Vancouver not goin' up!

[GRG55]

Re: Vancouver not goin' up!

Is investing in gold "a sound approach to personal finance and investment"?

Gold is generally considered a good investment by iTulip members . . . .
Yet who does not expect gold to eventually go into a bubble phase, followed by a crash . . . like it did in 1980?
And who will turn down the profits accrued from getting out before the bubble bursts?

Here's a few things that differentiate Vancouver real estate from speculating in gold:

1. Real estate commission on the sale: 7% of the first $100,000 + 3.5% on the remainder. Calculated on the full property value, including your original cost base.
2. British Columbia Land Transfer Tax: 1% on the first $200,000 + 2% on the remainder. Calculated on the full property value.
3. If you bought the so-called "average" single family detached home in Vancouver at the precise bottom of the post-techbubble bust low in Dec 2000 (good luck) and sold at the precise high in April of 2012 (good luck) you would have held the property for 11 years and 4 months...and during that time you would have paid to maintain it and the not inconsiderable property taxes to keep it for the 200% gain.
4. If you did the logical thing and rented the home to offset some portion of the costs of holding it, you would be dealing with one of the most landlord hostile rental legal structures in North America (good luck getting your tenant out quickly once you realize the peak has arrived and it's time to bail).

Gold over that same time frame looks pretty good to me by comparison.

Finally a comment about our dearly departed friend VancouverGoinUp. It is likely he was a real estate or mortgage broker. You can bet the farm that the gin & Jaguar set that comprises the real estate industry insiders in Vancouver will never let you get a great deal on a property...any time a property is undervalued in that sort of market (often an estate sale with a lot of emotional baggage involved) the brokers themselves snap them up before they ever hit the open market. That's the game raja. Still wanna play?

Edit Added: Oh, I forgot one thing. If you sold before April 1 of this year you had to pay 12% Harmonized Sales Tax on the commissions noted in 1 above.

[Milton Kuo]

Re: Vancouver not goin' up!

I see your point.
He does sound like a Multi-Level Marketing salesman.

But he was right . . . Vancouver was, indeed, going up.

So was real estate in California, Las Vegas, Phoenix, and Miami in 2003 - 2006. As of yet, VancouverGoinUp has not issued a "Time, at last, to sell Vancouver real estate" call despite the fact that he is still able to post from his account. He has never specified a timeline for when the bubble would end nor has he ever said that he'd give a warning sell to those heed his exhortations. If predictions of Vancouver real estate falling to 2004 - 2005 prices come true and no call to sell is given, VancouverGoinUp's advice would be utterly ruinous for a leveraged purchase like real estate. His advice to speculate on a bubble is only worthwhile if he gets people out before getting caught in a crash.

Maybe he was an enthusiastic true believer, who thought that Vancouver was really "bullet-proof".
Or maybe he was a conman and knew it was going to crash at some point, and he was just churning the bubble to increase his profits.
We don't really know . . . .

The last few postings of VancouverGoinUp here on iTulip were so over-the-top that I can't help but wonder if all of his posts were some sort of satire on the real estate bubble in Vancouver. It's crazy and a real indictment on how dishonest the real estate industry is that it's practically impossible to distinguish between mocking satire and genuine real estate marketing copy.

[Munger]

Re: Vancouver not goin' up!

Are you being sarcastic? I haven't seen EJ abandon Ka Poom theory at all. Last I checked, he still owned a lot of gold

Not sarcasm. It's been 5 years now with virtually no inflation.

I have asked EJ about the wrongness of what was certainly a major component of his predictions, and he acknowledged that there were various factors that he had failed to take into account. He also stated that he still believes in a "Poom" event -- just that he got the timing wrong.

To which I say "stopped clocks...."

[GRG55]

Re: Vancouver not goin' up!

Not sarcasm. It's been 5 years now with virtually no inflation.

I have asked EJ about the wrongness of what was certainly a major component of his predictions, and he acknowledged that there were various factors that he had failed to take into account. He also stated that he still believes in a "Poom" event -- just that he got the timing wrong.

To which I say "stopped clocks...."

Ahem...EJ's portfolio of Tbonds and gold seems to have done quite well over the time span of the Vancouver real estate mania (which was the topic that started this thread, so seems a reasonable comparative measure). And with a lot less headache than speculating in wet coast property...

[Munger]

Re: Vancouver not goin' up!

Ahem...EJ's portfolio of Tbonds and gold seems to have done quite well over the time span of the Vancouver real estate mania (which was the topic that started this thread, so seems a reasonable comparative measure). And with a lot less headache than speculating in wet coast property...

