The Greatest Wealth Transfer In History Has Begun

Good Morning,
 

U.S. equities closed higher on Friday, posting weekly gains, as investors monitored retailers during Black Friday as the post-election rally moved forward. The three major indexes were up more than 1 percent for the week ripping to new record highs on optimism that President-elect Donald Trump's proposed policies will stimulate economic growth.

U.S. Treasury yields and the dollar have also risen sharply since the election, with the benchmark 10-year note yield skyrocketing above 2 percent and the greenback trading around levels not seen since 2003, putting euro/dollar parity within reach. Gold prices, in turn, have turned sharply lower, hitting nine-and-a-half month lows.

Also of interest this week was consumer confidence, which rose more than previously reported to a six-month high in November, showing Americans became more optimistic about their finances and the economy after Donald Trump won the presidential election.

Despite this encouraging news, the U.S. is still home to a working class suffering from stagnant incomes and declining job prospects—widespread struggles that helped elect Republican Donald Trump. The relative wealth of Americans in all age groups keeps falling, compared with previous decades.

Nevertheless, 1700 millionaires are minted every day in the US of A…

In fact, today, more than 8 million households have financial assets of $1 million or more, not including homes or luxury goods, according to Boston Consulting Group. Yet before your faith in upward mobility is renewed, consider this: The very oldest Americans hold a disproportionate chunk of all those trillions, and they’re handing it off to their already well-off kids in what is the largest generational transfer of wealth in history.

Fundamentally inheritance is an increasingly significant driver of wealth in America. Be sure to check out this very interesting read in Bloomberg this week exploring the wealth picture in America.

Interestingly, the top 3 factors cited by the richest investors are encouraging:

1)     Hard Work

2)     Education

3)     Smart investing (Does Index Investing Really Count?)

Thought of the Week

 

"All life demands struggle. Those who have everything given to them become lazy, selfish, and insensitive to the real values of life. The very striving and hard work that we so constantly try to avoid is the major building block in the person we are today.” –Pope Paul VI
 

Stories and Ideas of Interest

• Self-control is a myth.  "There’s a strong assumption still that exerting self-control is beneficial…and we’re showing in the long term, it’s not.” Interesting piece here in Vox suggesting that willpower can’t be strengthened, so we should try to avoid situations that call for it…

• The buybacks aren’t working. Here's a sign it's time for CEOs to stop spending on buybacks and start reinvesting in their business: an index tracking European share buybacks is underperforming the broader market. Time to think seriously about R&D…

• Working for a big company is the new chic. When he started thinking about leaving Apple Inc. this year, Darren Haas briefly contemplated Uber Technologies Inc., where many friends worked. Instead, the cloud-computing engineer pursued an opportunity he considered more exciting: General Electric Co. Workers are now flocking to older and larger tech firms…Go figure.

• Don’t just lower corporate tax rates. Abolish them. Enlightening piece in Bloomberg View arguing that corporate tax rates should be done away with altogether.

• Why immigrants are more entrepreneurial. In the U.S., immigrants are almost twice as likely to become entrepreneurs as native-born U.S. citizens. Immigrants represent 27.5% of the countries’ entrepreneurs but only around 13% of the population. Harvard biz review looks into why.

All the best for a productive week,

Logos LP

What So Many People Get Wrong About The White Working Class

Good Morning,

U.S. equities closed slightly lower on Friday, led by health care, as investors digested Federal Reserve officials' remarks on monetary policy and falling oil prices.
 
Entering Friday's session, the Dow, S&P 500 and Nasdaq composite were all within half a percent of their previous all-time highs. The Dow had reached a record intraday high of 18,934.05 on Monday — on the back of a sharp post-election rally — while the S&P last set a record high of 2,193.81 on Aug. 15.
 
Fed Chair Janet Yellen's testimony in Congress on Thursday all but assured the central bank would raise interest rates next month. According to the CME Group's FedWatch tool, market expectations for a rate hike in December were above 90 percent Friday morning.

13Fs came out this week and they shed some light on the incredible rotation we have seen post Trump from tech/utilities/REITS/consumer staples into financials and industrials. Why? Consumer staples and tech were the 2 largest sector weightings amongst the top 50 hedge funds. Easy come easy go on the return chasing band wagon….
 

Musings
 
Last bit about the election I promise. Read a great article this week in the Harvard Business review that outlines what so many people don’t get about the U.S. working class. As a broad theme the white working class (WWC) resents professionals but admires the rich.
 
