Liberty

For those who have opened RRSP/TFSA accounts at IB Canada: If you haven't opened these accounts at the same time as a regular, unregistered account, can you tell me what the process was? (in other words, you have a regular account first, and later want to open these registered accounts) I see applications forms on the site, but I'm not sure if there's a way to open the accounts (RSP, TFSA) in a way that is linked to my current account, or if I have to fill out two independent forms and I'll end up with 3 mostly separate accounts. More in general, how does it work when you have multiple accounts like that at IB Canada. Are they somehow linked and managed together, or they all have completely separate logins/pass? Thank you in advance. (thanks rb for pointing out that I mistakenly posted this in the wrong thread -- oops)

I never said I was negative on China. I commented on a specific post about the Chinese work ethic and such. Nevermind.

Yeah but you can look at the huge gap in cost of workers and conclude there is still plenty of catching up to do. They would have to be a lot worse then western workers to justify their cheaper price. I agree with this sentiment if the difference was much smaller. But because the difference is so large, you can safely say that it is likely they will keep growing for another decade. A lot of things that are "likely" and "supposed to happen" don't happen, because there are way too many moving parts and variables and feedback loops and reflexivity in the system, and our information is too imperfect and limited, as is our brainpower. Looking back it's always obvious why something happened, but at the time nobody saw it coming. Were you shorting oil before the crash last summer? How are the other BRIC countries that everybody praised a few years ago doing? You need to learn self-doubt. I'm not even saying that China will do badly. Maybe it'll do better than people expect. That's not my point.

The point was not that China is Japan in the 80s. The point was that you can't know what will happen in advance, and if you think you do, you are fooling yourself.

Everybody makes mistakes when they start out. You and I invested in Fortress Paper if I recall. We learn from experience. Some things you can be told, and some things you have to find out (painfully) for yourself. There's a normal cycle of learning where you don't know anything, then you think you know everything, then you realize you didn't know much after all, etc. If I have a recommendation for our new member, it is to stop posting for a bit and read the forum's archive (yes, go back to the beginning thread by thread and read -- or at least skim the less insightful ones. Go through the investing section, the general section, the berkshire section, the fairfax one, the books, strategies..). When I joined in 2010 I did this, and it made me learn a lot. Take a few months to do this, as well as to read more books recommended in the books section, that'll be worth it. You'll find out soon enough if you have the investing gene or not. Some people are just gamblers down to their DNA...

Not saying I agree or disagree about China, but have you read the book The Halo Effect? (I'm trying to take this one meta-level up) If China keeps doing well, people will say what you're saying above. If they do badly, people will change their tune and say: "Well, of course. They have an uneducated population without real innovation, too much debt, no track record of rule of law, there's corruption, the government is too big and misallocates resources, they lack creativity, how do you expect people one generation removed from illiterate farmers to compete on the world stage, etc." (or whatever, the specifics don't matter too much, and I'm not saying any of those things are true as generalization -- the point is that both the good and the bad things are true simultaneously, and that the set that becomes the dominant narrative is decided based on how well things are going). Just look at what people were saying about Japan in the 80s before the peak and after. Same country. Same workers. Same infrastructure and education and everything. Same with Germans. Now they have a great work ethic and everything. But before the country turned around, different qualities were being highlighted to explain why things were going poorly. There's danger in relying just on numbers, but there's danger in narratives too. Basically, you can't know what will happen. Anymore than 10 years ago you could have predicted the subsequent 10 years. Ironically, this incertitude feels like more solid intellectual ground to stand on than the certitude of a narrative to me.

Do they allow U.S. dollars to be held inside registered accounts like RBC? They do allow CAD and USD to be held inside registered accounts, but no other currencies. So you limited to investing on Canadian and US markets in those accounts. Also their standard $10 minimum fees per month applies for accounts below $100k. rb https://www.interactivebrokers.ca/en/index.php?f=11792 So I can only fund the account in $CDN. But U.S. trades can settle in $U.S. inside the RSP/TFSA? Yes, but you can hold USD in the accounts and trades settle in the trade ccy. So once you fund you FX CAD to USD and you're good to go. Their FX fees are negligible. Nothing like RBC. rb Thank you, this answers one of the questions I had.

I just found out that Interactive Brokers Canada now has RSP and TFSA accounts. I haven't yet transferred my registered accounts from RBC and TDW, so I don't know much, but it's probably one worth looking at.

Thank you Sanjeev! :) Cheers!

