I continued the journey of helping build better financial literacy by contributing my first guest column to MoneySense. Please click on the link to read the article and if you like it please share on your social media. The “Rule of 72” is critical in […]
The following article appeared in THE GLOBE AND MAIL on Saturday September 29th. Please help with my mission of improving financial literacy and security, by sharing on social media. Thank You. ME AND MY MONEY How this investment author earned more than 11 per cent […]
(Photo courtesy of Pexels) Please share with others on your social media if you find it informative, and if you have read my book please write a review on the site it was purchased. Please have a look at current reviews on Amazon. Much Appreciated.
The theme of my 30-45 minute presentation is that most stock investing perceptions are actually misperceptions. Here are four common misperceptions:
- You have to watch it like a hawk: No you don’t, if you buy the right kind of companies. I bought shares of Bank of Nova Scotia in 1992 for $5.59 per share. I have collected about seven times my original investment back in dividends, and the shares now trade for about $76.00. How much watching like a hawk did that take?
- The Market is Risky: There are risky, speculative stocks, but overall the market is NOT risky. Every bear market has given way to a new bull. After the 2008/09 financial crises I was back to my previous high values within 3-4 years and today I am about 2-3 times my 2007 levels. The market is however volatile. Risk and volatility are commonly perceived to be synonymous but they are completely separate entities. Understanding this will significantly enhance investing returns. If you don’t believe me, please Google what Warren Buffett has to say on the topic.
- You have to be an expert: I might be considered an expert in my field of agriculture, although many acquaintances would even disagree with that! I have never worked in the field of finance. Yet my success and returns would rival and exceed most experts. There are advantages to being a smaller investor, like you aren’t going to get fired for making a mistake. Fund managers often follow the crowd because sticking their neck out and getting it wrong can cost them their jobs. However, with investing, avoiding the crowd will lead to greater success.
- You need to be able to predict where the market is going: Statistics show that less than half of predictions turn out correctly. Nobody has been able to regularly call changes in short term market direction. Best to simply understand that the market is volatile (not risky), and that average annual returns for the past century have been about 10%.
I will share another four common misperceptions at some point in the future. If you are involved with a group and would like to hear my full presentation, please email me at firstname.lastname@example.org
Preparing for radio! Fun 20 minute podcast discussing my book with Tellwell Publishing, the company that brought it to life. Key topics: Inspiration for the book. Examples of valuable investing lessons integrated into the book. Experience’s getting my kids started at ages 13 […]
*10-year growth compares 2017 to 2008. Example, Royal Bank’s 2017 dividend was 1.8 times larger than in 2008. This blog is the 7th in my series with Grainews. It beings together all previous columns written. Please share with others on your social media if you […]
Stocks for FUN and PROFIT: Questions and Answers about adventures of an amateur investor Fans of this site will know for many years now, I’ve reviewed a host of personal finance and investing books. Over years, these books have improved my financial IQ, matured my […]
I came across two articles this past week that deal with housing affordability and values across Canada. They are very much worth reading. The first one is from the Royal Bank discussing affordability. Housing in Vancouver and Toronto are now at their record worst level […]
(Photo: Pexels) This is an excerpt from my latest newsletter, expanding on how fear based media and marketing have become so prevalent.
As I was leaving my book signing session on Saturday, the radio news featured a clip that went something like, “Experts predict that if global warming continues BC forest fires will reach levels four times greater than the record 2017 fire season.” I googled BC forest fires to get a few facts. Since recording started in 1950, last year was indeed the worst on record consuming 1,200,000 hectares of forest. The previous record was set in 1958 with 855,000 hectares consumed. I also learned there are 95M hectares of forest in BC. Therefore in the worst two years since recording started, which were separated by 59 years of time, 0.9% and 1.3% of BC forest burned. If it got four times worse than 2017, 4.8M hectares or 5.0% of the forest would burn in a single year. I am clearly no expert on BC forests, but what do you think the probability of that would be?
In no way do I wish to be-little the 2017 forest devastation in BC. Like 2016 levels in Alberta, both situations were disastrous. I merely wish to ask the rhetorical question, “Why does the news media focus so much on sensationalism and the negative side of issues, and what’s bad rather than what’s good?”
Why do political parties focus so much on the disaster that will occur if we elect their opponent, rather than what good will occur if we elect them? Why has negative advertising become so prevalent in elections?
When you buy virtually anything but groceries these days, how does the conversation typically end? It usually goes something like, “Would you like the extended warranty so if anything goes wrong you’re covered?” My inside voice usually thinks, “So you’re admitting selling a crap product?” But my outside voice is polite and simply says, “No thank you.” Why does marketing often orient towards what bad might happen, if you don’t buy a product or service?
Let’s think about a couple of other issues. My profession is agriculture. Never have we supplied such high quality food at such low prices, in such an environmentally sustainable manner. Yet we remain mired in a twenty-year fear based debate around genetically modified or genetically enhanced organisms (GMO’s). It is so easy to create fear in people’s minds, that while there has never been a human health issue traced back to GMO’s the debate rages on. Large commercial interests selling “organic food” are often behind the fear based marketing campaigns. Bye-the-way, all food is organic. I don’t have much interest in eating in-organic dirt. Another perplexing agricultural related topic is the supposed environmentalists focus towards glyphosate. Yet this herbicide is instrumental in the ability to farm in an environmentally sustainable fashion as it significantly reduces the need for tillage, an operation that requires diesel fuel and causes the release of carbon and water from the soil. Glyphosate is produced by my fiercest competitor so I have no love for the company from a competitive standpoint, but I recognize the tremendous value this product brings to agriculture and thus all food consumers. There is always room for improvement, and agriculture is constantly searching for new and better ways to improve efficiency and environmental sustainability.
The pipeline debate is another focused on fear. Fear of an oil spill is real, but very low. The facts support that pipeline is significantly safer and more efficient than rail, which is much safer and more efficient than truck. Supposed environmentalists protest the general usage of fossil fuels, yet I’m pretty sure most if not all use fossil fuels themselves. How do they heat their homes? Fossil fuels have significantly enhanced our quality of life. Are there negatives? Sure, as with all things there are both negatives and positives. It just seems that we are in an era where the negatives are given significantly more credence than the positives. Many nations on earth don’t enjoy the standard of living we have in Canada, and these supposed environmentalists are trying to prevent other societies from enjoying the economic and quality of life benefits, of an abundant supply of safe energy.
To me true environmentalism supports the judicious use of all available tools while constantly searching for enhancements, more sustainable and efficient or alternative methods, in order to enhance the lives of all peoples and societies.
Last month’s issue discussed how fear impacts the investing world. This issue expands the topic, hopefully illustrating how fear impacts many facets of life. But why is fear and negative based marketing so prevalent? Why are the negatives given so much more credence than the positives? I think it is because we humans react much more easily to fear, than facts. Which headline will garner greater attention? “The market plunged five percent today as investor’s stampede for cover,” or “The market declined by five percent today which is a fairly normal occurrence?”
Yes, unfortunately it is much easier marketing fear than facts. My little rant isn’t going to change this phenomenon. I have however found it beneficial to listen and read with a healthy sense of skepticism, and think about whether an article is fear or fact based.
(Photo courtesy of Microsoft Clip Art) This blog is the 5th in my series in Grainews. It beings together all previous columns written. Please share with others on your social media if you find it informative, and if you have read my book please write a […]