Getting out of 21st Century Fox 

Five years ago I wrote about purchasing 26 FOXA shares for $34 USD each. At that time the stock was trading at 20 times earnings, so it wasn’t exactly cheap. However I saw great potential in this company because it had a lot of popular brands and intellectual properties. I had planned to hold this stock for decades. But I didn’t have to.

Fox shareholders approved the acquisition by Disney, and last month I was forced to sell all my FOXA stocks for $1,843 CAD. That’s a tidy 83% return on investment, before even adding on the dividend income I received over the years. 🙂 Plus, there’s no capital gains tax because it was held in my RRSP. Yay!

Overall March has been a really positive month for my finances. All my liquid assets went up in price.

Liquid’s Financial Update

*Side Incomes: = $3,300

• Part time job =$700
• Freelance = $600
• Dividends =$1200
• Interest = $800

*Discretionary Spending: = $2,400

• Food = $300
• Miscellaneous = $700
• Interest expense = $1400

*Net Worth: (ΔMoM)

• Total Assets: = $1,340,100 (+8,200)
• Cash = $12,200 (+1000)
• Canadian stocks = $171,400 (+800)
• U.S. stocks = $124,600 (+4000)
• U.K. stocks = $21,700 (+900)
• Retirement = $128,800 (+1000)
• Mortgage Funds = $34,900 (+200)
• P2P Lending = $34,500 (+300)
• Home = $367,000 (assessed land value)
• Farms = $445,000

• Total Debts: = $411,000 (-900)
• Mortgage = $188,800 (-300)
• Farm Loans = $178,600 (-500)
• Margin Loans = $43,600 (-100)

*Total Net Worth = $929,100 (+$9,100 / +1.0%)
All numbers are in $CDN at 0.75/USD

 

Preparing for Interest Rates to Drop

It’s been several years since the Bank of Canada lowered interest rates. The last cut was in 2015. Central banks around the world dropped rates near zero as a reaction to the global finance crisis in 2008 and rates have been low since. Policy makers expected the economy and rates to rebound back to normal in short order. But they discovered an inconvenient truth to the markets; low interest rates are addictive. Once consumers get a taste of easy credit, it’s very difficult for them to pull back.

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A lot has happened globally in the last few weeks that makes me weary about the growth of the financial markets over the next 1 to 2 years. Inflation in France sparked violent protests. The U.S. federal budget deficit for fiscal year 2019 is projected to be nearly $1 trillion. It will be hard to find borrowers who are willing to buy all those treasury bonds. The 2 largest foreign holders of existing U.S. debt are China and Japan. And both have become net sellers. The economic tension between the U.S. and China is momentarily on hold, but 3 months from now the trade war could escalate.

So what I plan to do going into 2019 is to keep more cash on hand. This will allow me to maneuver more easily as cash is very liquid. If interest rates become too high I will use the cash to pay down my debt. If stocks in general fall into a bear market I will be buying up more shares. 🙂

Liquid’s Financial Update

*Side Incomes: = $3,400

• Part time job = $900
• Freelance = $1200
• Dividends = $900
• Interest = $600

• Food = $300
• Miscellaneous = $500
• Interest expense = $1200

*Net Worth: (ΔMoM)

• Assets: = $1,225,600 total (+1400)
• Cash = $19,800 (+2300)
• Canadian stocks = $162,600 (-4500)
• U.S. stocks = $117,400 (+300)
• U.K. stocks = $20,400 (-300)
• Retirement = $117,400 (+2700)
• Mortgage Funds = $34,700 (+500)
• P2P Lending = $33,300 (+400)
• Home = $275,000
• Farms = $445,000

• Debts: = $420,200 total (-800)
• Mortgage = $190,300 (-400)
• Farm Loans = $180,400 (-500)
• Margin Loans = $49,500 (+100)

*Total Net Worth = $805,400 (+$2,200 / +0.3%)
All numbers are in $CDN. 

Financial markets are stretched thin. The S&P 500 is still trading relatively expensive at 22x earnings, even after the pullback that started in October. There isn’t much room for growth in equities. Real estate markets around the world are softening. U.S. home building company Toll Brothers warned that the housing market slowed further in November, particularly in California. Home prices and sale volume in Canada, particularly in Vancouver and Toronto are going down. Prices will likely fall further into the upcoming spring. But Canada’s continued trade deficit and high energy prices mean the cost of living will probably climb higher. The theme for 2019 could very well be higher inflation but lower investment returns. If that turns out to be true then I would prioritize paying down debt and acquiring hard assets.

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Random Useless Fact:

2018 is passing by quickly. We are already in the final quarter. 🙂 My stock portfolio’s value dropped a little in September. But I still managed to grow my net worth by half a percent for the month thanks to my multiple income streams. By January 2019 my goal is to have a net worth of $1 million. 🙂

A stock market dip in September is normal – perhaps even expected. Since 1896, when the Dow Jones Industrial Average was created, the Dow has lost an average of 1.03% in September. That compares to an average gain of 0.76% across all other months of the year. The funny thing is the Dow actually climbed higher this September. But it was the S&P/TSX Composite in Canada that dropped 1.8% lol.

Liquid’s Financial Update

*Sidel Incomes: = $2,800

• Part time job = $600
• Freelance = $300
• Dividends = $900
• Interest = $500
• Solarshare payment = $500

• Food = $300
• Miscellaneous = $500
• Additional Interest = $900

*Net Worth: (ΔMoM)

• Assets: = $1,240,100 total (+1,500)
• Cash = $12,800 (+1600)
• Canadian stocks = $176,800 (-1000)
• U.S. stocks = $126,900 (+900)
• U.K. stocks = $21,600 (unch)
• Retirement = $115,300 (-500)
• Mortgage Funds = $34,100 (+200)
• P2P Lending = $32,600 (+300)
• Home = $275,000
• Farms = $445,000

• Debts: = $423,700 total (-2,700)
• Mortgage = $191,200 (-400)
• Farm Loans = $181,500 (-400)
• Margin Loans = $49,500 (-400)
• CIBC Line of Credit = $1,500 (-1500)

*Total Net Worth = $816,400 (+$4,200 / +0.5%)
All numbers are in $CDN. 

Inflation in Canada is picking up. We are at roughly 3% this year compared to 2% in 2017. Higher inflation will have a positive impact on real estate prices. I’m thinking about buying another property either next year or in 2020. Home prices will likely continue to increase in Vancouver and Toronto, at least in the long run. So getting more real estate now is probably a good idea.

Due to the nature of my new job I will not disclose my annual salary from now on. I was able to negotiate a relatively high salary for myself, about 20% more than my previous employer which shut down recently. Lest any of my coworkers stumble upon this blog I don’t want them to know how much our company is paying me. But I’ll continue to share all other sources of income such as from investments and freelance graphic design. 🙂

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Random Useless Fact:

The hospital you were born in is the only building you leave without entering.