Monday, December 31, 2012

Canadian Real Estate Correction Coming?

Probably, yes.  Although we broadly agree with Turner's Canadian housing outlook at this point, as the chart below shows with "investments" (as opposed to home ownership because you need somewhere to live) timing, is everything..

As you can see, anybody directly fading (taking the opposite trade) on Mr Turner's advice as per our Anti-Turner ETF trade, exactly when he said it, is sitting on a decent profit at this point and can stand a correction of up to 17% again without going underwater. 

Will the price fall more than 17% moving forwards? ..maybe, but that remains to be seen, real investors would have been selling out again at the height of the bidding wars a year ago, not sitting out for years watching price run up without knowing why,  before slowing again.. 

Sunday, December 30, 2012

Garth Turners Financial Advice in January 2010

Hahaha ok, so the comment abuse from offended "blogdogs" has started already. We do promise to read them all and will definitely publish anything vaguely intelligent or humorous, if you can manage both, you're in. The theme of the first few has been "why are we picking on predictions from so far back?"  "..more recently he has been more correct, than not..."  ..sort of nonsense, so to be entirely fair, we'll have a closer look at  more recent history.  

This infomercial is promoting his new book "Money Road" in January 2010 - we got about halfway through part 2 of the 3 videos transcribing quotes, before it all got too Canadian and bored us to sleep, quotes below, our comments and the historically correct recommended trades the Anti-Turner ETF would take.
"The thesis of book is that the next number of years will not be normal, the recession did not just vaporize..  we're in very unchartered territory, theres the real estate bubble,  interest rates are going up, taxes are going up.."  
"we're at the top of a number of cycles, the top of the commodity cycle, commodities like gold are probably close to the peak.  
[Anti-Turner ETF trade - long the commodity index, extra long Gold] 
"I see oil going to $200 a barrel.."
[WTI @ $74 on 30-01-2010, first plunged to $68.00, but ran up to $114 a year later, before correcting back down to $75 again.  Some of our guys day trade CL (idiots) and so would disregard any mainstream media opinions or guesses]   
Turner's prediction of +266% in Crude Oil has not been realized thus far, although this in fact, IS possible in 2013. 
"China could explode" 
[A general China short is not an easy thing to act on unfortunately. Turner's "contrarian" (lol)  instincts however correctly sensed that at this point, China was indeed blowing its own bubbles all over the place, (since burst) and wanted in]
"there are huge opportunities for global investors, I think the equity markets are actually going to do quite well, equities are going up, trending above the moving averages, so I think we're in a young bull market that might last a little longer.. 
Note, correct call (1.) at this point!!  
Real estate is going down  [Anti-Turner ETF goes long Canadian RE]
"Lets not forget how 2008 felt, markets going down 500 points a day, people were freaking out, it came out of nowhere, it could happen again..  I think probably, it will.." 
(1.) [Whoops, blew it again]   
Bonds are going down because interest rates going up 
[Anti-Turner ETF goes long whatever bonds Turner was referring to] 
So, not even 3 whole years ago, Garth Turner seemed to understand (in the loosest definition of the word) the seriousness of the global situation, whilst not appreciating that global central Banks would print money continually to try to prevent the inevitable global debt destruction and deleveraging that must one day arrive even with monetary debasement. 

In the meantime this would so obviously cause a lull in the action, and the appearance of a recovery (to anybody with a goldfish length memory).  Three years later, we are now that much nearer the ultimate destination, nothing is fixed, banks are bigger and more dangerous than ever, the derivatives market has grown even larger, more concentrated and dangerous than ever (MFGlobal, London Whale $6bn loss) 

Meanwhile Turner has been  lulled back into his (retail trader) comfort zone once again, (see this nonsense) ready to be blindsided once more, only this time he has clients he is pushing into "Financial Assets"

When we talked previously about Turner's continual capitulation flip-flopping on the reactive side of the market,  he is still flopping, while the market has once more flipped ahead of him.

