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A Blog About Nothing …

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YADA YADA YADA …

Yoda

YADA … not … YODA …

You can nod off to sleep right now if you wish because I’ll be writing a thousand words or so here but I won’t be telling you anything you need to know that’s important other than to ignore the stuff happening that you think might be important, because it’s really not. Got it?

Let’s move on …

I mentioned last week that I’ve been writing this blog stuff for 3 and a half years now …

I also mentioned that I observe and steal from others … people I encounter day-to-day and people and ideas I see in TV and movies…

And if you’ve noticed, there are a few people out there in the artistic and investing community that I admire.

People like:

  • writer Stephen King who blows me away with his prolific writing and amazingly creative imaginary genius, even if I don’t always enjoy his “horror”-genre subject matter.
  • TV and movie writer Aaron Sorkin who concocts the most remarkable rapid-paced dialogue and clever one-liners to come out of actors’ mouths. The Social Network, Moneyball, Charlie Wilson’s War, Steve Jobs, A Few Good Men, The American President, The West Wing, Sports Night, Studio 60 on the Sunset Strip, The Newsroom. Just listen to the dialogue and Olympic-level verbal gymnastics that occur in these shows – in his writing.
  • Nora Ephron, the late queen of writing the classic romantic-comedy movie: Sleepless in Seattle, You’ve Got Mail, When Harry Met Sally, Silkwood, Michael. Ephron almost defines the Rom-Com scenario of the late 20th Century.
  • Warren Buffett, the Oracle of Omaha. An ordinary yet truly extraordinary investor guy who acts like a country bumpkin but has the calm wisdom of Solomon.

… and finally,

  • Jerry Seinfeld. Everyone knows Jerry. That guy who made TV shows about nothing. ABSOLUTELY NOTHING! And we all loved him for it. When we were in New York City a couple of years back, we visited the famous Tom’s Restaurant coffee shop where many of the group of 4 (Jerry, Elaine, George and Kramer) scenes occurred (in truth, just the exterior of the restaurant was real, the scenes were filmed on a soundstage elsewhere). A few weeks back, we took in a Jerry Seinfeld stand-up comedy “concert” in Vancouver – an hour and 15 minutes of non-stop laughter – yup, he still delivers.

Toms restaurant

So, in perhaps one of the strangest segues ever observed (And BTW? Segue – pronounced “SEGWAY” is one of my favourite words ever), let me take you back to the NOTHING I mentioned earlier…

If you’ve been looking at – or worrying about – all the turmoil and fear in world stock markets this week, try to remember Jerry Seinfeld and that all of this financial worry is just YADA YADA YADA …

A big NOTHING.

Background noise.

Markets go up … markets go down.

The sky isn’t falling and we’re living in a golden age even if we don’t always recognize it that way.

Most of us enjoy lives greatly superior to royal kings and queens of a few centuries back with our:

  • Heated homes and sometimes, indoor heated thrones too.
  • Sumptuous foods from every corner of the world every day.
  • Entertainment of a thousand varieties at the push of a button.
  • A pill to cure or assuage every affliction.
  • Teeth that shine like sparkly diamonds with no decay pain.
  • Our backs bathed in sunny warmth on sandy beaches in February while snowdevils whirl around our frigid northern homes.

I could go on but you get it, right?

I hear you saying I’m an interminable optimist who would have saluted Hitler with a smile. Sure, maybe you’re right.

But one of life’s lessons I think I’ve learned finally is that the things we worry about the most – MOST times never occur.

My mother passed on a minor version of her “worry gene” to me. This used to worry me… but the irony in that is just too silly to contemplate.

Of course, unpleasant things happen to all of us. BUT, to constantly worry about what could happen won’t prevent unpleasant things from happening. Quite the contrary, that’s usually a very efficient way to attract more unpleasant things into our lives.

Yes, unpleasant things happen. But when they happen, we find a way to deal with them, we find a solution and we learn and grow through them. We become bigger, wiser, better…

I used to worry about my financial health every time the stock market took a downdraft.

