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October 20, 2019 | Why

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.

One more sleep to the big vote. But let’s ignore that. Enough is enough. We’ll get the country we deserve.

But will we get the blog we deserve? That’s the question.

Truth be told, you haven’t impressed me lately. At least the 1% of visitors who leave a comment. Over the last few days, they have sucked. The IQ of this site seems to erode every time the testosterone level rises. That usually happens when we talk about investing.

Most have a profoundly unhealthy relationship with money. It destroys relationships. It turns us ugly and competitive. It flips prudence into risk. People let it define them – how much they earn, possess or how smart they are with it. Investing becomes a contest to be won. Amateurs believe performance is the sole measure of success. Some learn the truth. Many fail first.

In recent days this blog has offered advice, backed by research and history on proven ways to organize, keep and grow wealth. That included contributions by me and two of my colleagues – one a career Bay Street analyst and pro portfolio manager, the other a former v-p with two major banks, including RBC’s capital markets unit on Wall Street. With success, they look after families across the nation. In response, a bunch of DIY cowboys showed up here to insult them.

Makes me wonder. Why do we bother?

You’re familiar with your own accounts or maybe what you BIL owns. In contrast, I see and analyze hundreds of portfolios a year, plus interview the people behind them. I do not manage millions of dollars. Or tens of millions. People have entrusted me with hundreds of millions. And they all have the same two goals. Don’t lose money. Make a reasonable return. Unspoken but understood is the third goal: take care of me.

The wisdom and training I and my colleagues have garnered is distilled and presented to you, gratis. Seven days a week. At least for now.

There’s a reason I preach balance, diversification and liquidity. For almost everyone, it works. It’s the only thing that works, consistently, decade after decade – because people are not algos. They allow a myriad of factors to influence how they deal with money. Most of those are unhelpful.

Why do people fail?

They make emotional decisions. A marriage. Job loss. A baby. Divorce. All these things flood the brain with emotion and lead to kneejerk decisions.

People fail because they consistently acquire assets out of greed (because they’re going up, like houses or gold), and they bail out on fear (like stocks going down). Buy high and sell low is the norm.

We fail because of where we get information. From family or parents – people with zero training, unable to admit mistakes. Or, worse, Mr. Google. The online world teems with sites full of self-serving, sales-oriented, attention-seeking crap.

People fail when they trust TNL@TB or a 22-year-old ‘advisor’ with a mutual fund license to give them life or retirement advice. These folks are salespeople.

Failure also comes because of recency bias. The comment section swims in it. People think recent events dictate all events to come, like interest rates will never rise again or real estate values never fall. History is littered with the bones of such believers.

Most people don’t know how they’re taxed, or how to minimize it. Interest, dividends, rent, capital gains, employment income – they are treated unequally. Registered and non-registered accounts. Self-employment cash flow. Income-splitting between spouses or in a family. Commuted pensions. Return of capital retirement income. Trusts. Deductible interest. Probate. IPPs or what kind of insurance to buy.

We fail because we think short-term. Yearly performance is the cowboy preoccupation, instead of achieving life goals – a house, schooling kids or retiring securely. We exaggerate current events, believing we live in a time of unusual turmoil or unprecedented conditions. But we don’t. It’s not different this time. Your life isn’t that special.

Investing is not gambling. Genius isn’t measured in 12-month performance. Reaching for outsized performance involves unwarranted risk. Most people fail when they base decisions on feelings, perceptions and wants. We’ve allowed money to become so personal and defining that husbands and wives will share a bed and offspring and yet not an investment account. Despite being an economic unit, they work at utter cross-purposes.

Wealth’s greatest gift is to enhance time. Erase stress. Grant security. Let you savour each day.

That is the goal. Visiting a blog to brag and fight is, well, sad.

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October 20th, 2019

Posted In: The Greater Fool

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