Professional people are viewed as suspect and managers are college kids “who don’t know shit about how to do anything but are full of ideas about how I have to do my job”.
 
The WWC aspires to be independent and give their own orders and not have to take them from anybody else. Owning one’s own business — that’s the goal. That’s another part of Trump’s appeal.
 
Joan Williams writes that “Hillary Clinton, by contrast, epitomizes the dorky arrogance and smugness of the professional elite. The dorkiness: the pantsuits. The arrogance: the email server. The smugness: the basket of deplorables. Worse, her mere presence rubs it in that even women from her class can treat working-class men with disrespect. Look at how she condescends to Trump as unfit to hold the office of the presidency and dismisses his supporters as racist, sexist, homophobic, or xenophobic.”
 
Several other key points she makes are:
 
Understand that working class means middle class, not poor
 
Understand working-class resentment of the poor
 
Understand how class divisions have translated into geography
 
If you want to connect with white working-class voters, place economics at the center
 
(My favorite) Avoid the temptation to write off blue-collar resentment as racism
 
Defending this last one is bold yet perhaps one of the biggest risks facing America today is how out of touch the elite is with the rest of the country. This election has placed the spotlight on the gross amount of class cluelessness that exists today. As Joan indicates: “If we don’t take steps to bridge the class culture gap, when Trump proves unable to bring steel back to Youngstown, Ohio, the consequences could turn dangerous.”
 

Thought of the Week

 

" The state is nothing but an instrument of oppression of one class by another - no less so in a democratic republic than in a monarchy." -Friedrich Engels
 

Stories and Ideas of Interest

• We just don’t want to face the brutal facts. Came across an interesting piece this week in the Guardian highlighting the “fact” that “post-truth” has been named the word of the year by Oxford Dictionaries. This adjective was popularized as both the US election and EU referendum unfolded to describe a situation ‘in which objective facts are less influential than appeals to emotion”. Despite the incredible increase in data are we in fact living in a “post truth” world?

• But trust your gut. “Gut reactions” — subtle bodily sensations that result from risky behavior — have long been the stuff of financial market lore. Some successful stock market gurus, billionaire George Soros included, have claimed they pay attention to bodily pains and other sensations to gain valuable insight into how they should trade on the markets. A new paper published in Scientific Reports suggests some truth could be lurking behind these stories. Where can we find the delicate balance between reason and emotion?

• Don’t fear AI. Humans and AI will be inextricably linked in less than a decade. “Symbiotic autonomy” will forever change the decision making process.

• Short-term gain for long-term pain? That's the view of economists at Goldman Sachs Group Inc., who argue that while some of President-elect Donald Trump's proposals could boost U.S. economic growth in the near future, his other policies would offset those positive impacts over the long-run. Specifically higher inflation and unemployment?

• Debt crisis? A group of online consumer loans that were packaged into bonds is going bad faster than lenders and bond underwriters had expected, the latest sign that some startups that aimed to revolutionize the banking industry underestimated the risk they were taking.

• Renewables? A contrarian buying opportunity? Investors have been selling off companies that specialize in producing renewable energy. Bloomberg suggests that fears of a negative impact of Trump are really overblown. We would agree.

All the best for a productive week,

Logos LP

Trump's Win Yields Important Wisdom

Good Morning,

U.S. equities closed mostly higher on Friday, with the three major indexes posting their best weekly gains of the year on the back of a surprise Republican sweep.
 
Stocks skyrocketed after Republican Donald Trump's surprise victory over Hillary Clinton, as investors considered the prospects of higher infrastructure spending and less regulation within the financial sector.
 
Since Trump's victory, investors have been quickly reallocating assets, increasing exposure to financials and industrials, while lowering positions in sectors like utilities, real estate and consumer staples.
As of Friday's close, financials and industrials had gained 11.33 percent and 7.96 percent, respectively, while utilities, consumer staples and real estate were down 4.08 percent, 2.13 percent and 1.47 percent, respectively.
 
