What Garth Turner Wrote In 1999...

Garth Turner; that is a name that I am sure will send chills up the spines of many reading this. He was the Canadian Cheerleader of Tech Bubble. I would post his picture but I want to spare you from spitting at your computer monitor.

I was at a friend’s house recently and something interesting caught my eye on his bookshelf. It is none other than one of Garth Turner’s books written in 1999, just months prior to the stock crash, called 2020: New Rules for the New Age.

Of course I am right now using hindsight to criticize him but nonetheless, I know that he screwed up the financial situation of thousands of Canadian families so I want to ridicule this prick in this article.

First of all the title of “New Rules for the New Age,” sounds very similar like paraphrasing “it’s different this time,” one of the indicators of a bubble.

My poor friend bought this book in 1999 and read it diligently. His highlights made browsing for Turner’s main arguments very quick. I would hate to waste more time than necessary on garbage like this.

Just reading all his advice makes my head shake because nearly everything he said to do, would have made you broke! However, if you ignored what Turner said and did the opposite you would be extremely wealthy.

Now let’s get to the specifics of what Turner said: (with some of my brief comments in italic)

“If you have the bulk of your net worth in a home, you are probably at risk. You certainly will not see your wealth grow over the next 20 years. In fact, you may see a large chunk of it evaporate.”

Actually Canadian house prices have more than doubled in most locations during this time. The Dow and Nasdaq are down tremendously.

“Because real estate is no longer an inflating asset, buying a home and spending the next 15 years paying down the mortgage could be disastrous. Not only will the house likely be worth less at the end of that period, but the buyers could well have missed the best decade and a half in their lives to grow money in financial assets like stocks and mutual funds. Far better that extra money be put into high-growth assets like equity mutual funds than fed to a mortgage with a low interest rate.”

Like I said in the previous comment, Turner was 110% wrong. House prices have exploded while financial assets have dropped like rocks (excluding commodity stocks recently in Canada, but Turner said you should have 80-100% of your wealth outside Canada so he’s brilliantly wrong once again.

“10 years from now you should expect stock values to have at least doubled, if not quadrupled.”

Looks like values are more likely to be one quarter or one fifth (in the U.S.) from their peaks in 2000.

“Over the decades, financial assets, like equities and investment funds, will outpace real assets, like gold or real estate.”

It is a secular bull market in real assets and commodities so they will continue to outpace financial assets over the next ~10 years. Turner completely wrong!

“Do not expect the cost of living to rise in any meaningful way for at least a dozen years, perhaps longer.”

Inflation is rising and some are even suggesting that the governments are manipulating the figures to keep the figures lower than they actually are.

“Financial markets in North America, Europe, Japan, and other places are headed vastly higher. The Dow at 10,000 is just a stepping stone to a market that could achieve 30,000 or even 50,000 by 2015.”

I doubt it. The Canadian market may be the only one to rise because it has such a huge weighting to commodity stocks.

“Investing aggressively can also involve using borrowed money, whether that is employing a margin account at your broker’s, using existing assets like mutual funds, to pledge against investment loans, or taking a home equity loan against your residential real estate.”

Anyone who borrowed money to buy stocks in 1999 and 2000 got wiped out! This is one of Turner’s worst recommendations.

“Buy during the panics – Investing aggressively will also mean going against the tide, and actively buying when others are selling.”

If you averaged down between 2000 and 2002, you would have got wiped out also!

“Why would you have all of your wealth in Canadian dollars? Why would 80% or more of your RRSP holdings be in Canada?”

Turner was totally wrong here. This was approximately the low for the Canadian dollar and it has been appreciating ever since and it continues to hit news highs every month. The Canadian markets have been stellar in the past 3 years while the Dow and Nasdaq have been flat.

“The Canadian Peso: A steady slide over the last 15 years. There is little reason to believe this trend will stop, increasing the argument for putting more of your wealth into something more stable, like the U.S. dollar.”

Peso eh? At 0.90 U.S.?

“By 2005 Ford will dominate in a way that it has not since the Depression-era 1930.”

Hilarious! Ford and GM are struggling like crazy to sell anything and are both is serious troubles that could soon end in bankruptcy.

“Invest for the next decade, not the next month. Financial markets will be extremely volatile, so don’t worry about temporary declines. The long term direction is clearly up.”

Nope. Wrong again. 2000 was the peak for American Markets for a long time.

“Stocks will be higher in a decade than they are today. Between 1990 and 2000 the Dow went up 500%. Do you really think that between 2000 and 2010 it will go down?”

This is a terrible thing to ask. It degrades the reader into having to agree with Turner.

“Don’t Save – A basket of blue-chip stocks is an excellent thing for those near retirement age to cling to for capital growth and also tax-advantaged dividend income.”

Unbelievable how he shuns safety and caution and just recommends that people near retirement buy stocks for growth even though they should be more concerned about return of capital not return on capital.

“This is not a time for fear, but for confidence. You must remain an optimist and ignore the bleatings for those who worry about the next 10 days, not the next 10 years. The stock market and the value of your mutual funds could well take a hammering, but that should not surprise nor deter you, because it will be temporary.”

Yes they did take a hammering and hurt everybody who took your advice.

“Market declines in the first decade of the new millennium will, I am sure, prove to be nothing more than very good times to increase your portfolio at very good prices.”

Even worse that he recommends averaging down during one of the biggest melt downs in stock market history.

“Today, all the rules have changed. Deflation and demographics are the enemies of real estate. There is no guarantee of keeping any job long enough to build up pension assets. Interest rates have collapsed, so savers are losers. Life expectancy is marching cruelly higher, vastly increasing the amount of money that people need to sustain decent lives. Today you have absolutely no option but to invest. None.”

Was it really different that time? Not at all and I cannot believe he tried to convince innocent people that it was.

“We need to be fully invested now in a hard working diversified portfolio, not dripping a little cash into financial assets each month. In fact, given what lies ahead over the next 10 or 12 years, it’s hard to think who would benefit from dollar-cost averaging. Young investors today, in their twenties and thirties, also have a limited time to bulk up their assets before the harsh times set in. They cannot afford to be deer in the headlights, either.”

Unbelievable arrogance.

“Rule: Being cautious carries a huge cost”

Once again, terrible advice for anyone at anytime.

“Ignore what [your financial asset’s] current value is.”

How can you ignore this? Is it because they are in for a slide of a lifetime?

“Are you comfortable making [investment] decisions alone? Have you learned enough about all the possible options and dangers? Can you find the time necessary to research everything? Well I can’t. So I rely heavily on my adviser. This is a person I trust to make the right decisions at the right time, so when I’m on the road or focusing on making some money (rather than managing it), I know the job is being done right.”

If you can’t make your own decisions why are you writing a book about investing????!!!!!

Wow. I cannot believe I transcribed that much junk in one day. I do not know if this guy is/was a complete idiot or if he was doing this on purpose. His gushing arrogance during one of the bubbliest periods ever makes me want to puke.

Canadian are by nature conservative people but the methods and analysis presented in this book are anything but that.

When you combine totally wrong advice with suggestion people throw caution out the window, that is a recipe for disaster. And that is exactly what happened to thousands of innocent Canadian when they bought and read this book.

So where is this prick now? Well guess what, he’s back in government because he actually got elected in Ontario! I hate to generalize but those must be the most brainwashed voters ever. How could you vote for someone who recommended all these things that ended up completely setting back many Canadians financially 5-10 years or more?

Ultimately if you lost money because of this joker, you can’t do much except for spread this article and hope that he never gets elected again and leaves the country with his book profits to be never heard from again!!!!

Posted by Mike – May 21, 2006 – 17:30