A Whole Heaping Pile Of Wisdom

It has been many, many moons since I authored an article for Canadian MoneySaver. I was reminded of this when I was speaking at The Money Show in September 2024. There were many people that I knew, some from seemingly another lifetime. But now, we have grown older and greyer, and hopefully, wiser with the passage of time. At least some of us have. Just like many of this magazine’s readers.

I thought it was time to plunge back into Canadian MoneySaver. But with what? While wandering along a path near my house in October, autumn colours ablaze, ideas started to percolate. As they often do.

I have decided that this column should focus on several stock-specific topics rather than a deep dive into one area.

Some of you might remember the days when there were only full-service brokers. Back then, the fees were steep, and I was paying too much to a broker named Larry at Yorkton Securities. For example, for my nominal dollar trade in Mitel, they wanted to charge $140. At a discount brokerage, it would have been $40. That $100 differential was a lot to me then and remains so now. I asked for a rate reduction and Larry said something like, “I love you Benjy, but I can’t do it.” I took my business elsewhere.

Today there remains a significant difference between the discounters and full-service guys. If you have a good broker and feel that they are giving good added value, then by all means, stick with that person. But otherwise, save some money and use it in a wiser way. A good dinner, perhaps.

Another thought on the pathway was to make sure that you watch your investments. Do not simply leave it in the hands of your advisor. Show some interest, ask some questions, and keep your broker on their toes. The odds are that you will get better service and results.

If you find it challenging, attempt to understand—it is not so difficult to comprehend the expenses that you are paying for your investment. Some people shy away because the subject is money, and they are afraid to make a mistake. The error is avoiding it.

The key is that expenses can add up. If your counsel is trading too much, that can mean excessive fees—more for them, less for you. Yes, some of these people will sometimes churn accounts to make sure that they have lots of funds to send Jack and Jill to university. I believe that most advisors do their level best to help clients, but there are lots of stories out there where the best interests of the client are not served. A certain amount of cynicism can be healthy.

When new investments are proposed, it is best to take time to think about them and ponder, even. Might you miss some gains? Of course. But wise thought should win out over fast action. That leads to a key for me in my investing: patience. I only buy into companies that I have followed for at least six months, more often years. In my opinion, this is crucial. Rushing to purchase things is not wise. From this perspective, it is best to buy stocks after they have been beaten down or stabilized in price, rather than when they are exciting.

December is when I acquire most of my positions. That is because I am purchasing losers, and at the end of the year, many people are dumping so that they can take their tax losses. By contrast, I often choose to unload my losers in the spring, when the supply part of the equation is more limited, thus prices are better. That old supply-demand thing. Remember Economics 20?

Diversification is critical too, but not overdiversification. People often talk about the first one, but do not consider if they have money in too many places, meaning their investments effectively work against each other.

Venture beyond sports and entertainment in your reading. Maybe read a newspaper like The Globe and Mail (yes, I am biased since I write for them and think it is an excellent product). Perhaps head to the library and grab some magazines like Canadian Business, Forbes, and Fortune. Keep abreast of what is happening and try to think about what might happen in the future. Would that necessitate a change in some of your investments? There are a ton of worthwhile investment books, magazines, and online resources.

Consider your stage of life. What were primary considerations when you were 35 or 45 years of age, are likely not the same now that you are a senior. Your investments should evolve with time.

Be aware of fads. Often retail investors, brokers and institutional investors will get caught up in the latest and seemingly greatest new thing. We have almost all likely seen the earnest love of technology, marijuana, SPACs, cryptocurrency, and AI amongst others. All of these can have a place in a portfolio but one must be wary of putting too much into any sector or theme. Given that I do not buy into companies that have not been around for 10 years, it helps me avoid many of the hot areas, which later often morph into cold ones. That gives me more money to procure tulips, one of the previous manias in Holland, circa 1634. No, I did not witness that one in person.

There you have it, hopefully, a whole heaping pile of what to me is wisdom that will aid you to keep and make more money. If you have any thoughts or questions, drop me a line at gall@pathcom.com. I virtually always respond. And in a timely manner.

Benj Gallander. MBA. Co-editor of "Contra the Heard". Email, gall@pathcom.com, www.contratheheard.com