The Strategy: A Homeowner's Guide To Wealth Creation [Paperback]

Garth Turner  
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I have attended two investment seminars by Garth Turner, and found him to be articulate, witty and entertaining as a former politician can  often be. But on the negative side, he is often factually challenged, and promotes a "strategy" which is high risk and is reminiscent of a snake oil salesman. 

Buyer beware.

According to the gospel of Garth, he informs us of how the world will unfold beyond 1997: more taxes, pension tension, intergenerational warfare, plunging values for residential real estate, surging corporate profits, soaring stock markets, and a massive inflow into mutual funds.

Today, these predictions lie in ruins. The October 2000 budget reduced taxes by $100 billion over 5 years. Turner says the Canada Pension Plan is teetering on the brink of insolvency, and will collapse by the year 2010. In fact, the chief actuary for the CPP reported the CPP is sustainable to the year 2060.
Corporate profits have slumped in recent years, and the stock market has been badly mauled. 

The Toronto market plunged 50% between September 1, 2000 and October 9, 2002 and the S & P 500 suffered a similar decrease. NASDAQ? Well, it fell off nearly 80% from peak to trough. By contrast, residential real estate has been a strong performer the past few years, exactly the opposite of what Turner has said.

Turner's strategy is that baby boomers have no choice but to borrow against their home equity (which is earning them nothing), and buy stocks and mutual funds which will provide annual returns of 12%-15%. 

The past 5 years have exposed the foolishness of this strategy, and thousands of people who acted on his advice are now paying a heavy price for it. But Turner even suggests that Gordon Pape and the late Andy Sarlos were giving Canadians alarming advice by urging caution with respect to Turner's strategies. 

In hindsight, they were right and Turner is wrong.

Garth Turner served as Minister of National Revenue in the short-lived Kim Campbell government of 1993, a year in which Canada suffered its worst ever fiscal deficit of $42 billion. Enough said.

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