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F*** What????

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FuckedUpedness.jpeg

FuckedUpEdNess!

There, I said it… forgive me but… YAY!!

It’s a word I’ve anxiously saved and hoarded all of last year to make use of, so please excuse my bold application, but at last, its time has come.

And really, using it to describe my own actions (and those of the Man Down South) makes it OK to use, doesn’t it?

I’m writing this week’s post with a slightly rosy hue burning my cheeks (not the ones I’m sitting on!).

I spend a not-inconsiderable amount of time each day, week, and year, examining and studying, then finally purchasing (and selling) tiny amounts of publicly-traded companies in both Canada and the US.

My long-stated goal has been to swing a bat with care and sagacity to bring about an average return of about 15% on my accounts and those I advise on.

Each year (mostly), I happily highlight my investment acumen in the cases where I’ve made some head-swelling choices, and to be fair, grimly excoriate my less well-chosen trades on the markets.

BUT! The big bold F word above tells you which direction my choices have driven this past year… a Thelma and Louise skid off the steep cliffs of investment return. NEGATIVE!

Because I act as a kind of amateur investment advisor to my kids, I’ve already sent them each a letter of (FuckedUpedNess) apology and mea culpa for the bad news I wrought in their accounts that wasn’t so bad until … the final month of the year when the wheels were violently ripped off this market money wagon… CRASH!

To be a little gentle on myself, I know that all North American markets took a big haircut on the year. To be a little less gentle on others, I feel exasperated and irked with the Man Down South.

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But blaming others just isn’t healthy. I won’t go down that road. Please please please help me to not go down that road.

I know from lengthy experience that markets aren’t a solid, joyous ride up the rollercoaster…. on occasion, there is an underwear-staining heart-thumping tear down a steep track that we must expect.

OK… brass tacks … what’s all this FuckedUpedNess fuss about?

The bottom line: the return on my investments for 2018 was a sub-standard -1.76%.  My first down year since 2008. By comparison, the S&P 500 (the broad U.S. measure of markets) dropped 4.4% in 2018 and the TSX Composite fell 8.9%.

I hate it when I see my net worth sink even a little. When you invest on a serious level, net worth has a rough correlation with net self-esteem!

OUCH!

A negative result is different now than before.

I’m finding out in a non-fictional way today that negative returns have a real-life impact on a Retiree’s (there’s that nasty “R” word!) world… the regular bi-weekly paycheque has gone AWOL and is no longer a credit to balance the debits! The teeter-totter has lost one of its players.

But I’ve long known that a job is only one source of income. The American IRS suggests the average millionaire has seven sources of income. We should all strive for multiple streams of $, yes?

OK, enough delay… it’s time to pony up and share my results over the short and longer-terms.

I’m definitely no Warren Buffett when it comes to investing – the multi-billions keep slipping from my hands – but I’ve carried out my role in an OK kind-of-way over time, and more importantly, I love the pursuit, the challenge.

So here are my cumulative annualized returns over the past decade (to shrink my head a tiny bit, I’ve added in year 11 as that was the year of the big 2008 slide… a harrowing -37.1% return):

  • 1 year     -1.8%
  • 3 year     +6.1%
  • 5 year     +6.8%
  • 10 year   +19.7%
  • 11 year   +14.5%

Only over the 10 year period have I attained the pinnacle (15%+ returns) that I’ve been climbing towards. Clearly, my goals have outshot my reality. I’m not giving up!

And for this past year, I’m putting my investing acumen and self-accolades in the FUCKEDUPEDNESS column.

Guess I’ve gotta keep working on my swing (maybe I just haven’t reached my 10,000 hours of mastery yet). I hate those years when I strike out.

I don’t want to have to pull out that F word again next year!light sabre bat.jpg

 

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.

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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.

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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.

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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