This is How The Blog Magic Happens

This is How The Blog Magic Happens

Most days here at the ol’ FU machine, we do the same old thing. I talk about finance stuff and you kids pull up your proverbial chairs and gather round, just waiting to be wowed by the wonderful pageantry that is Nelson.

Either that or you’re dicking around at work in an attempt to forget about your crippling existence for a little while. Got a little real there, didn’t it?

A blog is kind of like a hot dog factory. You never know about the background, likely for good reason. All you get to see is the delicious tube-shaped product when it’s finished and you’re about to stick a six inch dog in your mouth. Be gentle with it. Anyone who puts it all in at once is just showing off.

So let’s do something a little different today. Let’s take a closer look at how I make the magic happen. Allow me to take you for a personalized tour of the hot dog factory, Nelson’s desk.

Picture it up, yo

nelsondesk

Oh God Nelson that’s disgusting. An energy drink?

Relax, it’s empty.

I don’t think you really understand my criticism.

So let’s start at the beginning. This high quality office you see actually costs me money.

The story goes something like this. I got back from South Korea and was deciding whether I’d take writing seriously or get a job and continue writing on the side. After applying for all of one job that semi-interested me, the choice was pretty clear. Typos and all, Nelly was going to double down and become a true professional writeer.

That typo is intentional. I’m not that big of a hack.

I quickly realized writing at home wasn’t going to do it for me. It was depressing not leaving the house for days at a time. I missed human interaction. My wife made me cook dinner. And most importantly, I really needed to put on pants and go to work. The psychological boost of leaving the house is a huge deal for me.

I started going to coffee shops and grocery stores to write, but that got old quickly. I’d run into people I knew or they’d just be too damn noisy. Coffee shop internet will do in a pinch, but it’s not really that good.

So I decided to rent an office. After viewing a half dozen different offices, I chose the one in the picture above for a few different reasons, including:

  • It’s located in a mall, which gives me a physical location for private mortgage clients to pay me
  • I liked the free option for opening up a retail store, although after more than a year here I still can’t think of anything I’d want to open
  • The rent is a terrific deal for what I’m getting
  • There are other people around who I can talk to
  • Snacks and energy drinks are close by

My desk basically sits in the corner of a retail space that’s approximately 400 square feet in total area. I use maybe 100 square feet. There’s another ~200 square feet in the back, too.

Here’s the view from the other side.

desk-2

As you can see, there’s plenty of room for me to stretch my legs. I’ve thought about opening a co-working space with my extra area, but my landlord isn’t really in favor of subletting and I am cripplingly lazy. I’m also not exactly sure how much demand there would be. Solopreneurs don’t really end up in my boring small town.

Anyhoo, onto the desk itself.

Let’s start with the two monitor setup. If you’re a writer, it’s an absolute godsend. You can research on one monitor while keeping the other open to your work. It makes everything go that much faster and smoother.

Ron Swanson currently guards one of the monitors, and Bender will soon be guarding the other. I left him at home. He’ll be standing right where the Subway cup is.

The MacBook pro exists for two reasons. I use it almost exclusively for email and tweeting, and every now and again I’ll drag if off with me when I do somewhere. I will need to replace the cord soon for the second time, which I don’t intend on doing. It will get replaced by a PC laptop sometime soon, probably in 2017.

My papers are always a bit of a mess. On the left is the least high-tech system ever for keeping track of stuff I want to write about. The large notebook has ideas for Motley Fool and other investing topics I want to cover, while the smaller one has all the ideas for this here blog.

I own the Texas Instruments BA II Plus Financial Calculator which is the only calculator any serious finance type needs. You can figure out things like depreciation, amortization, and compound interest on it, although I usually just use online calculators for a lot of those things. Still, it was only $30.

Off to the right is a printer and file cabinet, which actually get used. More than once. I went with the printer that could scan stuff because that’s nice to have every now and again.