One Tuesday morning in October 1987 I was sitting in the cafeteria of Penticton Regional Hospital on a coffee break with some of my fellow lab co-workers.

They were talking to me but I didn’t hear a word they were saying.

The New York Stock Exchange had dropped 22.6% a day earlier and my – what I had considered to be substantial – investments took a beautifully elegant swan dive off an Acapulco cliff.

Black-Monday-the-Stock-Market

My bastard inside voices told me the world was ending and life would be terrible and barely livable.

How would I manage? How would I survive the future? My children would be paupers.

In a state of lucky near-panic, I did nothing and rode the waves of worry and weight, while others sold their investments in extreme anxiety.

A couple of years later, it was as if nothing had happened. My stock shares rebounded and grew higher still.

It wasn’t my calm persistence and belief in the positive that carried me through the worry then. It was paralysis.

Since those earlier years, I’ve encountered more heartwretching stock market plummets (2008 was a classic!). I’ve fashioned mistakes of my own making in choosing an investment – where an individual stock price dropped to featherlight nothingness overnight.

The main thing I learned in my own evolution through these and life’s other worries is that the end result is rarely as bad as the thoughts that ran through my head.

Repetition of these distressing life events slowly began to infiltrate and become absorbed.  The lesson I was learning was the belief that I could survive each onslaught and that the final result would be fine. Or close to fine.

The worry – the overwhelming worry? – it wasn’t worth the paper it was written on… OMG, that’s a terrible analogy. Sorry, you can probably think of a better one.

My worry was wasted energy. Looking back it was me running on a treadmill, never getting closer to my desired destination.

If all the physical, health, mental, financial worries that I had imagined countless times had come true, I would have perished years ago, a tangled mess of a train wreck. KA-BANG!!

The answer to life’s worries wasn’t found in the wise words of YODA, the reflections of Buddha or Confucius, the blatherings of Donald Trump.

When it comes to worry – and we all have worries, it’s part of the human condition … the first words I hear now aren’t from green goblins named YODA …

… the words I hear are YADA YADA YADA …

… loosely translated as THIS TOO SHALL PASS.

I’ve written that here before just so you know I’m not delusionally and unknowingly repeating myself.

Some things, like eating a bowl of butterscotch ice cream, bear repeating.

And that is today’s blog post about NOTHING.

YADA YADA YADA …

nothing

 

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Build Yourself a Toll Bridge and Find Freedom …

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For Christmas I’d like to give you a gift of 10 million dollars. And Freedom.

Not by winning a lottery or a scratch-and-win prize. Not by falling into a huge inheritance.

Nope … Those are magical tricks I don’t buy into.

I want us to create our own magic.

INVESTING!

Wall street bull

 

My real goal in saving and investing has always been to pursue personal freedom.

The ability to choose my own path and not be at the beck and call of someone else who controls my destiny.

If I didn’t like what I was doing or who I was working with, I always wanted the option of kissing it/them goodbye.

I did just this when I quit a lab job on Vancouver Island that was eating me up inside. The financial returns weren’t worth the stress and burn.

I don’t need a zillion dollars to make my life livable. But I do need a reasonable base of savings and yearly returns that give me cash flow to live on. Cash flowing in like a toll bridge.

I like toll bridges.

toll bridge

Toll bridges don’t do anything, they just sit there collecting $$.

I want to own the toll bridge that pays me for just standing still, doing nothing.

I was fortunate – lucky really – to work only 3 days each week for the past 25 years in a job I enjoyed, working around people I enjoyed working with. THAT is freedom.

While I worked in medical laboratories, dipping swabs in delicately scented stool samples and pouring tubes of straw-coloured urine like fine wine, I quietly built a toll bridge.

I love investing.  I’m always searching for a zillion dollar idea in the stock market.

People like to whisper in my ear how I can make a zillion dollars.

I decided long ago to only listen if they’ve lived their dream and made it happen in their own lives. Otherwise it’s just a puff of cancerous smoke trying to kill me.

