Mar 072015
 

How does Moses make his tea? Hebrews it of course. 😀 But I bet Moses never got a chance to enjoy a 100 year old vintage tea that costs $600,000. This round disc of tea, which weighs 375 grams, is raw compressed pu’erh (a type of black tea.) It was recently imported into North America for the first time by a vintage tea wholesaler based in Vancouver. 😀 This tea is said to be the most valuable of vintage teas in the world. Wealthy hipsters in Vancouver can finally get their hands on some expensive tea to go along with their expensive Vancouver bungalows. 🙂

15-03-puerh-tea-vintage-tea-600000-vancouver

Brewing this $600,000 tea’s first pot would cost about $150,000, including the depreciation from breaking up the disc. It’s like driving a new car off the lot. Personally it’s a little out of my price range so I’m just going to move oolong, because there’s nothing for me to tea here. 😀

Vintage Tea

Pu’erh is known as the “king of teas” in some parts of China. It’s been drunk by emperors and monks. It’s even said that wars have been fought over. Much like a fine wine or Scotch whiskey, vintage tea becomes better with age, gaining a richness and complexity in flavour as it matures. This particular tea dates back to around 1910.

Many people collect tea the same way they collect art or vintage wine. $600,000 for a 375 gram tea cake works out to a price per weight ratio of $1,600/gram. Let’s see if this tea has been a good investment over the last century. If we assume the vintage tea was originally $1/gram 100 years ago then we can easily calculate its average annual return.

($1,600/$1)^(1/100 years) = 1.077

So this tea cake has increased in value by 7.7% every year on average over the last 100 years. Not as good as the stock market over the same period but it’s still a decent return regardless. 😎 As an alternative asset class I can see myself investing in vintage tea, or maybe even vintage tea cups. 😉 Large chains such as Teavana and Quebec-based David’s Tea are becoming more popular across North America. Tea consumption in Canada is expected to grow 40% in the next 6 years, according to Agriculture Canada. Maybe I’ll just pick up some Earl Grey and store it in a cool and dry place. I’ll wait 50 years, pass it onto my grandchildren, and give them instructions to sell it after another 50 years. 🙂 Why limit my investment time horizon to just a lifetime when I can go multi-generational? 😛

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Random Useless Fact:

42 years ago a Big Mac was only $0.65. Today it’s almost $5.00. #foodinflation

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Jul 112014
 

Meet the 5 wealthiest peoples in Canada, their net worths, and their source of wealth.

1) Thomson family. $26.1 billion. +30% from previous year. Thomson Reuters, Globe and Mail.
2) Galen Weston. $10.4 billion. +24% from previous year. Loblaw Cos. Ltd., Holt Renfrew
3) Irving family. $7.9 billion. -3% from previous year. Irving Oil ltd., J. D. Irving Ltd.
4) Rogers family. $7.6 billion. +18% from previous year. Rogers Communications Inc.
5) James Pattison. $7.4 billion. +20% from previous year. Jim Pattison group.

Except for the Irving family, it’s surprising that they’re still able to grow their net worths so much, percentage wise, despite how wealthy they already are. Thanks to these rich people small investors like us can just piggy back off their hard work and success. For example anyone who had invested in Galen Weston’s company, Loblaw Companies Ltd (L), at the beginning of this year would be up 12% on their investment so far.

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src: canadianbusiness.com

If we look at the industry these top elites work in it’s mostly information services, food, energy, telecommunication, and advertising. I think we should include these types of businesses in our own portfolios. For example late last year I blogged about buying Comcast, which is a big cable company but also has media properties that provide information and news. I thought Comcast has more potential than Reuters. So far this year Thomson Reuters stocks is down 2%, but Comcast shares are up 4% 😀 #lucky

There are many ways to invest in the food business as well like buying fertile land or stocks of seed producers. These are things everyone should do because if the price of food increase in the future at least our wealth will rise with it. Investing in oil and gas is a good bet long term and thankfully most Canadians are already well exposed to that 🙂 The three big telecom businesses in Canada are highly profitable due to their oligopoly. If we hold Roger’s shares (RCI.B.) then we’ll earn 4.3% dividend each year regardless of the stock’s performance. That’s better than a high interest savings account or government bonds right now. And if the Rogers family continues to grow their company and become even wealthier, then so will we 😀 Personally I have stakes in all three major telecom incumbents because an oligopoly has unfair competitive advantages that companies in other industries don’t.

