Canada GDP Residential Real Estate contribution in 2021(~9%) VS US During 2006(~6.7%)

Canada’s Economy Has Never Been More Dependent On Real Estate

So I came across this data which tries to get point that even during peak US housing bubble residential Real estate investment as a % of GDP in Canada is almost 3% higher. This surely means that Canadian Residential real estate may well meet the same fate of the US. (Just time may be unclear).

Canadian Residential Investment Reached 9.43% Of GDP

Residential investment has recovered much faster than other segments of GDP. Residential investment represents 9.43% of GDP in Q3 2020, up from 7.71% during the same quarter last year. This is not only the highest rate seen in at least 60 years, but it’s also very high for any country. For context, the U.S. residential investment peaked at 6.7% in 2006 during the housing bubble. The current rate in the U.S. is just 4.3%, having also sharply accelerated faster than GDP in the third quarter. Just not nearly as much as Canada.

Forecasting Is tough especially about future. However there are a lot of differences between the US housing bubble of 2007 versus the Canadian residential market. I will try to lay down some facts and some of my opinions which would suggest that anyone expecting a big crash like 2007 of US residential market in Canada might be mistaken unless big underlying changes happen to Canada especially related to immigration.

Securitization and consequently off-balance-sheet loans in United States in 2007 was rampant. Banks would loan knowing that they do not have to carry the loans on their balance sheet. but it’s not the case currently in Canada on a scale which was done in United States in 2007. If RBC or CIBC is making a home loan almost surely they’re keeping it on their books.

NO NINJA LOANS – No income no jobs no assets you still get a home loan. This was frequent in US especially for sub prime loans. in Canada it is not true. try going to RBC and say you do not have a income but you want 7 700 K loan. You will get a surprise.

No Freddie Mac no Fannie Mae no AIG No Ginnie Mae equivalent in Canada. The Freddie and Fannie played a big role in exacerbating the housing problem because of the implicit guarantee they had to provide which was directly from government. very very less or rare is like that in Canada. Canadian government isn’t really standing behind the Home Loan and saying hey if you default as a consumer we will pay. unless if you buy CHMC insurance which cost around 30,000 CAD.

Immigration is perhaps the biggest Driver of the real estate with high number of Indian and Chinese high earning high income potential making Canada their home as a permanent resident. Canada is perhaps the only developed country where if you’re below a certain age and know English you can basically fill a form and get a permanent resident certificate and just take a flight to come here. Try doing that with United States. Express entry is designed to get the most highest income potential people who know English and who are going to do high-level of high quality jobs when they get into Canada. There is no Mexico kind of immigration in Canada.

Amount of new permanent residence targets and actual value per year as a proportion to the total population of Canada is huge. Approximately 300 K to 400 K new permanent residence are coming every year in Canada. All in the big productive age with advanced English and almost surely you’re going to work in knowledge sector. On the other hand for United States total new permanent residence granted was just around 600k. mind you United States population is almost 9 times that of Canada. On top of that it is not changing. they are going to even increase more number of people being granted the permanent resident card in the future. this is in stark contrast to United States which laughably has around 65,000 H1B quota. and for the last four years with Trump in power God the number of people who have actually lost H1B renewal capability and L1 rejections you would be surprised how many people have been basically kicked out of United States. Unless some Canadian government completely reverses stance on immigration the housing prices are not going to collapse.

Updated on 15th Feb – 27k in 1 draw. Official Wooooo.. Real estate going down with thousands just waiting to come in? Dream on!!!

Hi income earners from UAE and Singapore and United States are entering Canada because this is the easiest to get in vs all developed countries with basically knowing English and filling up a form. got your H1B or L1 renewal rejected do the PR. Got your EP pass from Singapore rejected get the PR. UAE never gives a permanent residence so after three years if your employment visa was not renewed fill up the form come to Canada get the final passport after around 3 to 4 years. all these countries UAE Singapore and United States be far more for the same amount of work than literally any comparable company which does the same work in Canada does. Specially Singapore and you UAE they do not even have that high taxes so that people were coming from those two countries they have a lot of cash 600 to 700 K Canadian dollars is easy to save if you have been working in UAE or Singapore for around 6 to 7 years. Even United States if you working anywhere in United States the amount of money which you can save for a period of 6 to 9 yearall these countries UAE Singapore and United States be far more for the same amount of work than literally any comparable company which does the same work in Canada does. The people who are working in UAE Singapore United States or even UK they have absolutely no chance of getting the actual passport of that country unless the stars align. but Canada allows those high earners to get permanent resident card and passport passport by basically knowing English and filling up a form. brilliant. these people are smart hard-working intelligent and our top of the food chain at least in terms of knowledge work. These guys are going to buy the home they’re not going to just become a plumber or electrician when they come here. This quality immigration will always support the home prices.