Today I’m gonna whisper in your ear. You decide if it’s smoke and mirrors or solid ear wax.

Please understand that my whispers won’t make you a zillionaire overnight.

But let them incubate a few years and these delectable eggs may set you free.

I love reading company financial reports, looking for tiny shiny diamonds in a huge slag pile. My pulse quickens when I find an elusive gem.

I was elated in years past when Slater Steel and Western Star Trucks and Facebook, and more recently Apple and Disney and Aflac landed in my lap at fire-sale prices. Black Friday sales (and CRASHES too!) can happen any day in stock markets.

Famous investor Peter Lynch was always looking for the “10-Bagger”… a stock that multiplied in share price 10 times over. Peter Lynch was a great investor.

One Up on Wall Street cover

Honestly, I’ve never owned a 10-Bagger.

Actually I probably have owned a couple but I’ve yet to find one that I didn’t sell too early and miss the HUGE payoff. Just shoot me now.

I get skittish when I have a stock that’s risen two or three times over, even if it still holds potential for further gains.

The real goal for a true investor (not speculator or gambler) is to better the return of the stock market indices – The DOW. The NASDAQ. The S&P 500. The TSX.

If you can’t beat the stock market averages – and MOST mutual funds return LESS than the stock market averages – then sniff sniff … you’re just … average … and you might just as well stop wasting your time and put your money in an ETF (Exchange Traded Fund)  that follows the ups and downs of the whole market.

Nope. Not for me.

Over the past 10 years if you had socked your hard-earned $$ in the North American markets you would have seen yearly gains of 7.8% (DOW), 7.4% (S&P 500), 8.5% (NASDAQ), 4.7% (TSX)… not too bad when you compare these numbers with long-term GIC returns of about 3.5%.

My own 10 year investment return has been 12.2%. Not bad either, although I set my sights on 15% as a long-term goal.

Maybe I’ve set my sights too low in aiming for a 15% annual return on my overall investment portfolio. Perhaps if I looked higher in the sky, I’d make a better return. There’s something to be said for setting expectations HIGH!

This year has been relatively quiet on stock market fronts … both Toronto and New York markets have bobbed and wavered like an iceberg around the 0% change mark, sometimes slipping a bit above the ocean’s surface, sometimes dipping a bit below.

I can happily report that as of this week, I’m sitting on a 2015 investment return of 10.7%. I know it’s not an eye-popping number – Donald Trump won’t be naming one of his buildings in my honour (hallelujah!!) – but I take some satisfaction in outgunning the stock markets as a whole so far.

And my toll bridge is doing its job of sending me cheques every three months filled with $$ I didn’t have to get out of bed to earn.

But let’s end the narcissism right here.  Enough about me and my year.

What are a few names that might spell FREEDOM for you in today’s stock market world?

I’ll tell you this with one caveat.

As soon as I open my mouth publicly about a great investment, the Money Gods generally take vengeance on me by sending bolts of lightning to crush and sizzle my picks.

Of course this won’t stop me because I have a strong secular faith that markets and stocks that drop today – if well chosen – will rise like Phoenix’s from the fires and ashes and bring a financial smile to my lips.

And in the meantime, every one of these “whispers” pays a toll booth dividend to you, collecting and sending dollars your way while you stand still doing nothing. You can just take your time and breathe.

 

Here goes:

  1. Apple – the 2000’s world exists with an “i” in front of everything. Why fight this amazing colossus with ONLY $200 Billion cash on its balance sheet?
  2. Microsoft – don’t like Apple? Microsoft owns everything else in technology. Office 360 and X-Box anyone?
  3. Disney – Just watch the new Star Wars movie and Let It Go, it’ll make all your dreams come true.
  4. Aflac – the silly daffy duck that keeps on giving bigger dividends every year.
  5. Gilead Sciences – a cure for Hepatitis (HARVONI) at a bargain price of $75,000 per patient – KA-CHING!!!
  6. Alimentation Couche-Tard – the owner of almost every corner store and gas station in North America is migrating a path around the world bringing Mac’s and Circle K to the masses.
  7. Deere – you wanna eat? You ain’t gonna do it without a John Deere tractor pulling the harvester.
  8. Johnson & Johnson – I am stuck on band-aids, and AIDS treatments too. And 10,000 other products you absolutely need.
  9. Royal Bank – hate bank user fees? It hurts a lot less when you get them back in a dividend cheque.
  10. Torchmark Corp – just a quiet little health insurance company that spoon feeds all its profit back to investors.

