Liberty

Chad on BNN: http://watch.bnn.ca/#clip634083 Nothing groundbreaking, but he restates his intention to acquire 1-2 other DP mills. Maybe it's just me, but in other recent interviews he mentioned just 1 other mill. I wonder if this means that there's now a second deal that is making some progress...

Mr. Market's reaction to Q4 results is quite interesting. If I didn't own so much already, I'd take this as a nice buying opportunity. Cost overruns and possible delays with the cogen are bad, and Landquart's performance is still disappointing, but for an investor planning to hold for years, that's just small bumps in the road. The earning power is still there, and with India now banning the export of cotton, things could get interesting on the DP market (especially since management seems to have a pretty aggressive timetable to get 50% of Thurso and LSQ's production certified on the specialty cellulose market, bringing higher margins). I'm also intrigued by the sawmill(s) idea. I've never studied the economics of these, so I don't know how profitable they can be when the US housing market is going well. I guess it depends how cheaply you can get your hands on them...And we know Chad would only operate a sawmill if it was a high quality low-cost operator.

Maybe in the future. But right now, I don't think the Playbook's market performance even counts as "competing" with Apple. I'm ordering an iPad 3 soon, anyway ;)

Mr. Market didn't like Q4 apparently :o These bumps in the road suck, but they are to be expected. What matters most is that the big value creators are still on track, and I'm pretty sure that in 5 years I won't even remember that cogen hiccup...

A lot of people seem to have been buying without any actual downpayment, afaik. "cash back" mortgages have been giving back up to 5%, some of them even 7-8% (for a 102-103% mortgage). That's pretty reckless. And all the risk ends up with CMHC. *sigh*

That's what he said. About 25% of which would come from Thurso and 75% from LSQ, where softwood helps for specialty DP.

Conf call is beginning in 5 minutes

http://www.greaterfool.ca/wp-content/uploads/2012/01/Prices-incomes.jpg I think this graph shows it nicely. Housing tends to follow inflation -- people earn more, they spend more on housing, prices rise.. but now people aren't earning much more but prices are way higher, so the difference has to be made up by debt. Also, note that the graph ends in Q1 2011, so the difference is probably even wider now.

Well, thanks for being a good devil's advocate. I can't take credit for most of what I've said in this thread, as I've found these ideas elsewhere. A few weeks ago I, like most average canadians, believed that "it's different here" because "our banks are so strong and so careful about lending" and so on... But when you dig a bit, you realize it's all BS, and giving people a false sense of security, which is dangerous in itself. We have our own version of sub-prime lending here, with banks insuring so many loans with CMHC (which are then packaged and sold afaik...) that they don't give a crap about due diligence because they're not on the hook. People have pigged out on debt and leverage and that's rarely good. In fact, the more I think about it, the more I believe that one of the most important psychological factors in how long this bubble has been going on is that we mostly avoided the US crisis. This tells people: "See, we're fine here, this can't happen here, or it would have already when things looked worse a few years ago". After all, look at any bubble you want, and without a widespread psychological failing, they wouldn't inflate. Peple would look at the fundamentals and go "hmm, no, this isn't a good value". But in bubbles, they ignore fundamentals and think that "this time it's different" and all wish they had bought sooner so they could have benefited from the price inflation, so the next best thing is to buy now (before being "forever priced out!").

Q4 is out: http://www.fortresspaper.com/files/FTP_NR_Q4_2011_FINAL.pdf http://www.fortresspaper.com/files/Combined_Q4_Consilidated_Financials__MDA.pdf

Some more DWA discussion here: http://www.gurufocus.com/forum/read.php?2,165498,165498#msg-165498

New analyst report on Alderon: http://www.grandich.com/wp-content/uploads/2012/03/NBF_DM12C02_E.pdf

http://www.bloomberg.com/news/2012-03-04/china-targets-7-5-growth-this-year-as-european-debt-crisis-slows-exports.html

Do you, or anyone else, have any examples of this taking place anywhere else over a short period (±1 decade)? Not that I think Canada's urbanization pattern has changed that drastically over the past 10 years or that urbanization without increases in wages make debt any safer, but I'm still curious to hear more about this theory.

