal%20Finance%20Reader&utm_type=text&utm_content=PersonalFinanceReader&utm_campaign=123555881

"It is not relevant because they cannot dictate oil prices..." Perhaps they cannot dictate oil prices but they certainly can influence them.

"That is not relevant at all. First of all SA has huge reserves. Second, if you look at the game theory, it would not make sense for them at this point to cut production." I don't see how those factors would be irrelevant. I may be wrong but I believe that numerous times in the past SA/OPEC has cut production to support prices. This time they did not because other oil producing countries took advantage of this and let the Saudis take the loss in supporting prices.

Wellmont says: ... “don't look at what it costs SA to produce oil. look at what it costs to finance their society.” Exactly! Isn’t this what we should be looking at when discussing the price of oil, or where it’s going? It’s not the price of production, but the excess that has been supporting some of these oil producing countries. Oil accounts for 50% of Saudi Arabia’s gross domestic product, and about 85 per cent of their export earnings. Sure they may be able to produce oil at $30, but if they have been selling it at $100 that $70 difference has been supporting the county’s standard of living. But at today’s $45 oil, that $70 has already been cut to $15. How long can some of these oil producing (read oil reliant) states like Saudi Arabia, Venezuela, the UAE and others continue to allow the price of oil to drop before they have to cut production in an attempt to increase the price? Perhaps an oil company may be able to survive and break even with oil at their cost of production, but how long can a country that relies on the profit on that oil, continue when that margin is cut by 80% or more? How long before their citizens demand change? To me this would seem to indicate that we are very likely to see a bounce in the price probably sooner than later. The only problem that I see in this scenario is that I believe that one of the main factors behind low prices is primarily political, to punish Russia and to deprive Muslim extremists of funding. But how long will that last? That is my 1.5 cents worth (I’m Canadian).

Also............... Property held in a registered account such as an RRSP or TFSA is not included in Specified Foreign Property. Foreign investment property also does not include: 1) any property used mainly for personal use and enjoyment, such as a vehicle, vacation property, jewellery, artwork, or any other such property, and 2) assets used only in an active business, such as a business inventory or the equipment and building used in a business.

“ how do you evaluate the execution of your broker?” “I'm in favor of it.” Good one Gamecock! Reminds me of a commercial that used to run a few years ago that went - “For years I used a broker and the only thing that got broker was me”

Things have changed. Bought a new car two years ago. Previously always bought one or two year old with low mileage. But now it there seems that there is no longer enough difference between new and old. The same vehicle, two years old, was only about 15-20% cheaper (if that). But the new one is - brand new - has no miles on it and comes with a 3 year bumper to bumper warranty and 5 year power train. That's just not enough difference.

Probably sold out. However, you can still license his “least expensive strategy” beginning at just $900,000. http://seekingalpha.com/author/harry-long

As far as I can see Harry wrote two books - so far. One was 24 pages and the other 36 pages and I believe he was asking over $200 each which worked out to about $10 per page. Of course that may be a bargain considering it is billed as "The Most Powerful Trading System Ever Publicly Revealed". I didn't try downloading it but you might be able to download it here? http://collectingbooks.net/1559-you-re-welcome-planet-earth-the-most-powerful.html

I believe that Harry's book is free now giving credence to the saying "Advice is worth what you pay for it" ?

mrholty that was one of the most interesting posts that I have seen here for quite some time. Thank you for posting. To get back to the subject of concentrated portfolios, I think one really rolls the dice with something like that. Here’s a story I watched first hand. I may not have all the facts 100% as they happened, but here is the basic story. Some may recognize it. This occurred quite some time ago. My father was a branch manager for a very reputable Canadian financial institution for 30 years and was on first name terms with the senior executives of the firm. During his time he took advantage of every stock option offered. While these investments cramped the family financially somewhat, it was an investment in the future. The company was very successful to the point where there were expectations of a merger with one of the major Canadian banks. By the time Dad retired his holdings represented serious money which in today’s dollars would have eventually approached seven figures. Then came a new CEO with sweeping changes in mind. He embarked on a major expansion into the U.S and the stock continued to climb. But things didn’t quite go as planned, the stock price stalled and then began to slide. By this time Dad’s health was failing and as he watched the value of his portfolio drop maintained confidence in the company he had worked with for 30 years. He assured me that the drop was temporary. It’s not that easy to sell off something you have confidence in, even when logic may tell you otherwise. Unfortunately, not only did the expansion plans turn into a disaster, but other problems hit the company. At same time Dad started to show some mild symptoms of Alzheimers. And Dad wasn’t the only one with problems as shareholders began questioning the CEO’s mental status. The stock dropped to less than half its high. That may not seem too bad until you put it into dollars and cents. He was very depressed about this and kept thinking it would surly recover and yet the price continued its fall. He was losing sleep by now but the share price had dropped so far it was even harder for him to sell out and he just couldn’t make the decision to get out. After all this had been one of the more respected and successful companies in the country. I felt that if I continued to urge him to sell and then the price recovered I would never been forgiven. To cut to the chase, when the CEO took the stage at the annual meeting attended by many VERY respected men and women, he went into a rant laced with four letter words that left his audience speechless. By this time the company had reached the point of near insolvency. A new CEO or trustee was appointed and the company was broken up. The shares weren’t worth enough to buy a new car. Dad passed shortly after and while this wasn’t the cause, the stress certainly didn’t help.