You might have noticed the pair of shoes under the desk. They’re off most of the day. The only time I really put them on is when I go somewhere. The rest of the time I walk around in my socks.

And finally, let’s talk about the chair. I spent $170 on that chair (regular price, $249) and it was the best money I ever spent. If my ass could talk, it would probably just say things about my bidet and that chair over and over again.

The wall

As evidenced by the previous pictures, I don’t have much up on the wall. In fact, my wall only has two things on it, my business licence and my pictures.

buffett-wall

The two bottom pictures are of my wife. I decided to take these pictures out because the last thing I need is to be yelled at. The other two pictures are of my cat, who only yells at me in cat language. Besides, cats don’t use the internet.

Let’s talk more about the picture of Warren Buffett, which I got at the Berkshire Hathaway annual meeting for a buck. Warren looks down on me, making sure I don’t make any dumb decisions with my capital. Charlie Munger is on the other side, and periodically I might turn it around so Charlie is looking down on me.

Best dollar ever.

And that’s really about it. It’s not the most glamorous desk, but hey, it sure beats one of those standing desks. Nobody likes those things.

Lessons Learned From Bay Street

Lessons Learned From Bay Street

This is a guest post by The Financial Canadian. 

I recently completed a 4-month job stint at a Bay Street bank in Toronto.

I consider myself extremely fortunate to have had this opportunity. After living in rural New Brunswick for my life to date, this move was full of changes – both personally and professionally.

Bay Street is a really mysterious place for those who haven’t experienced it. I’m happy to report that it’s a wonderful place.

Nelson and I have been in discussions for some time now about a guest post, and we thought it would be cool to write about lessons learned on Bay Street.

One lesson I’m writing about today is about the culture of Bay Street (a pleasant surprise!), and the others are about investing in general.

Enjoy!

Lessons Learned on Bay Street

Lesson #1 – It’s not like the Wolf of Wall Street

The world of banking gets a bad rap from many people. And perhaps rightly so – after the financial crisis of 2008 resulted in millions of people defaulting on their mortgages and losing their homes, it’s not surprising that people are salty about it.

Banking also has a reputation for being tough on it’s employees, getting them to work insane hours. The media portrays bankers as individuals prone to substance abuse, who never spend time with their families and are workaholics by nature.

I’m happy to dispel these myths.

First of all, at the firm I worked at I can genuinely say that the employees worked for the best interests of their customers. Other than perhaps your doctor, there are few business relationships that require as much trust as those that are financial in nature. The employees on Bay Street take this responsibility seriously..

With regard to the work-life balance, this too was much better than the media portrays it. The hours were very normal for an office job. I was scheduled 8:30-5 every day, and though I often left a bit later, it was never extreme nor enforced. The office was generally empty by 6:00. Sure, there were evenings where I stayed until 8 or 9 at night, but they were rare, and often unnecessary – the work could have waited until the next day, but I was so caught up in it that I lost track of time. One of the side effects of loving your job.

I worked with a group of great people, and our environment was nothing like what is portrayed in the media. The work environment was excellent, and I felt supported and encouraged in my growth. Friends at other firms reported the same. So my first lesson – Bay Street is not the dog-eat-dog world that you see in the movies.

Lesson #2: The Butterfly Effect Is Real

but·ter·fly ef·fect
noun
  1. the phenomenon whereby a minute localized change in a complex system can have large effects elsewhere.

In layman’s terms, the butterfly effect is the theory that a single event, no matter how small, has the potential to change the world around it forever.  This applies to the world of investing too – the intelligent investor will make use of all the details, no matter how small, before committing any money to an investment opportunity.

One of the biggest things that changed about my investing over this summer was my attention to detail. Instead of making investment decisions based on an article from the Motley Fool or CNBC, I learned to really dig into the financial statements of a company. I no longer invest in companies whose business I don’t understand.

When I look back at the way I used to invest, it seems very near-sighted. It’s amazing to me how little I considered the facts before I would make an investment.

