OT: Lets talk about stocks (Part 2)

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QuebecPride

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May 4, 2010
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Love Buffet but some of the quotes attributed to him really need to be time stamped. Was he discussing leverage when rates were 10%+ or the past few years when money was free? He also talks a lot about diversification but has a pretty concentrated portfolio - Apple is something like 40% percent of his holdings.

I don't think leveraging is for everyone, and a lot of folks are going to get crushed in the near future, but for the average Joe it offers the only real path to wealth. I think most folks would be much better off rebalancing the net worth they have in RE by moving money to market based ETF's. Most of HELOC money goes to toys, second homes, vacations, etc. Much better to have that money in the markets.

It's from 2018...

https://www.cnbc.com/2018/02/26/buf...adies-and-leverage-leverage-is-the-worst.html

Buffett is the first to say the average Joe should just buy the S&P500 ETF and move on. What he preaches for the average person and what he does as an all-time rockstar investor can differ. Not many people have his smarts.

https://www.cnbc.com/video/2020/05/04/warren-buffett-investing-advice.html
 

QuebecPride

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May 4, 2010
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Sherbrooke, Québec
Well, buying a second home is an unnecessary risk as well. Does that mean it was the wrong move for me to buy one? I don't think so.

Homes are now beyond the point of being worth buying as an investment. Some people have credit sitting on the sidelines and the economy is expected to boom over the next couple of years. I'm willing to tolerate that risk because I'm going to borrow money that I know I could pay back if I lost it all.

At least when you buy a second home you either get revenue or you have a solid value at the basis of the debt. Stocks can fall 30-50% overnight.

Home prices are really 'sticky' as we say in Finance, and usually don't go down.

Stocks over the long term go up, but you need be able able to withstand those shocks. Adding leverage makes that much harder.
 
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Lafleurs Guy

Guuuuuuuy!
Jul 20, 2007
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At least when you buy a second home you either get revenue or you have a solid value at the basis of the debt. Stocks can fall 30-50% overnight.

Home prices are really 'sticky' as we say in Finance, and usually don't go down.

Stocks over the long term go up, but you need be able able to withstand those shocks. Adding ea leverage makes that much harder.
Have you looked at those numbers? Even if you took the worst 15 years of the stock market, you'd still make money.

I'm all for investing in real estate by the way. But there comes a point where it's no longer viable. Real estate as an investment in Canada right now is a lot trickier than it was even a couple of years ago. A 450k house in Hamilton from a couple of years is now going to go for 650 easily and it's going to need probably 100k+ if you want to rent it out and max the returns. You can buy it and rent it out at a monthly loss if you want to but... we could very easily be at the top of a bubble right now.

As for stocks dropping 50% overnight... again, not likely to happen unless you're investing in something like crypto. And quite frankly, when we've seen drops like that there are usually immediate recovery. Look at this March 2020. Ditto with 2008, stocks plummeted. If you held on (or even better invested at the bottom) then you didn't have any worries because it bounced right back.

Again, depends on what you're investing in. Depends on your risk tolerance. Depends on what you can afford... Bottom line is that real estate isn't an option for a lot of people but anyone can buy stocks if they have some money.
 

QuebecPride

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May 4, 2010
7,987
2,427
Sherbrooke, Québec
Have you looked at those numbers? Even if you took the worst 15 years of the stock market, you'd still make money.

I'm all for investing in real estate by the way. But there comes a point where it's no longer viable. Real estate as an investment in Canada right now is a lot trickier than it was even a couple of years ago. A 450k house in Hamilton from a couple of years is now going to go for 650 easily and it's going to need probably 100k+ if you want to rent it out and max the returns. You can buy it and rent it out at a monthly loss if you want to but... we could very easily be at the top of a bubble right now.

As for stocks dropping 50% overnight... again, not likely to happen unless you're investing in something like crypto. And quite frankly, when we've seen drops like that there are usually immediate recovery. Look at this March 2020. Ditto with 2008, stocks plummeted. If you held on (or even better invested at the bottom) then you didn't have any worries because it bounced right back.

Again, depends on what you're investing in. Depends on your risk tolerance. Depends on what you can afford... Bottom line is that real estate isn't an option for a lot of people but anyone can buy stocks if they have some money.

