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September 2, 2018 | Not Cooked?

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

The hated Harperites tried to tear him down in the election three years ago. Remember ‘just not ready’? Sure you do. Voters ignored the warning and voted for The Kid with the Nice Hair. He was modern, hip, preached the Obama-style politics of hope and told people everything would be okay, with legal weed and budgets that balanced themselves.

So T2 has done better than a lot of people (Cons) expected. Still a rock star, too. But after spending last summer insulting and enraging small business guys, entrepreneurs and doctors, this summer’s toll is worse. He bought a pipeline with $4.5 billion in tax money without asking Parliament. Then the pipeline was ruled illegal on the day the sale was closed. Oops. He met with the American president at a summit in Quebec that cost taxpayers $600 million, and ended in disaster. The Kid’s post-meeting media conference enraged Trump and ignited a trade war. So NAFTA fell apart. The US did a trade deal with Mexico, freezing us out. Next week the T2 government will scramble to rescue a treaty, throwing a lot of farmers (and others) under the bus in doing so.

As for the budget, it hasn’t balanced itself yet, with deep deficits and $100 billion added to the national debt by the time of the next election. Taxes have increased and soon CPP premiums will follow (the average family will pay $2,260 more a year when this round of hikes is done). People making over $240,000 a year are now in a 53% tax bracket, and TFSA contributions for everyone were effectively halved. Let’s not even mention India

But, the economy’s grown along with that of the US, inflation is back, interest rates are going up, job creation has improved and weed is coming next month. House prices crested, then retraced, lending regs were tightened, household debt has hit new record levels and the banks are making more money than God.

Is this enough to get re-elected in a year?

Maybe. This week will be pivotal. No trade deal would whack the dollar, open the door for auto tariffs, spank southern Ontario and flatline the economy. The trade deal Trump wants would end supply management, pit Ottawa against Quebec, increase input costs plus goose inflation and interest rates. We should know what the damage will be by Friday. But there’s no denying the fact Canada will suffer because the emotional, egocentric US president was slighted by a telegenic young prime minister playing to the cameras on June 9th. Did he stand up for Canada? Or has the old guy deked him out of his Calvins?

Of course, if Mad Max Bernier gets any traction and rips away even 5% of the core Conservative vote for his destined-to-fail alt right movement, then T2 will be the dude in charge for a long time.

Voters didn’t buy it. Now he’s the anti-Trump.

 

The FIRE still burns. Seems all that talk about ‘work-like balance’ has been rejected by a growing number of people who want to amass some capital as fast as possible so they can exit. All life, no work. It’s led to the financial-independence-retire-early meme that’s spawned an online revolution among thirty-somethings who have zero interest in a career. So they save big, live small, invest, avoid debt and check out of a full-time gig as soon as possible.

Is it a worthy goal? Or hopelessly selfish to spend the bulk of your adulthood diddling?

My mailbox is smouldering. Here’s a sample, first from Vlad, who can apparently resist strippers:

Here’s an email from yet another insufferable 30-something, FIRE devotee.  I’ve been addicted to your blog since 2009, although I haven’t followed your real estate advise to a T.  I own real estate and am actively looking to acquire more, but as you say, only if the numbers make sense.  Instead of bragging about my financial triumphs, I’m hoping my story can serve as a cautionary tale to other young people looking to flourish in our new economy.

I graduated from pharmacy school in 2009 in the midst of a massive pharmacist shortage.  I walked into a $130k/year job with a $36k signing bonus, while the rest of the world was still reeling from the Global Financial Crisis.  I rented out my Toronto condo and headed to Owen Sound, Ontario.  For the next 3 years, I proceeded to work 6-7 days per week.  Not only did I have my main full-time job, but I worked the equivalent of a second full-time job by picking up locum / relief shifts all over the Grey Bruce region.  I lived in a $690/month apartment in downtown Owen Sound, located catty corner from the town strip club.  I went without the fancy Starbucks coffees and to this day, I don’t even know if Owen Sound has a Starbucks.  I saved aggressively when times were good because I knew that labour market shortages don’t last indefinitely.

In the past 9 years, new faculties of pharmacy have opened while existing schools have increased enrollment.  New programs aimed at expediting the licensing foreign trained grads have also played a role in creating a huge surplus of pharmacists.  The oligopoly of the big pharmacy chains has shifted the focus to the bottom line, so labour hours have been cut to the bare minimum. There is endless pressure to do flu shots / med checks to bring in taxpayer funded sources of revenue.  The final straw for me was when two armed robbers walked into my pharmacy, jumped the dispensary counter, and cleaned out the narcotic vault a few months ago.  I demanded management make changes to the pharmacy layout to improve security and as a result, I was unceremoniously fired after 9 years of service.

That experience, while unpleasant, has not derailed my life.  I’ve benefited greatly from the rising real estate and stock markets of the last decade, as well as the FIRE frame of mind which kept me from frittering away money on shoes or lattes.  So despite being an unemployed millennial, I have 3 rental properties and $750k invested.  My advice to any millennial with a 6-figure job would be to stay cognizant of their spending & saving.  These days, you just never know when early retirement may be forced upon you.

And this is a note from Derek Foster, who wrote me claiming to be “Canada’s First Youngest Retiree’:

My “claim to fame” was that I retired at 34 – WAY back in 2004 – so I’m not quite a wrinkly, but not a moister either (a Gen Xer).  So I guess I did the whole “FIRE” thing before anyone ever called it that….

I realized early that working for decades for the promise of some pension and occasional pats on the head  did not make sense, so I saved a lot while teaching in Asia,. travelled a lot backpacking, and stopped working at 34.  I guess my “side hustle” was writing books after I retired – wrote 6 of them. Remember when people read books instead of blogs???

Anyhow, now at 48, I have no regrets.  I guess being retired young gave me a lot of time on my hands, so my wife and I have 8 kids, so not typical, but life is good.  I don’t follow all of your ideas – I own dividend stocks (around 30 of them – roughly 50/50 US can Canada, keep a little cash and own a house in Ottawa…oh  and I don’t own a dog…

You only live once and you only have so much time, so what’s wrong with the whole “FIRE” idea?  Beats the 9-5 grind…

Of course, if you spend time working at something of value you enjoy, it isn’t ‘work’ any more. So why retire?

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September 2nd, 2018

Posted In: The Greater Fool

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