Juggling Dynamite

“Amateur landlords are rampant in the Toronto condo market…50-60% of condos under construction are being sold not for owner-occupied but for “investment purposes”…this could hurt the Canadian banks but also the bank investors” [shareholders].Here is a direct video link.

Sure one could buy or hold Canadian banks here for the 3-4% dividend income….so long as one doesn’t mind holding through capital implosion in the process. Remember a cyclical gain of 100% is completely extinguished in a price decline of 50%, and the downcycles typically move at lightening speed compared with the multiyear price recoveries.

Chart source: Cory Venable, CMT, Venable Park Investment Counsel Inc.

Coming into the final hour of yet another crazy day in financial markets. As of 3:30 ET we have bonds and precious metals weaker, with the US dollar stronger, all three suggesting a FED QE taper is more likely on some of the stronger economic data the past week. While stocks had sold off the past 5 days on a similar assessment, today they are rebounding all in a world of their own dreaming. For those who believe it is smart to ride bubble prices up and then exit when troubles hit, the following graph shows the challenge. Like tidal waves, market bubbles are asymmetric: they take their own sweet time to crest, and then crash down in violent mean reversion as buyers vanish and sellers scramble to find a bid. By the end, typically all of the price gains seen from the beginning of the uptrend are evaporated. Sometimes more.

See more at: Business insider: Market bubbles are asymmetric

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Here is a direct video link.