Some Things Just Can’t be Timed; Empty Homes; Low-Carbon Economies

Q2 | July 2019

stack of old newspapers, pile of old newspapers

Topic: Pearls of Wisdom

Devin Crago CFA

July 8, 2019

Image used with permission: iStock/hanohiki


Print & Share

Print

Some Things Just Can’t be Timed; Empty Homes; Low-Carbon Economies

Q2 | July 2019

Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some serious and some light-hearted – rise to the surface. We attempt to share a few of those with you in each of our issues of Nexus Notes.

Some things just can’t be timed

At Nexus, we often note the folly of trying to time the market. The only task more quixotic might be trying to time when you are born. And yet, that matters quite a bit for investment returns. According to numbers from Ritholtz Wealth Management, if you had invested from 1960-1980 and beaten the market by 5% each year, you would have made less money than if you had invested from 1980-2000 and underperformed the market by 5% a year. While this might be an example of “cherry-picking” the data, it does bring home the point that there are many factors that determine investment outcomes. As such, it’s best to incorporate conservative assumptions into your financial plan just in case you weren’t born when the investment stars were aligned. (“The Twenty Craziest Investing Facts Ever”, The Irrelevant Investor, March 13, 2019.)

Empty homes (that aren’t in Vancouver)

Canadians have been inundated with tales of homes sitting empty in Vancouver. The reasons for this phenomenon are difficult to pin down. But the provincial government has seen enough to institute a “Speculation and Vacancy Tax”, while the city has put in place a separate “Empty Homes Tax” to combat the problem. Yet, Vancouver is not alone in enduring this empty-home phenomenon. In Japan, approximately 14% of the housing stock is currently vacant. This represents a total of 8,460,000 homes across Japan, a record high. Stripping out homes that are available for sale, rental or are vacation homes lowers the Japanese vacancy rate to a still impressive 6%, or 3,470,000 homes. In contrast to Vancouver, the reasons for Japan’s high vacancy rates are fairly easily explained: (1) a shrinking Japanese population and (2) the flight of youth from rural towns to cities in search of jobs. (“One in Seven Homes in Japan is Empty”, Bloomberg, April 19, 2019.) 

 Low-carbon economies

A recent research report from Raymond James delved into the rate of decarbonization of the U.S. economy. The conclusion was that U.S. CO2 emissions have been gradually declining for more than a decade. Most of the emission reductions have come from the electric power sector, which accounts for 26% of U.S. emissions, where the retirement of coal-powered plants has been the driving factor. Change has been slower in other key sectors including Transportation (30% of emissions), Industry (22%), Commercial and Residential Buildings (11%) and Agriculture (9%). The U.S. economy may continue to reduce its emissions, spurred by technological advancements and regulatory mandates. However, the bigger question for the global climate is whether other major countries can follow suit and transition to low-carbon economies. (“Energy Stat: To What Extent Can the U.S. Become a Low-Carbon Economy?”, Raymond James, April 22, 2019.)

More Like This...

See another CRM2 blog post that may be of interest to you.

No posts found.

More Like This...

See another Foundations & Endowments blog post that may be of interest to you.

That Giving Feeling

Topic:
Foundations & Endowments, Tax Planning
Excerpt:
Summer is now a distant memory. In fact, a radio announcer declared only 77 days until Christmas. Ugh. It is usually in the last quarter of the year

More Like This...

See another Human Interest blog post that may be of interest to you.

Is COVID Giving You Scurvy?

Topic:
Human Interest
Excerpt:
The early ocean-going explorers learned the hard way that a lack of vitamin C can give you scurvy. And, according to Wikipedia, “the knowledge that

More Like This...

See another Inside Nexus blog post that may be of interest to you.

Onboarding in a Not So Normal World

Topic:
Inside Nexus
Excerpt:
Starting a new job can be nail-biting! We have all done it at some point in our lives and each time it brings a new sense of excitement, questions,

More Like This...

See another Investments blog post that may be of interest to you.

Nexus and the ESG Integration Approach

Topic:
Investments
Excerpt:
At Nexus, we think Environmental, Social and Corporate Governance (ESG) considerations are a helpful input to our investment decision-making process.

More Like This...

See another Pearls of Wisdom blog post that may be of interest to you.

“Work, Work, Work, Work, Work, Work”

Topic:
Pearls of Wisdom
Excerpt:
This has been a busy year. I’ve had lots happening on the home front (a wedding!) and lots going on at the office (too long to list!) Managing work

More Like This...

See another Tax Planning blog post that may be of interest to you.

The (U.S.) Taxman Cometh

Topic:
Tax Planning
Excerpt:
Like the medical patient who expects to endure a fair bit of poking, probing and prodding from the doctor, clients of financial providers have had to

More Like This...

See another Wealth Planning blog post that may be of interest to you.

Living to 100… Is 100 the New 80?

Topic:
Wealth Planning
Excerpt:
It’s a common saying that there are two certainties in life, death and taxes. While we have a pretty good idea when we get taxed, which feels like all

On a Side Note…

See another CRM2 Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Foundations & Endowments Nexus Notes Quarterly article that may be of interest to you.

No posts found.

On a Side Note…

See another Human Interest Nexus Notes Quarterly article that may be of interest to you.

Worth 1,000 Words

Topic:
Human Interest
Excerpt:
A little humour makes the world a better place.

On a Side Note…

See another Inside Nexus Nexus Notes Quarterly article that may be of interest to you.

From the Editor: Springtime

Topic:
Inside Nexus
Excerpt:
It’s official: it’s spring! Ever since people have been telling each other stories, they've used the different seasons as metaphors, and spring evokes

On a Side Note…

See another Investments Nexus Notes Quarterly article that may be of interest to you.

The Tail that Wags the Dog

Topic:
Investments
Excerpt:
We thank our friends at Northwood Family Office for having brought to our attention a fantastic book called, The Psychology of Money, written by...

On a Side Note…

See another Pearls of Wisdom Nexus Notes Quarterly article that may be of interest to you.

A Table for None, Please; Working From Home on the Rise

Topic:
Pearls of Wisdom
Excerpt:
Reading is one of the principal occupations in our profession. As we digest a wide range of material, interesting ideas and surprising facts – some

On a Side Note…

See another Tax Planning Nexus Notes Quarterly article that may be of interest to you.

The (U.S.) Taxman Cometh

Topic:
Tax Planning
Excerpt:
Like the medical patient who expects to endure a fair bit of poking, probing and prodding from the doctor, clients of financial providers have had to

On a Side Note…

See another Wealth Planning Nexus Notes Quarterly article that may be of interest to you.

Living to 100… Is 100 the New 80?

Topic:
Wealth Planning
Excerpt:
It’s a common saying that there are two certainties in life, death and taxes. While we have a pretty good idea when we get taxed, which feels like all