I look at everything from Capital flow point of view and believe fundamentals follow Liquidity or Capital flows. Shift enough Capital into one place and you will start seeing all assets going up irrespective of fundamental valuations..
Martin Armstrong writes in his blog…
Canada will benefit from the capital inflows to North America which will not be as intense as those into the USA because of your government’s punitive actions against foreign investors and its sheer stupidity in understand international trends.
Canadian real estate will be a hedge for an Emerging market investor looking to buy asset which maintain the purchasing value of money.
He further writes…
Here is an illustration of our Canadian Real Estate Index in both Canadian dollars and in Chinese yuan. You can see that from the Chinese perspective, Canadian real estate is still rising as a hedge against their currency.
Here is the Canadian Real Estate Index in terms of Euro. Again, we are witnessing breakouts that are stronger in foreign currency than in Canadian. As we head into the Monetary Crisis Cycle, capital flight from Asia and Europe will continue and this will distort the profits they think they are making in real estate not understanding that they are playing the currencies.
Nevertheless, the is all part of the shift from Public to Private assets. While the “real terms” perspective of “value” may not be making new highs in purchasing power, this is still part of the shift from public assets. Some people will buy equities, others will go into real estate, and still others gold or other precious metals. The end game is to divest yourself of public assets and stay away from “fixed rate” investments where you are the creditor. Borrowers should be fixing their loans.
He concludes….The majority of people just look at the price and do not understand that the currency swings can make a bad investment look good. You must always look at this from an international perspective.