What is winning and losing? (Too soon to say whether these trends will continue)

* WINNERS:

• BANKS: rallied as Trump has vowed to reduce regulation
• DRUGMAKERS: surged as Democratic threats of price controls are no longer a concern with Republicans retaining both houses of Congress
• DEFENSE & INFRASTRUCTURE: Lockheed Martin Corp. and Caterpillar Inc. climbed on Trump’s pledge to boost spending in both industries
• PRISON OPERATORS: Corrections Corp. soared on speculation the new administration will rescind a government contract phase-out

 
* LOSERS:

• INTERNATIONAL TRADE: Coca-Cola Co. and Procter & Gamble Co. retreated
• GUNMAKERS: Sturm Ruger & Co. sank on speculation that fewer people would rush out to stock up on pistols and rifles with the threat of stronger gun control laws fading
• HOSPITAL OPERATORS: Community Health Systems Inc. sank on speculation Trump will move to repeal Obamacare
• CLEAN ENERGY: SunPower Corp. fell on concern Trump will weaken demand for renewable energy

 
In addition, the dollar surged on the week as sharp moves were also seen in the U.S. Treasury market with the benchmark 10-year yield breaking above 2 percent.
 
Could we be seeing market participants considering a Trump presidency as a transition from a government that had its hands around the neck of growth to a free economy?

Our Take
 
Quite frankly these moves were incredible yet understandable given that the “conventional wisdom” going into election got it wrong yet again (like they did for Brexit). As I wrote after Brexit investors would do well to distinguish between the trend of the system and the trends in the system.
 
Political preferences aside, what happened on Tuesday was not a collapse of democracy but simply a powerful blow to the misplaced arrogance of the U.S. elite.
 
Trump won not because he was perceived to be a racist, xenophobic and even sexist candidate (in fact Trump won several states that voted twice for America’s first black president). He won despite these deplorable characteristics because he was not just a nationalist populist but an anti-corruption crusader that was masterful at turning anger – over lost jobs, lost wages, lost hope – into votes. Americans simply had become fed up with a ruling elite that appeared to have become increasingly corrupt and out of touch with a growing majority of Americans that have been left behind by a wave of prosperity that has lifted only a few large boats.
 
Six out of ten Americans didn’t even like Donald Trump. But the number that mattered in the election was this one: Two-thirds of voters said the U.S. was on the wrong track.
 
Thus, he was the outsider they wanted. And he knew it. He was a master marketer that understood the political marketplace better than any pundit, pollster or status quo politician. He successfully painted Clinton as the embodiment of the Washington establishment Americans had grown tired of, and she never crafted a capable comeback.
 
Now we can argue (as many have) that the Clintons are not in fact corrupt, but that isn’t the point. The optics were sufficiently convincing. Furthermore, Democrats once represented the working class. Not any more. Bill Clinton and Barack Obama in fact shifted power away from the people towards corporations. It was this that created an opening for Trump.
 
Luckily, business as usual looks to have been disrupted and the Trump administration has been presented with a unique opportunity to start with a set of bipartisan issues that could begin the healing process for the country and pave the way for continued innovation.


Thought of the Week

 

" The stock market will be higher 10, 20, 30 years from now, and it would have been wih Hillary, and it ... will be with Trump," –Warren Buffet
 

Stories and Ideas of Interest

• Trump’s win yields investing wisdom. I’m getting tired of hearing the endless bickering on social media regarding what happened during the election. The continued negative and elitist judgments from the left about Trump’s supporters etc. The result was a major surprise for many but the reaction should be to decipher what lessons can be learned, rather than to confirm one’s prior beliefs. Barry Ritholtz puts together an excellent list of lessons.
   

1. Forecasters are terrible: they almost always get it wrong
2. Confirmation bias: everyone reads what confirms their prior beliefs (this is even worse in our echo chamber social media world.
3. Models are not perfect
4. Optimism bias: we each think we are above average. Most of us are not.
5. Random factors and luck: we underestimate the impact of luck and confuse random chance with skill.
6. Hindsight bias: many of us believe we knew it all along.
7. The Narrative: we create a story line after the fact to try and make sense of what we can’t explain.
8. Nobody knows anything: my personal favorite. Be humble.

• Startups and Tech under Trump. From carried interest to cybersecurity to tech talent concerns, VCs for CB Insights analyze the impact of Trump's victory on startups and tech. Interesting trends here including bio-tech, cybersecurity and infrastructure boosts  

• 2016 was an awful election. 2020 will likely be worse. Interesting piece from Quartz looking at the trends that will shape the 2020 election. One in particular I like:  “Red” and “blue” America will fragment further into self-contained worlds of fan fiction.

• Things won’t get any easier for the low skilled worker. Trump / Clinton it doesn’t matter. Robots could displace millions of jobs with industries favoring a digital revolution at the expense of human workers, according to a UN report.

