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Thursday, 17 November 2016
New Year's Eve Dinner Party : 31-Dec-2016 (Rahul Vashisht & Friends)
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Sunday, 13 November 2016
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Thursday, 6 October 2016
Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group) - Newcomers to Canada
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Saturday, 20 August 2016
Diwali Dinner Party - 08-Oct-2016 (Indo-Candians Group)
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Wednesday, 6 January 2016
2016 - a look down at the abyss / the roller coaster ride
Hello Friends,
We're here in 2016.
I have been thinking about posting an update to my blog this year, about the expectations for the new year, & thinking hard to write positive things in this negative environment. Most of the fundamentals are negative. So it's a challenge to find the positives.
Lets first go back & read the post for last year & see how much matched & what was accurate : Rahul's Blog report 2015
After you've read that. Here's my report for 2016 :
These are probably the things that will happen in 2016 (in no particular order) :
* 5 year mortgage rates may rise 1-2% during the year.
* Property prices face a slight correction, following the rising mortgage rates.
* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
* Gold / Silver prices make remarkable recovery more than 20% for the year.
* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once commodities start to post recovery.
* The Oil patch (US & Canada) lays off 100k workers, as unprofitable oil wells close down.
* A "black swan" event - unexpected events that lead to conflict.
* In a world full of uncertainties, Canada emerges as a magnet for net foreign investments, in residential properties & farmland in the prairies.
* Food prices rise by more than 20%. Many parts of the world face food shortages.
* New Immigrants flock to Canada. Prairies become the new frontier. Farming becomes big enterprise & Canada's biggest export promise & potential for the future....
I want to leave this page on a positive note.
The age of Paper & intangible assets is soon coming going to an end.
Hard assets will stand the test of time, even if during the short term - if their values decline, they will eventually hold their value over time & will be the assets of choice, where paper money will flood into as a sense of security.
Best Regards,
--
We're here in 2016.
I have been thinking about posting an update to my blog this year, about the expectations for the new year, & thinking hard to write positive things in this negative environment. Most of the fundamentals are negative. So it's a challenge to find the positives.
Lets first go back & read the post for last year & see how much matched & what was accurate : Rahul's Blog report 2015
After you've read that. Here's my report for 2016 :
These are probably the things that will happen in 2016 (in no particular order) :
* 5 year mortgage rates may rise 1-2% during the year.
* Property prices face a slight correction, following the rising mortgage rates.
* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
* Gold / Silver prices make remarkable recovery more than 20% for the year.
* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once commodities start to post recovery.
* The Oil patch (US & Canada) lays off 100k workers, as unprofitable oil wells close down.
* A "black swan" event - unexpected events that lead to conflict.
* In a world full of uncertainties, Canada emerges as a magnet for net foreign investments, in residential properties & farmland in the prairies.
* Food prices rise by more than 20%. Many parts of the world face food shortages.
* New Immigrants flock to Canada. Prairies become the new frontier. Farming becomes big enterprise & Canada's biggest export promise & potential for the future....
I want to leave this page on a positive note.
The age of Paper & intangible assets is soon coming going to an end.
Hard assets will stand the test of time, even if during the short term - if their values decline, they will eventually hold their value over time & will be the assets of choice, where paper money will flood into as a sense of security.
Best Regards,
--
Rahul
Vashisht
=======================================================
Questions from Sanjay (answered below):
* Property prices face a slight correction, following the rising mortgage rates.
How much correction you think will be in housing market?10-20?
A recent report plugged in the numbers & indicated that for every 1% rise in 5 year mortgage rates - detached home values can decline by about $100k in the 416 area code (Toronto metro) & 604 area code (Vancouver metro).
These 2 markets have detached home values priced over $1 million, so that would mean a 5-10% decline in values for every 1% increase in 5 year mortgage rates in the city.
The price drops will be to a lesser extent in the suburbs and small towns in the countryside.
The reason for that is people in the cities are carrying a higher proportion of debt & lots of monthly payments on other things, such as personal loans, auto loans, personal lines of credit & HELOCs used mostly for home renovations or money used up just for keeping up with the expensive lifestyles..
* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
If TSX goes down when will it rebound? Third quarter?
The market has to have a "puking out" moment before recovery. If that does not happen, then the recovery is longer. This happens every time. It's like a drunk man, recovering from a bad hang-over. That's when the speculative money runs away. These days Money & Capital move global boundaries in a flash without much hindrance & so something that happens in China, has an impact on the TSX & DOW the next day.
With all things being as they are, I'm assuming the "puking" moment is coming soon & recovery starts in the 3rd or the 4th quarter of this year.
* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once
commodities start to post recovery.
Dollar slide- where you think it will go?
* A "black swan" event - unexpected events that lead to conflict.
Black swan event?! - due to geopolitical u certainty all around, we r not far from it!
This may the big surprise. There's too many factors - we just hope Canada remains unaffected.
