Issue #4 - Don't just buy stuff, own the businesses that make stuff, too

Feb 09, 2024

Read time: 3 minutes

Hola amigos! Welcome back to the Journal. I truly appreciate each and every one of you reading and commenting.

We are in Mexico City visiting family, introducing baby Julia Sofia to her great-grandmother, Mosa. Then off to San Miguel de Allende for a wedding of one of MJ's cousins.  

Hopefully, you are doing great.

Let's get to it. 

 

1. Personal Finance

Tax time is coming, and it'll feel like Mike Tyson is hitting you in the face. Unless you start preparing now. 

Last week, I polished up the bookkeeping on my business and personal affairs. I am ready to press 'go' on filing and know precisely my tax bill. And it feels effing good to be done.

There may be reasons why you can't complete this work right now, but some advanced prep work can go a long way. Then you can focus on what matters to you.

So, just some friendly encouragement to get started sooner rather than later.

 

2. Stock Markets

Almost one year ago, my wife MJ downloaded Wealth Simple... 

She had never heard about compound interest, and we were discussing how to make money work for you. 

I showed her the US S&P500 and said: 

  • "Don't just consume products. Own the businesses that sell the products, too."

In 5 minutes, she opened her first investing account from her iPhone, and with one click, she bought shares of $XSP (iShares S&P500 ETF). 

Immediately she started investing in the 500 best companies in the United States.

  • diversified portfolio
  • no more losing to inflation
  • investing in the innovation machine that is corporate America

Her S&P500 was up 25% last year.

This is how you make your money work for you. 

Great timing, March 10, 2023 for her first purchase, maybe a bit lucky. She knows 10% is the long term return to expect. Not 25% year after year.

Anyways, food for thought. Seasoned investor or absolute beginner - owning a piece of Innovation using low cost ETFs is a game changer.

See the video we made and how easy it is to do it yourself here: 

 

3. Real Estate 

Listening to three real estate veterans last week at breakfast - Avtar Bains, Shenoor Jadavji, and Eric Carlson.

No question the real estate industry is hurting.

  • There is more office vacancy in Calgary than there is total office space in downtown Vancouver
  • Despite Vancouver office headline statistics showing high occupancy - we just heard of a lease deal done at $0 net rent. Sure, a sublease - a "one off"...but wow, $0 net rent
  • Multifamily investing development returns are extremely skinny as construction and interest costs skyrocketed and have stayed elevated. Not to mention, slow municipal turnaround and levels of government that don't speak to each other..

So much so that some of the questions centred around “how do you keep your teams motivated?"

Avtar spoke so eloquently of his history beginning at Colliers in 1981 – he made $150,000 and won rookie of the year – he expected his income to double the next – it got crushed to $9,000 instead. 

The lesson he shared is that real estate is about liquidity, understanding there is always a cycle, and that during times like this it’s important to differentiate, be creative, and patient as the next opportunity arises.

Avtar is positive on Retail and worried about Office and Residential. 

Shenoor is positive on Retail and looking outside of British Columbia for better opportunities.

Eric Carlson is bullish on Alberta, acquiring Industrial and Retail, but much less positive about BC due to policy issues.

 

1 Quote

"Remember, there are no bad questions and if there are you did not ask it."

-my dad Nick Gudewill's motorcycle diaries.

 

A Question  

Do you consider yourself a real estate investor or stock market investor?

Both? Let me know.

 

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Thank you

Eddie Gudewill, CFA

 

P.S. How I Can Help You

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