This really smart guy I know, lets call him Really Smart Guy, has made a whack of dough through his business. He’s married with two kids and owns a beautiful house in a so-called desirable neighbourhood in stunningly beautiful, and outrageously expensive, Vancouver, British Columbia, that’s worth a few million bucks. His excess cash he shovels into residential real estate, buying homes and renting them out.
Why residential real estate? I’ll leave that one alone for another blog entry, since the topic demands a space all its own. For now, let’s just say that Really Smart Guy bought into the conventional wisdom that bricks and mortar is always a good investment. And for the most part, he’s done well.
Is That a Brick In Your Head?
The other day he was talking to me, telling me how he sold two properties at a slight loss. Feeling sorry for himself, he says to me, ‘you know, if I had invested the same money in Royal Bank of Canada back in 2008 (Canada’s largest publicly traded financial institution with a market value of about $140 Billion Canadian dollars [RY:TSE] – or about $107 Billion of the more valuable American paper [RY:NYSE]), I would have tripled my money! Shoot, I’d be really rich by now!’
Every publicly traded company (i.e., company listed on a stock exchange) is given what is known as a ‘ticker symbol’. The purpose of a ticker symbol is to identify a particular security listed on a particular stock exchange. The ticker for Royal Bank of Canada is RY. Since it is listed on two stock exchanges, RY:TSE indicates Royal Bank of Canada, Toronto Stock Exchange. And RY:NYSE, indicates Royal Bank of Canada, New York Stock Exchange.
I’m listening to Really Smart Guy, not saying anything. But I’m processing what he just said, ‘I’d be really rich by now’. And I say to myself, Wow.
Here’s someone who owns his own business, runs his days however he wants with no one telling him what to do, he and his wife and two children are all healthy and thriving, and he’ll likely never have to worry about paying rent or a mortgage, putting food on the table, or providing shelter or clothing to himself and his family. Not only are his basic needs taken care of but he has the wherewithal to satisfy most any other need or want.
Yet, Really Smart Guy doesn’t see it this way. He’s already sailing with the top 1% but that’s not enough. He wants more. He wants to be ‘really rich’, whatever that means to him.
Channeling Buddha, I say to myself, okay, here’s a person who’s filthy rich and doesn’t know it. What should I say, what should I do? Well, my perpetually smiling friend tells me:
There is nothing ‘to say or do’. Really Smart Guy is on his own path. Who are you to tell him to be grateful for what he has, for what he’s accomplished? Maybe his perspective will shift one day, maybe it won’t. Either way, your role is not to offer unsolicited advice about living life. What you’re here for is to offer investment advice; that’s the only thing Really Smart Guy asked of you.
This Way or That
After some more talking about how rich he could have been if only he knew then what he knows now, Really Smart Guy tells me he has never invested in the stock or bond market and he wouldn’t even know where to start.
I get it. There’s so much noise out there coming from mainstream financial media, banks, investment houses, mutual fund companies, exchange traded fund companies, financial newsletters, economists, analysts, central bankers, blogs (except BuddhaMoney, naturally), advertisements, well-meaning but misinformed friends …
… and the noise can be persuasive, pulling you every which way, screaming at you to BUY this; SELL that; stocks are best for the long run; balancing stocks and bonds is essential; buy gold, dump everything else, the system is crashing, paper money will soon be worthless; no, no, no, cash is your best friend; mutual funds are the only way for most people to adequately diversify; scratch that, mutual funds are too expensive, buy me, I’m an Exchange Traded Fund (ETF) that is essentially a mutual fund that charges you lower fees; global markets are down 4% and falling fast, the sky is falling, sell SELL!; global markets are up 4%, sunny days ahead so buy now while stocks are on sale, buy stocks, buy real estate, buy commodities, buy, buy, BUY!
If you want to ride an emotional rollercoaster and in the process drive yourself completely nuts, read these kinds of headlines everyday. That said, because you’re here, cozying up to BuddhaMoney, I assume you shimmy toward inner peace and balance. Bravo.
And if you’re a daily follower of the markets frenzied gyrations then, at this very moment, you agree to take a solemn vow to change this behaviour, to stop allowing mainstream financial media to push your emotional buttons, simply because it will be good for you, good for your BuddhaMoney soul, to shut out the noise.
Still, how do you know what to tune into and what to tune out? What sources are objective and reliable, not touting their own self-interest? How do you know what to buy/sell, when to buy/sell, how much to buy/sell?
Check out our next blog post (ahhh, the cliffhanger), I’ll be talking more about stock market investing, where to start on your investing journey, and how to figure out what’s best for you.