This is time of year, specifically for companies with a calendar fiscal year end, where housekeeping issues have to be completed.   For most companies it’s the time to close the books on the previous year, and ensure that T’s” are being crossed and the “I’s” are being dotted for the upcoming year.  Try as we might, but we have never been able to fully complete our budget, our plan, and our strategy prior to the New Year.  Revisions are required, and taking into account seasonality, mid-January is the time where we can exhale, for about a nanosecond.  Once everything is finalized, then the heavy lifting begins.

One thing that you cannot plan for is luck, good or bad, karma, fate, good fortunate or misfortune.  Irrespective of the comprehensive analysis, the business plan and budget, the organization goes about its business knowing that variables beyond your direct control will determine if you had a good year or not.  Luck plays a part in success, and anyone who suggests otherwise, well, eventually the hubris will catch up to them.

But just for a moment imagine if you could stack the deck in your favour to ensure you had a good year.  I’m talking about results beyond your ability or intellectual capacity to achieve your desired results.  I think we would all jump at the opportunity to be able have that type of influence. That’s why it is difficult for me to criticize the actions of the government when the do exactly that.

Loonie

Take the performance of our Loonie.  You’re probably aware the market has taken our Loonie to the woodshed and given it a good whooping.  Is something going on in shadows? According to the Globe, “To some observers, the currency’s recent sharp decline suggests the Bank of Canada is stealthily engineering devaluation – a gift to beleaguered manufacturers, exporters and domestic tourist operators, and a tonic for an economy suddenly grappling with disinflation“.  Poloz has an affinity for manufacturing, his previous gig was CEO/President for Export Development Canada, Carney’s comfort zone one was Bay St., as in mortgages. Is it a coincidence that we’re hearing less about mortgages and more about our dollar, inflation and manufacturing?  You be the judge.

Outlook on Real Estate

As for the real estate sector, some must be very satisfied with most recent trend. Real estate sales in Toronto, Calgary and Vancouver are skewing the numbers.  The reality is that over 60% of Canadian market place has seen a drop in the number of homes sold for three consecutive months.  At the highest levels of government, household debt is still being spoken of but in cautious terms.  Here’s what Prime Minister Harper had to say about house hold debt this week, “So look, it’s not a reason to panic; in fact, we’ve actually seen Canadian debt beginning to level off. But we would obviously encourage people to look at their debt levels carefully. Eventually, it may not be for two, three years, but eventually interest rates will start to rise. And Canadians should ask themselves serious questions about if interest rates came up significantly, would I still be able to afford my debt payments?“.  Interest rates will rise in about two to three years?  We should thank the PM for the specificity. I have to assume he’s in the know.  It might be time to dust off the variable mortgage pitch. In my case I may have to alter the distribution of volume between fixed and variable mortgages in our projections.  So maybe I’m farther away than I thought from being able to lock up the 2014 business plan and budget in the corporate vault.

One final note about the PM, he really is one of us.  Here’s what he had to say about his own personal mortgage, “in our case, my wife and I have never been big borrowers, but we have borrowed some money in the last few years because of the low rates, but we also know if the rates went up significantly we could still afford to carry that debt”.  It’s heartening that our Prime Minister is so connected to millions of home owners, who did exactly what he did, and just as responsibly.  One last thing about the Prime Ministers mortgage, I wonder if he got in before the changes to amortizations, and did he have to use rental offset to qualify?”.

Until next time

Cheers.