Mr. Happy

Let’s take a break from all the generational bleating, moaning, blaming and shaming to visit a normal person. Like Rob. And he’s happy.

“Just thought I would check in to say thanks for all the free guidance you provide,” he says, in a refreshing moment of contentment. “Sometimes the proof is in the numbers and I thought I would share mine with you. I took ALL the proceeds from the house sale (it was paid for) and invested it.”

Seriously. Rob eschewed buying another house six years ago and chinked it all into a balanced and diversified portfolio. “Almost a million bucks. I rebalance twice a year. Reinvested all dividends. Haven’t taken a dime out.”

In 2020 my wife asked: “what do we do?” I said:”Garth says do nothing”… Last year my wife asked: “What do we do?” I said: Garth says do nothing.” And that’s exactly what we did…nothing. Nothing but watch it grow. See the attached results. Thank you Garth. Thank you, thank you, thank you….

Well, below is the chart he sent me. The cumulative gain is close to 70%, and the annualized performance is 8.58%. Could Rob & his squeeze have done better sinking the cash into a new property and using some leverage to crank things up? Maybe so, depending on location. But by following this path he has the better part of $2 million, all liquid, throwing off income and no need to worry about cashing out in an iffy housing market. No realtors, No listing. No staging. No showings. No rapacious commission. No vultching buyers. No moving.

One blog dog’s tale: Do nothing, make money

Why relate this? Because R did the san  e thing. He ignored the noise. In 2020 that included the Covid meltdown – the fastest retreat ever into a bear market. As we predicted, it passed. Quickly. In 2022 he ignored Putin, inflation and the CB. More noise. The portfolio swooned for a while, then recovered. It always does. Until the world stops growing (which will be never), financial markers will edge higher over time. The noise fades. The steady player wins.

Now, where are we? What next? Is this s strategy to hang on to in 2023? Or are we lurching towards a hard landing like all the Internet guru-smarties flogging gold and crypto swear is coming?

Two words. Soft landing.

This is the holy grail. Such an event happens when an economy cools enough to stem rapid price increases and wage pressures (inflation) without throwing oodles of people out of work and trashing business investment (recession). With each day that passes, we inch closer to this reality. Consider this…

The Canadian economy, we heard Tuesday, is chilling nicely. Growth of 2.9% in the third quarter dropped to 1.6% in the final months of 2022 as those aggressive interest rate hikes bit. This is pretty much what Bank of Canada boss Tiff Macklem had to say last week when he suggested the rate hiking orgy was over. Our CB was the first major one in the world to pivot. Now you know why. If we have a slowdown in the coming months, it will be shallow, tepid and something Rob can easily ignore.

“The BoC can feel comfortable keeping its policy on cruise control,” says a TD economist. And it will. Adds BMO’s Doug Porter: “The overriding message is that the economy is just managing to keep its head above water, which squarely fits with the BoC’s view.” Yup, Tiff nailed it.

Second, things are looking up across the global economy, despite the crazies in Russia and China. The International Monetary Fund (IMF) just upped its growth forecast for the planet to 2.9% this year

Says its chief economist: “Around the world, you see labor markets that have been quite resilient; household consumption that has been stronger than expected and business investment. You put all this together, and you have a slightly more resilient global economy. We’re expecting things to bottom out.”

No recession, it concludes. But that could change if the Trumpers in Congress cause a debt ceiling crisis later in 2023. Odds of that happening: same as Harry Styles staying famous.

That brings us to reason three, America. It’s fine.

Tomorrow the Fed makes its latest rate pronouncement and investors are betting on a weensy, piddling little 25 basis points followed – as in Canada – by a pause. Maybe there’ll be a further quarter point bump in March, but this baby is winding down fast. Many even believe, as we told you last week, rates could be rolled back by a half-point or so at the end of 2023.

Also, no recession in the States. Growth modest, but positive. Like me. Like Rob.

Keep your stick on the ice.

About the picture: “I’ve enjoyed your blog for a number of years. Thanks to you I have a nice B&D I don’t worry about,” writes Jim (who’s also happy). As an additional suck up, attached is a picture of my Springer Gus surveying his kingdom.”