Then there is a lot of money which is coming from Chinese investors who have just become rich in the last decade or so by the boom in China. There are real stories where half of a condo that is almost 50 or 70 units were directly booked by a group of Chinese investors. They are not going anywhere. none of the countries are so open to outside money coming directly into the real estate. lot of efforts are being taken to cool down the real state and control the foreign inflow of money.

Virtually unlimited supply of software engineers from India who have close to zero chance of getting an on-site opportunity. Indian outsourcing companies like Tcs infy hcl are really reluctant now to send their stuff to developed countries. This directly means the million plus people who are actually working as a software engineer in all these companies have only one chance to go to Canada if they want on site and they can do it independently that’s the best part. Good to not have to depend and beg to a company that please send me on site. all these knowledge workers who come to Canada are going to get a passport Canadian passport. And of course they’re going to buy home. In fact if you go to any of the large banks IT department you’ll be surprised to see close to 70% plus people there are Indian software engineers and it’s growing. All these people are going to buy your home what about the price maybe.

Canada has basically four large cities only but United States is really United States huge with huge amount of opportunity and vast areas which are actually populated. Canada is much more concentrated with the opportunities of income constricted in top four cities only. this means that new people were coming will go exactly in these four cities versus United States where immigration whatever values it be can actually be so widely spread out that they cannot support high house prices except key 7 to 8 cities.

There might be a number of other reasons as well but the above are the ones which I focus on.

Coronavirus and School Opening

There have been so many articles about coronavirus that people have got bored of reading all those things. Epidemiologists has become politicians and politicians have become epidemiologist. But I haven’t read many thought-provoking ideas other than mostly to rhetoric About how or why a parent who can work from home would choose to send their children to school. What are the risks what are the rewards what are the emotions what are the main decision factors which the parents are looking for who can work from home as they have been since March but still, they want to send their children to School when there is no cure no vaccine for coronavirus and the virus is as deadly as ever going into the normal flu season in September October November? If you have a child who is already probably in eighth grade or ninth grade from my viewpoint you must not send the child to school.

But what about those parents’ whose children are below second grade that is their children cannot read or study just by looking into a screen?

What about those parents who has a child not even in school but can go to the daycare. Should the parents send to the daycare ? Why or why not. What are they actually doing? What are the reasons, motivations of the parents for doing what they’re actually choosing to do?

Most economic theories start with this …………Assuming human beings are rational or markets are rational and everything remaining (Ceteris paribus) same here is a theory and this is how the things in real life in economy should work. That is all garbage assumption. Markets are not rational human beings are rational some time while taking a decision but not that rational when taking some other decisions.

A number of times risk and reward or not even thought about what people do take the decision. Think of conquering Mount Everest. A rational person would most probably not want to attempt to do that. The reason is pretty simple the risk is death or some bad frostbite from which you might have to amputate a part of your body. The reward well is a lot mental. In fact, if I ask you to name a person who conquered Mount Everest and he was not the first person can you even remember who did it? Let’s say you remember a name now please remember a name from another country from where you are born or who was not the first woman Mount Everest climber, I bet you don’t even know that. You can do a Google search of how many people have been killed while trying to Mount Everest and of course the innumerable people dead without actually attempting Mount Everest because you don’t just wake up one day and go to the base camp of Mount Everest. You have to 1st conquer a lot of tall mountains dangerous mountains before you can even think of actually going up above to conquer Mount Everest. An economist or a person who likes probabilities would say the risk versus reward doesn’t add up but people still do it 100 years 1000 years from now because contrary to the popular opinion being taught in the business schools (finance lectures) people are not rational all the time.

Risk and Reward of Sending Children to School

People have got a very hard time thinking in terms of probability. In terms of risk versus reward. Think about it for a second let’s say you are a parent who has a five-year-old child and both the husband and the spouse can work from home and they have been doing the same since March 2020. Now comes September 1st week or next chance to choose online Vs actual Class when the schools are going to open.

What is the risk of sending your child to school and what is the reward which you will get because you sent the child to the school?

