I understand that there were a few condo projects in Vancouver that went into receivership early this year.

http://www.yattermatters.com/real-estate/pre-sales-and-receivership-in-vancouver/

Someone was telling me a similar story about something in Calgary but I’m not sure if that’s accurate.

Received this by email recently. Will be interesting to see if this one goes ahead. Sure hope so.

http://www.normfisher.ca/images/teamblog/riverlanding.jpg

Kelowna condo project hit by financing crisis

Calgary companies stop building after losing bank funds

http://tinyurl.com/6dv84n

“Two Calgary real estate firms are at the centre of a half-completed $30-million Kelowna condo project that became a victim of the spreading credit crunch, after construction activity was halted Wednesday when bank financing dried up.”

I don’t know anything about these Calgary RE firms or how financing is usually arranged in these circumstances. Is it typically run on a fairly tight margin?

I understand deposit holders will get refunded, but a bit disturbing, nonetheless. Getting new financing for this developer may not be easy.

I really didn’t mean that as an attack on Buffet’s character, I’m sure in his mind he means well. However I think his allegiance is to the US whose future is directly tied to the economy. Maybe he doesn’t want to see a crash, both for his own sake and for his country’s. Who know his true motivation. However the nature of the credit problems are such that they can temporarily be solved by people’s perception and moods. e.g. if you are a business owner and you are convinced there will be a recession, rather than wait for it to happen the logical decision may be to start cutting costs, reduce inventory and conserve cash in preparation. If you do that your suppliers and your employees are forced to cut back, etc… It’s a downward cycle. So maybe Buffet, in his infinite wisdom, thinks that is a bad idea, maybe he feels obligated to try to stop the process. This is pretty much what he said on his charlie rose interview except he was urging the government to solve the issue.

As far as his predictive abilities on the economy I would say they are nothing special. You are right that he made a wicked call in ’74 but otherwise he has stayed fairly non-committal. Yes, he said things were over-heated in 99 but he made similar comments several years earlier as well. He completely missed the 2002 bottom and even said in his annual report that while stocks were cheap he had seen them much cheaper. As this credit crisis built-up, while many others were pointing out the problems in the subprime market and credit markets in general he again deferred an opinion. He has even now said that he thought the crisis was over after the Bear Stearns bail-out.

What Buffet IS good at, is identifying and investing at favorable prices in superior businesses. So you probably will do okay if you invest strictly in the stocks that he buys. The problem is, the deals he has been getting lately with goldman and GE are simply not available to anybody else. The stocks he buys for his personal portfolio are not published so that won’t do you any good either. If you don’t invest in his picks well there is no guarantee that you are going to get very good results.

Beyond Buffet, the problems in the general economy are far from solved. All that has happened is the western governments have shifted the financial responsibilities onto their shoulders. This is at best a temporary solution as it doesn’t solve the problem of too much debt. The US debt for example is 300% of their GDP if you include consumer, business, municipal, state and federal debt. This is simply unprecedented. Ultimately there are going to be severe consequences and sacrifices will need to be made. This would have terrible reprecussions for the US economy and ultimately the global economy as well.

It wouldn’t surprise me if the government intervention calmed the credit markets down and we saw a bounce but the fundamental issues remain. If you are a long-term investor I don’t think this is a buy yet.

In theory, your plan definitely produces the better result in terms of “more” if one can time the market correctly. At 45 years of age, more would be nice but my primary objective is “enough.”

Something,

Wouldn’t you agree that the landscape has changed significantly in the past three weeks? Prices are down considerably. Hasn’t the government taken pretty bold steps in buying up debt?

If you read that piece, Buffet actually claims that none of his personal portfolio was invested in equities three weeks ago. Everything was in government bonds and he says he is now in the process of turning to equities.

To the best of my knowledge the guy has publicly and accurately predicted turns towards both bull and bear markets. In 1974, he said, “Now is the time to invest in stocks and get rich.” In 1999, he said, “Investors these days are expecting far too much from the stock market.” I am not aware of any reputation attached to Buffet which suggests he publicly spins for profit.

Perhaps I’m missing something here, but Buffet strikes me as a good man (committed about 90% of his wealth to charity) and a sharp investor.

In the interview he then goes on to talk about the leveraged situation everyone is in. Banks, consumers, governments, and many businesses are all leveraged up and now everyone except government is scared to death of that debt. This fact is nothing new to anyone on this blog. He states quite clearly that as people start to deleverage there is going to be massive side effects to the global economy. In his opinion, the only solution is for the US government to step in and start buying up debt to stop the deflationary spiral. Otherwise, buffet says we are looking at years of deflation. Keep in mind that the man is extremely conservative with his statements. If he says years, I read decades.