For example, if I was considering an investment in TD Bank, the old Financial Canadian might have said:

  • “They are one of the biggest companies in Canada, so they must be doing something right.”
  • “Canadian banks are known to be profitable and low-risk investments.”

Now, my approach is much more granular, and I consider objective facts, like:

  • TD has demonstrated excellent EPS growth in recent years.
  • Their expansion into the US leaves plenty of room for further growth in a new market.
  • The potential for an interest rate hike from the Federal Reserve will increase TD’s Net Interest Margin in their US operations, boosting the bottom line
  • Their exposure to oil & gas loans is lower than the rest of the Big 5 Banks, reducing credit risk in the current oil downturn.

See the difference? By accounting for all details while making investment decisions, we can simultaneously reduce risk and increase return.

 

Tangerine is offering new customers a fantastic deal. Become A Client And Earn Triple Interest Of 2.40% For Six Months! Plus, earn up to $50 in bonuses just for signing up. Interest on your savings is a good thing. 


Lesson #3: Building a Network Is Key

This summer I had the pleasure of working with a tremendous group of investment professionals who were experts at their trade. I consider many of them to be among the smartest people I know.

As smart as they are, none of them know everything. But through their craft and through their personal endeavours, they have all spent years building a network of people they can rely on.

This network is extremely valuable.If a well-connected person ever stumbles upon a question that they don’t know the answer to, they will know someone that does.

So how do you build a network?

Well first of all, being genuinely nice is a great way to start. As well, don’t be shy! Reaching out to people cold (whether it’s through email, LinkedIn, or what have you) is a great way to meet new people and I’ve personally made great connections this way.

After seeing the importance of networking first-hand this summer, I wrote a full post about successful networking tips. Give it a read!

Lesson #4: Investing is About Numbers

This blog is quantitative by it’s very nature. Investing itself is also very quantitive, at least when it’s done properly.

This might seem very obvious, but this summer took it to another level for me.

This summer I learned all about valuation metrics, Microsoft Excel, Discounted Cash Flow models, and all kinds of other applications of mathematics and statistics to the world of investing. Since business is communicated through financial statements, and financial statements are composed of numbers, then it only seems natural that quant skills are important.

Equally as important as being able to calculate these numbers is the ability to interpret them. Investing is just as much an art as it is a science, and this summer I made great progress in developing the “gut instinct” that is necessary in a successful investor.

Concluding Remarks

Having the opportunity to work a stint on Bay Street was one of the best things that’s ever happened to me.

I’ve learned so much about investing, living in the big city, and all sorts of other things.

One day I hope to make it back.

Readers, did any of this surprise you about Bay Street? Let me know in the comments section!

The Foreign Buyer’s Tax is a Terrible Idea

The Foreign Buyer’s Tax is a Terrible Idea

Let me begin this article by reminding you kids that I think Canada has a massive real estate bubble and it should be something that concerns us. Back in 2012 I even went as far as shorting Canada’s banks (using options) as a way to bet on this. This investment didn’t go well.

And if you read my stuff over at Motley Fool, I’ve probably written at least a dozen articles in the past year alone pointing out various concerns about the market. I firmly believe anybody investing in Toronto or Vancouver real estate is setting themselves to lose a metric assload of money. That’s more than an imperial assload, btw.

I also that we should be doing things to attempt to pop this bubble, and to their credit, governments have been trying. Mortgage insurance has become more and more strict as the years have passed, although many still believe it’s far too lax. Certain cities have set up land transfer taxes to make buying all the more expensive. And apparently even banks are getting in on the act, slowing lending to markets they feel are overvalued.

Oh, the restraint.

And yet, even though all those changes were implemented to make it harder for folks to buy property, the two big markets are like my rockin’ dance moves, refusing to quit. What gives? What was happening?

For many observers, the blame rested at the feet of one group of people, and that’s the damn immigrants. They felt the same way Moe Szyslak felt about the immigrants. Take it away, Moe.

immiggants

Oh man Frinkiac is my favorite thing ever.