Most of us will never become billionaire entrepreneurial giants. But at least we can stand on their shoulders and go along for the ride. This is the easiest way to make money. If we side ourselves with the same interests as the ultra rich, then it only makes sense that we will eventually become rich too. The universe has a mysterious way of giving us what we associate ourselves with 😀 Investing with the rich won’t make us billionaires, but millionaire status is more than probable, which is good enough for me 😉

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Random Useless Fact:
The diversity of Fox News anchors.

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Jun 052014
 

Want to invest in China? The Shanghai stock market index (SSE) has returned an embarrassing -22% in the last 5 years. A buy and hold strategy would have lost money. Doh! The Chinese stock market is too mainstream anyway. So I’ve developed a better strategy to invest in the world’s second largest economy. My plan is a bit risky, and you’ve probably never heard of it before, but so far it’s proving to be very effective. If anyone else had held the same investments as me, their net worth would have also increased by more than $100,000 over the last 12 months 😀 See my fiscal updates category for details.

To successfully invest in China we have to think like hipsters, and buy stuff before it becomes cool 😉 So here is my strategy. Invest directly in China’s economy by purchasing financial assets OUTSIDE of China that the wealthy Chinese are also buying. Let’s study what the rich in China are investing in so we can predict with relative certainty how the next cohort of new Chinese millionaires will use their money as well. Then we just need to invest before they do.

So what are Chinese millionaires buying?

Generally speaking Chinese investors love real estate. An investment bank recently reported that the richest 1% in China owns about one third of all residential properties in the country. Holy hamburgers! Such property hogs 😯 They are so enamored with housing that it’s no surprise Chinese investors are looking elsewhere in the world to satisfy their real estate addiction 😕 The top three countries that are attracting Chinese investors are the U.S., Australia, and Canada.

14-06-chinese-realestate-foreign-countries Chinese foreign investors invest in china

Real estate agents do not have to disclose their client’s information to any global anti-money laundering organization. So foreign Chinese buyers can land with suitcases full of cash and get real estate deals done clean and fast.

China’s outbound real estate investment jumped by 25% in the first quarter of this year. Great Scott! The top cities to attract Chinese money so far in 2014 have been Chicago ($464 million), London ($348 million), Sydney ($243 million), Melbourne ($150 million), Los Angeles ($144 million) and San Francisco ($72 million), according to real estate firm Jones Lang LaSalle. Chinese buyers spent $30 Billion on overseas real estate in 2012. About $9 Billion of that went to the U.S. and a lot of that was in California.
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Sep 212012
 

Forbes recently published their list once again of the richest people in the US. On top of the list this year is Gates with $66B, followed by Buffett with 46B. This is very inspirational to me. I like reading about their stories and how they got to where they are. I don’t expect to be on the list, but it motivates me to at least do my best with what I’m given. The combined wealth of these people totals $1.7 trillion, up from $1.5 trillion last year. It makes me wonder how they can continue to get richer yet at the same time still give away billions of dollar every year to charities.  But it’s not always good news for the rich. Mark Zuckerberg, the young founder and CEO of the Facebook saw his wealth slashed in half after the Facebook IPO. I can’t imagine how I’d feel if half of my hard earned money were to just disappear, ouch! With a net worth of only around $9 billion dollars now, his ranking in the Forbes list dropped from 14th place to 36th. How will he ever get by now? 😛

 

Interesting PF posts and other interesting articles from around the web

 

Fellow Vancouvorite Modest Money explains the important of connecting with your readership

CF from the Outlier Model explains how it is never too late to start something new in life and follow your interests.

Young and Thrifty reviews a local restaurant.

The Passive Income Earner shares his latest dividends progress. One day I wish to catch up to him with my own dividend income.