Mr Turner, a few questions for you to mull over in those quiet hours of self doubt you have in the middle of the night, that the idiots believe might help your limited understanding of long term macro events.
  1. Why did you not see the gold run from $1088 upwards? (+51% Jan 10 - date) ..if you could just work out the answer to that..
  2. What are negative real interest rates?  Why are they important? 
  3. What is Shadow banking?
  4. What is the future significance of open ended Fed stimulus on the USD bond markets? 
  5. What are the implications of a $4 trillion Fed balance sheet at the end of 2013?
  6. What significance does Japan's imminent negative current account have on global financial outlook?
  7. Whats significance does Japan's latest open ended commitment to money printing stimulus have?
  8. What is the significance of the Fed printing enough new money in 2013 to buy 11% of the world's above ground store of gold
  9. When the Fed owns the majority of US Govt debt, who could they ever sell to? 
  10. Why are the Chinese amassing Gold at an unprecedented rate?
  11. What is the significance of the Gold:Oil ratio, and why has it been relatively stable at around 15:1 for 40+ years?

We believe reaching a true understanding in these questions would give you a much better shot at being on the right side of a long term trend moving forwards, rather than running headlong into bursting bubbles every few years.  In the meantime, if you could let us know promptly on your blog whenever you capitulate and decide to add more gold to your diversified portfolios?

 As on that very day we will be looking to unload some

Garth Turner - A Man You Can Trust With Your Money?

Call us skeptical, cynical even, but this kind of behaviour is par for the course with politicians, and so we would have been more surprised had there not been shenanigans like this to be found...

Garth Turner, Green Lights, and Secret Bank Accounts

Wednesday, October 01, 2008 at 05:57 PM 
This story came and went rather quietly.  Millennium Media, the company Liberal MP Garth Turner founded in 1999, settled a lawsuit brought against Turner.   
Details weren't mentioned in the media.  But the court filings are public information.  So what exactly was at issue? These are the allegations brought by Millennium Media against Garth Turner.
There are allegations of camera equipment bought with company funds. Cost?  over $76,000.   
There are allegations of office supplies, accounting fees, travel expenses, being paid for out of the company accounts. Cost?  Nearly $25,000. 
And then there are allegations of a secret bank account:  Read full article 
And it's well documented that Mr Turner doesn't mind a bit of a  cover clean up when required..

....dunno, all sounds a bit Madoff / Wasendorf Sr / Corzine to us? 

The Unbelievable Arrogance of Garth Turner's Continually Wrong Predictions

If Garth Turner had ever even got a SINGLE ONE of his macro predictions (ie outside Canada) correct over the many, many years he has been making them, it might be easier to understand the unbelievable arrogance he displays in statements like these
No major western industrialized country will default in your lifetime, or that of your children. — Garth 
Rogoff & Reinhard studied 800 years of sovereign default history in "This Time It's Different" - which Turner cannot have heard of, never mind read. The empirical evidence shows that not only do major sovereigns default, but they do it regularly throughout history. 
Using clear, sharp analysis and comprehensive data, Reinhart and Rogoff document that financial fallouts occur in clusters and strike with surprisingly consistent frequency, duration, and ferocity. 
They examine the patterns of currency crashes, high and hyperinflation, and government defaults on international and domestic debts--as well as the cycles in housing and equity prices, capital flows, unemployment, and government revenues around these crises. 
While countries do weather their financial storms, Reinhart and Rogoff prove that short memories make it all too easy for crises to recur
Turner having been on the wrong side of and blindsided by every bubble since the black Monday crash in 1987, once again misses the dangers of the artificially propped up government bond market bubbles and now attempts to herd gullible future customers towards the danger, at exactly the wrong time  (again) because..

"This Time IS Different"  ..huh Garth?  

Having been fully onboard, pumping, (and burnt by) the:

Real Estate bubble I 1982-1987 
Tech bubble (DotCom) 1995-2000
Real Estate Bubble II  (2002-2007) 

Turner still lacks the basic and fundamental understanding of what is and what isn't an unsustainable bubble. 

This would be ok, were it not for his continual attempts to profit from the public with what will certainly be some more absolutely wrong predictions over the next decade, just like the previous decade, and the one before, and the one before that. 

Saturday, December 29, 2012

"Looking out for your Financial Health - I'm Garth Turner."

