tag:blogger.com,1999:blog-31427364.post6406344411046854282..comments2024-03-26T03:52:23.395-07:00Comments on Housing Analysis: How Should I Invest My Down Payment?mohicanhttp://www.blogger.com/profile/06094213357140749289noreply@blogger.comBlogger14125tag:blogger.com,1999:blog-31427364.post-3571979312067898132007-04-24T22:07:00.000-07:002007-04-24T22:07:00.000-07:00if the Americans head into a recession with inflat...<I>if the Americans head into a recession with inflation still a threat how would that affect Canada?</I><BR/><BR/>US inflation is not really a factor, what matters is real demand, and that's going to go down whether there's an inflationary or deflationary recession. <BR/><BR/>IMHO a US recession is in the bag, and it could be inflationary if the Fed tries to fight it with more easy money. Give the alcoholic another drink.<BR/><BR/>As for where to put your down payment, long bonds or preferreds have the same correlation to interest rate moves as RE, and long bonds almost always do well in a recession, barring inflation. And I do have faith in the BoC fighting inflation, it does not have any motive to sink the currency unlike its counterpart south of the border.<BR/><BR/>I also have some floating rate preferreds which are a hedge against interest rate increases. All preferreds yield dividend income which has a great tax advantage in BC.patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-82576269699564040562007-04-24T15:57:00.000-07:002007-04-24T15:57:00.000-07:00"In previous market downturns, large cap, dividend..."In previous market downturns, large cap, dividend paying companies do quite well."<BR/><BR/>It very much depends. High dividends generally fall in two categories:<BR/><BR/>1. A company in big trouble that has yet to cut dividends.<BR/><BR/>2. A utility/bank<BR/><BR/>The first category will certainly be bad news in a recession, unless they happen to dabble in contrarian products.<BR/><BR/>The second category needs to be looked at in detail. If the utility is a pipeline, that could be bad news, as could natural resource extractors. What about banks? It really depends on their mortgage exposure.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-27841640301266224352007-04-24T08:18:00.000-07:002007-04-24T08:18:00.000-07:00While we're talking about investing, we may want t...While we're talking about investing, we may want to add a word for those who want to <B>gamble</B> with all or part of their future downpayment. This'd be for those with high risk tolerance or those with small pots and lots of youth.<BR/>Also, it's a position for those folks <B>anticipating US recession</B>:<BR/>Long USD (next 6 months).<BR/>Long US treasuries (eg TLT).<BR/>Short QQQQ (or long position in instruments like QID).<BR/>and higher risk but same theme:<BR/>Short Emerging markets(eg short EEM).<BR/>---<BR/>Call me krazy, but keep an eye on this prediction too.rentahhttps://www.blogger.com/profile/15702043040945599471noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-90664460305031076282007-04-24T08:07:00.000-07:002007-04-24T08:07:00.000-07:002 cents worth:Currently USD is at very long term s...2 cents worth:<BR/><BR/>Currently USD is at very long term supports (80 on the dollar index).<BR/>Also, everybody and their dog is betting that the USD is now a one-way bet down.<BR/>Thus, using contrarian principles, watch the USD make a nice bounce here, perhaps with a target as high as 90 on the dollar index.<BR/>This will likely co-incide with weakening loonie when cf USD, but less so than for other currencies 'cos we're joined at the hip with the US.<BR/><BR/>---<BR/>FTR, I believe that the USD is eventually going to breakdown, but that's a very low frequency event, and it'll likely happen when nobody expects it.rentahhttps://www.blogger.com/profile/15702043040945599471noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-15018042284068184602007-04-24T07:44:00.000-07:002007-04-24T07:44:00.000-07:00Regarding US vs CDN dollar investments, for a down...Regarding US vs CDN dollar investments, for a down payment I would be wary of investing too much outside the country because of currency fluctuations. <BR/><BR/>Assuming a tolerance for some risk and a decent time horizon, investing a portion of a down payment in dividend equities is not all that risky. In previous market downturns, large cap, dividend paying companies do quite well. Look at the annual return data for some of the best Dividend funds - TD Dividend Growth or AGF Large Cap Dividend. Volatility is quite low but the upside potential is fantastic.mohicanhttps://www.blogger.com/profile/06094213357140749289noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-16278358948285890582007-04-24T07:42:00.000-07:002007-04-24T07:42:00.000-07:002 questions: if the Americans head into a recessi...2 questions:<BR/><BR/> if the Americans head into a recession with inflation still a threat how would that affect Canada?