8th Longest Economic Expansion Of All Time

[Rickson9]

The current economic expansion is now in its 47th month going back to
June of 2009. That means that since 1857 there have only been seven
periods of expansion that have lasted longer than the current one. Out
of the 33 total cycles in that period, the average expansion lasted 38
months. Since World War II the average has been 58 months in 11 cycles.

8th Longest Economic Expansion Of All Time



Annual deficits are falling even faster than the Congressional Budget
Office predicted back in February. And the country's total debt is set
to fall as share of the economy for a few years.

Deficits Fall Faster Than Expected



Stock Market 2013 YTD Returns*

Dow +16.1%

NASDAQ +14.7%

S&P500 +15.7%

S&P/TSX +1.2%

* does not included dividends



YTD at +15.8% I'm barely keeping track with the market. I tend to do better in bear markets. I don't do well during bull markets. My average annual rate of return is ~15% for the last 15 years.



Tabular results



Graphical results



Portfolio 1



TFSA holdings



TFSA trade dates



The TFSA return is better only because it was introduced during the
last stock market crash. I only buy during crashes. Because the TFSA
is so young and was introduced during the perfect storm, it shows a
better result. However, this will normalize (read: fall) over time.



I don't believe in conventional diversification, asset allocation,
re-balancing. I strongly believe that utilizing those methods would
destroy portfolio returns. Without going into it (because it would take
too long), utilizing those methodologies would increase risk as well as
fees and provide no benefit whatsoever.



I like using the TFSA as a good example of what a small amount can turn
into if an individual applies a rational framework for investing while
ignoring conventional diversification, re-balancing, and asset
allocation. It's easier to turn big money into bigger money. But most
people think that the TFSA is too small to do anything useful (because
the majority are using it like a savings account). I think that they
are wrong.

 

[nubiwan]

What's really happening in the US? How much of the DOW's lofty valuation is supported on cheap money and no underlying fundamental. What'll happen with the US debt bubble, and when will foreign investment simply halt? What happens to the Canadian economy if/when it all come tumbling down? When will an IMU replace the foundering US Dollar?



Is anyone else on this board worried about this?

 

[Thomas Beyer]

[quote user=nubiwan]

Is anyone else on this board worried about this?
not really.



The US will grow far faster than Europe, has lots of room to increase taxes if they want for example on gasoline, oil&gas reserves in the ground, GST/VAT that would raise a trillion annually) .



The core issue is a free spending Europe with no or negative growth and 4 levels of government, much of it bloated (city/county/municipality, province, state, EU).



Money is a concept. It is not real. Oil cost $4 two decade or so ago, now it is $100. It is the same oil. Beer cost 30 cents a can 20 years ago, now it is $2 a can. Has the beer changed ? not really. Ditto with real estate, gold, shampoo, toothpaste, water, any real thing.



Thus buy REAL things, with cheap money (i..e a mortgage) and you will be fine if you can hold. I thus prefer real estate (over beer or shampoo) but there is nothing wrong per so to own a toothpaste, car, shampoo or beer making company ! Most companies make real things, too, like cars, coke, shampoo, .. so their stock goes up because the stuff they sell goes up in price due to an eroding monetary value.



Asia has billions of people that want, and increasingly get, what we have: cars, life insurance, fridges, A/C, houses, education. India will surpass China in population this decade ! So that is 2.6 billion people combined. They all got to eat, drive a car, buy stuff.



The issue is sustainability, i.e. delivering all this stuff without wrecking our planet, i.e. land use, energy use and pollution (some call it global warming but I don't believe that is actually a fact, see here: http://myreinspace.com/rein_members_only/Coffee_Shop/106-10127-Man-Made_Global_Warming_is_a_myth.html)



Countries left behind are fundamentalist countries that deprive half their population basic rights (namely women) and they will breed more and more radical ideas, mainly out of poverty, illiteracy and ignorance. That is what I am worried about.

 

[Rickson9]

[quote user=nubiwan]Is anyone else on this board worried about this?




Not really.

 

[nubiwan]

No one really thinks that the US is going to tank? I am happy to hear the responses to the contrary, but would an instable US dollar and economy not affect Canada?



How much of our own economy (export) is dependent on the US buying from us? Are you both saying there is no reason to expect double digit interest rate in Canada over the next 3-5 years?

 

[Thomas Beyer]

[quote user=nubiwan]but would an instable US dollar and economy not affect Canada?


Expect US $ to Appreciate vs. Euro, Yen and Can $ !



The US economy will expand faster than Canada's or Europe's or Japan's due to monetary easing, high immigration, high birth rate, lower taxes on consumption, rising house prices in most markets, rising stock markets and low low interest rates.



As such, Canada will enjoy a nice ride along, and Canada will also benefit from Asia's middle class expanding at unprecedented historic rates as they buy condos, fridges, cars, jewellery, banking services, travel, .. to reach S-European GDP and income levels and will leave aging over-coddled Europe (and Quebec) in the dust.



Stop worrying, read less left-leaning newspapers like the Globe&Mail or Toronto Star, watch less left leaning TV like CBC and get in the investing game: borrow money (it is on sale these days at sub 3% !!) and invest in income producing assets that yield 5% or more. You, and your rich grandchildren will thank you for it !

 

[Rickson9]

[quote user=nubiwan]No one really thinks that the US is going to tank?


Unlikely.



[quote
user=nubiwan]Are you both saying there is no reason to expect double
digit interest rate in Canada over the next 3-5 years?


Unlikely.

 

[Thomas Beyer]

[quote user=nubiwan]Are you both saying there is no reason to expect double digit interest rate in Canada over the next 3-5 years?
Extremely unlikely. Why would that be ?



We will see a "race to the bottom" ie. lowering your currency to be more competitive, and to do that you must lower prime rate. I would not be surprised if in Canada the prime rate drops even further (although unlikely, but more likely than double digit)