Garth Turner may shout louder than anyone about a housing bubble in Canada currently, but he should know really, being as he was helping salespeople to sell mortgages and HELOCs to leverage into Mutual Funds at high pressure sales seminars as far back as 1997.  

"A common complaint against financial seminars is that investors are encouraged to leverage themselves heavily to invest, either via a loan or the equity in their home. Duff Young, once a familiar presence at seminars-he's cut back appearances-and now a marketer of his own software programs for financial advisers, notes that seminars promoting leverage can be substantial moneymakers for sponsoring brokers or financial advisers. 
"If the adviser gets 100 people [to attend]," Young explains, "and just 10 of them go along with the idea, each borrowing $100,000 to invest, that's $1 million in mutual-fund sales, or $50,000 in commission for the adviser. Not bad for an evening's work." 
Young questions the penchant at these leverage-oriented seminars for promoting lump-sum investments. Seminar salespeople rarely propose equal monthly investments to benefit from dollar-cost averaging, Young says, and he claims to know why. 
"With a lump sum [the salespeople] make all the commissions upfront. Ask about dollar-cost averaging and they say, 'Listen, the client might chicken out if he only puts 20 grand in this month and the market drops.' But if the client has invested 20 grand, and you can't convince him to buy more now that the price is lower, I want to ask, 'What are you getting paid for, anyway?'" 
Stan Buell, president of the Small Investors Protection Association, recalls one seminar he attended just before the current bear market struck. "The core of the presentation was to use the equity in your home," Buell says, "to borrow money on it and invest in the market. 
A lot of the people attending this seminar were older people. I'm sure many of them would have invested that way, and many of them would have lost a substantial part of their equity. 
The lead speaker at the seminar was Garth Turner. 
Criticism of his work ignites a fire in Garth Turner's eyes. People don't understand what financial commentators are trying to do, he suggests.
"It's so easy to sit on the sidelines and take a shot at the guy on the stage." We are seated in a small office near Turner's Bay Street TV production studio. "And you guys [the media] do it so well. I'm not complaining for myself. I've got a thick skin. I proved that in Ottawa." 
(Turner served as Revenue Minister in Kim Campbell's short-lived 1993 Tory government.) "Go out and hear what people are saying," he instructs. "Determine whether we are doing a public service of education, or whether it's sales. That's a huge distinction. People who go out to motivate the public, that's great. People who go out to sell product, and they're not licensed-that's wrong."
Turner may not directly sell investment products, but he clearly associates himself with them. He speaks at seminars sponsored by banks and financial advisers, and has appeared in television "advertorials" for CIBC and AIM Funds with the tag line, 
"Looking out for your financial health I'm Garth Turner."
As in his advertorials, Turner elides the distinction between advertising and information as principal owner of Millennium Media Television, which produces 250 shows annually, many of them broadcast on the Global and CTV networks. As the CBC-TV program Disclosure revealed, some of Turner's shows-company profiles-do not make clear that they are paid for by the featured companies, the aim being to enhance their investment appeal. 
Duff Young recalls speaking at a seminar in October, 1997, "and the financial adviser who hired me had previously used Garth Turner. He said he'd had excellent results, which meant he earned a ton of commissions. Turner had proposed leveraged purchases of mutual funds, using home equity as security to borrow the money." 
What disturbed Young was not Turner's recommendation, nor the opportunity for the broker to make a substantial gross from his own appearance, but the presence of a third party that was aggressively marketing leverage. "An hour before my presentation, I'm horrified to see a mortgage lender setting up a booth at the back, and someone placing mortgage applications on every chair in the place." 
Young demanded to know if the seminar operator was recommending real estate-backed leveraging for everybody. "And he says, 'No, of course not. That wouldn't be appropriate. I only recommend leveraging for homeowners!'" 
Turner says he covers about 35 different investment strategies during a seminar. "The idea is to get the juices flowing, so they think, 'I'm not a victim, goddammit. I'm not going to be a victim of this economy or this stock market or my bank. I'm going to be proactive and seek solutions.'" 
Turner promulgated his strategy of pulling equity out of one's home and plunging it into diversified mutual funds in his book The Strategy: A Homeowner's Guide to Wealth Creation. It includes some quite pointed advice. 
Turner writes: "If your real estate falls in value, to the point where the home equity loan is greater than the worth of your home, you can always take a walk. Then it's the bank's problem." But it's not just the bank's problem, as any real estate lawyer or banker will confirm. In Ontario and most other provinces, a homeowner continues to be liable for mortgage debt. 
To be fair, Turner warns readers in the "Caution" at the front of his book, "If laying your paid-for home on the line will keep you awake and in a sweat at night, put this down." And when he discusses investment strategies at his seminars, home-equity leveraging may receive no more than a minute's mention, Turner says. But he's adamant about the strategy's premise. "Everybody thinks real estate is a good investment," he says. "Are you kidding? You buy an asset with 90% leverage and you think it's a safe investment? We've got to get out of this mindset." 
It takes an unrepentant bull to propose Turner's style of real-estate leveraging. Which raises the question: Just how prescient has Turner been in recent years? 
In a Canoe "Money" chat room back on Sept. 27, 2000, Turner assured participants that the stock market was undergoing a mini-correction, that the Dow would hit 30,000 by 2006, and that "Nortel [then trading at $96.60] is a wonderful company and, given the recent decline, I think it is a strong 'buy.'" That day, the TSE closed at 10,250. 
Barely two months later his enthusiasm refused to wane, despite a TSE index of 8,945 and a price for Nortel stock of $56.35. "Will the Nasdaq again reach 5,000 and the TSE attain 11,000?" Turner asked. "Will it be warmer again in April? How about clipping this column and taping it to the fridge?" 
Those who did would have noticed that, as of March 26, 2001, the TSE had slipped to 7,686 and Nortel, at $25.60, had begun its slide to penny-stock status. Turner remained confident: "By the time the flowers bloom in Saskatoon, the back of the bear market will have been broken. We will see sustained gains in Toronto and New York, and those who fled from stocks and equity funds into cash and money-market funds, taking a loss in the process, will be sorry indeed." The bull was still charging. 
It's true that plopping a lump sum on Nortel in 1995 and selling the stock in the first half of 2000 would have earned a major chunk of profit. Not so later. This sort of brinksmanship is not what the average homeowner's investment strategy is made of. 
Turner is not registered by the OSC or any provincial securities commission, nor does he intend to be. "I'm not in the business of selling product. I'll write a book and they'll market my book, but I don't want to be a mutual fund salesman. I don't want to stand in front of a crowd and say, 'Go and buy XYZ Income Trust.' 
That's not my thing. I don't want to cross the line from information to sales."
Now it is true this was a while ago, and having been advising people to leverage their real estate equity into the tech bubble, Nortel etc, doubtlessly hurting and wiping out many who followed his schemes, and then re-emerged and reinvented himself, surely he would have learnt from his mistakes, and not do that again?

