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Buying and Seling, Real Estate, Real Estate Investor

Booming Real Estate – Are You Scared?

by News Feed • December 5, 2013

There is no end to the rising Canadian real estate market. Everything seems to be in a “booming mode”. On the other side, the reality seems to point to a different picture. Builders are confident. Statistics Canada says Canadian municipalities issued…

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Investing, Real Estate Investor

Farmland: Up 20% in one year

by News Feed • November 11, 2013

It is a real estate asset, and it is not your house. In the span of one year Canadian farmland has increased in value by 20%. Is this good or bad? It depends on your point of view. If you…

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Buying and Seling, Real Estate, Real Estate Investor

Home prices keep going up. For how long?

by Vasko DeLev • August 15, 2013

The Canadian Real Estate Association reported once again numbers suggesting home buyers are not scared of anything and are prepared to pay big bucks for that dream home. July is traditionally the busiest month for home buyers. Despite numerous warnings…

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Economy, Investing, Money management

Stock Market: 50% down by the end of 2014

by Vasko DeLev • April 22, 2014 • 0 Comments

Such warnings come always during a time when things look just fine. Often nothing dramatic happens. But sometimes markets do get shaken up for a while. This time even the name of Warren Buffet is used to add validity to…

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Economy, Real Estate

End of housing boom will be costly, Scotiabank warns

by News Feed • April 21, 2014 • 0 Comments

The outsized gains that Canada’s economy has enjoyed on the back of the housing market can’t continue as a real estate slowdown may already be underway, one of Canada’s big banks warned Wednesday. Most mainstream economists today are of the…

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Real Estate

Saskatchewan farmland values jumped 29% in 2013

by News Feed • April 18, 2014 • 0 Comments

Farmland values are increasing rapidly across Western Canada, but nowhere as fast as in Saskatchewan, a report from Farm Credit Canada says. Saskatchewan farmland values jumped 29% in 2013

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Bitcoins

Bitcoin exchange Mt. Gox heads for liquidation

by News Feed • April 17, 2014 • 0 Comments

The Mt. Gox bitcoin exchange in Tokyo is headed for liquidation after a court rejected its bankruptcy protection application. Bitcoin exchange Mt. Gox heads for liquidation

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Personal Finance

Low interest rates come with high cost for savers, retirees

by News Feed • April 17, 2014 • 0 Comments

While overleveraged homeowners, and those eager to join them, worry when record low borrowing rates will come to an end, savers on the other end of the spectrum are anxious to see yields get back to more normal levels. Canadian…

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Buying and Seling, Real Estate

Vancouver’s cheapest house sold

by News Feed • April 15, 2014 • 0 Comments

According to the Huffington Post B.C., Vancouver’s cheapest listed single family home attracted large numbers to open houses, with two written offers pushing the final purchase price seven per cent over asking. Bidding wars are back. Is this a sign…

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More on investing

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  • Warren Buffett: How to make money?
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  • Countries With The Best Stock Market Returns Have The Lowest Growth In GDP Per Capita

    Per-capita GDP and equity returns

    This chart presents something of a paradox: it shows that the correlation between a country's stock market returns and the same country's growth in per-capita GDP is actually negative.

    The findings may be counterintuitive, as one would expect countries with higher rates of economic growth to produce superior investment returns.

    Elroy Dimson, Paul Marsh, and Mike Staunton, researchers at London Business School, revisit this conundrum in the latest Global Investment Returns Yearbook published by the Credit Suisse Research Institute.

    "Many investors and commentators have misunderstood the evidence on economic growth and equity performance," say Dimson, Marsh, and Staunton.

    "Though difficult for investors to capture in portfolio returns, stronger GDP growth is generally good for investors. Why, then, has it been so difficult to make money by buying the stocks of countries that are improving their economic position?"

    The authors break down in detail the answers to this question and the reasons why this negative correlation holds, but here is the quick version, boiled down to four main points (emphasis added):

    The first explanation is of course that stock prices impound anticipated business conditions. As we showed in our 2010 paper, although past economic growth does not predict subsequent equity market movements, stock prices do predict future economic growth. Markets anticipate the macro-economy. To use public information to try to predict the market is to bet against the consensus view set by a multitude of other smart and informed global investors.

    Secondly, a strategy of buying the shares of countries that are advancing economically is a strategy of buying companies that are on average becoming less risky, and hence offer a lower expected return. It is more risky to invest in companies in distressed economies. Other things held constant, the expected return on equities in successful, growing economies should therefore be lower than the expected return in declining economies.

    Third, there may be limits to arbitraging global mispricing. There is extensive evidence that investors bid up the prices of growth assets, to the point that their long-run return is below the performance of distressed assets (sometimes referred to as ‘value’ investments). Some observers regard this as mispricing, and contend that it offers opportunities for arbitrageurs. The strategy would be to buy equities in distressed markets and to short-sell securities in fast-growing markets. However, short-selling can be costly and risky, thereby allowing 'hot' markets to remain overpriced, and to yield disappointing long-run returns.

    Last, there is the question of luck. Some countries have resources — agricultural, extractive, capital, or intellectual — that may confer an advantage compared to other nations. If that advantage is appreciated and already priced in by investors, there can be no expectation of superior investment returns. But if the consensus undervalues those resources, then an astute or lucky investor may outperform. In the 20th century, resource-rich countries like the U.S., Canada, Sweden, or Australia prospered. In the opening decade of the 21st century, commodity-rich and low-labor-cost emerging markets prospered. Some of the successes and disappointments may be attributable to Fortuna — the goddess of luck.

    Click here to read the full analysis, which begins on page 17 »

    Join the conversation about this story »


        






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