The Goodwill Investing Journal - Issue #8

Happy Friday!

I'm playing in a squash tournament this weekend!

My style is ground and pound - I like to bring the heat. Onlookers always tell me: "Eddie, hit it softer, play smarter"...well folks, don't hold your breath. Like on the tee box, I like to grip and and rip it! Will let you know how the tournament goes in next week's issue :).

Now, without further ado...

1. Personal Finance

Had some good commentary on the Cost of Starbucks last week - you can read that issue here.

As it follows, I've been thinking more about how companies are winning, and people are losing. And so we have:

The Lion vs Gazelle

Gazelles (people) are fun. They enjoy life, and they just love to eat grass all day.

Then a Lion (a company) comes along and offers them a new type of grass. It looks so delicious they just have to eat it. It is the exact same grass, just in a different fancy new package.

One Gazelle spends all their money on this "new" grass. Then it tells it’s friends to buy the grass, and they spend all their money, too!

You see, Lions may seem nice (Lion King anyone?), but they are excellent hunters. 

When a Lion smells a Gazelle nearby, the Lion goes into hunting mode (internet cookies, social media algorithms).

Mufasa to Simba: “shhh…we’re going to mind trick these Gazelles to pay top dollar for our “new” grass.”

And ultimately, the Lion eats Gazelle (wins their money).

The Lions are winning: Taylor Swift is winning, Apple is winning, the Kardashians are winning. And the Gazelle's are losing!

The moral of the story is, we all live in the 'Pride Lands', and we are part of the Circle of Life called the free market. The good thing is, unlike most animals, we have the ability to choose what animal we want to be: Lion or Gazelle.

And by the way, I'm all for a good amount of consumption. I like to go to the movies, go on trips, etc. But, take some time to think about your spending patterns. And if they are making a real difference in your life. Or if it's nothing more than food for the Lions.

Don't be a Gazelle. Be a Lion.
No Sea Gazelle. Sea Leon 🦁

2. Stock Markets

If you're going to be a Gazelle, you might as well be a Lion, too. Own the companies that eat the Gazelle's. Easiest way to do this? Invest in ETFs. 

Exchange Traded Funds (ETFs) are one of the most powerful investing tools ever created for the average person.

They allow you to invest into hundreds of companies at a time in one single investment.

Let’s look at the US S&P500 ETF – this tracks the 500 best companies in the United States

Investing $1,000 into this ETF is the same as buying:

• $71 in Microsoft

• $59 in Apple

• $49 in NVIDIA

• $37 in Amazon

• $26 in Meta

• $18 in Alphabet

• $17 in Berkshire Hathaway

• $15 in Eli Lilly

And $708 in the other 492 companies. All with one single purchase. 

Selecting individual stocks may seem fun, but successfully doing it for the long term is very difficult. Because things are always changing:

• Some companies lose their significance (Peloton)

• Or go Bankrupt (Enron, Lehman Brothers...etc)

• While other new companies go public and skyrocket to the top (ie Apple)

You can save yourself so much time and stress by using ETFs to become a successful investor.

You can just sit back and participate in the self-correcting innovation machine that is Corporate America. 

3. Real Estate 

We are selling our townhouse. Vancouver real estate - must be making tons of money right?

Wrong. After GST (we bought it new build), Property Transfer Tax, interest costs that ran up faster than any rent would have (due to rent caps) and brokerage fees - making money isn't as easy as one thinks. 

Next time someone tells you the price of their sale - subtract 10% from that at a minimum. 

On $1,000,000, that's $100,000. Hardly chump change.

1 Quote

"Men will do nothing unless they have to. But once they have to, they will do anything" 

-Tucker Carlson on Lex Friedman Podcast.

A Question  

Did you enjoy the Lion vs Gazelle concept?

Which one are you?  

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Thank you

Eddie Gudewill, CFA

P.S. How I Can Help You

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