It is difficult to be certain, although ten  years later this blog post  was only several months before the two real worst years in recent stock market history

Turner has deleted all the /columns/ entries from his old site, and  prevented search engines from spidering what is still there with his site's robots.txt file

But as the domain was registered in 2000, but only seems to have any content from 2005-2009, it would appear a reinvention and/or cover up or two may have taken place along the way. The books should help shine some light and establish a clearer forensic investment chronology, watch this space.

Edit. This post was quite early in proceedings, articles from the 2006 era have since surfaced and yes, indeed, Turner was doing exactly the same thing, yet again. 

As he still is to THIS DAY, in fact.

Friday, December 28, 2012


Everyone has some.  Not everyone has as many, nor as varied, as Garth Turner's predictions over the years. But as fabulous for digging up the past as the internet is,  it tends to contains only snippets of the whole context, so a little online shopping is in order.

Amazon is very cool,  £5.95 ($9.50) is a fair price for all 4 books to enable proper research in depth. We'll start out with a figure and model the performance of various strategies over the intended future periods in time he was covering. This will take some time, but should be very instructive.

And it looks like figuring out a way to go short on his books' street price spreads might have been a winning trade for Mr Turner.. 

Thursday, December 27, 2012

Garth Turner on Precious Metals

When it comes to the subject of precious metals, Garth Turner, like most mainstream financial "advisers" thinks , or at least says, "Gold is a bubble". One would think that with his lifelong experience with multiple bubble participation, he would understand what does, and what does not constitute a bubble by now, but maybe not. **We'll come back to this. 

