Matthew Lekushoff |
Markets return | Trump | Housing markets

As expected market volatility is back -----  not as extreme as the seesaw-like  bubbles and crashes mind you, but the markets definitely feel like they're waking up from their summer slumber. We've yet to know if these are the yawns of a bull or a bear, but my ears are perked and my eyes are focused to see what emerges from the cave. The answer may come from south of the border.
Although I'm a recovering political junkie, my interest in politics has never been to gain insights into the markets. This time I'm not sure that will still be the case. As it stands, odds are Clinton will win the presidency. If that happens, the markets will likely remain stable, as I expect things to continue as they have for the last eight years. 

And what of the alternative? If the "elephant" in the room wins, you best have a balanced portfolio, be ready to rebalance, and keep a pack of Rolaids on hand-----  things could get very interesting!
Along with the GOP's establishment-----  and the rest of the world-----  I'm still trying to figure out how Trump won the nomination. He's about as unknown a political entity as I've seen in my lifetime.
Trump as president may be the worst political nightmare in U.S.history, but he may also be the only person able to corral and embarrass the House and the Senate into getting things done. He may offend every world leader he meets, but he also may offer them olive branches behind closed doors and win them over. He may take the U.S. down a dark protectionist road that costs billions in trade and millions in jobs, but he also may force countries like China to amend their trade and currency behaviours-----  behaviours that have hamstrung U.S. trade for years. 
We just don't know. Other than insults and hot air, we don't know what Trump thinks, what he believes in, or what he will do tomorrow. If he were an investment, he'd be in the deepest part of the "high volatility" bucket, to say the least. 
On the home front, it looks like the housing market-----  predominantly in Vancouver-----  is starting to experience some instability Vancouver recently implemented legislation that was punitive to foreign property investors, who are considered to be a contributing source of the city's housing bubble. The fallout from this has seen house sales fall almost 20% from July to August in the Greater Vancouver Area.

Toronto's housing market, on the other hand, is continuing to move along with prices up more than 17% from a year ago. I, along with many property watchers, am becoming increasingly concerned about the affordability of real estate in cities like Vancouver and Toronto. Perhaps more troubling is the debt-to-income ratio (a key measure of an individual's indebtedness relative to income) continues to hit all-time highs reaching 167%. 

And I was even concerned a while ago when the number was in the mid-140% range. If it keeps climbing due to increased mortgage debt and weak personal income growth, I think this could end badly for a lot of people. The question is, how much longer can home prices go up and what will happen when interest rates eventually rise with them? Many (including yours truly) thought this would have happened a long time ago, but anything can happen.
Technology is a wonderful tool, isn't it? Back in the '90s, letters were mailed out, and letter-formatting programs either weren't available or were incredibly expensive. But alas, even though things have improved and it's easier to communicate effectively with clients and interested investors, sometimes things still go wrong. My point? I recently became aware that some of you haven't been receiving these letters over the last few months. After several hours of searching, we've figured out the issue and rectified it.
To those this has affected, I'd like to apologize for the inconvenience and hope you enjoy receiving these letters again!! If you'd like to reference any of the ones you have missed, here is an archive of my newsletters.

In the review queue
Why Uber is an Economist's Dream  by Freakonomics Radio: Great podcast on how Uber's rates dynamically adjust as the supply and demand of drivers and customers change. The data currently being mined from Uber has economists salivating and may play a part in changing commerce in the coming years and decades.
The Ego is the Enemy  by Ryan Holiday: You may remember I recently finished reading  Ryan Holiday's The Obstacle is the Way and thoroughly enjoyed it-----  so much so that I picked up his follow-up book, The Ego is the Enemy. The book is divided into three sections: Aspire, Success, and Failure, all of which I enjoyed. What makes this book different from many others in the self-development genre is that the last two sections are of a cautionary nature, especially for younger readers, than you'll normally find.
Although I enjoyed this book, I found it a bit repetitive and a little thin in actionable strategies. It also requires a level of self-awareness many books don't assume. I'd recommend it as it's a short read, but it may not need to be at the top of your reading list, especially if you haven't read The Obstacle is the Way .
What Should you Choose: Time or Money?  by Hal Hershfield and Cassie Holmes: The age old question, money or time? Most people likely spent more time considering this when they were in school, but when the busyness of life grabs them by the scruff of the neck, they forget to consider it. This short article will give you the chance to do so again.
A Value Creation Checklist  by Seth Godin: From his blog, the brilliant Seth Godin offers a great list of questions for someone running, or thinking of running a business.
RQ, IQ & EQ - Redefining smartness  by Gestalt Reality: Everyone knows what IQ measures, while  EQ, or emotional quotient , has been a big buzzword for years. RQ, or rational quotient, on the other hand, may be just as important. If you've ever wondered why intelligent people consistently make dumb decisions, and seemingly not-so-brilliant individuals often over-achieve relative to your expectations, this article will give you a better insight.

Just for fun   

Matthew Lekushoff, CIMA

Financial Advisor 

Raymond James Ltd.


T: 416-777-6368 | F: 416-777-7020


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