Hey everyone, spent some time on my Dad’s boat this past weekend. Fishing on the west coast of Vancouver Island. Commemorating my Grandad who died 31 years ago, in his favorite place on earth—on board the Sprite V. We can only hope to go out in that kind of style one day. Anyway, 10 Gudewills on board, we caught caught salmon, halibut, and lot’s of laughs. Mostly us young gen did a lot of listening as the four old boys (my dad and his brothers) waxed eloquent, tossed friendly insults (you need to have a thick skin on board) and quoted the honorary man who was Eddie H Gudewill.

If you are enjoying the Journal, please forward to your friends to subscribe. 

Personal Finance

Having a 1:1 call with a subscriber next week, she says:

I’m already nervous! Hahaha.

It’s a side note but I would love to hear your thoughts on this: 

https://www.thetraumaofmoney.com 

Thought experiment on whether it’s more practical… or emotional… or perhaps a split 🤷‍♀️ 

My response:

Lol, don’t be! Will keep it light and casual and like anything, a little bit of practice and you’ll build your confidence up in no time.

Thanks for sharing that website. I just spent some time going through it, and I love the concept and approach.

I came across Gabor Maté (who is quoted on the website) a few years back as I was looking into understanding trauma after someone I love got sick, and I was blown away at everything he was saying—how childhood trauma, if not dealt with, can completely alter someone's future and even lead to addictions and deadly disease... and so I've taken a lot of his words on trauma to heart and try to be more sensitive around that. Not just blowing someone off who says they are depressed with the usual "oh, just be happy" — that doesn't cut it!

Anyway, one could argue that money is 100% financial. But equally so I'd argue 100% emotional. Because we are in a world that requires trading time for money. You can't have one without the other. Because things cost money—cars, houses, nice clothes... even basic survival costs money. So we have a natural, if rarely spoken about, complicated relationship with it. And that creates wide-ranging outcomes for different people all across the wealth spectrum.

You see rich people completely unhappy with no real friends or family that care for them—because they get in return what they project—that preference for money over all else. In short, selfish operators.

And then you have those people with few dollars and yet happy as clams because they are surrounded by true friends and loving family, for they exude gratitude and love and appreciation and it's doled back in spades. Not transactionally; naturally.

Or those in the middle or on a journey of sorts... like me I guess, somewhat unsatisfied with the amount of money in my account as I'm convinced I need to buy things I yet can't afford. I like to blame marketing companies for their exceptional ability to convince me/us we need something, and need it now. But for me it's a challenge, and I like that challenge, I also love numbers, that helps a lot to be sure. And so despite the “unsatisfaction”, I operate pretty relaxed and am grateful for where I live, my friends, loving parents and family, etc.

I've made plenty of mistakes with money in the past. And these have traumatized me, one in particular, most definitely. I'm lucky the trauma didn't endure. Maybe it didn't endure because I told myself, let's learn. Money as the end goal is not the way. Money as a tool to provide you with optionality, freedom to choose... that to me is what money is for. Like a tool—an axe—use it improperly and cut off a limb. Learn to wield it properly and you can do a great many things.

Sorry, it turned into a bit of a diatribe there... but the website inspired me!

And I think this will make it into tomorrow's newsletter!

Thanks for the inspiration.

Have a great day.

💝 Newsletter subscribers get 10% off the Simply Investing course with the code: SIMPLYINVEST

🎁 Get $25 when you open a Wealthsimple account. Use my referral code: PRGS3Q

Stock Markets

I’ve been hearing markets are “weird” for a long time.

Since I started in the business in fact, in 2011.

• Valuations are too high

• This can’t go on for much longer

• Geopolitical risk is greater than ever

• We have the same set up as 1930 (great depression)

• The end is nigh

For many years I would read and read and read the top investor minds in the world; Howard Marks, Ray Dalio, Gary Shilling, David Rosenberg…

I was convinced of the fact that markets just couldn’t go any higher.

And yet the SP500 has climbed 6x over that time period.

The ironic thing is I worked on the Canadian version of Wall Street at an institutional Equity Research desk for about 4 years during that time.

And so I was gaining skills in analyzing investments and stock markets.

I would search and search and search for small cap stocks that showed promising financial characteristics and future prospects.

So while I was busy nodding my head in agreement that “markets” were expensive, I was dialing up the risk curve by selecting individual investments (the most risky are the smallest ones).

And some of these did well. One even went up 10x.

But many of them did poorly. Two went out of business. One of those losses crushed my finances when I was 26.

I would have been FAR BETTER OFF putting every dollar of savings I had into just one thing. A market ETF, one that owned ALL the stocks. Not just one small stock.

Over the years, my investment style has definitely changed.

I certainly still have an affinity for the small cap value, one off “deal” side of things.

But I’ve learned the best way to invest in a stock, is to own all of them.

S&P500? Great place to start.

Cue the warriors that will reply and say it’s too overvalued 🤣

Charlie Munger said something like—if you buy companies that have high returns on equity, you will still outperform, even if you overpay.

Know what the average Return on Equity of all the companies in the S&P500 is?

27%.

Real Estate

Speaking about the deal side of things.

Since I’ve ventured away from the small cap stock side of things, I fill my cup with private real estate investing (this is my day job in case you didn’t know, VP Acquisitions at a high quality private real estate investment firm). This is about 50% of my net worth.

Why I like it:

• Analyzing individual property cash flow is the same as analyzing any cash flow statement. So to is evaluating its strengths, weaknesses, opportunities, threats, customers (tenants), and management teams.

• You get the benefit of investing with leverage. You can leverage stocks, but it’s highly dangerous because of stock volatility (margin calls).

• You can physically kick the tires and see your investment, influence the financials (improve leases, convert gross rents to NNN, manage expenses, challenge property tax valuations, increase NOI, etc).

• There is no readily available public market to transact your commercial property, so you are forced to allow time do its thing. Prevents you from making irrational buy or sell decisions that you might regret later.

If anyone is interested in private Limited Partnership investing, let me know (must be an accredited investor).

There aren’t many deals to be had these days as the commercial real estate market is still in a major slump due to wide gaps between what buyers will pay and what a seller is willing to accept. But when we find something investable that meets our return and quality criteria, we will go all in. It’s just a matter of time.

1 Quote

“Hurry goin, take your time comin back”

Eddie H. Gudewill, my namesake.

A Question

Have you ever experienced money trauma?

_____________

Thank you,

Eddie Gudewill, CFA

🎓 Want a smarter, simpler path to long-term wealth?

My self-guided ETF investing course walks you through the exact strategies I use and teach in this Journal—built for real people with real lives.

Click here to learn more + save 10% with code SIMPLYINVEST