• What’s behind a sudden foreclosure spike? Foreclosures had been falling steadily to the lowest levels in nine years, but a curious spike in October may be the first sign of a crack in the recovery.

All the best for a productive week,

Logos LP

US Election Investment Opportunity

Good Morning,

U.S. equities closed mostly lower on Friday after the Federal Bureau of Investigation announced it is investigating new emails related to Democratic nominee Hillary Clinton.
 
Bit of a wild ride today as the Dow Jones industrial average ended about 10 points lower after trading 74.71 points lower following the announcement. The index was trading about 75 points higher before the new probe was announced.
 
The U.S. economy grew at an annualized rate of 2.9 percent in the third quarter, the Commerce Department said. The 2.9 percent clip marked the fastest economic growth in two years.
 
Despite the moderation in consumer spending, the third-quarter rise in growth could help dispel any lingering fears the economy was at risk of stalling. Over the first half of the year, growth had averaged just 1.1 percent.

Our Take

This latest probe into Hilary Clinton’s dealings could have an impact on undecided voters, but for the most part it is likely that people have already made up their minds about which candidate is most fit for the Oval Office. Yet we must say that what is peculiar is that although the FBI has not yet re-opened the investigation, it is now conceivable that a sitting US President could be the subject of an open FBI criminal investigation…
 
Also of interest is the fact that an AI robot that has a perfect record of predicting electoral races is now predicting a Trump victory. As Brexit showed us, nnything can happen….
 
As for the US economy, the third quarter 2.9 percent print is encouraging. Growth does not appear to have stalled and this is consistent with the S&P 500 now reporting earnings growth for Q3 2016. The blended (combines actual results for companies that have reported and estimated results for companies yet to report) earnings growth rate for the S&P 500 is 1.6%, which is above the year-over-year blended decline of -0.5% at the end of last week and the year-over-year estimated decline of -2.2% at the end of the third quarter (September 30). If the index reports growth in earnings for the quarter, it will mark the first time the index has seen year-over-year growth in earnings since Q1 2015 (0.5%).
 
What is particularly interesting is that at the sector level, all 11 sectors have contributed to this increase in earnings. However, the Financials sector has been the largest contributor of all 11 sectors to the rise in earnings growth for the index since the end of the third quarter.

Musings
 
All in all, I must say that we are getting tired of talking about this election. The whole thing has turned into a sort of endless cascade of tabloid style trash. Yet the nightmare is that as prime time news, it is unavoidable even to he most careful consumer of information.
 
As such these two “leaders” have reminded me of the important distinction David Brooks makes between resume virtues and eulogy virtues. Resume virtues are those skills you bring to the job market and that contribute to external success. Eulogy virtues are deeper. They are the virtues that get talked about at your funeral, the ones that exist at the core of your being- whether you are kind, trustworthy, honest, faithful, loyal; what kind of relationships you formed.
 
Now most of us faced with this distinction would claim that eulogy virtues were more important but this election has made me question that. I believe that the tragic-comedy surrounding BOTH candidates is a symptom of a society that has lost sight of the value of eulogy virtues.  
 
Most of us spend our time focusing on what it takes to achieve career success and this often occurs at the expense of eulogy virtues. Have we lost track of how to develop a profound character? Have we as a society lost focus on the value of serving the world in favor of conquering the world? Chosen ambition and status over respect, self-discipline and humility?
 
Perhaps this election presents us with a unique investment opportunity. The opportunity invest in ourselves by examining who we are and to decide whether we need to work harder to re-balance and reconcile our resume virtues with our eulogy virtues. After all, we can choose which virtues we wish to espouse whereas we sadly cannot chose when we face our eulogy…
 
Thought of the Week


  "The line separating good an evil passes not through states, nor between classes, nor between political parties either- but right through every human heart.” –Aleksandr Solzhenitsyn
 

Stories and Ideas of Interest

• Pirates look set to conquer Iceland. The Pirate Party, founded less than four years ago by a group of activists, anarchists, and hackers, could upend Icelandic politics with an Oct. 29 general election victory. It is led by Birgitta Jonsdottir, a former WikiLeaks contributor who describes herself as a “poetician.” This is an example of a trend we see intensifying. People are fed up and want change…

• Google is firing on all cylinders. We liked them going into earnings and we like them coming out. The company’s monopoly on search is growing while mobile and YouTube continue to represent growth drivers. In addition, they remain focused on building their mobile ecosystem launching AI/machine based assistants to provide users with useful information. If you really want to take a deep dive (which you should if you want to learn where next generation tech is going) check out this fascinating report on Google from CB Insights. They dissect the company’s strategy not by listening to what their senior execs say but by looking at where they are allocating resources. What we see is a company betting the house on AI and Cloud Services. I like that bet and at current multiples this large cap tech behemoth remains attractive.

