Jan 272020
 

Why it’s hard to replicate success

After celebrating my millionaire status last year I reflected on my past and examined what factors contributed to my financial growth. I’ve realized that a big part of my wealth comes from simply being in the right place at the right time. 🙂 Sometimes good things just happen to me for no apparent reason. In order to make better decisions going forward I believe I need to understand what my undeserved privileges are, and not take them for granted.

Here are 5 advantages that I had no control over, yet have helped me grow my net worth. 😀 And due to the serendipitous nature of these advantages, it’s not likely for others to make use of them all.

  1. I’m a millennial.
    Fund manager Peter Lynch says regular retail investors have an advantage over professional stock pickers. We can identify opportunities in our areas of expertise. What has been the best performing stock sector over the last 10 years? Technology. 🙂 Which investor age group is the most familiar with technology? Millennials. 🙂 This inherent advantage has made me so much money as I followed Peter Lynch’s advice: Know what you’re buying. And know why you’re buying it. Millennials are better educated about stocks than any prior generations. We have so much information at our disposal. And we know how to use it. We grew up with Google, Apple, Amazon, Netflix, Tesla, and other tech companies. We know these brands intimately because we use their products and services religiously, and have a better sense of which brand will become the next big thing. This gives us a unique advantage over older generations. If something attracts you as a consumer, it should also interest you as a potential investment. 🙂
  2. I started my career in 2008.
    Lots of companies were restructuring in 2008 and didn’t have the budget to hire expensive senior workers. They could however afford to bring in juniors at that time. As someone who just finished school I was cheap, available, and eager to prove myself. Since most unemployed people were looking for jobs that required experience, I didn’t have much competition at my salary level. It didn’t take long before I landed my first job in the graphic design industry.
  3. I was given a large severance.
    My employment abruptly ended a couple of years ago. But I already had a contingency plan prepared. So I got back on my feet pretty fast. I actually started to make more money than before. 🙂 Plus I received a five figure severance package from my old employer since it was a no-fault termination. Things couldn’t have turned out better for me. 😀
  4. I’m not American.
    Several years ago I tried get into a venture capital deal in the U.S. I asked the company if they accept Canadian investors and they said yes. So I wired them $55,000 to put into a startup business which delivers online music streaming, and some other companies. I imagined my seed money was going to turn into $500,000 when the company eventually goes public. 😀 But a few months later they refunded my $55,000. It turns out they can’t accept my money after all because I’m not American. Thankfully my investment didn’t go through – I just found out that the music streaming company ceased operations last month. Its user base has been shrinking and it ran out of operating money. So I definitely dodged a bullet there. Phew. 🙂 I clearly didn’t know what I was doing. But something beyond my power saved me from making a huge mistake.
  5. I grew up in Vancouver.
    Vancouverites talk about real estate more than we talk about the weather. Most already own their homes, and the rest are just waiting for the right entry point. So growing up in this environment has made me naturally biased towards favouring home ownership. I purchased a condo in 2009. Property prices here have doubled since then. But the same can’t be said about other Canadian cities like Calgary or Ottawa where price growth is slower. A big part of my net worth today comes directly from the tremendous growth in the local real estate market. So where you live can have a big impact on your finances. And I just happened to be lucky enough to live in a city with a strong real estate market.

Making smart financial choices obviously helps. But not everyone can save and invest their way to wealth. Some are just born with certain privileges. Even Warren Buffett admits that luck is important to success.

Buffett said he is lucky to be born in America. If he had started his life in Africa he would have become some animal’s lunch because he can’t climb trees very well, lol.

We all have different stories, different beginnings. There are many things that we cannot change. But it’s important to develop a positive, growing mindset to face the world. The more we concern ourselves with the things we can’t control, the less we can affect the things we can control. 🙂

I believe everyone has innate advantages that aren’t shared by most people. 🙂 Let’s all keep our eyes open for opportunities that are unique to ourselves – or else they will pass us by and we will have squandered our privilege.

 

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Random Useless Fact:

Actor Leonardo DiCaprio has never been married before.

Aug 192019
 

Millennials swell to 73 million as Boomers decline to 72 million

This year millennials have overtaken baby boomers as America’s largest living adult generation, according to population projections from the U.S. Census Bureau. This will have implications for how financial services are consumed now and in the future.

A new report called the Apex Millennial 100 takes a deep dive into the “unique investment behavior of a new generation.” It analyzed over 658,000 accounts held by millennials, which had more than 8,000 different stock holdings.

Apex CEO says that as “millennials mature into savvy investors, their evolving interests and values will shape a new wealth management industry, one that looks a lot different from the traditional model.”

Top 10 stocks held by Gen Y

Here is a list of the top 10 stocks most favored by millennials. Notice how heavily its concentrated on the high tech industry. 🙂

Maybe it shouldn’t be surprising how many digital companies are on the list. As famous investor Peter Lynch suggests, you should always invest in what you know. You must value the business in order to value the stock. And these are the type of companies you would expect millennials to know most intimately about. I personally interact with several of these companies on a regular basis. 🙂 You can see the entire list of 100 stocks here.

Some trending stock themes from the report include:

  • An increased focus on Canadian cannabis companies, which demonstrates the growing role marijuana may have on the medical and lifestyle decisions of millennial investors.
  • Chinese companies are leading the pack as millennials, who consider themselves to be global citizens, take the long view on international investments.
  • IPOs: Millennials consistently show support for companies that mirror their personal ideologies and offer products and services they understand and value, and will jump to invest in companies like Uber, Lyft and Slack as soon as they go public.