Risk is pretty simple, I guess. Child may not get serious from Covid. But you may die. After that your child will have much bigger problems than the problems you are imagining currently which child is supposed to face!

Probable Rewards

Child May Not Get “AHEAD” in life

If you think your child will not “get ahead” in life because they had 9-11 months of online education when they were 5—- then let me ask you a question-

What if I gave you 1 more year in your life? Where will you be? Would you be having tremendous success (however you define it– money, happiness, career, growth,)?? Is 1 year more exactly what has been holding you back since your birth?

Or in reality 1 more year of life really speaking doesn’t matter? Whatever negative things you have in your life is NOT because there was 1 year you want. It’s because of YOUR effort which you have not yet given. Don’t blame a lack of so called 1 year. Hence by that logic if your child at 5-7 years of age is missing out on 1 year of life from the miraculous in person classroom teaching then its fine. Chill. Life is really a marathon.

Child May miss being social and miss friends

Is that the reward for which you can risk your life? How about not being a weekend parent? You used to drop child at 7 or 7.30 after seeing him for just 30 min in morning. Pick up at 6 PM. Rush back home, ask customary questions how was your day –etc. Then force feed a quickly made dinner so child can sleep before 8 PM.

Really speaking other than weekend when you have to do all groceries and million other things.

I think now every day you can be with your child and that is precious. You will never have this much amount of time together from now on.

Any other Excuse?? Is not worth your life risk.

Two Step Canada PR Process

Pardon for the shitty adv which will be above this!!!

Most important thing. Canada PR is not going to Handcuff you and say you cannot come back to India or Go back to US. Say you wanted a Onsite for 2 or 3 years. And you current company was sending you to Toronto for 2 years would you go? With a chance that your wife or husband can also work? Take it like that if you want to see it as onsite. No one is saying to permanently live in Canada if you apply for PR. Life is SHORT. See you never realised you are now 35+ ..maybe add a 3 yr experience of living in a developed country and then get back to India… Ooooo you cannot adjust after coming back. Ask those H1B rejected guys who have been in US for 10 + years.

Typically this is topic is such a rage like the way it is in India for kids to prepare for IIT/Medical or IAS prep in Delhi.

However I am writing this mostly to let people avoid any so called agents who charge upwards of INR 70000 for actually doing nothing.

GO below . Use your common sense and use 7 or 7.5 for each IELTS exam score and Check if you get more than 450 score and your/wife birthday is not around corner!!!

Historical data for points :

If you AND your wife are above 38 or 40 yrs age and above pls don’t read further.

If you are unmarried and never worked in Canada almost forget it. You won’t be able to get the points via Express Entry. There maybe 100 other convoluted ways like Provincial Nominee and others. Go figure it out.

If you are in IT field ie either a SE , BA or in InfoSec/Audit/SOX Compliance or KPO or IT OPS you will get a job upto 80k CAD within 3 months of landing here(doesn’t matter which technology …). Because companies are made by ppl like you. Whom will they pick? A local canadian who will ask 100k above or a Indian with PR and no job ? Think..!!!

There are only 2 steps to get into Canada PR selection pool or should I say PR.

Step 1: Give General IELTS exam and pass with above 7 or higher in each section. Cost around Rs. 11,000. Yea per person. So you and your wife needs to give the exam. And if you are able to read the blog entry you ll do just fine with just 4 sample papers which they send and 4 listening exercises and just try to use pen and write couple of pages a day for 3 days or so. That’s all what is tested in IELTS. You are an Indian. You have passed 6 subjects in 6 days with less than 6 days of preparation. What hell is IELTS.

Step 2 : Get your Graduation/Post-Grad marksheets attested and put in a sealed envelope and get it sent by the university to WES Canada. The attestation needs to be only by Controller or examination or Registrar and will be typically done only at University(not in college). Cost is around Rs. 20000. Yea per person. So you and your wife both need to spend 20k each for a total of around 40k. And yes courier will be typically per person around 3000. FedEx or UPS to Canada costs that much.

If you are thinking God can I go to University and get all the crap done? You love India!!!!

Total Cost before getting into the draw = 11000+11000+20000+20000+3000 = 65k. Yea cannot even get a iPhone XR with 720p Screen!!! Is this too much ? If you think yes probably you love India.