• Understanding tech investment: A how-to guide. The five largest companies by market cap in the world are all technology companies. They have a combined market cap of ~$2 Trillion and combined revenues of $530 Billion over the last 12 months. The fact is, technology is no longer just a sector, almost every business is now a technology company to some extent. Investors can no longer ignore these companies altogether. The dilemma is understanding how to approach investing in technology stocks. With this in mind, Livewire reached out to contributors who are experts in technology to get their preferred metrics for analyzing technology stocks, and their recommended reading.

• You are never to old to avoid making financial errors. Great article in the NYT with a primer on how to get smart with your money.  Also a must read in the WSJ outlining the mistakes we make decade by decade.
   
  20s: playing it too safe (46% of millennials say investing is too risky with 70% of their investments in cash)
  30s: overwhelmed by complexity (too many decisions leads to decision paralysis)
  40s: misjudging big expenses (spending too much on a house and children)
  50s: the difficulty of catching up (realize you don’t have enough for retirement)
  60s and beyond: not delegating (our analytical capabilities can’t keep up)

• The consequences of risk taking. A Wealth of Common Sense looks at risk as something that only matters when there are consequences attached to your actions. To understand true risk, investors need to ask themselves: “What are the consequences if I am right or wrong?” Many so-called investors believe that they can jump in and out of markets and try and get their timing just right. Ben Carlson deconstructs the historical performance of the S&P 500 to get a sense of why a wrong move can really cost you. Sit tight.

• The next 10 years of returns look ugly. It doesn’t seem like much to ask for—a 5 percent return. But the odds of making even that on traditional investments in the next 10 years are slim, according to a new report from investment advisory firm Research Affiliates. In fact, over the next decade, according to the report, “the ubiquitous 60/40 U.S. portfolio has a 0% probability of achieving a 5% or greater annualized real return.” What is more likely is a return of about 2.3%. Could stock picking make a comeback…?
   

All the best for a productive week,

Logos LP

The Sky Is Falling...

Good Morning,

Stocks closed mostly flat on Friday amid a strong dollar and as earnings season continued.
 
The S&P 500 ended around breakeven after holding lower for most of the session, with consumer discretionary leading advancers. Consumer discretionary stocks were led by Time Warner, which rose more than 7 percent amid reports the firm has engaged in talks for a deal to be bought out by AT&T, which dragged the telecommunications sector lower.
 
So far Q3 earnings have been pretty good according to data compiled by The Earnings Scout, 80 percent of the 116 S&P components that had reported as of Friday morning had beaten Wall Street's earnings estimates, while 65 percent had beaten revenue estimates. This week also saw encouraging beats from Microsoft, Netflix and MacDonald’s in addition to a juicy bid announced by British American Tobacco to acquire  one of Logos LP’s holdings Reynolds American (RAI). Look for strength next week as Apple, Amazon and Google report.
 
Our Take: The investment mood is still downright miserable. Hedge funds are bleeding money, closing up shop and complaining that: “There’s gloom everywhere,” or that the financial crisis “was a sudden death for a lot of people, like a heart attack, but this feels like cancer to many people, a slow death.” Or that “There was a playbook based on logic that worked most of the time before 2008...But the game has changed and logical investors haven’t got the new playbook figured out yet.”
 
The International Monetary Fund chief economist Maurice Obstfeld said in October, while presenting the fund’s 2017 outlook, that “taken as a whole, the world economy is moving sideways” with other pundits stating that: “The crisis has left a cocktail of interacting legacies—high debt overhangs, nonperforming loans on banks’ books, deflationary pressures, low investment, and eroded human capital—that continue to depress potential investment levels.”
 
Furthermore next year ends in a 7. If you’re superstitious or a little loose with statistics, that makes us due for another financial crisis. The biggest one-day stock drop in Wall Street history happened in 1987. The Asian crisis was in 1997. And the worst global meltdown since the Great Depression got rolling in 2007 with the failure of mortgage lenders Northern Rock in the U.K. and New Century Financial in the U.S.
 