My investments are split into two portfolios, one consists primarily of mutual funds and is partially managed by a “financial advisor” because I don’t have enough faith in my own abilities. The other is primarily stocks that I manage myself. The ‘professionally’ managed stuff is up about 7% and my own stuff is up about 15%. Now that would be fine if my self managed investments were particularly aggressive compared to the ‘professionally’ managed investments, but when the crap hits the fan the ‘professionally’ managed stuff always drops much farther and faster than my own investments. However, the markets have been so volatile lately who knows where things will be in a few weeks.

Never mind Amazon... Look at the effect technology is having, and will have, on city dwellers. Where I live, you can build a large brand new home on or close to a beach for about a quarter of the price of an older smaller home in say, Toronto, Calgary or Vancouver. We have high speed internet, fiber op, and good cell coverage nearly everywhere. More and more people are moving away from those high coast major centers to low crime and laid back areas such as we have here on the East Coast. Case in point. I recently met a couple who had moved here from Western Canada. They sold their expensive home out West and now primarily work from their newly restored home on a beachfront property here. He is in charge of staffing and equipment for a regional airline based in Western Canada. Between his computer and his cell phone (with a Western Canada area code) few people know that he is actually 3,000 miles away and not stuck in some downtown office in a major city. He spends about one week a month in his physical office out west. His wife also works from their home for another company that is located in a third province. So the impact I see from this is that as people move to the friendlier, less expensive areas of the country, prices will tend to equalize throughout the country. This will also have other impacts such as reducing traffic congestion, parking, and other related problems. This will not happen overnight, but the change in lifestyle will appeal to many. But to come back to Amazon, between Amazon and eBay, shopping is no longer limited in the smaller population centres such as we have here and that is just one more reason for a population shift.

Believe Norm is a board member here. Good article.

Not a jackpot perhaps but putting things in perspective, a 35% gain in the past 12 months is pretty respectable. One year ago FFH was at $424 C$, to day it is $575 C$. What makes it more significant is that FFH’s hedges still offers a fair amount of protection should the economy see a sudden down turn. On the other hand, that elusive 100% gain could disappear pretty quickly if the market dropped a few thousand points.

Its amazing how comments on this board can get so twisted from their original intent. The point here was simply an observation that, in a market that can react so drastically to some small rumor, that it is surprising to see that when FFH posts results - good or bad - there seems to be times when that same market can be quite slow to react when FFH releases results. This happened again this quarter. The observation from that is PERHAPS this may offer an opportunity to make money. I may have been under the erroneous impression that we were sharing observations to promote discussion and provide any insight into buying opportunities. Just my two cents worth. Like PETC, I would like to know what prompted ERICOPOLY to pick Monday as a point to buy such a large position?

"My goodness. Such confidence astounds me!" Well that confidence just made ERICOPOLY over $100,000 in two days and earned me about 8% in four days. I take it you didn't have the same confidence in FFH? :) "There's very little that's obvious in investing" So very, very true. That is the point of the post I made yesterday. There are very few occasions in investing that something seems obvious. In this situation it seemed reasonably predictable that FFH share price would rise again after the results. The results were better than expected and tended to indicate that FFH was on the right track and they also backed up their ratios from the previous quarter which was not necessarily expected. But the share price stayed relatively steady during the next day or so. But if I remember correctly there have been other times that the market has been very slow to react to FFH's results. So it was that delayed reaction that was surprising and afforded the opportunity to make a quick return. Similarly, if company A reported unexpected dismal results, wouldn't it be reasonably "obvious" that the share price would drop?

Yes… Obvious… Then why when I asked if it were time to buy FFH again I got almost ridiculed??! ;) Gio Not by me Gio. I read those posts too and there seems to be a bit of anti-Fairfax out there in some quarters. So be it. Glad I stepped in again and bought a few more shares. Some people are still holding the hedges against Fairfax. I see those hedges as a plus because they offer an unsophisticated investor like myself some protection against deflation. If we don't have deflation than FFH still has their investment income and their improving insurance performance.

"I'd say I waited until the last hour before my Monday purchase at $511:" - ERICOPOLY Wow - 3,000 shares! Congrats! Wish I had the confidence to have jumped in with both feet (but my feet will never be as big as yours) :) However, I am still satisfied with the gain on my few additional shares. But my point was, and I think you will probably agree, FFH posted good returns backing up the improvements shown in the previous quarters but the market once again seemed to be very slow to react. Also FFH seemed to have been slightly undervalued for the past month or so. It just seemed to be rather obvious that it was almost inevitable that there would be a quick jump in share price.

Crip I have noticed this for a while now. Results were out Thursday and they were probably better than expected so it wasn’t really rocket science to come to the conclusion that the share price would pretty well have to rise. But I have noticed this delay before and there seems to be a delay before the market takes notice and it often several hours if not days before Mr Market reacts. I have seen this happen enough that this time I put my money where my mouth was and bought some more shares shortly after the market opened Friday morning for about $510 (CDN). Now on Tuesday FFH closes at $546 on a day when the TSX was down one percent. That's a 7.25% gain in just a couple of days on a reasonably stable equity. Certainly I could have picked up FFH at a lower price prior to the third quarter results and gambled that the results would be good, but this was after the results were released making this buy almost a sure thing. Has anyone else noticed this? eb