Nov 032014

Last month was quite the roller coaster ride. But maybe all this market volatility is a good thing. The rich keep getting richer because the assets they own, like stocks and real estate, continue to grow in value. But this is a worrying signal because high levels of inequality have usually lead to recessions in the past.


For someone to make a lot of money it generally requires other people to work for it. For example, the CEO of a large company can’t earn a large salary if not for the hundreds of employees working under him. 🙂 And a real estate investor can’t make a living off his rental income if his tenants decide to move out or otherwise stop paying him. So in order for the wealthy to maintain their high standards of living they have to be supported by the larger base of the lower and middle class workers. But if the poor keeps getting poorer then eventually they’ll just give up supporting the wealthy. This is already starting to happen around the world as people are dropping out of the workforce. 🙁 In the U.S. the labor participation rate is only 62.8%, the lowest since 1978. But it’s also important to remember that employment circumstances are very localized. For example the unemployment rates in Oregon and Idaho are 7.1% and 4.5% respectively, which is quite a big difference, even though the two states are right beside each other. 😉

The recession in 2008 somewhat served as an equalizer of economic status where the people who owned the most financial assets lost more than anyone else, and the world became a little more equal. But the net worth gap between the rich and the poor has been growing again since 2010. So maybe a small stock market correction every now and then like we’ve seen in October is probably more favorable than having another large recession. It’s in society’s best interest to not let wealth inequality get out of control. The rich depend on the production of the working class to thrive, so if the working class becomes less productive then eventually everyone will be in trouble. 😕

At one point in mid October my stock portfolio was down by more than 4%. Luckily however the market decided to recover most of that loss. My existing investments are still down for the month but I saved some money from my income and paid down some extra debt to make up the difference. In other words both my assets and debts were down, but my debts lost more value so I still increased my wealth overall, albeit just barely. 😀

*Side Income:

  • Part-Time Work = $800
  • Dividends = $500
*Discretionary Spending:
  • Eating Out = $100
  • Others = $100

*Net Worth: (MoM)chart_14sept net worth graph market volatility inequality

  • Assets: = $832,000 total (4,000)
  • Cash = $2600 (-800)
  • Stocks CDN =$85,400 (-3300)
  • Stocks US = $52,600 (-300)
  • RRSP = $49,400 (+400)
  • MICs = $15,000 (same)
  • Home = $254,000 (same)
  • Farms = $373,000 (same)
  • Debts: = $521,500 total (-4,200)
  • Mortgage = $196,300 (-600)
  • Farm Loans = $204,300 (-500)
  • Margin Loan CDN = $27,000 (-500)
  • Margin Loan US = $23,900 (-1000)
  • TD Line of Credit = $30,700  (-300)
  • CIBC Line of Credit = $11,400 (-200)
  • HELOC = $18,400 (-100)
  • RRSP Loans = $9,500 (-1,000)

*Total Net Worth = $310,500 (+0.10%)
All numbers above are in $CDN. Conversion rate used: 1.00 USD = 1.13 CAD

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