My point was the leveraging in Real Estate is not that much of a risk, because you have a tangible asset that won't fall down in price.

Stocks over the long term go up, but leveraging your investment makes the downside shocks hurt even more.

On paper it's a great plan, but very few can withstand to see something they took a loan for go down in flames.

Nothing wrong with buying stocks/ETFs, I actually favor that over real estate. Adding leverage to stocks is what is wrong.
 
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DAChampion

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May 28, 2011
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My realtor called me.

She spoke to the seller's realtor. They have four offers. Ours is clearly the best one and the realtor is advising that they take our offer, but the seller decided to sleep on it.

Stressful ...
 

Scintillating10

Registered User
Jun 15, 2012
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Nova Scotia
US equities have around 1T leveraged against them so hardly a cardinal rule of investing.

As long as you are diversified, shouldn't be an issue.

If you borrow to invest in a single stock then ya, that would be pretty stupid. But buying say an SP500 ETF any time over the past 10 years would have returned 10%+, last 20 years including the GFC around 6%.
I have borrowed before to invest in stock market yes. But never mortgage my house to invest in stocks. That's another ball game altogether. Can lose it. Many fallacious and fakes in stock market. I am not that desperate for money. House paid for, new Toyota Camry paid for, good enough I call it.

I invest in stocks. Hit jackpot with Tesla last 2 years, but outside of that so-so results.
 

Scintillating10

Registered User
Jun 15, 2012
18,764
8,363
Nova Scotia
Well, buying a second home is an unnecessary risk as well. Does that mean it was the wrong move for me to buy one? I don't think so.

Homes are now beyond the point of being worth buying as an investment. Some people have credit sitting on the sidelines and the economy is expected to boom over the next couple of years. I'm willing to tolerate that risk because I'm going to borrow money that I know I could pay back if I lost it all.
With big spike in house prices upper Camada. I imagine house taxes go way up soon.
 

llamateizer

Registered User
Mar 16, 2007
13,672
6,770
Montreal
I noticed you talked about lowering your average a lot, how do you track this? Through a spreadsheet?

I need to add this in my spreadsheet but its quite the task.

I use my own spreadsheet. here a snippet.
I do FIFO (first in, first out)

upload_2021-4-28_18-43-28.png


another tab tracks the summary
upload_2021-4-28_18-46-41.png



I do track also my regular stock purchases. I have some graphs to give me an idea of how things are going.
upload_2021-4-28_18-48-17.png


(gamble = growth). as you can see, it's not going great heh
 

Mrb1p

PRICERSTOPDAPUCK
Dec 10, 2011
87,764
53,495
Citizen of the world
I use my own spreadsheet. here a snippet.
I do FIFO (first in, first out)

View attachment 427300

another tab tracks the summary
View attachment 427302


I do track also my regular stock purchases. I have some graphs to give me an idea of how things are going.
View attachment 427304

(gamble = growth). as you can see, it's not going great heh
Lmao, that gamble.

Thanks for that, its a great spread.

Do you have on spread per coin or only one for crypto? Currently something similar but for all crypto and it gets messy at times. I used color codes but with me diversifying like a dumi it gets confusing
 

llamateizer

Registered User
Mar 16, 2007
13,672
6,770
Montreal
Lmao, that gamble.

Thanks for that, its a great spread.

Do you have on spread per coin or only one for crypto? Currently something similar but for all crypto and it gets messy at times. I used color codes but with me diversifying like a dumi it gets confusing

I do use one code per crypto in the same sheet. (O = omi, E = ETH, B-01 = BTC)
I try to track the staking + interest + fees



upload_2021-4-28_18-54-17.png


I can do some cleanup and share the sheet if you want to take a look.
There is one tab for the Transactions, and another for summary
 

Mrb1p

PRICERSTOPDAPUCK
Dec 10, 2011
87,764
53,495
Citizen of the world
I do use one code per crypto in the same sheet. (O = omi, E = ETH, B-01 = BTC)
I try to track the staking + interest + fees



View attachment 427306

I can do some cleanup and share the sheet if you want to take a look.
There is one tab for the Transactions, and another for summary
Nah dont bother, Im sure you have other things on your plate, youve been a great help regardless, thank you for this.
 