I can understand why other millennials are choosing these companies since I have a similar inclination to do so. I have fewer than 100 stocks in my portfolio. But somehow I hold most of the top 10 companies from the report. One of the most recent stock I purchased was Alibaba Group (BABA) which is already 15% higher since I bought it a couple of months ago. 😀 I guess I’m an example of your typical millennial investor. 🙂 The only stocks I don’t own on that top 10 list are Tesla, Berkshire Hathaway, and Microsoft.

 

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Random Useless Fact:

According to Reuters, California and Texas are the 2 states with the highest number of school shootings.

Apr 292019
 

Earlier this year hedge fund manager Ray Dalio gave 3 financial recommendations for millennials in an interview.

His first recommendation is to focus on savings, and to think about how many months of living expenses your savings can get you through. Savings, explains Dalio, is “freedom and security.” Savings can also provide you with opportunities. If you need to further your education, start a new business, or invest in a discounted asset, it’s easier if you have extra money. If you can accumulate enough savings to last you for the next 300 months then you can be considered financially independent. 🙂

Dalio’s next advice is about what to do with your savings. He says “it’s important to realize that the least risky investment that you can make, which is cash, is also the worst investment you can make over time. You can judge that by comparing the rate of inflation to the after tax rate of return you will earn.” So if inflation is 2%, and you’re only making 1% on your cash investment then you are actually losing purchasing power and getting poorer. “So you have to move into other assets that will do better over a longer period of time.” This is why some people like myself don’t have a cash emergency fund.

The last advice Dalio gives is a bit of surprise to me. Instead of going with the mainstream and buying an index fund, he suggests that millennials should do the opposite of what their instinct tells them to do. This can be emotionally difficult to pull off. The market reflects the crowd and your instincts will usually lead you to do the same thing the crowd is doing. But herd mentality won’t get you any further than the rest of the herd. So you want to buy when no one else wants to buy. Famous investor Warren Buffett has a similar saying: “Be fearful when others are greedy and greedy when others are fearful.” The best way to approach this last advice for me is to apply original research and critical thinking to your investment strategies if you want to outperform the market. But then again, a lot of people are perfectly happy earning market returns and I think indexing is an acceptable way to invest as well.

Ray Dalio created a 30 min YouTube video about his famous work, Principles for Success. He believes that dreams, reality, and determination can all help to create a successful life. And that pain plus proper reflection will give us the tools to progress. It’s an interesting watch if you’re into mental models and self development.

 

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Random Useless Fact:

An actress posted a photo of a man’s rear because she was tired of being harassed online by people leaving lewd comments on her Instagram account.

Jul 272018
 

According to a Fox article, millennials now make up the largest generation in America, and we’re seeing some troubling trends as they are increasingly turning away from capitalism and favouring socialism instead. Based on a study of over 2,000 people, nearly 45% of millennials polled said that they would prefer to live in a socialist country compared to the 42% who said they preferred a capitalist one. Another 7 percent said that the preferred living in a communist country. Oh dear. 🙁

By comparison, most baby boomers polled favor capitalism, compared to 26% who said they prefer a socialist system. Socialism never works in the long run because you eventually run out of other people’s money to spend. For a recent example we can turn to Venezuela, which has a socialist government. Venezuela’s currency has lost 99.9997% of its value in the past 6 years. In the span of a few months, the International Monetary Fund (IMF) has gone from forecasting that Venezuela’s inflation rate would hit 12,875% by the end of the year to now saying that it will get to 1,000,000%. Yikes! The country’s economy is on the verge of collapse for the past year. People often struggle to find food, medicine, and other essential goods.

If socialism is better than capitalism then all the socialists should get together and redistribute their properties fairly among themselves. But that has never happened, lol. As Winston Churchill once said, “Socialism is the philosophy of failure, the creed of ignorance, and the gospel of envy. Its inherent virtue is the equal sharing of misery.”

 

 

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Random Useless Fact:

Eating healthy can cost more money

 

 

Mar 022017
 

I’ve been saying for years that real estate prices in Canada are not that high. Certain areas like Vancouver and Toronto have the perception of being unaffordable. But the fact that population growth is still positive in these major cities suggests otherwise. If these places weren’t affordable then people would be moving out of them, not in. 🙂

People from all the world have wants. These wants turn into demand, which fuels certain parts of the economy. And what do young adults want right now? According to an HSBC survey, the “vast majority” of millennials want to buy property.

Demand from Young People 

HSBC bank polled 9,000 people from 9 different countries: Canada, Australia, China, France, Malaysia, Mexico, the UAE, the U.K. and the U.S. The results include some interesting numbers about the housing market among individuals between ages 18 and 35, which the bank defines as millennials.

37% of millennials said they had financial help from the bank of mom and dad to cover their housing costs. Canada is roughly in the middle of this trend.

A little over a third of Canadian millennials polled already owned their own home, and among those who didn’t, 82% say they intend to buy one within the next 5 years. Thus, housing must be relatively affordable, because even at the lowest earning stage of their careers, most people either already own property, or have the means to own in the foreseeable future. They are also willing to sacrifice a lot in order to become homeowners.

The results of the HSBC study shows that Canadian real estate may not be in a bubble. Funeral costs, health care costs, and tuition have also grown at a faster pace than inflation over the decades, but most people don’t label those sectors of the economy as becoming a bubble. So I don’t think housing is overpriced either.

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