While Turner appears to especially enjoy taunting precious metals enthusiasts, the cynical might wonder if this is just a dual edged marketing technique, as nothing raises the blog comment count like an attack on Gold (and occasionally silver) and he is of course potentially in direct competition with the precious metals for any of his undecided readers' spare investment funds. So, this is quite interesting: 
Wed 29th September 2010 
"Which brings us to Garth Turner. 
For those who follow Turner, they know he is adamant that Gold is a relic and not a place to put your money.
But Turner can see what is happening too. In this interview with Stirling Faux on he begrudging admits that gold will still climb further...
Towards the end of the interview, at the 10:23 mark, Turner dismisses Gold rising up in price but stumbles and concedes that "yeah... it may go to $3,000. But not $5,000 or $10,000".
Hands up out there how many thought they would ever hear Turner predict Gold at $3,000 an ounce?  Such is the import of what is happening right now." 
Unfortunately the audio interview has since been taken down, but it is not important for the purposes of this post, what was said is not in contention, and we want to examine performance figures since, and motives. 

On the day that article was written gold had been rallying hard, Turner was once again showing his losing retail trading aptitude by being a) outside of the charging bull market looking in, and b) trying to convince others, if not himself, 
" its a bubble.. must be right?  #FoolMeSoManyTimez!  - Wont get fooled again!.." 
  • Sept 29 - 2010 - Gold closed the trading day at   $1308.50.
  • Sept 28 - 2012 - Gold closed the trading week at $1773.00
Over 2 years of the simplest  "buy and hold" strategy this is +35%, or approx 17.5% annually. In fact, 17% is the average annual gold appreciation since the beginning of the bull market. Turner (cl)aims to make 7-8% a year but when asked refuses to show examples, purportedly because he has only been a registered financial advisor since 2010.

He is on one hand showing standard signs of (retail trader) capitulation as gold runs off without him:
"yea it might go up [+another 229% => $1308] to $3000" 
And on the other hand advising people to stay out,  "don't buy any, as I have identified this as a bubble". The more cynical reader might think that Turner himself is a very accurate contrarian indicator, what with his gift for picking the exact tops and bottoms, (but pointing 180 degrees the wrong way) just do the exact opposite of what he does, when he does it.

If we just look at the steady appreciation over the years, its difficult to imagine Mr Turner outperforming a simple buy and hold in either metal over any medium timescale

So lets come back to the subject of bubbles, because as we have shown, Turner has been on the wrong side of quite a few, notably including the Dotcom and real estate bubbles, and so should really understand what their primary characteristics are, because it is more complicated than just a steadily rising price over time.  

Eric Sprott, also Canadian, has asked, and investigated this question in depth, we would highly recommend inward digestion of the empirical facts about Gold and bubbles here: (you too Turner) 

To be clear, a speculative bubble forms when prices for an asset class rise above a level justified by its fundamentals. For this to happen, increasing amounts of capital must flow into the asset class, bidding it up to irrational levels. Gold may be trading at all-time nominal highs, but a look at investment flows proves that it isn't anywhere close to being overbought.
This fundamental lack of comprehension of the nature of bubbles has found Turner the wrong side of this bubble debate, exactly like all the previous in his murky but forgotten past

In 2010, around the same time Mr Turner was warning people off a potential 17% per annum gain for the next 2 years, the Sprott Capital L.P. Fund was awarded “Hedge Fund of the Year” at the Absolute Return Awards in New York and In 2011, Sprott was named “Top Financial Visionary in Canada” by 

Bearing in mind these two started their different paths around the same time in the late 90's early 2000s, the difference in performance (results) the two paths produced 10 years later is simply staggering. Having absolutely nailed the last decade's best investment (Gold) right from the beginning, Sprott is still bullish on gold, as all the elements are still there, nothing is fixed or changed, however he is super-bullish on Silver, expecting it to outperform, and possibly go up 30x over the next decade.