QuebecPride

Registered User
May 4, 2010
7,987
2,427
Sherbrooke, Québec
Plus the immigration will resume eventually. That should drive prices (both for renting and for buying) upwards.

I wonder how much people we'll let in once the pandemic is under control. Will we compensate for the low immigration in 2020 and 2021? Or will we keep the same yearly ceiling we had before?

I don't think Immigration will be much of a factor. In Québec it's roughly 50000 people per year, which is not that much. Maybe in Ontario it's another shebang. They might open up the valves for a couple of years to compensate for the lack of immigrants the past year or so, we'll see.
 
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mariolemieux66

Registered User
Sep 17, 2008
16,315
7,252
Vancouver
I don't think Immigration will be much of a factor. In Québec it's roughly 50000 people per year, which is not that much. Maybe in Ontario it's another shebang. They might open up the valves for a couple of years to compensate for the lack of immigrants the past year or so, we'll see.
I live in Richmond, BC. In the last month,I have seen several groups of foreigners from Hispanic and African origins, walking around Richmond Center, the Minoru Library and Olympic oval. I haven't ask if they were tourists or new prospects Canadian citizens.
 

japhi

Registered User
Jul 7, 2014
3,719
3,055
I have borrowed before to invest in stock market yes. But never mortgage my house to invest in stocks. That's another ball game altogether. Can lose it. Many fallacious and fakes in stock market. I am not that desperate for money. House paid for, new Toyota Camry paid for, good enough I call it.

I invest in stocks. Hit jackpot with Tesla last 2 years, but outside of that so-so results.

Fair enough, to each their own. My experience is consistent 8% returns.

Not for everyone, but turning 2% into 8% is pretty easy money. Personally I would rather have a mortgage at 500K with 500K invested and a 1M house then a 1M house paid for. In that scenario my 500K is returning 40K a year and my mortgage on 500K @ is 24K. So 16K delta. But, you have to be a long term, index investor to really make it work. Hold through events like the GFC and COVID, reliable income, enough equity in the home you don't get demand called, spending in check, etc. Takes focus but literally free money at these interest rates.
 
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llamateizer

Registered User
Mar 16, 2007
13,672
6,770
Montreal
Fair enough, to each their own. My experience is consistent 8% returns.

Not for everyone, but turning 2% into 8% is pretty easy money. Personally I would rather have a mortgage at 500K with 500K invested and a 1M house then a 1M house paid for. In that scenario my 500K is returning 40K a year and my mortgage on 500K @ is 24K. So 16K delta. But, you have to be a long term, index investor to really make it work. Hold through events like the GFC and COVID, reliable income, enough equity in the home you don't get demand called, spending in check, etc. Takes focus but literally free money at these interest rates.

yep. Did this with my HELOC
3% interest rate for 8% "guaranteed" div stocks + potential gains.


doing this compensate the loss of my growth stocks recently
 

Scintillating10

Registered User
Jun 15, 2012
18,764
8,363
Nova Scotia
Fair enough, to each their own. My experience is consistent 8% returns.

Not for everyone, but turning 2% into 8% is pretty easy money. Personally I would rather have a mortgage at 500K with 500K invested and a 1M house then a 1M house paid for. In that scenario my 500K is returning 40K a year and my mortgage on 500K @ is 24K. So 16K delta. But, you have to be a long term, index investor to really make it work. Hold through events like the GFC and COVID, reliable income, enough equity in the home you don't get demand called, spending in check, etc. Takes focus but literally free money at these interest rates.
What did you go into Berskire Hathaway or something? It has quite a diverse portfolio. Get some railroad, banks, tech companies
 

Scintillating10

Registered User
Jun 15, 2012
18,764
8,363
Nova Scotia
I will be living near Baltimore :)
I live in a small community in Nova Scotia of about 1,000 people. Right on the ocean. Recently, we had a spike in real estate prices also. Mostly by people from Ontario selling their homes and buying same house much cheaper down here. Out walking other day, passed new guy in neighborhood by his house. He said he sold out for over a million in Toronto bought same house here for 200k. Pocketed a million. He was about 55-60 I would say. Said his son is looking to do the same and buy a home here
 
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