Slides from a presentation that MMM gave a couple years go in Equator. Good stuff: http://www.mrmoneymustache.com/wp-content/uploads/2013/09/happiness_vs_riches.pdf?6d6156

Bloomberg interview with Ackman: http://www.bloomberg.com/news/videos/2015-02-12/pershing-s-ackman-on-pharma-deals-zoetis-activism

This tool is pretty neat (you can isolate countries in the list on the right, say, Canada and the US): http://www.economist.com/blogs/dailychart/2011/11/global-house-prices

I don't know what stats you are using but remember that averages are misleading. Average U.S. housing prices might appear cheaper but most of the cheap cities are not desirable. Anyone want to move from Toronto to Detroit, Buffalo, or Cleveland? The really desirable cities (San Francisco, LA, San Diego, NY, Miami) are expensive even after the housing meltdown. The other factor that people are ignoring is land use policies. Land is scarce in Vancouver and Toronto. In 2005, the Ontario government introduced the Places to Grow Act designed to promote intensification. This has limited the supply of single family homes (and resulted in a condo boom). Housing prices are certainly elevated but when you can control for supply constraints and interest rates, I don't know that we can be certain there is a bubble. We will only know in retrospect. I know all this. Still doesn't make sense to see housing totally disconnect form wages and inflation for so long. Do we foresee people making 60k/year buying $3-4 million houses in 10 years? Where does this stop? Either wages go up a lot to catch up, or housing comes down a lot. Because in the meantime, the delta between wages/inflation and housing has been filled with debt, and there's a limit on that too.

I'm sure people were saying that in 1998 and 1999 too. The market can stay irrational a very long time. I've always said that I have no idea about the timing of any correction or crash, just that pricing doesn't make sense, and what can't go on forever will stop at some point. In the meantime, I'm renting. All the excuses I hear about Canada being different ring hollow to me. Vancouver is not Paris or New York, Canada isn't 2x more desirable to live in than the US, our economy isn't booming, land is not scarce, our debts are incredibly high (people take out their equity through HELOCs) and now that almost everybody owns, who will the marginal buyer be, esp as boomers retire and downsize (few other investments than their homes, right?), etc. CMHC isn't some magical institution that can snap its fingers and make everything right.

Housing is a very emotional purchase. When you buy stocks or bonds, you calculate your returns and (hopefully) are somewhat rational about it. Most houses aren't bought like that. People usually live in them, so there's no rent income, and they tend to be bought because "it's what you do when you reach a certain stage in your life", because "everybody I know is doing it", and because of social pressure from your mother in law or whatever. That's why I think what matters most is sentiment, and who knows what can make it turn, but I know that confidence is built over time, but lack of confidence can be very very sudden. Looking at interest rates is looking at it more rationally than most people look at it; in fact, many people now buy houses like they buy cars (stupidly), just by looking at the monthly payment rather than at the actual price + interests.

That's possible, but I don't think interest rates have to rise for sentiment to change (at least in Canada, I'm less familiar with other markets). The current oil crash could be the final nail in the coffin. Mining (esp. junior) has been depressed for a few years, and now this. That's a big chunk of the Canadian economy, and especially, a very visible chunk. Bad news are hard to ignore when you have no margin of safety (record debt levels, etc).

Interest rates are similarly low in many other places, yet houses aren't as expensive as in Canada. I think what will matter in the end is that house prices have completely disconnected from wages. People are barely able to afford housing even with the help of super low interest rates. Most people justify buying because they think prices will keep rising and 1) if they don't buy now, they'll never be able to and 2) over time they'll make money on their house. As soon as sentiment changes and people realize that trees don't grow to the sky, I think things can start to happen fairly quickly.

AXP to lose Costco exclusivity, stock down over 5% this morning: http://www.wsj.com/articles/american-express-to-lose-costco-exclusivity-1423746408 This should be good for MA and V, more transactions.

Why would it be "hard not to buy a place" when you have kids? In many countries, most people rent, and I think they still manage to reproduce.

It's not correct to give the statement like this. Market-cap weighted index funds are very hard to beat for mutual fund managers, net of fees and costs. The considerations are different for disciplined, trained and skilled individual investors. Indeed. The question is always, will I find out too late that I'm not a disciplined, trained, and skilled investor, but am actually just a schmuck pretending to be one? Heh.

The chest-puffing and self-back-patting by Canada about all this reminds me of Europe right after the subprime crisis started in the US. I remember reading Economist articles quoting European politicians gloating and saying that American capitalism was dead, the European model had triumphed, and Americans should come over to Europe to see how it's done, etc. How did that turn out?

I think that's likely correct. Canada benefited from the commodities boom while pretending that what made it get through the crisis was actually prudent citizens and institutions. It's quite clear that debt levels higher than the U.S. at its peak and houses that cost almost 2x what they cost in the US aren't exactly a prudent state to be in...

Yes, good post. There are times when I wonder if I should just index everything and forget about it. I'm already mostly just holding high-quality companies for the long-term, so it's not like I'm trading a lot and puffing and discarding cigar butts with a big churn, but there's something about it being "out of your hands" that reduces stress even if ultimate results aren't as good. It's more about psychology than anything else. Not intending to do anything like that, but it's a thought that crosses my mind once in a while...

OK, I like Tim Cook. But this is facepalm worthy. "made up law"? WTH? This is stupid. Of course there are limits to which companies can grow. You cannot have more than 100% of market share. And even assuming you create new products, there's still a limit. Thinking that there isn't is pure stupidity. Except that's not what he was saying.