Step 1 Output is a reference number with IELTS Score. (Start to end typically 1 month)

Step 2 Output is another reference number and confirmed that your degree in India is equivalent to XYZ degree in Canada. They just want to eliminate the shady non recognized college guys from India. (Start to end typically less than 20 working days assuming you already got your sealed envelope)

Take both ref numbers, make primary applicant who is younger generally wife and there is a simple online form for Canada PR process. It will take typically less time than filling up you Tax or a Service Now Requst. Get all your work experience certificates scanned and in soft copy format with as much details like number of days per week and hours etc. Don’t worry no one India issues certificates with number of hours mentioned.

While filling up online form you have option to upload a letter of explanation. That is your golden ticket to write everything which you officially could not get like the hours worked above or the Current company work exp certificate(who wants to go to your Crap Manager and say hey I want to go to Canada Pls give me work exp certificate..). Just write in plain english in the letter of certificate whatever you want.

Upload and fill the online form and bingo . You will be in the queue to the most talked about immigrant friendly country in the world where seems from outside only Cold is the negative part !!!!!! You will learn negatives once you land here. Don’t read too much quora. Legal Mariuana Check!!!

Submit and wait ….!!!!!!!!! This is the best most exciting part !!!! Its like IRCTC tatkal booking over 1 or two or 5 months..

The excitement of waking up in night and checking the gmail for that elusive Invitation to Apply….mail.!!!!!! And to have this high for 4 months is Golden.

… Its like gambling. Al Pacino said in Two For the Money – “You know, the best part of the best drug in the world isn’t the high. It’s the moment just before you take it. The dice are dancing on the table. Between now and the time they stop, that’s the greatest high in the world.”

Guys there is a reason why below is happening. Its so simple. And Canada needs foreigners and you will get a job here.

Any other doubts mail me on

There will be of course lot of nitty gritties like police verification , money deposit etc etc all those are nothing and happen after you get invitation to apply.

And most important thing if you postpone.. Yea I know you have postponed for last 2 years … 5 points deducted each year at each of your birthday. And same 5 points down for your wife’s birthday. So Postpone again and say your birthday goes by you are going to be down from 445 to 440 and maybe you wait forever coz in then your wife’s birthday comes and you ll be down to 435 and you will be distraught. So postpone and at your birthday think that your 5 points have gone down.

Thanks for reading till end. If you have specific queries email me at . I won’t ask you to send bitcoin before answering… But pls don’t sue me as well.

If you want to read long typical quora article here it is. Lots of detail which at start you don’t need to know else you get overwhelmed

Just Dial IPO Analaysis – Absolutely Amazing Business

Just Dial IPO Analysis

This would be an analysis of Just Dial IPO which was refiled with SEBI in August 2012. The earlier one was in 2011 but was cancelled due to adverse market conditions. This post will be a bit long but worth reading because of unique business of Just Dial .

First some disclaimers– If you read this and invest in IPO when it comes out and LOSE money don’t sue me. If you make money contact me on my email/blog and I will try to take 1-2% of your Profits J (how is that for free advice). If everything fails and you really want to sue me GO ahead. This is a country where Kasab is still alive, hale and hearty, eating biryani from tax payer’s money and no sight to be hanged. What do you think you can do by suing me?

I had been an employee of Just Dial for around 9 months which was the best learning experience of my lifetime as I had the privilege to interact with Mr. Mani and his brilliant senior management team of Just Dial. This gives me unique insight in one of the really different businesses not just in India but in the whole world. There is a not a single business on the planet which works almost exactly/close to how Just Dial makes money on that scale. (Rs. 250 crores odd revenue and Rs. 50cr worth profits last yr with 0 debt and return on capital close to 40+% for last 3 years).

My analysis will be primarily based on the basic parameters on how Buffett would like to invest in a company like

If you are more of financially inclined person Financial Data and Calculations Just Dial with all the numbers and you can directly   see that pristine looking financial statements and ratios people dream of.

Here is a one line business model of Just Dial – When people need to buy something (goods or service) from some shop/business they call up Just Dial which in turn provides that data (business phone number, address) free of cost to person calling but Just Dial charges the business owners to make sure their phone number/address goes to the caller. How simple yet how difficult to beat.

I have put ratio analysis right at top so that you have a basic idea about financial strength of the company and no need believe in some kind of ‘STORY’ as it generally is with overhyped losing businesses (aka organized retail , Suzlon , Infra , DTH) .

