I didn’t notice it at the time, but in light gray font at the bottom of the email are the words “Advertisers with self-managed signup accounts are subject to a $5 activation fee that will be deducted from the promotional credit.” This would turn out to be relevant later.
I went over the the Google adwords site and started puzzling through the signup process. It’s not very friendly, having some annoying “wizard” style elements that don’t let you perform operation “B” until you have performed unrelated operation “A”. But that isn’t the important part. After spending valuable time figuring out how stuff worked I ran into these words: “Your account will be charged a non-refundable CAD $10.00 activation fee upon continuing” and “The promotion code does not apply to the activation fee.”
Google lied to me twice over. They lied about the actual cost ($5 versus $10) and they lied about whether I could deduct the cost from the coupon. In the end I walked away without any free advertising and about 1/2 hour closer to death. Thanks for nothing, Google.
]]>News channels from CNN to CBC are very fond of trotting out wise men and women to give us some insight into what has happened and what will be happening. Almost without exception these people were unable to predict all the bad things that have happened in the last year. The fact that housing prices were at clearly untenable levels didn’t give them a hint, nor were they aware of the trillions of dollars in bad derivatives floating around. It should be noted that a very small number of them did know what was going on, and successfully predicted the crash. However these knowledgeable ones, before being proven right, were consistently mocked by the perma-bull guests. A perfect example of this is the appearance by Peter Schiff where he accurately spelled out everything that was going to happen, end got lambasted by the other guests (this video with Ben Stein is also amusing). The lesson? Unless you have done some serious homework on who you are watching and are able to determine they know what they are talking about it is best to completely ignore them.
I’ve invested through 2 recessions now, and neither of them have been predicted by the major banks who hand out advice to clients. After some thought, the reasons for this seem clear. First, banks rely for income on clients being invested. If they tell me “oh, things are looking pretty bad, you should take your money out” then they lose income. They obviously don’t want to do that. Perhaps more importantly, however, is that big banks make markets. By this I mean that if Royal Bank comes out and predicts a collapse then people will listen, and the prediction will hasten and perhaps deepen that collapse. Royal Bank will then be accused of having been partly responsible. So, for the sake of their business I think big banks will never predict a downtown. To clarify this point, I don’t think that the big banks consciously mislead. My theory is that, because of the reasons I outlined, big bank culture encourages employees who are eternally optimistic and discourages employees who have a more realistic outlook. The realistic employees will either leave the bank themselves or be driven out for their non-conformist attitudes. The bank is then left with nothing but eternal optimists.
I have a fairly low opinion of politicians to begin with. They appear on the whole to be of very average intelligence, and typically act in an entirely self-interested manner, focused solely on achieving either election or re-election. So, when faced with something as complex as the economic crisis, which professional economists don’t even understand, I think that there is pretty much zero chance that the politicians will be able to solve anything. It is hard to defend this argument, as in this case with the economic crisis we can’t even confidently define what the problem is. I would nevertheless venture to say that a history of misguided government intervention in the markets has been at least a contributing factor to the current problems, examples being the setting of low interest rates at the beginning of this decade which inflated the housing bubble, and the setting of low reserve ratios.
I mentioned Peter Schiff earlier, and from the mention you might conclude that he must have made a lot of money from his predictions. Well, he didn’t. In fact he probably lost at least as much as most people. Another bright guy, Eric Sprott, who made similar predictions, also lost a lot of money, some of which was mine. Why did this happen, when they made such accurate predictions? They were only half right. They both predicted the housing downturn and the derivatives crisis, but they incorrectly predicted the outcome. Peter Schiff thought that international companies with solid balance sheets would perform well, but they didn’t. Eric Sprott thought that the oil prices would stay at lofty heights, even in the face of a recession, but they didn’t. Both of them predicted a US dollar collapse, and the dollar has soared. The lesson? It is not enough to be mostly right. Mostly right can kill you. And I don’t know of anybody who has been entirely right, which means that the last year has been brutal to almost everybody.
]]>I didn’t buy it, and figured that we were entering a bubble. That may sound like bragging after the fact (now that things are clearly on a downturn), but here I admit that I actually messed up royally, not in my judgment, but in my timing. You see, I called a top in the real estate market in 2003. At that point I had some real estate, and for whatever reason as spring time rolled around I decided “this is it, we’ve hit a peak. I’ve got to get out.” So the house went up for sale, got sold in 3 days, and I was sitting much more comfortable, not having to worry about the thing.
At that point I considered buying a condo, and actually looked at one near Metrotown, but the thing was going for 250k, which is a lot, and was only 1200 sq. ft. or so. Sounds like a rip-off to me. So I gave up on that idea as well.
As you can see, I messed up. I was way way early in my pronouncement on real estate doom. And now that it is finally coming to pass I don’t feel all that good that I have proven to be belatedly correct. Being right at the wrong time is the same as being wrong.
As an aside, I find it fascinating how the Vancouver media has made an about-face in its attitude towards real-estate. For several years the local newspapers were among the biggest promoters of real-estate. Now, within the last two months they have very suddenly taken the opposite view, publishing bubble-talk at every opportunity.
Oh, and for the folks who think real-estate will be fine, I want to take this opportunity to respond to the usual arguments:
If you are interested in reading more about the bearish case for Vancouver real-estate, I suggest you visit vancouvercondo.info.
]]>And Peter, if you ever read this, please get your ass in gear and make me some money.
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