In his presentation referenced above:
Sprott will take a hard look at the world economic crisis, exploring risk and the need for a financial system reset. 
The world economy is still so uncertain; we’ve got tremendous pessimism, people earning less while the cost of living is going up, and we’ve got an aging demographic which affects our ability, as a society, to cover the costs of our pensions, our health care and education systems,” said Sprott. “The same old ways of thinking about these challenges won’t address the financial crisis we’re faced with. We need to rethink our approach and the financial system needs a reset.”
Turner is advising people to ditch their "volatile" silver  (as-if.. +500-700% over last 10 years) and get into his products, and that everything is OK, and financial assets are where the future lies.  hmm. 

As we said in the first post, we would advise assigning credibility to investment advice based on a verifiable long-term success record, preferably with their own money on the hook, and unfortunately that pretty much discounts Turner altogether when it comes to Gold or anything much else come to that.

Contrarian Investing Techniques by Garth Turner

Recently, Garth Turner, in one of his characteristic sweeping generalizations said:
"Day traders are idiots. Professional stock brokers are going deservedly extinct. 
...And don’t get me started on mutual fund salesguys"
Presumably then he is no longer predicting Dow 30-50,000 by 2015, and "Mutual fund TV" is no more? - Whilst it is a well known statistic that as many as 95% of retail daytraders do lose, and in among those, there are certainly some idiots, what he doesn't seem to get, is that anybody who is consistently beating the market for long enough to call themselves a professional day trader, is far from an idiot.  

But he's smarter than those dumbass daytraders anyday, he's been around a long time, since as far back as the 1987 Black Monday crash in fact, as the video below shows, he was there. Here he is acting like every other losing retail trader, on the day of the very bottom when you should have been buying, advising everybody to stay out for the foreseeable future.  


Still, this was a long time ago, it might be unfair to single out just this one extraordinary event which did catch most off guard, and he did change his views on stocks back again, and then started DotCom Television.

Recently Mr Turner has started to imply that his investing techniques do involve trading by means of attempting to time the market, with comments like this:
You do buy-and-hold? Explains a lot. — Garth
As stated here, it means maintaining weightings for assets in a diversified portfolio and rebalancing as prices change. Simple. — Garth 
 When challenged..
#37 chaser on 12.11.12 at 11:18 pm
S&P is less than it was in 2008 and 2001. Great asset. haha
You do buy-and-hold? Explains a lot. — Garth
Garth, that is a bit rich, no? You yourself tell people to buy and hold, and to not try and time markets. So people aren’t supposed to daytrade the markets (hence your frequent chiding comments about traders) yet they are not supposed to buy and hold (or they are just dopes).
So clearly, your audience is supposed to time markets perfectly for big long term swings to catch the major moves. Oh, and buy the right etfs while they’re at it. All while holding down their regular jobs which usually have nothing to do with the markets. C’mon people, catch up!!

Day traders court short-term risk, buy-and-holders define long-term risk. Smart investors establish target weightings for assets in a balanced portfolio and rebalance as prices change. That way you always buy low and sell high. And if you don’t have time, you hire somebody smart to do it. How hard is that? — Garth
So  if he is now trading with other people's money,  rebalancing portfolios, he wouldn't still make the same mistake twice (way more actually) many years later? After all, one definition of an idiot is someone who does not learn from repeated mistakes.  So what was he writing in 2008/2009, some 20 years later?  Had he learned the lessons a successful daytrader needs to learn very quickly, to survive?  
“We’ve had a crash. America has crashed, stock markets crashed, Wall Street crash, real estate crashed and the global economy crashed,” he says of the events of the fall. “The world as we’ve known it is gone.
You are not going to get credit cards in the mail, you are not going to get lines of credit easily. Those days are gone. The question now is are we going into a bad recession, are we going into a depression?”
Turner believes Canada’s gross domestic product will plunge five to eight per cent from the beginning of the recession, which he believes began after Labour Day, to the end, which he says won’t come until the spring of 2010.
As well, he expects housing prices will plunge another 30 per cent next year - on top of the 11 per cent drop so far this year. For the first time since the Dirty Thirties, Turner expects many Canadians will wind up owing more on their homes than what their home is worth, particularly those who purchased in the last two years with little down payment.
That’s not a depression, as he sees it, but pretty darn close.
Nope, faked out again, just like every other daytrading loser.  Fear and Greed are hugely powerful human emotions, and (not only) idiots usually find it very hard not to be scared at the bottom, and are way too confident at the top. 