Agree completely. That's where I have had quite a bit of my assets for many years, thanks to this site, and it has performed well. And EJ definitely called the 2008-ish crash correctly, which saved me a lot of money. I obviously consider his advice very valuable, or I wouldn't still frequent this site after 6 years. Regarding my comment: I was merely responding to the previous (somewhat off-topic) comment. I do, however, think the patrons of this site need to acknowledge the lack of "poom." Seems a bit of an elephant in the (chat) room.

[GRG55]

Re: Vancouver not goin' up!

Agree completely. That's where I have had quite a bit of my assets for many years, thanks to this site, and it has performed well. And EJ definitely called the 2008-ish crash correctly, which saved me a lot of money. I obviously consider his advice very valuable, or I wouldn't still frequent this site after 6 years. Regarding my comment: I was merely responding to the previous (somewhat off-topic) comment. I do, however, think the patrons of this site need to acknowledge the lack of "poom." Seems a bit of an elephant in the (chat) room.

Chuckling to myself.

Some of you folks are starting to sound like inverted-Megas...instead of "Where's the Crash!!!!!!!!!!!!!", it's "Where's the Poom?????????". Patience, patience. As for amusement in the interim, since EJ's Tbond+gold call there's been a nice little uranium bubble up that I was lucky to make a bit of money on, the oil run up to $150 after all the high paid pundits said the world economy would come to a complete stop at $40 crude, two full cycles of the gold mining stocks (and a third in the formative stages now it would seem), and one nice little natural gas bubble cycle as a sweetener. No inflation? Check your food bill, your energy bill and your tax bill since August of 2007 when the financial crisis started. Over my limited lifetime "eat and heat" has always been the leading indicator of a more serious inflationary cycle.

And one last observation. EJ has several times posted the Argentine experience with Ka-Poom. Don't ignore that little deflationary dip before the main event...

[verdo]

Re: Vancouver not goin' up!

Not sarcasm. It's been 5 years now with virtually no inflation.

I have asked EJ about the wrongness of what was certainly a major component of his predictions, and he acknowledged that there were various factors that he had failed to take into account. He also stated that he still believes in a "Poom" event -- just that he got the timing wrong.

To which I say "stopped clocks...."

Well i wouldn't say we haven't seen inflation. While the CPI remains benign (just as unemployment remains benign on paper through some hickery dickery), I would be hard pressed to find anything that I frequently buy that has not become annoyingly more expensive over the last 5 years. Besides, wasn't the "Ka" part of EJ's theory supposed to be a period of disinflation? I never expected inflation to really pick up until some fundamental change in mindset occurred, and I never expected it to happen right away (it's something I thought would occur around 2015 - 2016). I just don't understand why the lack of the "Poom" occurring yet means that EJ was wrong. The timing might have been off (which is understandible given how long ago he created this theory), but if the theory were wrong, I would expect the whole gold trade to have died long ago. The fact that it's price has continued to rise fairly unabated is a signal to me that those with deep pockets and more influence (ie. central banks) still firmly believe that the real crisis, the poom, is in our future, and not our past

[metalman]

Re: Vancouver not goin' up!

Not sarcasm. It's been 5 years now with virtually no inflation.

I have asked EJ about the wrongness of what was certainly a major component of his predictions, and he acknowledged that there were various factors that he had failed to take into account. He also stated that he still believes in a "Poom" event -- just that he got the timing wrong.

To which I say "stopped clocks...."

gold falters in it's 13 yr continuous rise... fun to watch uber religious gold buggers act like a bunch of old ladies bitching about the price of food & rent vs their social security check... like 10%+ gold up per year is an entitlement.

[Munger]

Re: Vancouver not goin' up!

Well i wouldn't say we haven't seen inflation. While the CPI remains benign (just as unemployment remains benign on paper through some hickery dickery), I would be hard pressed to find anything that I frequently buy that has not become annoyingly more expensive over the last 5 years. Besides, wasn't the "Ka" part of EJ's theory supposed to be a period of disinflation? I never expected inflation to really pick up until some fundamental change in mindset occurred, and I never expected it to happen right away (it's something I thought would occur around 2015 - 2016). I just don't understand why the lack of the "Poom" occurring yet means that EJ was wrong. The timing might have been off (which is understandible given how long ago he created this theory), but if the theory were wrong, I would expect the whole gold trade to have died long ago. The fact that it's price has continued to rise fairly unabated is a signal to me that those with deep pockets and more influence (ie. central banks) still firmly believe that the real crisis, the poom, is in our future, and not our past

That's the typical answer -- "But CPI is a lie!?!?!1ELEVEN!11!11".

http://bpp.mit.edu/usa/

[Munger]

Re: Vancouver not goin' up!

