Hello friends, spring is in the air and I hope everyone is doing great.

Quick word on the power of showing up, networking, and putting yourself out there.

Walked into my 6am sauna routine, passed a guy and he called out at me, hey you’re that Eddie guy posting on LinkedIn—yes—nice to meet you I’m Rob—love your stuff and got my kids set up investing on Wealth Simple. Great stuff.

Turns out we are in the same line of work, in fact he was previously a top commercial real estate broker and now focuses on value add investments on the buy side.

We are going to meet for a beer soon.

Pretty neat!

Also - what does Eddie do when the market crashes ↓↓↓

Personal Finance

If you saw $50 on the ground, would you walk past it, or pick it up?

I’d like to think the fact you are reading this Journal implies you would pick it up.

If not - let me know. I have questions.

But this idea is important.

You see easy money and don’t even think twice about picking it up. The only investment is stopping your motion, bending over (my back hurts!), and putting it into your wallet.

But then the same folks who would do that—on average at least—won’t pick up the easy money all around them:

• Max contributing TFSAs - tax free investment growth in the most powerful wealth creation tool we have.

• Utilizing FHSA - great way to earn tax free growth to contribute to a down payment for first time home buyers.

• Topping up RRSPs - useful for high income earners, defer taxes today, tax deferred growth tomorrow. See my previous entry on when opening an RRSP is more appropriate than a TFSA.

• Moving large portions of chequing account cash—wasting away to inflation—into a long term investing account. At the very least, exploring a High Interest Savings ETF.

• Signing up for Wealth Simple and getting a 2% bonus on deposits, plus an extra $25 if you use my referral code PRGS3Q.

• Paying off credit card debt before speculating on meme coins. When you are charged 22% interest, if you pay it off with cash, you literally earn 22% after tax on your money. This is better than the best investor to ever live, Warren Buffet. So why does anyone think they can make more money than the 22% interest they are being charged?

• Investing $200 to get financially literate in 2 hours that will rain money on your future.

This is easy money.

Sadly, because money is a bad word—or at least it was, I’m trying to make it easy and fun!—a lot of us sit in between nervous and afraid when it comes to “investing” and “ETFs” and “accounts” and getting financially literate to actually do something.

Most people ignore it or delay until it becomes late in the game.

Don’t walk past the money right in front of you.

Pick it up.

Stock Markets

What a gong show.

Rhetoric is flying across the border, markets are moving fast, and it’s hard to keep up.

I think it’s stressing me out more than I would like to admit—not the stock market, but the divisiveness. And I’m usually a pretty relaxed dude.

Still, I haven’t made any changes to my investing program. Nor should anyone else that is building for long term.

Whether it’s S&P500, VGRO, VEQT, VT, or individual stock picks—stock market investing is decade(s) money.

In other words, don’t invest anything into stocks that doesn’t have a at least a 5 year time horizon.

Last week I wrote about how often stocks fall, on average, and by how much. Today I want to show you the chances of a positive return depending on your holding period:

• 1 month: 59%

• 1 year: 69%

• 5 year: 79%

• 10 year: 88%

• 20 year: 100%

That’s right, the US stock market has never had a 20 year decline.

No one can predict with certainty where the stock market will go in the short term. But if you are a long term investor, dedicating some of your income and net worth to long term investing, 20 years plus, you need not worry about the short term declines.

Instead, flip the script. Take advantage of the dips, buy more shares for the same dollar amount you invested last week (thanks to your automatic contributions & purchases you set up).

Remind yourself that with your same $$ contribution, you get more shares for the same amount of money when the stocks are falling.

To quote Martha Stewart, that’s a good thing.

Because the inputs to portfolio value = Share Price X Amount of Shares

Focus on getting as many shares as possible, wait long enough, and see how the math works out.

Real Estate

Every now and then we get pitched on power center or large format retail centres like enclosed shopping malls.

They come with enticing attributes: low price per square foot, high cap rate and therefore cash flow.

The problem is that for a long time now, enclosed shopping malls are like dinosaurs.

Yes, for sure there are some stellar malls like Park Royal that have competitive advantages, but by and large, enclosed shopping malls are struggling big time.

Issues we see in this asset class:

• Trend away from enclosed shopping centres is no longer a trend, but a systematic result of consumer preferences.

• Therefore leasing velocity is very slow and tenant life expectancy is low

• Added costs to manage the mall itself, staff, security, customer service is expensive

• Huge capex required to attract new tenants, or reformat vacant space

• Extremely hard to back fill a big box tenant that goes bankrupt and leaves you 80,000 sq ft to repurpose and release.

• Bank financing is challenging and liquidity (when you want to sell) is extremely limited because indeed there are so few buyers that care for this asset class anymore.

Evidence of this is all over the place but most recently, one of the oldest companies in the world, Hudson’s Bay, a 335 year old business—far older than America (249 years old) or Canada (158 years old)—has sadly just filed for bankruptcy.

Millions of square feet are now on the block and backfilling 80,000 sq ft enclosed spaces is going to be a colossal feat for mall owners.

I’m especially glad we didn’t even come close to bidding on either of the two Hudson Bay properties that we got pitched in the last 9 months.

1 Quote

A Question

Wondering if anyone ever gets this far?

If so - reply with something, anything, an emoji even!

Have a great day.

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Thank you

Eddie Gudewill, CFA

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