The world needs more bridges of all kinds to solve its problems. Why not consider constructing yourself a toll booth and enjoy sleeping in late tomorrow?

Freedom. Enjoy this Christmas gift to you.

sleep in

 

 

 

 

Become Your Own Financial Gardener …

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goofy investing

You may already know this, but I love investing in the stock market. I’m a Market Nerd.

But be careful reading this. I like to invest, not speculate.

I’m not loading my ass up to join in any Klondike Gold Rushes for untold wealth.

There’s a lot of fool’s gold out there, and I’ve bought my fair share over the years. Like the $25,000 I “invested” in YBM Magnex (a rare earth magnets company with wonderful financial statements) that turned out to be a front for Russian money launderers… the toilet got to eat those dollars.

Now, I bite into every piece of gold before I plunk my devalued Canadian dollars down.

At the age of 10, I knew I wanted to be a millionaire.

larry-spec-carrier-tiff

For an average guy with an average intellect, I’ve been able to make a reasonable return (12.2% annually over 10 years) on a consistent basis with a modicum of knowledge in reading balance sheets and income statements. It takes a steady hand on the tiller and confidence in the decisions I’ve made.

When so many others bailed out of stock markets in 2008 during the financial crisis and lost a huge whack of $$, I had no hesitation in staying the course.

WHY?

Because I did my own research and analysis of each company and stock that I owned a tiny piece of.

Warren Buffett, the world’s most famous investor taught me well.

A year or two later I was back above where I was prior to the “crash”.

It didn’t matter to me that markets tumbled precipitously day after day after day (OK, I’m human, it hurt a bit… nobody likes to see wealth appear to evaporate like a cloud of steam arising from a kettle).

  • I looked around and I could see that the lineups at Tim Hortons Drive-Thru lanes remained as long as ever.
  • People still stopped at Shell stations to put gas in their car tanks on the way to work.
  • I heard of no one cutting their Shaw cable or Bell phone connections because markets dropped.

Granted, home sales dropped off the cliff and there were small cutbacks in family budgets for fine dining and car purchases.

But in the real world, very little changed other than perception.

Markets are all about perception.

In the stock market world, on any given day, everything is super amazingly fabulous … or … everything is catastrophically terrible. In the short term, rational thought doesn’t find a place on this rollercoaster. It’s screaming fun or vomiting your guts out over the sides.

This is one great thing about experience and aging. For the long term, I’ve learned to just shrug and remain calm. No bull.

Financial-District-Bull

I began investing in the stock market in the 1970’s in my 20’s.

Hot Tips” and broker recommendations were the way I made my investment choices. “This baby will double in 3 months!“… “You can get in on the ground level now, but it will be too late next week“.

When you hear those words anywhere in your life, I suggest you turn and run away as fast as you can. Those guys have stinky armpits and bad breath, but their seductive smile blinds you to the underlying stench.

The good thing about such tutorials at this point in your young life is that the hurt you can inflict on yourself is generally pretty small. These are just small razor nicks, not a nasty slice through the main financial artery.

Once you’ve accumulated a nest egg of a decent size, hopefully you’ve learned sufficient lessons to protect yourself from yourself and irrational decisions.

Just as you should feel more comfortable eating a meal you’ve prepared with ingredients you know, you can swim in warm comfort when you have a bit of understanding and know the reasons and rationale for making an investment.

You read your own financial cookbook if you want the best result.

financial cookbook

Nowadays, I can assess within about a minute and a half if a company has any interest to me whatsoever in terms of investing in it.