That's how it works, that's how "The Market" takes your money

Turner claims to be a "contrarian investor" but closer examination reveals that he actually just flips and flops on the reactive side of the market his whole career, jumping onto every latest thing that's going up, just like the rest of the investing "Herd" who get systematically sheared at regular intervals.  

Turner is attempting to claim recognition from one potentially (maybe) correct call on Canadian Housing, and align that with his financial advice about the future, having been previously blindsided by virtually every bursting bubble you can name for the past 14 years.

Hopefully he was a better politician than his "Financial Guru" record shows, because Garth Turner is neither smarter than the markets, NOR any single consistently successful daytrader

Wednesday, December 26, 2012

Garth Turner - Real Estate Prophet Saviour or Just "Business As Usual"?

If you live in Canada, or have any interest in the macro economy and housing bubbles in general, you might possibly have heard of Garth Turner - Canadian housing bubble blogger. Turner is an ex-politician, which in itself, depending on your opinions of politicians, could speak volumes about how much he might be trusted from the outset. 

His Wikipedia entry does not show much in the way of verifiable fact, probably written by Turner himself, it is prefaced with the statement:

The financial section of the entry contains [citation needed] at the end of most sentences,  and judging by the mention of libel and multiple edit history, Turner has possibly been complaining about the entry, but if so has seemingly not been able to provide reliable citations requested, to back up his transparently advertorial entry. The page also lists some of his media companies, but carefully skirts around various others, such as:
  • Garth Turner's Investment Television
  • Real Estate Television; 
  • Mutual Funds Television; 
  • DotCom Television  (yes, really) 
It might appear that wherever there has been a bubble over the years, Turner has been attempting to persuade people into them all, for financial gain in one form or another.

To his credit however, he has managed to effectively leverage his name recognition over the years into a well trafficked blog, ( where he has been preaching his sermon to the faithful and condemned about the inevitable Canadian housing correction for many years (while all the time prices continued ever-upwards.)  Recently, now that his "stopped clock" prediction is finally, after many years starting to look likely, he has taken on a distinctly pompous "told you so" attitude, which includes deleting any comments from his blog that make any kind of real challenge to his financial sales propaganda, or his previous record with financial advice over the years. 

Although Turner pretends to be on the side of the public, rescuing them from themselves and oncoming real estate train crash, the blog reads like a thinly disguised marketing tool, where he derides anything he does not sell or advise, and pumps his own preferred products continually, throughout blog posts peppered with absolutely certain predictions, presented as facts, apparent only to him, such as this multidimensional corker from August 2012:

  • 2012 - "There will be no hyperinflation, government debt crisis, bank collapses or currency crumbles. Every month for the next 60 or beyond, your dollars will buy more real estate, car or computer. The returns everyone expected from just owning a house will be gone, transferred to financial assets." Source

However when one looks back into the past, there are many equally certain, but very wrong calls.

  • 1999 - “Financial markets in North America, Europe, Japan, and other places are headed vastly higher. The Dow at 10,000 is just a stepping stone to a market that could achieve 30,000 or even 50,000 by 2015.” Source 

  • 1999 - “Stocks will be higher in a decade than they are today. Between 1990 and 2000 the Dow went up 500%. Do you really think that between 2000 and 2010 it will go down?” - “10 years from now you should expect stock values to have at least doubled, if not quadrupled.” Source 

Some might think these charts illustrate a somewhat different picture, and that there has already been a powerful decade plus long wealth transfer underway if you knew where to look. Note: Turner did not. 

The DOW:GOLD ratio from 1999 onwards is particularly informative - In fact Turner's bullish DOW prediction caught the EXACT peak in the real value, followed by the market's decade + long decline. Nice market timing, but 180 degrees in the wrong direction. 

Markets have at best, stagnated as the money you price them in has lost 30% of it's value. Meanwhile and precious metals have run 500-700+ %  - do you think facts like this get discussed very often? 