He went from that to a buy recommendation so quickly, it really makes me wonder his game. Given his doom and gloom prediction a couple weeks ago I really see his latest NYT post as an attempt to bump up the stock market and with it the economy and the credit markets. He has all his money, his legacy, essentially everything in the stock market, of course he doesn’t want to see a collapse. Do not trust Buffet.

If you go to Ishares.ca there is a fund which is rrsp legible but it is entirely sp500 its in the international tab. For the other countries the only ones I found are all in USD but an easy way to look them up is go onto http://www.fool.com and use their search typing in ishares and it will pull up a ton of ishares emerging market etfs.

May I add this to your list of fine qualities- you’re also pretty damned funny.

I did take a small loss- about 7%- by cashing out when I did. In retrospect I do feel like I waited too long, but I didn’t listen to my “gut” right away for fear I was catastrophizing. I tend to do that on occasion.

Regarding the market, my intention is not buy back the same number of units at a discount in the future, but to be able to buy substantially more units at some later date for roughly the same amount of cash. Right now the market is so volatile who knows what I will eventually end up doing. I completely agree that the market may pick up well before the economy does. I was thinking about this disagreement earlier this evening and though that in reality, buying more units along the ride down may not be that different in the eventual outcome. The only difference is that I have not lost on the way down, whereas I very well may lose some on the way up. We would both like to be sitting in a good position for the upswing. We may get there by different routes, but the outcomes may possibly not that different. Yikes, I think I’ve been “De-Beared” Just a little.

Well, enough of that. Thank you again for putting up with the likes of us.

Good night!

On your advice I shall redeem these worthless certificates forthwith and count my 5.1% early return, minus brokerage fees, a gift from my gracious creator. Kindly grant this poor fool the benefits of your wise counsel by sending word, without delay, when the bottom is upon us. Else I fear that a miserable life awaits me.

Let’s give this a break folks. As I said before, I’m talking about my annual RSP contribution here. Should the markets lose all of their value I can probably recover from my foolishness. Sure glad I didn’t mention what I bought.

Crikey,

Cheers!

“Not at all,” unfortunately. I requested a conversion to cash on, or about August 1. I allowed myself to be talked out of it. Now, that was foolish.

I did not choose to buy because I felt we had hit the bottom. I bought because I believed there are decent opportunities for fairly decent returns even in the absence of growth in stock prices.

Guy_in_regina,

A friend of mine once said, “When you ask most agents if it’s a good time to buy, or a good time to sell, they’ll ask you what you’re considering doing before they answer the question.”

George,

The bottom was particularly long in coming in the great depression crash but the value of the Dow did triple between 1932 (bottom) and 1936. These things are pretty much always followed by a bull run and it can happen in the midst of very difficult times. I wish each one the best in identifying that proper time to jump in.

I figured if anyone knew the answer you would. Do you know where I can find a list of ETFs that I can buy using CAD? I am interested in stuff like Japan, Asian, Brazil, Korea, Germany, France, etc. However I can only find the USD ones. Your help would be appreciated. Thanks

You guys are a case study of civilized disagreement – John Gormley would be disgusted… Zing!

One one hand, the markets have shed quite a bit of flab in a short period (I think they were quite overvalued to begin with, mind you). So, now might be a good time to buy.

On the other hand, seems like this slowdown/recession is just getting started. So, now might not be a good time to buy.

It’s a tough call; but I’m taking the latter position.

As an aside, today I went for lunch with a guy who thought it was a good time to buy a little stock last week – he said he’s down $5,000 on it. Now, it has only been a week or so. But still… he wasn’t too happy about it.

Yeah, this is his blog

http://www.thestreet.com/video/10443034/cramer-buffett-buying-but-should-you.html?puc=_htmlatb&s=1

I must concur with the “a fool and his money are soon parted” lobby. There is nothing wise about purchasing an item that cost $1 today, and will be worth 50 cents tomorrow, even if it was priced at $2 yesterday.

You want to be be watching the stock market death spiral from a safe distance.

“One thing that strikes me as particularly comical is the way media constantly asks the experts (typically realtors) if the time is right for buyers to step into the market and scoop up the supposed bargains. In the first, has anyone ever met a realtor who told them now is not the time to buy? In the second place, the question misses the point that practically all potential buyers have already bought. There are not too many of us who waited out the bubble, and those of us who did will certainly not be foolish enough to overpay now”.

I think that sums up my won situation, and probably many on this blog. I, and many of you, won’t be fooled into buying real estate at a slight reduction from peak as we have now.

