Oct 212019
 

Investing is a lot like dating. Low confidence can keep you out of the market. A good way to gain confidence is to learn from those with experience. 🙂

When you do an internet search for “famous investors” you might see a list of highly experienced individuals. Some are dead. Most are alive. But despite being from different backgrounds, all the investors from the search result appear to have one thing in common.

None of them are wearing hats. A piece of headwear can tell a lot about someone’s personality. However, there is one famous investor that didn’t come up in my search results but does like to wear hats: and that’s Hetty Green. There aren’t a lot of photos of her because she died in 1916, but she had an incredible investment career. Here are five lessons we can learn from Hetty.

 

1. Start early

Wearing hats wasn’t the only trait that differentiated Hetty from other world class investors. With her grandfather’s encouragement Hetty had learned to manage her family’s financial accounts when she was just 13 years old. Born into the Quaker family (yes, the cereal name) Hetty was raised with conservative financial principles that would stay with her for life. The world was much simpler back in the days before Instagram and electric scooters. But while other kids were playing hopscotch outside, Hetty was busy reading financial papers and stock reports. 🙂

2. Practice delayed gratification

When her father bought her brand new clothes, Ms. Green sold her new wardrobe and purchased government bonds with the money instead. She eventually turned an inherited sum of $6 million into $100 million by 1916, which is the equivalent of $2.3 billion in today’s climate thanks to inflation.

3. Have an independent mindset and don’t follow the crowd

Hetty followed a contrarian investing strategy where she bought stocks and bonds when the market was full of pessimistic sentiment. She also had a knack for snapping up cheap real estate deals and trading railroad companies. In her own words she told the New York Times in 1905, “I believe in getting in at the bottom and out at the top. I like to buy railroad stocks or mortgage bonds. When I see a good thing going cheap because nobody wants it, I buy a lot of it and tuck it away. I keep them until they go up and people are anxious to buy. That is, I believe, the secret of all successful business.” She showed off this strategy a couple years later in 1907. After deciding that the market was overvalued, Hetty called in all her loans. Then, when the market crashed, she swooped in and bought them again at the lows. This line of thinking is very similar to Warren Buffett’s investment advice about being “fearful when others are greedy and greedy when others are fearful.”

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Mar 302018
 

Peter Munk 1927 – 2018

The founder of the world’s largest gold mining company passed away a couple of days ago at the age of 90. Peter Munk came from humble beginnings. He fled his home country of Hungry during WWII when it was invaded by Nazi Germany. Soon after he boarded a boat from England and came to Canada when he was 20 years old.

With no skills, money, or influence Peter and his family had to start from nothing in a foreign country. But that didn’t stop him from wanting to achieve great success. After graduating from the University of Toronto in 1952 Peter thrived in the business world. He helped to build multiple companies, including resorts, an electronic manufacturer, and mining companies. His biggest career move began in 1981 when he formed Barrick Investments, which would eventually become Barrick Gold (stock symbol ABX) the largest gold miner in the world. The company currently produces about 5 million ounces of gold per year across its many operations around the world.

Among other things, the billionaire entrepreneur is also known for being one of canada’s most significant philanthropists giving hundreds of millions of dollars to charity such as hospitals. He also established the Munk School of Global Affairs, the Munk Debates, amd was named a Companion of the Order of Canada, the country’s highest civilian honor.

Last year he was included in the New York Stock Exchange Wall of Innovators, alongside Warren Buffett, Jamie Dimon and Jack Ma. In a remark that captured the two leading pursuits of his life—business and philanthropy—Peter Munk said. “You can create wealth. You are entitled to the joy of this creation. But ultimately society makes it possible, and this wealth should flow back to society.”

Being independently wealthy is nice and all. But doing something meaningful with that money is more important. Having money doesn’t make our problems go away. It merely replaces one problem with another. For example Elvis Presley’s daughter inherited $100 million from her father’s estate in 1993. But that’s when the problems began. Through years of spending and mismanagement the funds have nearly dried out. This year only $14,000 remains of the initial $100 million fortune. Ouch. 🙁  Having a lot of money also created many problems for Jeane Napoles and her family. Peter Munk has 5 children and 13 grandchildren. I hope they can make their inheritance last longer. Financial management education is important for everyone, but especially so for children who come from wealthy families.

The idea that rich people don’t have money problems is a myth. Everyone has money problems from the single parent living on social assistance to the CEO of a large company. The difference is the CEO just has better money problems. Or maybe worse, depending on your perspective. 🙂

 

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Random Useless Fact

 

Feb 162017
 

A survey done a few years ago found that 34% of people rely on winning the lottery as a legitimate retirement plan. 😐 #smh. I’m no financial expert, but when it comes to aggressively planning for one’s retirement, playing the lottery more frequently probably isn’t the best strategy.

But of course some people can get very lucky, like Jane Park, who lives in the U.K. When she was 17 years old she bought her first lottery ticket and won the jackpot of £1 million. That’s roughly CAD $1.6 million, or USD $1.2 million. What did she do with her new found wealth? First, she spent £4,500 on a boob job. 😄 Then she purchased some properties, a Louis Vuitton handbag, and a chihuahua, because why not? 🙄

But it appears her lucky situation had unintentional consequences. At 21 years old today, Jane explains that winning the lottery has actually made her sick. That is to say, “sick of shopping for designer goodies.” She is also “struggling to find a genuine boyfriend who isn’t after her money.” Jane says that despite her wealth people don’t seem to understand her stress of being a millionaire. She says despite her material possessions her life feels “empty and without purpose.” Damn. Poor girl.

