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Housing bubble 2.0

Almost 12 years ago, I stated on my famous YouTube channel, The Real Truth Channel, house prices would not crash when interest rates stayed at Recession levels, and since the last true recession in 2008, rates remained accommodating, rising to just below 2% before being clobbered by the Pandemic. And house prices more than doubled. Then the worst hit, inflation... well yes, if you pump money into an already bubbled housing market, guess what happens? But the concern has never been the big ticket item... just the small ones. The BOC cares about you buying a new car and tv, but doesn't' give a damn if you have a mortgage.

Just recently when questioned on how does the current interest rate hikes effect mortgage renewals and mortgage holders, Carolyn Rogers BOC Deputy Governor stated, she is not concerned about mortgages, our concern is inflation. And yet economists have stated it takes 18 months for an interest rate hike to have an effect in the economy, the BOC, has jacked rates up 2000 %... .25 to 5.0... as can be seen in this chart, in only 17 months. It doesn't take a PhD to see how this could end. Almost every time the Fed and BOC have jacked up rates in a short period, it has led to a drastic decline, and this is the worst in history. They have never ever gotten it right, so what makes us think this time is different?

Probability alone indicates a big drop is coming.... yet markets are booming? Don't kid yourself. Market players have no loyalty, especially in a fragile economy. Its great that the Nasdaq is up 40% in the last year, but at some point greed will take over and watch the sell off happen, all it will take is a trigger. Some analysts think this will happen in Aug of this year. We will see. Oil is also up, but for how long?

China is already starting to crash, tech is laying off, gold is climbing, Telus just announced a huge buy our package, and insiders have said hundreds will take the package. Here in BC lumbers mills are closing faster than Oprah can eat a Twinkie, as thousands of mortgages are resetting at triple rates. So what to do?

Yes, a decline in housing is coming, prices have dropped, and listing languish for months, and it will not get better soon. BOC fear of inflation will keep rates high, or higher inflicting pain and suffering until they are sure, inflation is dead, along with our economy. The crash is here, Sorry Charlie...

And what about investments? Is it a Bull, is it a Bear? Beats me, but you wont see me pumping my savings into Bitcoin, or Twitter any time soon. In fact I am selling into this latest Bull, Oil and Tech are on the block to create cash, that will be generating 5% interest from T-Bills, and GIC's. My financial advisor, who works for a major bank, stated "Opportunities will soon exist" which is his way of saying keep some cash on hand. At the same time, there is no reason to panic and sell off all you good equities. Balance is key now, Bonds will be making a come back as rates project an end to tightening, and project a decline in the near future. This will most likely start sometime in 2024, but who knows. Looking at chart above, drops can be severe, and abrupt. T-Bills are doing great, but at some point will lose their appeal, so if your looking to build a cash cushion, now is the time to lock in a 2 year GIC to fund something down the road. Equities may get crushed in the short term, but that is just an opportunity to convert non performing cash back in to solid dividend paying equities such as Royal Bank and similar. I also like BRK and may buy more.

All we can do is wait it out and see what happens... and don't buy Bitcoin.

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