No inflation? Check your food bill, your energy bill and your tax bill since August of 2007 when the financial crisis started. Over my limited lifetime "eat and heat" has always been the leading indicator of a more serious inflationary cycle.

That seems to be the standard reply here - but I just don't see it more than a few percentage points per year, which doesn't seem like a poom to me. That's what CPI indicates, and that's various what other measures indicate:

http://bpp.mit.edu/usa/

And of course highly cyclical elements like gas and oil are removed from the CPI. Funny how I don't hear cries of "deflation, deflation everywhere" when oil periodically crashes.

[verdo]

Re: Vancouver not goin' up!

well if you think inflation wont be a problem, you probably should get out of gold, and most of the other investment suggestions that Eric has made. As I said, I would have expected the whole gold trade to have died long ago if you were right and Eric was wrong. The fact that it's price has continued to rise fairly unabated is a signal to me that those with deep pockets and more influence (ie. central banks) still firmly believe that the real crisis, the poom, is in our future, and not our past. There's absolutely no reason for a lump of metal with no major industrial use to perform as well as it has over the last 12 years if you were right on this and none of the major powers had any fears of a significant currency devaluation sometime in the future. Also, I really don't understand why you gave me that link. I'm very well aware of what's going on atm where inflation is concerned, so I really don't need the MIT references. As a matter of fact, this is a post I made about a month ago

That, and my view of there being a strong likelihood of a severe market correction this year in the U.S. (which will cause a crash in the major indexes worldwide) and another short term "flight to quality" as some would put it. I don't consider US dollars quality, but if everyone else does, then that's where the market will probably run to. I'm not selling any gold mind you, but I'm selling out of other investments so I can buy them back when they're cheaper. Even gold may take a little dip, which I would welcome because I got into this bull run a tad late in the game, so another 2008-style correction in gold would be a nice opportunity. EJ says that there's a good chance of a "mini-ka" happening, where deflationists will come out of the woodwork for a short while. I'm kind of banking on EJ being right on that, on top of the mess going on in Europe and Japan

I mean, take a look at one of the recent front pages of MacCleans (its a popular magazine here)


^One of the biggest bull runs in history? Really now? If this isn't late 2007/early 2008 all over again, i dont know what is. xD

And of course just a few weeks after that, gold drops the most in 30 years, but I'm still not sure if its quite over yet because stocks are still ridiculously high in my opinion. What's happening now looks very 2008-like to me, and back then, gold fell first also before the system went nuclear. This is something that Eric has been hinting might happen for a while now (he calls it a mini ka) and based on what I've been seeing, I'm inclined to agree. So no, I'm very well aware of where inflation is, and where it might go. It seems like every time gold goes down more than 10%, these are the kind of conversations that I end up having (normally with deflationists who come out of the woodwork) but it's what I've come to expect. I treat what is going on atm as temporary, just as it always has been when gold has dropped more than 10%

[c1ue]

Re: Vancouver not goin' up!

That seems to be the standard reply here - but I just don't see it more than a few percentage points per year, which doesn't seem like a poom to me. That's what CPI indicates, and that's various what other measures indicate:

http://bpp.mit.edu/usa/

And of course highly cyclical elements like gas and oil are removed from the CPI. Funny how I don't hear cries of "deflation, deflation everywhere" when oil periodically crashes.

I don't know about you, but I don't see the price of gasoline being in any way cyclical - unless you mean up.

The only reason overall energy prices haven't increased is due to shale natural gas fracking.

[GRG55]

Re: Vancouver not goin' up!

That seems to be the standard reply here - but I just don't see it more than a few percentage points per year, which doesn't seem like a poom to me. That's what CPI indicates, and that's various what other measures indicate:

http://bpp.mit.edu/usa/

And of course highly cyclical elements like gas and oil are removed from the CPI. Funny how I don't hear cries of "deflation, deflation everywhere" when oil periodically crashes.

Funny, I hear the "deflation" thing quite loudly every time oil prices "crash"...even here on this site. Sometimes it's even legitimate.

Average USA retail gasoline prices. They are cycling in a range that is above the prices in the years before the financial crisis hit, despite the fact that USA total consumption has been declining since 2005.

[jk]

Re: Vancouver not goin' up!

I beg to differ.... About the furthest thing from being an investor short of whore-mongering.

whore-mongering can hardly be speculation. after all, there must be a reason that prostitution is the oldest profession.

[jk]

Re: Vancouver not goin' up!

Funny how I don't hear cries of "deflation, deflation everywhere" when oil periodically crashes.

yeah, wtic oil crashed all the way down to $89 a couple of weeks ago!