I copied this response to a blog on National Post from an unknown source because it was so good.  Well worth the read.  By the way I have proven that buying your principal residence, even with zero down and 40 years still outperforms renting.

Garth Turner, a man who knows how to sell books at the right time, regardless of the content is back at it again.  Many of you, except those who followed his advice have thus forgotten the 1998 book by Garth Turner “The Strategy: a Homeowner’s Guide To Wealth Creation”, in which he advocated regular investors borrow against the value in their homes and invest, using leverage in an attempt to create wealth and tax deductions.  

This strategy assumes increasing home values, increasing stock market values, continuing deductibility of interest and sustainable payments. One wonders how many of these investors were able to continue this program after 2000 to 2002?

That was a few years back.  Now he suggests that that was all wrong and it’s time to “get out”.  What if you’re the people now caught with a lower valued property, interest payments you may not be able to afford and market values or invested assets, down %15 or more? Easy to say get out, but it was Garth’s advice that got people into this mess to start with.

According to a 2002 Globe and Mail report, ” Duff Young recalls speaking at a seminar in October, 1997, “and the financial adviser who hired me had previously used Garth Turner. He said he’d had excellent results, which meant he earned a ton of commissions. Turner had proposed leveraged purchases of mutual funds, using home equity as security to borrow the money.”

It would be very interesting to hear from those who did follow Garth’s advice before and see what the results had been.

End result is that nobody, nobody, has any predictive ability in any sense, in any market, yet for some reason Canadians all rush out to buy the books, fill the seminars and do the dance.  As Canadian investors we must STOP this gambling addiction.

Four Pillars asked a good question- “If Garth Turner has sold his house?”  The answer would say more about the man than the concept.

This is not to say anything negative about Garth Turner, his job is to write and sell books and he does that very well, but his job is NOT to create wealth for anyone but himself and his publishers.  We Canadians must become more discriminatory in our investment ways to weed out good advice for us and bad.  Every single study bar none has conclusively shown that moving from one asset class to another, or attempting to predict markets, or time markets, or beat markets is a fruitless endeavor, but Canadians keep searching for a holy grail of investing which does not exist- take a lesson from the now wealthiest man on the planet, who has every year stated that the majority of investors should follow passive, diverse program of investing- “A very low-cost index is going to beat a majority of the amateur-managed money or professionally-managed money.”

Keep costs low, avoid fads and realize that even in times like this, capitalism works.

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