I don't see how that would change anything in a RE bubble bursting panic. Please elaborate. I think the baby boomers reached house-buying age many years earlier than that, but they are now certain reaching retirement age, and they haven't saved anything, and most of their net worth is in a single asset, their houses. They're all going to want to cash out at the same time in the next few years, 9 million of them. Indeed. Who knows what will be a catalyst this time, but all I know is that what we have now can't last; either wages go up like 30% a year for 3-4 years to catch up and that nothing happens in the meantime to make people lose their animal spirits over houses, or it's going to go down at some point because there just won't be any more buyers who can afford these houses, no more greater fools. There's also the fact that the gov't is progressively tightening the situation (from 0 down and 40 years mortgages in 2006 to 5 down and soon 25 years mortgages), and that inflation is above the BoC's target and that at some point - especially if the economy goes well in the USA - they'll have to raise rates. I disagree. What matters is the massive overvaluation, not how long it took to get there. In fact, the longer it takes, the more people become convinced "this time it's different" and the harder the fall will be when they realize it isn't. Yeah, at this point it seems to be mostly first time buyers and speculators, people who can even less afford/desire these million dollar shacks, especially in a falling (or even stable market, because they are counting on prices going up to refinance and build equity). There are already bad signs for RE in certain areas (ie Vancouver), but not in others. Can't predict future, but like someone who understands the difference between price and value looking at the dot-com bubble, it's easy to see that this can't last and will end very badly. It's like looking at a stock with a PE of 100 that people keep buying and expecting to go up endlessly... I think you are underestimating the psychological aspect of the bubble/bursting cycle. There's always going to be a certain number of people who have to sell, and since prices in a market are set at the margin, even those who don't sell will see their house market value go down and down, and hear all the doom & gloom in the news, and see their monthly payments go up and their small sliver of equity melt and then disappear, etc.. A 2% raise per year won't compensate IMO. And there's been so many mortgages where banks have not done their due diligence (no home inspection, just basing loan on postal code -- self-reported income loans, cash-back loans with no down-payment, etc) that these will probably start the ball when things become difficult. Yes, that's why I think it could last a while longer, but a lot will depend on what happens in the US. But the longer it goes on, the worse it'll be. If 800k bungalows become 900k bungalows, it won't help the situation one bit... Inflation would have to be terribly high and for a long time to catch up. I don't think we'd ever get to that point without that causing a big enough shock to the economy. Fact is, houses are not artwork or fine wines. They can be valued in relation to rents and wages and historical standards and such. And right now, most of the country really can't afford houses, but they keep buying because of a speculative mindset (I have to buy now or I'll be priced out forever! it's a lot of debt, but it'll be worth more when I sell it anyway). It's the only thing that keeps this thing going. When that mindset changes, well... It's not entirely - even in majority - about rational economic decisions at this point, IMO. All about animal spirits.

I don't think you can look that far. It's possible that by then a totally new player will dominate, or that the iPhone will have the best security of all (after all, when Apple decides to do something, their execution is usually very good), or whatever. In fact, RIM's in a worse position than Apple to have the best security of all in 10 years because they first have to survive that long..

Sharper, do you work in real estate? Just curious. Iceland's such a small market (320k people for whole country) that I'm not sure I would extrapolate too much from it. Especially if the numbers are nominal units of currency rather than inflation adjusted. And even after fast growth, you can still be underwater for a long time if the peak was inflated enough. Took 13 years to get back to the same level after the 1989 GTA crash, and the current bubble seems much bigger and widespread.

I also find most publications not worth reading, and I don't read The Economist page by page because with the 3-4 other books that I usually read in parallels, I'd never get through my stack. But in general I find that they are above other news sources in quality. Definitely not perfect, but better than pretty much all others I can think of.

That's a good point, but I think it only accounts for a small fraction of it. Canadians earn incomes in Canadian dollars, so the exchange rate has very little to do with their ability to pay for their houses, and wages have lagged inflation for many years while house prices have surged very rapidly. I also think that historically, even when the FX difference was wide, houses in both countries have mostly tracked inflation and each other, unlike now. Here again, this isn't a new trend afaik, yet the major discrepancy between the two countries is pretty recent. Despite this difference in urban density averages, house prices in both countries have fairly closely tracked in the past. And I'm pretty confident that if you compare just cities to cities, Canadian prices are out of whack compared to US prices, to rent prices, and to incomes. I don't pretend to be an expert on the intricacies of real estate, but I think I can recognize when people are living dangerously beyond their means. It could last a while longer, though. We'll see.

Unless wages more than double in a very short period of time and interest rates never go back up to historical averages, I just don't see how people who make 60K can afford these 800k+ bungalows and condos, or how the average house in Canada can cost twice the average house in the US... It just doesn't make any sense. Who knows how long it'll last, though.

I suggest you read at least this one, if only for the graphs that are based on data from other sources: http://www.greaterfool.ca/2012/01/08/in-the-end/ It doesn't 'prove' anything - no one can predict the future - but those data points (and others elsewhere) are certainly cause for great concern, IMO. Absolutely true. Make sure to apply the same standards to all those economists working for banks, realtors, gov't officials, etc, though. For each Garth out there, there are thousands of people inflating the bubble. And that's not counting the millions of homeowners who just won't see any problems with real estate because they have huge sunken costs.

http://en.wikipedia.org/wiki/Reverse_takeover

BREAKING NEWS: Bald CEOs = growth!

I wonder what a RE crash would do to the Canadian dollar, actually. Might be a better deal on foreign exchange rate after such an event, if it were to take place.