<BR/><BR/> what investment would you look for to take advantage of rising interest rates?blueskieshttps://www.blogger.com/profile/18021192854011714780noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-4045357761241682362007-04-24T06:07:00.000-07:002007-04-24T06:07:00.000-07:00would you recommend US or Canadian.. or other?Whic...<I>would you recommend US or Canadian.. or other?</I><BR/><BR/>Which country has to borrow $2billion+ from the rest of the world every day? Want to lend part of that?<BR/><BR/>What happens if the other lenders get cold feet?patriotzhttps://www.blogger.com/profile/11154064267408955762noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-57949499677026750062007-04-24T03:35:00.001-07:002007-04-24T03:35:00.001-07:00Bloomberg: Subprime Bondholders May Lose $75 Billi...Bloomberg: Subprime Bondholders May Lose $75 Billion in U.S. Housing Slump<BR/><BR/>http://tinyurl.com/yt6o4c<BR/> <BR/>More pain to come.Unknownhttps://www.blogger.com/profile/15910317878726017663noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-18273879567194351332007-04-24T03:35:00.000-07:002007-04-24T03:35:00.000-07:00But assuming one is willing to invest in the marke...<I>But assuming one is willing to invest in the market, would you recommend US or Canadian.. or other? Specifically I'm wondering about the value of the C$.</I><BR/><BR/>That's the $64k question. At this point, things could go either way...but I'm more pessimistic about the US$.<BR/><BR/>My wife and I had money in a US$ account which we exchanged a while ago into C$. Time will tell if that was a good move or not.<BR/><BR/>We're currently out of the market and have our savings in GIC's and PC bank at 4%. It barely keeps up with inflation (arguably doesn't), but I don't trust the market right now. <BR/><BR/>A couple of people who I respect are strictly day-traders now, as they don't want to keep money in the market overnight.Unknownhttps://www.blogger.com/profile/15910317878726017663noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-14195709589201862442007-04-23T22:21:00.001-07:002007-04-23T22:21:00.001-07:00This comment has been removed by the author.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-56966284279637856882007-04-23T22:21:00.000-07:002007-04-23T22:21:00.000-07:00"Specifically I'm wondering about the value of the..."Specifically I'm wondering about the value of the C$. "<BR/><BR/>Oil/resource prices down, C$ down. That could be a double whammy if you are invested in Canadian energy stocks. That is if oil/resource prices cool. They may or may not, but if U.S. goes into recession and China's growth slows, they likely will.<BR/><BR/>I'd stick with cash, or possibly a long short hedge.freakohttps://www.blogger.com/profile/06236681769619303395noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-74259769548471976372007-04-23T20:30:00.000-07:002007-04-23T20:30:00.000-07:00I agree with casual observer, regarding the possib...I agree with casual observer, regarding the possible connection between housing and the equities market.<BR/><BR/>But assuming one is willing to invest in the market, would you recommend US or Canadian.. or other? Specifically I'm wondering about the value of the C$. There are excellent tax benefits to a Canadian company for dividends which can't be ignored.<BR/><BR/>For high savings, ETrade offers a 4.15% account, no fees. I don't know if you need to have equities with them, but I don't think so.Warrenhttps://www.blogger.com/profile/00586650821846362670noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-52570893388075470862007-04-23T17:23:00.000-07:002007-04-23T17:23:00.000-07:00I would be quite cautious with money to be used fo...I would be quite cautious with money to be used for a down payment. If housing prices go down anywhere near what some people are suggesting, the economy will take a hit.<BR/><BR/>If the economy takes a hit, the stock market may not be where you want to have your money invested, even if the time period is five years.<BR/><BR/>I remember looking at five year returns on equity mutual funds a couple of years ago. Some of these were near zero or even slightly negative. People would have been better off just leaving their money in a high interest account, with a lot less risk.<BR/><BR/>BTW, The TD and RBC Premium Money Market Funds, and The National Bank Cash Fund that are mentioned in the thread all have a $100,000 minimum initial investment threshold.<BR/><BR/>If you're looking for a good money market mutual fund (***** - Morningstar Rating) with a low initial investment threshold, the best I could find was the Altamira T-Bill fund. The minimum initial amount was only $1000.<BR/><BR/>As an alternative, ING Direct pays 3.5%. Presidents Choice pays 4%. Neither of these require you to lock your money in for any length of time, and neither has any service charges.casual observerhttps://www.blogger.com/profile/17802647397113775005noreply@blogger.comtag:blogger.com,1999:blog-31427364.post-36995215216819832192007-04-23T12:39:00.000-07:002007-04-23T12:39:00.000-07:00Cheers!Cheers!domushttps://www.blogger.com/profile/12219518832803471294noreply@blogger.com