So they reacted in a very predictable way. After years and years of getting upset that rich Chinese and Middle Eastern folks were showing up and making houses unaffordable, British Columbia passed a special 15% foreign buyer’s tax on any property in the province not purchased by Canadian citizens.

The many problems with the foreign buyer’s tax

For an issue that governments have apparently been studying for years and years, the B.C. government sure did botch the passing of this bill.

The biggest mistake made was making the bill effective immediately. When the foreign buyer’s tax was passed, it was passed with no implementation period. That means even if a foreign national bought a house three months before and was set to close on it in a couple days after the bill passed, these folks would be forced to pay the foreign buyer’s tax.

Put yourself in that person’s shoes for a minute. You decide to make a decision that involves spending the better part of a million bucks. Everything is going fine and then all of a sudden some bureaucrats sign a bill and you’re looking at an extra hundred grand that you have to pay. You’d raise all sorts of hell, and rightfully so.

It’s not that governments can’t change the rules, because of course they can. But they have to change the rules in a fair way. That includes not making people who entered into a transaction in good faith pay tens or hundreds of thousands in a tax they never agreed to.

A seller can’t go back and demand extra cash from a buyer in the middle of a transaction. They’re bound to that contract. Governments should follow the same rules.

Why are we targeting foreigners?

I’ve heard all the arguments, and they all have a variation of the same theme. Foreign money pouring into Canada is the reason why house prices are so high. Vancouver is dominated by Chinese money, while Toronto has been a haven for Middle Eastern oil cash.

There’s a certain amount of truth to that, I’ll admit. I’ve been to both Vancouver and Toronto, and it doesn’t take a genius to see how multi-cultural both of those places are. It’s obvious foreign money is propping up real estate markets in those two cities.

But at the same time, Canadians are playing a huge role in prices in those cities as well. So many otherwise smart people are putting all their eggs in the real estate basket, buying a place before they feel priced out of the market forever. Low interest rates are helping landlords buy up supply that gets rented out for peanuts. And population growth to both centers is robust as tens of thousands of Canadians move to the largest centers each year.

In other words, foreign buyers are the tipping point, but we’ve done most of the heavy lifting ourselves.

One of the great things about Canada is we have a free economy. Americans, Brits, Chinese, or anyone else is free to invest in our market, own a company, or buy real estate with very few limitations. Hell, you can even buy your way into Canada (Quebec only, but still) for the low cost of $800,000 and a net worth of $1.6 million.

We roll out the welcome mat for foreigners when its convenient for us and make them the scapegoat when we decide they’ve taken advantage of the rules. We’re happy to accept their money when it suits us and then we slam the door shut (and disparage the crap out of them) when they have the audacity to want to invest in our country.

And yet, with more and more anti-children guys like me out there, Canada is going have to rely heavily on immigration to grow our economy and pay for our massive social obligations.

Conclusion

It comes down to this. Canada has done all sorts of things to make buying houses easy for the average family. Mortgage default insurance is (relatively) cheap and banks regularly give 25-year old borrowers loans of 20 times their original investment with nobody batting an eye. Millions of Canadians feel they have a right to buy an affordable home in our most popular markets.

And yet when foreigners want a piece of the same action, we think it’s okay to slap a foreign buyer’s tax on them and only them.

Ultimately, I do not believe putting restrictions on foreign cash is a way for an economy to get ahead. If we want to cool down certain housing markets, we should do so by putting the same rules in place for everybody.

Cutting Cable Is a Terrible Decision

Cutting Cable Is a Terrible Decision

This is going to sound really dumb after reading the title, but hear me out. OH GOD WHY WON’T YOU ALL GIVE ME A CHANCE?!?

Here at Chateau Financial Uproar, we currently don’t have cable. We have a Netflix subscription Vanessa pays for out of the allowance I give her each month ($46 and not a nickel more) and I enjoy watching the odd baseball game from MLB.TV. I’m too cheap to pay for a subscription to that particular service, so I use my buddy’s account.