=======================================================
Questions from Sikandar (answered below):
=========================================================
Disclaimer : This is not investment advice. Its for educational purposes only.
I'm only providing news & information for the sake of general awareness.
Do your own due diligence before investing.
I'm not liable for any of your investing decisions.
=======================================================
Questions from Sanjay (answered below):
* Property prices face a slight correction, following the rising mortgage rates.
How much correction you think will be in housing market?10-20?
A recent report plugged in the numbers & indicated that for every 1% rise in 5 year mortgage rates - detached home values can decline by about $100k in the 416 area code (Toronto metro) & 604 area code (Vancouver metro).
These 2 markets have detached home values priced over $1 million, so that would mean a 5-10% decline in values for every 1% increase in 5 year mortgage rates in the city.
The price drops will be to a lesser extent in the suburbs and small towns in the countryside.
The reason for that is people in the cities are carrying a higher proportion of debt & lots of monthly payments on other things, such as personal loans, auto loans, personal lines of credit & HELOCs used mostly for home renovations or money used up just for keeping up with the expensive lifestyles..
* TSX looses 10-20 % value, but recovers most of it due to the rising commodity prices.
If TSX goes down when will it rebound? Third quarter?
The market has to have a "puking out" moment before recovery. If that does not happen, then the recovery is longer. This happens every time. It's like a drunk man, recovering from a bad hang-over. That's when the speculative money runs away. These days Money & Capital move global boundaries in a flash without much hindrance & so something that happens in China, has an impact on the TSX & DOW the next day.
With all things being as they are, I'm assuming the "puking" moment is coming soon & recovery starts in the 3rd or the 4th quarter of this year.
* The Canadian Dollar slides below 70 cents briefly for the first time since more than 10 years, however recovers, once
commodities start to post recovery.
Dollar slide- where you think it will go?
I think 65 cents and then it will move
between 65-70
Yes, 65 cents (1
USD = 1.5 CAD) looks very real & not very far away. The
long term trend will be 75 cents for the next 1-2 years. It
also depends on how well the American economy performs. * A "black swan" event - unexpected events that lead to conflict.
Black swan event?! - due to geopolitical u certainty all around, we r not far from it!
This may the big surprise. There's too many factors - we just hope Canada remains unaffected.
=======================================================
Questions from Sikandar (answered below):
My concern is about the rising mortgage
interest rates for the homes in future. If the interest
rates goes up, many of the home owners will not afford to
pay their mortgage payments and may sell their homes or
lenders might acquire them for default payments. My
question, for example the home price was say $1 million and
the same amount of mortgage (ignoring the down payment), and
due to mortgage interest rate hike that causes market
correction and the price goes down to say $700,000. On
default payment, the bank will acquire this property and
sale it for $700,000. What about the balance loan of
$300,000? In Canada unlike the US, the owner has to still
pay this balance amount $300,000 right?
curious to know..
You are right. If property values drop below the mortgage
amount owed to the Bank, it's termed as an under water
mortgage. If you're unable to meet 3 consecutive mortgage
payments, the FI (financial Institution) can start foreclosure
proceeding to seize the property back & put it back on the
market to recover the loan. Most Canadian provinces have laws
for "recourse" mortgages, where even if you walk away from the
foreclosed property, the FI still has the right to recover the
remaining owed balance + legal fees from you. Bankruptcy is
the only option left for the homeowner, in those
circumstances. Saskatchewan is the only province that allows
homeowners to walk away, with "no recourse".
Many of the US states (39 of them) have laws similar to Canada
- they do not allow you to walk away from your mortgage, with
"no recourse".
That's why a mortgage is also termed as a "mortgage prison".
You are bound by the terms & conditions, until you pay it
off. Many people are stuck with big mortgage loans &
forced to keep servicing the payments, even if it becomes
difficult to make monthly payments, its like a "white
elephant". Walking away from an underwater mortgage is also
not an option for many Canadians, because the FI hounds you
down for the remaining money & can even garnish your
savings & wages.
Bankruptcy is also not great escape, because it adversely
effects your credit for the next 7 - 10 years & also
effects your career prospects. Many jobs require disclose of
bankruptcy. If you are applying for a new job - most white
collar jobs in Canada require a credit check & a previous
bankruptcy will surely diminish your chances, at-least for the
next 7 years or so.
some interesting facts about under water mortgages 2015 - Of nearly 46.3 million mortgaged residential
properties in the United States at the end of the third
quarter of 2015, approximately 4.1 million (10.4%) had a
mortgage amount greater than the value of the property.
Also read : Garth Turner :
http://www.greaterfool.ca/2014/06/30/mortgage-prison/
=========================================================
Disclaimer : This is not investment advice. Its for educational purposes only.
I'm only providing news & information for the sake of general awareness.
Do your own due diligence before investing.
I'm not liable for any of your investing decisions.
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