“I thought it would make it ten times better but it’s made it ten times worse. I wish I had no money most days. I say to myself, ‘My life would be so much easier if I hadn’t won.’” ~ Jane Park

But don’t feel too sorry for her just yet. Jane is currently thinking about suing the lottery company for giving her the money and ruining her life. She claims that the company should not be selling lottery tickets to 17 year olds because someone at that age can’t handle so much money. Again, I’m no expert. But if money caused her to feel empty and without purpose in the first place, then I’m not sure suing for more money is going to help her situation. 😄

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Random Useless Fact:

There was record snowfall this year in parts of Canada

This is what Vancouver looked like a week ago.

Feb 092017
 

I recently watched an HBO documentary called “Becoming Warren Buffett,” which features the life of the man himself. The show gives viewers an extensive look at Buffett’s achievements, struggles, and challenges with his career, and probably more importantly, with his personal relationships.

Buffett started making money at a young age selling gum door to door, and delivering newspapers. He began trading stocks in his early teens and started college when he was only 16 years old. Today everyone knows him as the investment guru who is currently worth about US $72 billion, which makes him the second richest person in the world, right behind his close friend, William. 🙂

becoming warren buffett review

The documentary covers his family background and personal relationships. It felt like I was watching an honest biography about Warren. For the first time ever I got an inside look at the day to day events and lifestyle choices of Warren Buffett. It has been a real eye opener! For example on his way to work in the morning, he often stops by a McDonald’s and orders a Sausage McMuffin.

Doh! :/ No wonder I’m not rich yet. This whole time I’ve been ordering the Bacon ‘N Egg Bagel like a peasant. If only I had known his secret earlier. 😛 Below are some other important lessons I learned from watching “Becoming Warren Buffett.”

  • Live close to work. It takes Warren only 5 minutes to drive to his office everyday. And he’s been taking the same route for 54 years! Not wasting much time on commuting is why he gets so much done.
  • Be smart. Warren admits that he’s wired in a way that gives him an advantage over others when it comes to understanding businesses. He was always good with numbers starting at a young age and learning about the financial markets comes easily to him. Unfortunately for some, intelligence is largely genetic.
  • Read a lot. Every day Warren goes to work and reads books, newspapers, financial reports, or various other material for 5 to 6 hours.
  • Have role models in your life. In the documentary Warren said, “the best gift I was ever given was to have the father that I had when I was born.
  • Develop your own inner scorecard. Don’t let other people’s standards and expectations define who you are or what makes you succeed or fail.
  • Learn from people you trust. Business partner Charlie Munger helped Warren realize that in order to build immense fortune, it’s better to look for great businesses at reasonable prices rather than okay businesses at cheap prices.
  • Develop focus. Warren believes this is the most important quality to have if you want to be successful.
  • Have patience. The biggest factor to making money is time. Warren says you don’t have to be smart to become wealthy. You just have to be patient. 🙂

If we keep in mind these simple guidelines from Warren then I’m sure his wisdom will have an impact on our lives. Depending on different sources, Warren appears to have either an ISTJ or INTJ personality type. This mean he is a rational planner who likes to keep to himself most of the time. As an INTJ myself I understand what it’s like to live inside one’s own head sometimes. It’s probably why I can relate to his investment philosophy. 🙂

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Random Useless Fact:

Jan 192017
 

Meet the World’s Wealthiest

Charity group Oxfam recently reported that the world’s 8 richest people have as much combined wealth as the poorest 50% of the world’s population.

Here is the list of the 8 richest individuals, in order of net worth:

  1. Bill Gates: America founder of Microsoft (net worth: $75 billion)
  2. Amancio Ortega: Spanish founder of Inditex which owns the Zara fashion chain (net worth: $67 billion)
  3. Warren Buffett: American CEO and largest shareholder in Berkshire Hathaway (net worth: $60.8 billion)
  4. Carlos Slim: Mexican owner of Grupo Carso (net worth: $50 billion)
  5. Jeff Bezos: American founder, chairman and chief executive of Amazon (net worth: $45.2 billion)
  6. Mark Zuckerberg: American chairman, chief executive officer, and co-founder of Facebook (net worth: $44.6 billion)
  7. Larry Ellison: American co-founder and CEO of Oracle  (net worth: $43.6 billion)
  8. Michael Bloomberg: American founder, owner and CEO of Bloomberg LP (net worth: $40 billion)

The level of extreme wealth has become more concentrated over time. In the previous year, it took the net worth of 62 individuals to match the poorest 50% in the world. Here’s a look at the trend over time.

The middle class is feeling squeezed in many parts of the world. From 2000 to 2014 the number of households in the U.S. considered to be middle class fell significantly. A study from Pew Research shows that a majority of Americans no longer lives in the middle class. Median income of U.S. households in 2014 was 8% less than in 1999, according to Pew. For context, a 3 people household making $42,000 would be considered middle class.

One similarity shared by most multi-billionaires today is a focus on philanthropy. 🙂 Bill Gates would already be worth 12 figures today if he hadn’t given so much to charity already. He has been estimated to save over 6 million lives with his efforts to eradicate Malaria, end Polio, and help third-world countries grow rice. Warren Buffett wants to donate 99% of his wealth to charitable causes. Hundreds of other billionaires have signed up for the Giving Pledge, a campaign to encourage the rich to give away most of their money.

We all want to make money. But once we reach a certain level of financial success and become independently wealth, we have to think about how to use our excess wealth in the most meaningful manner possible. Helping other people in need is probably one of the best ways to achieve this. 🙂

I would be inclined to donate more money too if I were rich. I have already decided that if I ever win $1 million from the lottery, I will donate a quarter of it to charity because I am so generous. 😉
I still have to decide how I want to spend the remaining $999,999.75 though. 😄 j/k.

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