All I was really trying to say (jabs about Buffett needing a bailout aside), was that paying less than you have in the past for an asset should not be the only issue to consider. I think I have less to lose by buying in slightly late than buying too early. If you sold late (or not at all), of course you would feel differently. Your ideas about when to call bottom are just as legitimate as mine- impossible for anyone to time exactly.

At least on my end, consider the issue “dropped”.

Maybe not a depression, but the world is at least headed for a severe slowdown for next few years. Credit will be harder to get. And it is here in Saskatchewan already. In todays Star Phoenix, major developments such as River Landing have to come up with more capital before they are given the credit they need to start.

1927-1933 Chart of Pompous Prognosticators

http://www.gold-eagle.com/editorials_01/seymour062001.html

http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

Armoth,

I don’t believe for one bit that OPEC contols the oil. The same people in the world who control the credit, control the oil as well. What happens with oil is guess. If price was factored just with supply and demand, not with speculation and price manipulation, the price would be a lot lower. But, then again, what do I know?

Perhaps I’m reading too much into this:

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

Oh, I see where you’re coming from.

My posting of the Warren Buffet quote was primarily defensive. You implied that my decision to buy was nonsensical. John followed up by suggesting that I am foolishly pissing money away.

I’m not a big time investor and I am not sure about whether or not I could have done better by waiting. I am feeling confident that these buys will serve me well over the long term. As my objectives are long term, it would suit me fine if the market continued to decline for several years before it recovers. I will enjoy the opportunity to buy low as long as it lasts.

I admire you for the foresight that you had to get out when you did and I’m not questioning the decision that you’ve made to stay out at this time. That said, there is nothing nonsensical or foolish about my decision to buy some investments at a much lower price than I’ve paid for them in the past.

Thanks.

Im sorry you are mistaken about Buffet. For one is it public information what he buys and trust me he has millions of groupies that yell it from the mountain tops long before he says anything. 2. He is a buy and hold investor or else why would he do the goldman sachs deal with 10% dividend. 3 If you want to accuse somebody of being a pumper and dumper at least choose som1 believable like Jim Cramer since he is a trader and would profit from practices like that. 4. Did you enjoy thanksgiving =o) I know i did now im sick of turkey(vile bird)

No, I can’t. First off, I’m not telling anyone not to buy. There will be a time for me to buy hard assets- it’s just not now.

Buffet, on the other hand, is telling people to buy. What he really is saying: “I need to publicly announce my buying spree to make sure you people follow in my wake to prop up me up.” He says he’s buying to get you buying. Once you start buying, he’ll be selling. Sure some stock looks “cheap” at this range, if you know they can hold revenue and profits. A small problem with being at the start of a gloal recession, however, is that we don’t know how far earnings will fall. Not having a crystal ball, who on Earth knows what will happen long term.

That’s all I’m saying.

Glad you are buying stocks it is an opportunity that only comes once in a lifetime to those that see it. I am working 7 days a week now putting all of it into the stock market namely XRE.TO a reit index etf. They pay a decent dividend while u wait and are immune from the income trust tax coming 2011.

Crikey,

The ironic thing is you say for others to wait for real estate to bottom out and crash yet when the stock market loses 40% you say not to buy. You can see where I am coming from =o)

George,

OPEC will never let oil get that low if you could see the signs now is the perfect time to buy in an unfavoured sector either way if oil goes down you win at the pump and if it goes up you win with stock appreciation.

“Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value.”

I’m about 20-40%+ ahead of most people I know right now. I’m not worried my position is “silly”.

I have no idea what you’re invested in or how long you are, so I have no idea whether or not your postion is silly either. My only issue was the yesterday’s tacit ecouragement for others to buy in this environment. I may have read too much into this too (it’s very likely, actually). I fully realize you’re not responsible for anyone’s behavior. I also fully realize that George is a bright guy and not easily influenced. You might have a far wider influence over others’ behaviour than you think you do, however.

It seems to me that it was you who implied that my position is “silly.” I said no such thing about yours.

I agree that cash is a terrible long term asset. But it does have its moments of glory and right now is one of them. Timing is important

Let’s take 500,000 and use cash, Saskatoon real estate and TSX (stock) and bought in the spring when everything was going great guns for Saskatchewan’s economy.

Cash- if put into a GIC would have netted you just under inflation 3%. Very liquid and easy to move.

Real Estate – A loss of about 10%. $50,000. With more losses coming. Very, very illiquid.

TSX- A loss of 30- 40%. $150,000 – $200,000. More losses could come or a person could break even in a few years. liquid.

Real estate is the worst investment right now as we are still quite far from the bottom. TSX may or may not be. And cash is like the turtle in the race. Slow and steady is not bad over the next year.