Today we begin with a quick personal finance challenge.

Next, for the capital markets enthusiasts, we have a story about when I should have been fired.

We finish with a good back and forth with a friend on the rent vs buy debate continued from issues 83, 84, and 85.

Finally we close with the John McCrae’s “In Flanders Fields” marking the 80th anniversary of the end of WW2, as reminded by cousin Spencer Gudewill in his recent letter: Worthy of Remembrance: Lest We Forget

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Personal Finance

I’m getting off the Ferry in Vancouver, need to get downtown.

I can take an Uber for $75. Gets me there in one hour.

Or I can take the bus & sky train for $8.00. Gets me there in one hour and fifteen minutes.

I was about to click book ride. Then I thought, let’s try a little game.

Skip the Uber, go into Wealthsimple, and buy $67 dollars of XSP SP500 ETF, which includes Uber.

It just so happens XSP is trading around $66 right now. I did this three times over my short trip, so an extra 3 shares of XSP worth ~$200 invested in companies actively pursing profit.

A small purchase, but it was fun. Actively moving an otherwise gazelle expense into the stock market. This is over and above my automatic recurring purchases.

Furthermore, I do this trip about 20X per year. So, $200 × 20 = $4,000. $4,000/yr earning 10% in the stock market goes to $1.77 million over forty years.

Next time you have two alternatives that give you basically the same result, challenge yourself to take the lower cost option and immediately go into Wealthsimple and invest the savings in the stock market.

Feels good.

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Stock Markets

In 2013 I was hired by Raymond James Equity Research as a young whippersnapper, age 24.

Ben Cherniavksy and Theoni Pilarinos brought me in on a 12 month contract to cover an upcoming maternity leave.

Let’s see what the kid can do, they thought...

A bit of background:

Institutional Equity Research is a highly desirable, extremely tough position to get in the finance world. Especially in Vancouver, where Institutional Capital Markets are dwarfed by Toronto/New York/London, etc.

The job is to study public companies, industries, competitors, interview CEOs, and scour financial statements to build forecasts and valuation models. This is the foundation for producing research papers and recommendations (buy, hold, sell) for institutional clients, including monitoring and quickly reacting to quarterly results and other market moving news.

The mission critical piece is obviously the quality of your research and the accuracy of your investment recommendations. But so too is your timeliness. Stock prices move instantly, and your clients—billion dollar money managers—need the facts and your opinion as quickly as possible.

News broke on Friday afternoon.

I’m driving to the ferry to start the party weekend for my 25th birthday when I get a call from my team saying Alaris Royalty just made a major acquisition. This was big news for the stock.

I didn’t know this three weeks in, but if one of your companies under coverage breaks news—you must report on it, ASAP. Otherwise, your clients will leave you for competitors.

I was expected to turn around, on my birthday weekend, to work that evening and help publish a report on the news.

I kept driving and had an epic weekend with my pals.

Arriving to work on Monday, I was 99.9% of the way to being fired.

Ben, furious, disappointed, shared a story with me. Some years ago, he was walking into his 40th birthday party, his family and lot’s of others waiting for him, and news broke on his biggest company.

He turned around and went back to work.

I was lucky not to be fired. But I learned quickly there’s almost no room for these types of royal F$ck ups in an industry where millions and billions of dollars are on the line, not to mention the thousands of candidates that would happily take the position. My work ethic and commitment improved 100-fold after that day.

And now I know what it’s like for the young, entitled whippersnappers today that think their stuff doesn’t stink (because I was one of them). Well, it does—and sorry to tell you, you are replaceable, so don’t take anything for granted.

Certain experiences can shape careers and entire lives. This was one of them. Thanks to Ben and Theoni for not firing me and giving me a second chance. We still remain great friends 13 years later.

Real Estate

Question of the week from Issue 85 inspired this dialogue on rent vs buy:

Hey Eddie, love the question this week. Our family has always taken the approach that we will work really hard to pay off our home as quickly as possible, while also investing what we have left. The philosophy is that once you are debt free (or close to), you open the opportunity to take more risk in business and investing without the fear of losing the roof over your head. Lots of unpredictable shit can come up with work or family. You might lose your job, your company goes bankrupt, or you can lose on your investments, but you always have your home to fall back on. If you totally go tits up; you can sell the house and continue supporting your family. It might not be the right financial move (as you have proven out), but it’s a backstop if shit hits the fan.

I guess you could argue the other side and do the same thing with an investment portfolio and have the ability to liquidate if you get into trouble, but a home in where your family sleeps and your kids feel safe is a physical asset and I believe that carries value or at least a feeling of security and stability.

My response

Thanks for the response and I love that approach. I’m renting for convenience right now and I have a multi million dollar view on the cheap, but as I largely subscribe to your family approach as well I will be buying again in the future for sure. Definitely one of those things that’s probably worth more than the numbers that might argue for the alternative, as having security is priceless. The only place I see people doing a disservice is by buying too much house and leaving no extra scratch leftover to invest or liquidity to use in an emergency… So you say in the first sentence: pay off the house while also investing along the way what you have left—a two prong approach—and you get the best of both worlds.

Reader follow up:

Totally agree with your point about too much house, especially in the BC market. From talking with friends here, I am blown away by how much they have to spend on their mortgage each month. Luckily, we made the move to AB when we finished school and were able to build a bunch of equity so that when we came back to BC we had a good down payment. We’ve been fortunate enough to keep our mortgage at around 22% of our monthly income and have $500 monthly that goes into my TFSA no matter what. Our budget (and I use your budget tool now! So thanks for that) leaves about $1,000 of float to cover any unplanned costs. If those costs don’t arrive, we can add what’s left to our monthly investment. It’s been a good system so far and since I took your course (around May 2024) I’ve got my TFSA + cash savings in Wealthsimple at almost $20K!!  

🎤🫳 

1 Quote

“In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie,
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.”

-John McCrae

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