And if that wasn’t bad enough, calls for a correction in Silicon Valley are multiplying. Bloomberg reports that “things were different in Silicon Valley in the distant year of 2012, when iPhone sales were skyrocketing and you could still buy a house in Palo Alto for less than $2 million. Back then, most restaurants had menus, not tasting menus. Chief executive officers could say something grandiose at a tech conference without worrying about getting mocked on HBO six months later by the Beavis and Butt-head guy. And a talented entrepreneur could walk into a venture capitalist’s office, say his startup was a mobile-first solution for pretty much any problem (payments! photos! blogging!), and walk out with a good-size seed investment. “That pitch was enough to get going,” says Roelof Botha, a partner with VC firm Sequoia Capital. “It’s not enough anymore.””
 
Well from where I’m sitting things aren’t that bad. There are still plenty of ways to outperform the market if one is patient and thoughtful in their approach. (We would be happy to show you how we do it.)
 
Furthermore, as I’ve stated before being bearish costs nothing and quite frankly is a healthy sign of a market that hasn’t yet peaked. The most likely scenario is a sideways market in which returns will be more difficult to come by but this is how systems work. Reset expectations and take a close look at what the market is now offering you.

There are still many individual businesses that are generating immense shareholder value growing their top and bottom lines. Instead of “whining” about a “rigged system” or “unconventional central banks” or a “climate you don’t understand” or “no longer recognize,” enjoy the challenge. Relish in it. It is through adversity that growth occurs. Life like investing is in many ways simple. But never easy….

Thought of the Week


  "Times of transition are strenuous, but I love them. They are an opportunity to purge, rethink priorities, and be intentional about new habits. We can make our new normal any way we want.” –Kristin Armstrong

Stories and Ideas of Interest

• A visual history of US elections and global markets suggests business as usual. A few weeks ago I addressed the question of whether a Trump victory would send the markets into a tailspin. My answer was that a win by either candidate would most likely have very little impact. Chris Groskopf and David Yanofsky, after charting changes of power in the White House going back to 1992, show that market reactions to new presidents are generally a great big “meh.” Ignore the noise.

• The real danger of Donald Trump’s conspiracy theories. The Republican nominee is whipping up his supporters into a state of paranoia, convincing them that the election will be rigged and everyone is against them. To prevent violence, Sarah Kendzior argues, Trump’s critics—especially Republican ones—should stop pressuring him to drop out; it just gives him ammunition. Furthermore, the claims are unfounded. “It is more likely that an individual will be struck by lightning than that he will impersonate another voter at the polls,” said a 2007 report from the New York University School of Law’s Brennan Center for Justice that the center has been referencing in light of Trump’s claims.

• An alternative way to cope with failure. At present there is a craze for celebrating failure in entrepreneurial culture. The problem is that it is confined to those who’ve eventually made it big. What about those who haven’t? Bene Cipolla argues for a new way of confronting failure: accept it. Bask in it as it can be life giving.  

• The smart money suggests that Italy will leave the EU. The country’s outflows are accelerating - up €118 billion ($130 billion) from just a year ago. No I suppose we haven’t seen the last of troubles originating in the EU….

• We need to plan for a future without jobs. Very interesting article in Vox from Andy Stern former president of the Service Employees International Union (SEIU), which today represents close to 2 million workers in the United States and Canada. A Universal Basic Income is coming…..Consider the types of businesses on Forbes’ list of 25 Next Billion Dollar Start-Ups….Lots of “productive” software offerings…. What are you worth anyway? Career website Glassdoor Inc. is releasing a new tool aiming to help employees find out if what they are earning is fair based on their location, employer, job title, years of experience, and education. Is it a cruel world that our efforts have been reduced to each worker having a simple fair “market value”? Or is this a helpful tool?

• Toronto real estate looks set to slow down. Evan Siddal CEO of the CMHC raised a red flag this week and stated in relation to the new real estate measures: “If people can just save a bit more money and have a bit more equity in their homes, that would be safer,” Mr. Siddall said. “A 5-per-cent down payment means you don’t have a lot of cushion on the downside.” Yet he states that there may be unintended consequences. Luckily Toronto Life Magazine looks into their crystal ball and finds that the average home in Toronto in 50 years will be 4.4 MILLION….(average price now is $620 000 which represents 7% CAGR over next 50 years. A lot can happen in 3 years let alone 50…)
   

All the best for a productive week,

Logos LP