9 out of 10 prospectives get tossed quickly, then I can delve more deeply into that 1 possible gem and decide if it has long term potential. Potential and a sensible price to make the purchase.

I love DISNEY as a company, but I can’t make myself buy it right now because it’s selling for a crazy high price. I love APPLE as a company, and it’s selling for a modicum of its true worth (in my evaluation). BUY BUY BUY!!

Once I’ve made the decision to invest, it’s important to be out in the financial garden daily or at least with a regular frequency.

The very best investments occasionally turn south for a myriad of reasons (eg. new management (General Electric), changing technologies (Blackberry)).

Beautiful investment flowers can sadly become unexpectedly infected with a virus or fungus.

My investments are like bonsai trees. I trim a little deadwood here, I let other healthy branches grow.

Mistakes will always happen and need to be pruned.

Other times, a FACEBOOK takes the world by storm, and you just sit back and watch that branch grow and grow. Ka-Ching! Ka-Ching!

Pssst! Here’s my HOT TIP for you if you want to be your own financial gardener.

Start by reading and absorbing what’s worked for the ORACLE of OMAHA… Warren Buffett.

The Warren Buffett Way by Robert G. Hagstrom

Let’s go outside and smell the roses divine.

financial garden

How to Be a Lazy Bum and STILL become a Millionaire

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Million dollar toilet-paper

Q: You want the short, easy answer to the title above?

A: Buy an old, worn-out slum house in a grotty section of Vancouver (substitute Toronto/Calgary/Hong Kong here if you like) in 1989 for $45,000. Do no repairs or maintenance for 25 years. Sell it on the 2014 real estate market in 2 days.

PRESTO, you’ve got a million bucks.

.

Congratulations on being amazingly prescient and/or amazingly lucky.

I am neither of these and so I haven’t walked the smooth, easy path to apparent and modest (only by North American standards) wealth. As a result, I’ve worn upmarket Valu Village fashion for most of this arduous journey.

BUT… I am a Lazy Bum.

LEGAL DISCLOSURE (ie. the fine print):

Maybe I’m a millionaire, maybe I’m not.

I only tell the complete and unashamedly full story when it comes to sex!

I refuse to reveal the full truth here because if I say that yes, I am a millionaire, then it’s boastful bravado bragging. You’ll move on from this post saying:

Who wants to read stuff from that over-inflated windbag?”

Or, if I say I’m not, I blow my credibility totally in your eyes and then you won’t read my advice as if it has any meaning to you:

Why should I trust him, he hasn’t walked the walk, he’s just making this crap up!”

LIAR_LIAR

The luxurious cachet of calling yourself a millionaire has blown away in the inflationary wind over the past couple of decades.

The unceasing rise in prices has transformed a million dollars from an estately “Downton-like” sum to merely making a daily Starbucks latte a cheap treat; it’s hardly a sultan’s caviar fortune.

Anyway, just what makes you a millionaire in today’s world?

  • Is it an annual income of $1M bucks?
  • Is it an accumulated savings account of $1M?
  • Does it include the value of real estate like your house, or is it strictly money in the bank?

For clarity purposes, let me tell you my personal definition of millionaire. Bear with me, it’s a bit loose and a bit boundary-less.

This is important because it affects my ability to live daily life and pay the bills that flow like cool, rushing mountain streams, or beer from the tap of a sports bar on Stanley Cup final night.

MILLIONAIRE [mil-yuhnair]:

A millionaire has the financial resources to live comfortably from the income flowing from their investments without having to stir from his/her bed in the morning. Just yawn, roll over, and the passive-income is deposited in your account.

It’s a fuzzy concept, but for some, living the life of a millionaire can be achieved with $250,000 of financial resources… for some it might take $2,000,000 to live the millionaire’s life they’ve chosen.

AND… while you’re alive, the value of the real estate in which you live and sleep just doesn’t count because (in most cases) it can’t deposit a monthly sum in your bank account.

There you have it.

boss

I’ve told everyone I know –  and probably unsuspecting people on buses and in coffee lines who I don’t know –  that I was going to retire when I was 35. This was the voice of enthusiastic and naïve youth thinking that retirement was just one major economic score away on the penny stock exchange.