I then used his password to hack into his email account, where I responded to a Nigerian price. Turns out that one was legit, and he is now a millionaire.

Whoops.

Anyhoo, cutting cable isn’t such a hard sacrifice. We just turn on Netflix and go to town if we’re in the mood to watch TV. If I want to watch a sporting event like the NFL, I’ll either go to a friend’s house or just find a stream online. This isn’t really a problem because I so rarely watch games.

I’ve cut my television watching to virtually nothing, in other words. I might watch two or three hours of TV a week, choosing instead to spend my leisure time reading books for free, looking at stupid gifs on Reddit, or throwing things at my cat so it’ll leave me the hell alone. I guess I’ve also been trying to spend more time with actual people rather than what I did previously, which was mostly brooding and yelling at teens to get off my damn lawn.

Speaking of stupid gifs, here is my favorite one.

squirrel-catapult

I guaran-damn-tee you at least one squirrel was harmed in making that gif.

Cutting cable

If you’re like me and you just stop watching TV, then by all means. Cancel your cable and never go back.

Where I have an issue is with folks who end up cutting cable and then don’t decrease their television usage. These people want to have their cake and to eat it too. They desire the ability to watch TV almost like normal without paying any of the associated cost.

Related: How to get (nearly) free TV

They’ll do a number of things to get that sweet free TV. Installing an antenna is usually their first step, a move that gets them anywhere from two to about ten free channels over the air. They’ll rave about the quality of the picture. Because hey, the only thing better than HD is free HD, amirite?

Except unless you live in a very specific part of Southern Ontario, you’re only getting a handful of channels for free over the air at best. And even then, who cares? You’re getting CBC for free. That network shows four shows and twenty hours a day of highly entertaining test patterns.

CBC, right now. Go ahead and check.

CBC, right now. Go ahead and check.

Call me when I can get HBO for free. I’ll get excited then.

The next step is usually getting one of those Android boxes that are preloaded with all sorts of ways to get pirated TV shows, movies, pornography, and probably the feed to your neighbor’s nanny cam. In theory, these boxes can give somebody access to a whole internet worth of media. It’s a cutting cable orgasm in a plastic box.

Reality is a whole lot different, though. I’ve talked to a few people who got these boxes, and it’s the same refrain over and over again. They’re great at first, but then access to the media starts getting taken away as hosting sites and apps are shut down by the Feds. Within a few months people have abandoned them because it takes more time to find an episode of The Big Bang Theory than it does to watch it.

And then when you do find a stream, the picture quality is hot garbage. I went through this while living in South Korea a couple years back when I wanted to watch the Super Bowl. I was able to find a stream online and use my Chromecast to watch the game on our provided TV set. But the picture looked like blurry ass. The TV could handle 1080p. The picture quality was about 6p.

And if that’s not enough, the damn feed buffers every 14 seconds, magically right when DREAMY Tom Brady was about to throw a pass. Remember when Seattle lost that Super Bowl on that dumb passing play on the goal line? What I remember is Twitter losing their minds and then my slow-ass stream telling me what happened twenty seconds later.

Life is too short to watch crummy streams and trying to figure out where you can find the latest episode of your favorite show.

TV value

When you think about it, TV is terrific value. Where else can you get hours of entertainment for $2 or $3 per day?

Yeah, a certain amount of TV is trash. But come the hell on. There’s a reason why The Bachelor is still on the air after 5,203 seasons. It’s because people eat that crap up.

Readers like to belittle TV watchers as slack-jawed yokels, barely able to stop drooling over themselves long enough to watch the latest episode of Grey’s Anatomy. Meanwhile, readers are buying cheap romance or mystery paperbacks that are just as consumable as the latest Hollywood blockbuster. And at least some TV watchers are watching PBS.