It is our belief that more trust should be put into the opinions of the people who actually understood the significance of events like negative REAL interest rates and told anyone who would listen in 2002. Had you in fact had the foresight possessed  by others, like (now Billionaire, and also Canadian) Eric Sprott at the time, and invested your housing deposit into Gold and rented instead, then you could have made good money from this chart, (and potentially even better if real estate does indeed tank hard) because as the chart shows, even as Canadian Real Estate rose into bubble territory, as it is based on some ultimately unpayable housing and consumer debt and negative real interest rates:

 Real Estate has, and continues to deflate against real money - Gold (ask the Central Banks


As we shall show, back at this point in time, Turner was in fact aligning himself with organizations pushing mortgage products, and advising potential "advisees" to leverage up on HELOC debt, to, wait for it, "invest in financial products"

Certainly some of the leverage advice (borrowing to invest) is well beyond the limits of a conservative investment philosophy. I particularly disagree with the illustration that describes a young couple borrowing against a paid up home to invest in mutual funds and then pledging the mutual funds as security for a further investment loan. The scenario suggests withdrawing from the investments to pay the loan interest and writing off the interest expense against income tax. This is where the book fails the reader. It throws out concepts such as these without outlining the potential pitfalls or tax considerations. The write-off figures that he uses are not proven and do not make sense
It is fairly obvious how anyone following that suggestion over the 2008 precipice might have fared.

So given his utter arrogance in predicting the future as though nothing else but what he sees could possibly ever come to pass, whilst selflessly helping you with your finances, combined with deleting any real challenges to his wisdom in his domain, and his factually poor prediction success rate (to be explored in depth in future posts) our inherent skepticism of psychics indicates a little historical perspective might be in order. Turner now acts as though he has always been right, and as we shall show moving forwards, in depth on each subject...

This might not be the exact facts in evidence.. 

Turner relies heavily on the fact that many people do not bother go back and check his record over the last 15 years, and indeed much written back then, has now disappeared, as old sites fade and die. Luckily however, using the power of the Internet Archive digging into his past predictions and examination of his financial predictions is still possible (and underway).

Given that in 2002 CBC aired a program looking at Turner's allegedly dubious media activities:
Millennium Media Television (Garth Turner, CEO, produces a number of programs, such as: Garth Turner's Investment Television; Real Estate Television; Mutual Funds Television; DotCom Television; and Board of Trade Television)
..Where he was accused of taking payments for advertorial appearances in several of his Financial media companies, a casual observer might be forgiven for thinking that the blog is just his media business brought into the modern (social media) world.

It would appear that most of his business ventures have eventually failed, a failed alternative energy brainwave from 2008/2009 amusingly also appears to show Turner going a bit "survivalist" for a spell:

What Is Xurbia?

Xurbia is an attitude, a determination. Not urban or suburban, but xurban. Here you can rule more aspects of your environment – the energy you consume, for example.
In Xurbia you’re not helpless and dependent when something fails. When the lights quit or the water stops, you have choices.
In Xurbia, you don’t always need to live by the decisions others make for you. Today, such decisions have brought an unwelcome world. Jobs, homes, assets and people are being devalued. Society is dangerously dependent. Most citizens don’t walk their own path, but many wish they did. In Xurbia, you can. 
Apparently this was an effort to sell various "Prepper" gadgetry to the scared, much like his financial approach with the blog in fact, although 4 years later Turner is now pretending none of this ever happened and Xurbia is just flogging his tired series of books.

And then there's the whole Credit River business and the bankruptcy controversy, where it doesnt even look like Real Estate was working very well for him in 2007.

Obviously, the point is that nobody knows what the future brings, and most predictions will contain some elements of "right and wrong" and so any credibility assigned should logically be based primarily on a verifiable track record, (current) - internet persona, not so much.

Given Turner's behaviour in silencing any legitimate challenge on his site, is our intention to use the power of the democratic internet ("they who shall be nameless" ;) ) to make the site highly visible in Google, for people to publish their deleted comments on, and for the public to be able to decide the truth for themselves in 2013, based on the facts and (f)actual win rate from his previous psychic episodes. 

Internet karma coming your way Turner, Happy New Year  

..Oh, and don't bother commenting to attempt to defend yourself, it will of course be deleted.