Ratio Analysis (A dream for any CEO)

Liquidity Measurement Ratios
FY08 FY09 FY10 FY11 FY12
Current Ratio 1.3 1.3 1.6 1.5 1.3
Quick Ratio 1.3 1.2 1.5 1.4 1.3
Days Inventory Outstanding(DIO) 0 0 0 0 0
Net Sales Per Day 1.9 2.5 3.6 5.1 7.5
Average Trade Receivables 4.2 0.5 5.6 5.4 0
Days Sales Outstanding(DSO) 2.1 0.2 1.5 1.0 0
Cost of goods sold (taking it as total expenses)/365 1.8 2.2 2.9 3.9 5.5
Average Accounts Payable 24.3 25.3 40.3 47.0 21.9
Days Payable Outstanding(DPO) 12.9 11.2 13.8 11.8 3.9
Cash Conversion Cycle = DIO+DSO-DPO -10 -11 -12 -10 -3
Profitability Indicator Ratios
Operating Profit Margin 4% 10% 21% 23% 26%
Net Profit Margin 2% 8% 14% 15% 19%
Return on Capital Employed (PAT/Total Capital) 2% 7% 15% 15% 21%
Return on Net Worth(PAT/NW) 5% 16% 29% 31% 51%
Debt Ratios
NA as it’s a debt free company
Cash Flow Ratios
Operating CF to Sales 20% 7% 26% 32% 33%
FCF Return on Net Worth 23% 0% 39% 44% 65%
FCF to Operating CF 60% 0% 72% 68% 74%
Valuation Ratios still mystery as no price declared

Continue reading “Just Dial IPO Analaysis – Absolutely Amazing Business”

Critique of Daniel Kahneman – Decision Making Theories

That’s a very bad heading but I could not think of anything else .

What is evil — “ Evil is Knowing Better but doing worse “

Mr. Daniel Kahneman(the nobel winner) is one the most amazing   thinkers of modern era who has just completely changed the way we look at the world and the decisions taken by people in the world. His brilliant book( )  is a 20 times read. You can just keep reading again and again and again – discovering new things every time you do that. It makes you understand why probably you took a decision when ideally/rationally you should not have done so. So why the critique post ??

Well having read the brilliant book Thinking Fast and Slow by Mr. Daniel Kahneman I noticed something strange in every single question he had ever asked for framing his theories mostly related to monetary gambles/chance/risk taking . They  will NOT  apply completely to the thousands of Bankers, Traders, Lenders, Insurance Sellers(who are or should I say were too big) –who are taking decision under risk . The reason the theories will NOT apply is NOT because decisions are complex or theories completely wrong or they are using System 1 instead of System 2 but because the crucial elements (situations/conditions) are almost always neglected in almost all questionnaires for any psychology/logic tests undertaken by any researcher.

I searched for various of his articles and the references he himself used for writing those and  I could not find the most important factors which affect decision making under risk in real life organization/situation .

The choice of picking a decision using rational calculations or System 1(intuitive) based on prospect theory or whatever is secondary to the conditions surrounding the decision making. The conditions surrounding decision making are NEVER extraneous or too unimportant in real life.

This analysis will look at the financial risk taking while showing that  prospect theory(  cannot explain the decision making in financial world today when complete picture of conditions which leads to reckless risk taking is taken into account i.e. the incentives (bonuses), Superiors’ orders, managing other peoples’ money, too big to fail and implicit guarantee from all Central Banks around the world that you will be saved even if you completely screw up (the whole firm or consequently even the economy).

I would love if Mr. Daniel Kahneman applies all his theories of decision making to the bankers and financial industry as we know today to show how effectively it predicts the actual actions of these Lords of Finance. I am sure the theories cannot be applied to decision making of bankers which have brought terrible misery to millions around the world and amazing riches to bankers and financial institutions.(if you do not believe this stop reading!!)

I argue that what happens in REAL world more than 99% of the time when real people (almost all in some sort of organizational set up) are taking real decisions in organizations which can be observed by anybody is not explainable completely by theories like prospect/certainty effect/loss aversion/utility/System 1 or 2,  etc.

I am not a professor who can catch 50 students and give them a sheet of paper with 5 logic questions (each with 2 choices) and then extrapolate them to real life decision making. I will ask the same questions which have been asked in the book Thinking Fast and Slow  at the end of the write up. The only difference will be – I will use context/surrounding events before anyone has to decide which option to choose. The responses I am sure will be exactly normal as what happens in real life but the responses will violate most of the existing theories regarding decision making under risk.

Continue reading “Critique of Daniel Kahneman – Decision Making Theories”