If you get value from TV, go ahead and keep your package. And if you don’t, then start cutting cable with all the gusto of Taylor Swift being crazy. But as it exists today, free or nearly-free streaming options have a lot to be desired. If you value your time–and you should–then just pay the damn cable bill.

Instead of Retiring in Your 30s, Try This

Instead of Retiring in Your 30s, Try This

Us here at Financial Uproar (me and my 52 helper monkeys) are no fans of retiring super early.

There are a number of reasons why. First, I LURVE money, and want to make more of it. I see no reason to stop doing so early. I’ll just go do something else if I get bored.

I also think taking our hardest-working and most motivated employees from the workforce in their prime working years isn’t good for anyone. Somebody with FU money is far more likely to stumble upon something truly remarkable than the guy who is 14 different kinds of screwed if he gets fired. The wealthy guy can afford to take a few risks; to try and create something worth creating. The poor guy is going to play it more safe than a Mormon on prom night. ZING HE’S STILL GOT IT.

But, alas, no matter how much I shout, y’all don’t care. I know very reasonable people who insist on hanging up their proverbial skates right when their working lives are about to get really interesting. HOW DARE THEY DON’T LISTEN TO ME. I ought to murder them all…with love. And axes.

While most of us don’t have the desire to permanently stop working in our 30s, I think many of us would like the freedom to change jobs, take a year or two off, or be able to start a business without worry. I know I went from working for the man to self-employed, and it was terrifying. Let’s not talk about how many times I wet myself.

So rather than retiring early, allow me to propose another option.

Mini retirements

I can’t take much credit for the originality of this idea. Tim Ferriss came up with it before me, and he probably ripped it off of somebody else. I’m pretty sure the first guy who came up with the idea was Benjamin Franklin, but keep in mind my research skills are about as through as a 7th grader throwing together a last-minute homework assignment.

The concept is simple. When working, save your ass off. Create that huge savings rate everyone is always talking about. And then when you inevitably get tired of your job, quit it without hesitation. I’d recommend not playing your boss’s head like a bongo drum on the way out the door, but hey. I’m not your mother.

bongo

At that point, you’re free to do whatever you want. Fancy a trip to the French Alps? Go ahead, Captain Pretentious. Want to start your own business? Feel free to work really hard before throwing up your hands and getting a real job. Wife about to have a family? Cool beans. Somebody’s going to have to get yelled at.

And so on.

The whole key is what happens next. After taking a few months or even a year or two to recharge your batteries, it’s time to get back to work.

This arrangement offers the best of both worlds. It allows someone to have the advantages of spending some of their prime years traveling, learning a new craft, or one of the million other things folks who retire in their 30s end up doing. And then it makes sure they get back to work before their resume turns to dust and they become unemployable.

Imagine you were an early retiree who wrapped up your working career at 35 during the top of a long bull market. You have $1 million in the bank. Suddenly, stocks are down 40%, and you’re only looking at a nest egg of $600,000. The whole plan looks shot.

So you decide to go back to work. But the combination of a poor job market and the giant gap in your resume make you all but unemployable. What’s an early retiree to do?

I’m sure plenty of these retiring early folks have planned for such contingencies. Still, backup plans are good. I’ve always found work comes easy when I’m not exactly looking. The opposite is true when I’d really like to find something.

Let me tell you a secret

Come close. I’m going to tell you kids something that’ll blow your collective minds.

There’s no such thing as people who retire in their 30s.

Every last one of them has something that keeps them busy. Some build an online presence. Others build houses. Some freelance. And some take care of the house/kids. The point is all of them end up working in some sort of capacity again. The work might not be paid, or very glamorous, but they do it.

When you’re financially independent, you can make the decision to switch from a very demanding career to an easier one. You can take a break from working. Or you can travel. You can do anything you desire, including retiring.

The point? Get financially independent and then let the rest take care of itself. Once you get to that point, all sorts of options open up. I’m a fan of taking time off between jobs myself, but hey. Whatever floats your boat.