No one ever went wrong taking a profit.
Remember....bulls make money, bears make money...pigs get slaughtered.
No one can time everything right. Heck, if I get 50% +1 I consider it a good day LOL
Interesting article by David Rosenberg in the FP today:
David Rosenberg: Another reason Toronto’s real estate market may keep defying skeptics
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David Rosenberg | July 7, 2015 3:25 PM ET
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Tyler Anderson / National PostDavid Rosenberg: Despite being seemingly expensive, and propped up to some extent by foreign buying, there is very likely going to be another leg up in the GTA housing market fuelled by Canadian inter-provincial migration inflows.
Well, well, the big bet against the Canadian housing market, especially in the Greater Toronto Area, has still failed to take hold. Yet this is the primary reason why U.S. hedge funds have reportedly been adding to their short positions on Canadian bank stocks.
Home sales nationwide hit a five-year high in May, with average resale prices up eight per cent, led by Toronto and Vancouver, which have acted as a huge offset to the retreat in Calgary where sales have predictably fallen 30 per cent from comparable 2014 levels.
Despite being seemingly expensive, and propped up to some extent by foreign buying, there is very likely going to be another leg up in the GTA housing market fuelled by Canadian inter-provincial migration inflows.
This might bring what is already a hot market back into a bubble by the time the cycle is over, which is likely still a few years away (the Bank of Canada is hardly likely to be raising rates anytime soon, no matter what the U.S. Federal Reserve does).
I am merely taking a page out of the 1985/86 playbook when oil prices collapsed and sent the Alberta economy into a tailspin that lasted at least a year before an initially tepid recovery.
In 1986, which was the major point of economic stress for Alberta, real GDP contracted 2.3 per cent, a huge negative swing from the eight-per-cent expansion of 1985.
Ontario’s real GDP moderated slightly to 3.5 per cent in 1986 from around five per cent in 1985. But the combination of the competitive weakening of the Canadian dollar, cost reductions for manufacturing via lower energy prices and a 200-basis-point rate cut by the Bank of Canada gave a huge lift to the economy in 1987 and 1988 when Ontario’s annual growth rebounded to five per cent.
From 1986 to 1988, nearly 60,000 Albertans, on net, left the province for greener pastures elsewhere, and almost all of them showed up in Ontario.
The province took in a net 110,000 migrants from other areas of the country over that three-year period, as the combination of the prior currency depreciation, a rebound in U.S. growth and the cost benefits of lower energy prices triggered a durable pickup in growth in southwestern Ontario.
Over that period, housing starts rose at an annual rate of 15 per cent and home prices annually increased 24 per cent — ultimately causing some big headaches for then-Bank of Canada Governor John Crow, who was inevitably compelled to take the punchbowl away over the ensuing two years. But the central bank today is actually going to embrace inflation rather than resist it.
There are two other supportive current developments.
First, Alberta, with a new NDP government, will likely be pursuing higher tax policies, making Ontario the proverbial one-eyed-man in the land of the blind.
The second is the current political situation in Quebec, where the new PQ leader wants to revive pro-separation sentiment. Something tells me that for Albertans in the oil patch looking for work elsewhere, La Belle Province is not going to be their first choice.
Ontario has rarely looked this good — at least on a relative basis. And escalating in-migration inflows coupled with tight land supply and ultra-low interest rates means that this hot real estate market is about to get a lot hotter in the next year or two.
Don’t get me wrong, fiscal policy, demographics and the permanency of many of the plant closings in recent years rule out the same sort of economic climate that was enjoyed in that 1986-to-1988 period, but suffice to say that Alberta’s problems are not Ontario’s problems.
In a perverse sort of way, Ontario benefits from the impact that interest rates, currency and in-migration flows will have on the local housing market.
David Rosenberg is chief economist and strategist at Gluskin Sheff + Associates Inc. and author of the daily economic r
