Fact 1: Over the past 12 months alone, Tesla’s market capitalization grew by more than a full Berkshire Hathaway! Growth’s outperformance is well known and documented, but the speed of this outperformance is jaw-dropping.
Fact 2: Residential investment as a proportion of GDP in Canada skyrocketed during the pandemic and remains at extraordinary levels. The Canadian economy is significantly exposed to a downturn in the housing market.
Fact 3: Housing prices in the US have mainly risen in line with disposable incomes (first chart). In Canada, however, the gap between housing prices and incomes started widening significantly at the turn of the century (second chart). Today the gap is at extreme levels.