And even though in my head I’m nowhere close to reaching age 35 yet, my birth certificate and driver’s licence inexplicably insist that I’m in my mid-50’s (damn liars!).

We all know there are a myriad number of ways to make it to millionaire status, but I’ve chosen to let others be the financial Cross-Fitters and do the heavy lifting for me.

How so?

  • I could have started a small business and worked countless hours to build it into a mini empire. I have friends who were focussed and energetic and have done just that and live lavish lifestyles as a result. I admire their energy and courage.
  • I could have studied incredibly long and hard and gained a career such as physician or MBA CEO/banker that paid handsomely for knowledge acquired. I respect their intellect and perseverance.
  • I could have become a real estate investor, purchasing houses and apartment blocks. Managing income-producing real estate would pay down mortgages and with increasing property values, I would be a wealthy man. I marvel at their risk-taking and verve.
  • I could have rolled the dice and become a professional gambler. There are people who spend inordinate amounts of time in casinos. The occasional one actually makes a handsome return, I’m told. I applaud their optimism and steady nerves.
  • I considered becoming rich through the Male Escort industry… but… well, we won’t go there today. I commend their ability to see past the “EWWWW” factor.

But, in the end, I’m a Lazy Bum.

Lazy Bum

Whaddya mean, a lazy bum? How can you be a lazy bum and still find a way to make a million without cuddling up to a rich relative on their death bed?

Well… it’s easy .. no, it’s hard …or, maybe it’s a bit hard, but not really.

I’ve chosen a path of less resistance and have forced my cash – saved little-bit-by-little-bit through the years – into the competent hands of others. Others who work extremely hard to generate financial value through creating and growing successful companies that produce services and products for which most of us, year-after-year, will dish out our hard-earned dollars.

For many years, I’ve entrusted my savings in stock markets where companies like McDonalds and Microsoft and Deere and Intel and Aflac and General Electric and Bell Canada and TransCanada Pipelines have slashed a pioneer’s path through the economy and paid me increasing dividends to sit back in the bleachers with my pom-poms and watch them do their stuff.

Every time a child stumbles and scrapes their knee, I’m there with a Johnson & Johnson bandage.

Need a coffee to get going this morning? I’m there with a steaming cup of Tim Hortons java.

Gotta have the newest iPad? I’ll deliver you a great Apple product and collect the dividend happily.

Charge your next movie theatre visit to your Royal Bank Visa card and I’ll roll over in bed with a smile on my face.

I consider this to be the lazy way, but to be fair to myself, I’ve invested many many hours in learning to read and interpret corporate financial reports. I know what and why I’m investing my savings in a company before I hit the BUY button.

I’m lazy, just not crazy lazy.

BUY

But never ever do I sit back worrying about a phone call from a tenant with a broken stove, or a rent cheque that bounced, or a client that has chosen my competitor’s business over mine.

For sure, I make missteps occasionally. Shame on me.

I make mistakes like investing $25,000 in a Canadian rare earth magnets manufacturer that turned out to be a Russian mob money laundering operation. Worthless!

I’ve invested in funeral home companies that had everything going their way (how can you lose $$ burying an aging North American population?) but still managed to go bankrupt. Worthless!

I’ve put money into huge real estate corporations that took on too much debt to manage, toppled under the weight and became insolvent. Worthless!

And yet, I sleep well at night because the positive steps have overwhelmed the mistakes over time.

So. You may be two steps ahead of me or you might be two steps behind, doesn’t matter.

Anyone with the patience to save a few dollars aside EVERY month and the willingness to learn a bit about balance sheets and income statements can make intelligent, “Lazy Bum” investments (I talked about some investment tips in an earlier post).

Who knows, you might even retire at 35 and thumb your nose at me as you drive by in your Porsche. Good on you!

But why don’t you stop in and we can wear chocolate ice cream on our faces and play in my sandbox and be lazy “millionaire” bums together?

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