Friday, May 21, 2021

Short Takes: Investing Questions, CRA Oral Interviews, and more

My attempt to move the email delivery of my articles from Feedburner to follow_it has been anything but smooth.  Follow_it decided to require everyone to click a confirm link at the top of my Test post before they could get more articles.  My wife missed that and apparently many others did too.  I’m not happy with the inane ads follow_it places at the end of my articles, and I don’t like the tracking stuff they add to all links in my articles.  I’m seriously considering eliminating email subscriptions on my blog, but I’ll wait a while longer before making a final decision.

Here are my posts for the past two weeks:

What Might Have Been

Seeking Prophets

Here are some short takes and some weekend reading:

Tom Bradley at Steadyhand asks some very interesting questions.  One good one is “Who is going to buy the flood of low yielding government bonds being issued?”  Another is “Is the political risk around China fully reflected in securities prices?”  I won’t be buying the new bonds, and I’m wary of investing in China.

Anna Malazhavaya explains that CRA can now compel oral interviews.  This is a change announced in the 2021 Federal Budget.  If I understood correctly, they can even compel people to answer questions about a neighbour.  I guess that’s another good reason to get along with your neighbours.

Big Cajun Man continues to have difficulties making contributions to his son’s RDSP.  It seems that TD is trying to apply rules that make sense for RRSPs to RDSPs where they don’t make sense.

Boomer and Echo looks at reasonable expectations for future market returns.  Some investors expect the high stock returns of recent years to keep rolling.  The party has to end sometime, and making moves to try to keep it going likely won’t end well.

Wednesday, May 19, 2021

Seeking Prophets

It ain't so much the things that people don't know that makes trouble in this world, as it is the things that people know that ain't so. — Mark Twain.
Recently, I was reminded of how difficult it can be to help people with their financial decisions.  What they don’t know isn’t the problem so much as what they think they do know.

A young man I’ll call Lucas came to me wondering what to do with a modest sum in employee stock options.  He’s not sure which way the stock market is going, and he’s not sure where his employer’s stock is going.  Is now a good time to sell the options or not?

I started by explaining that nobody knows where the stock market or any individual stock is going, and that selling should be based on other considerations, like diversification and needing the money.  I tried to continue with how his best course of action depended on the stock’s price and the strike price as well as the amount involved, but there was little point.  As far as Lucas was concerned, I couldn’t help him and he’d have to ask someone else.  No doubt Lucas will find someone else who will confidently make random predictions about the stock market.

There are things Lucas doesn’t know that made it difficult to help him.  For example, he doesn’t know what a strike price is, so he couldn’t tell me how far into the money the options are.  He told me a dollar amount for the options, but I’m not sure if that’s the value of the stock or the net value of the options.  It’s even possible he doesn’t have options at all, but has some restricted stock.

The bigger barrier to helping Lucas is his mistaken belief that he needs help from some stock market prophet who can tell him the future.  I’ve had the experience before of having someone nod in agreement that such prophets don’t exist, and then immediately ask another question searching for predictions of the future.

Even when someone knows very little about investing, it’s necessary to first get them to unlearn things they think they know but are wrong.  Only then is it possible to help them.

Monday, May 17, 2021


This is a test post after I tried to fix my blog.  Feedburner is dropping email subscriptions, and I tried to switch them to  So, if this worked, emails will look different going forward.  If it didn't work and I broke my feed, I'll have some extra time on my hands.

Wednesday, May 12, 2021

What Might Have Been

I’ve let some very lucrative opportunities slip through my fingers over the years.  I won’t call them regrets as I’ll explain later, but I could have ended up with a lot more money than I have now.  Here I describe the top three potential paydays that got away from me.


I spent my career as a cryptographer, so it’s not too surprising that I took an interest in the workings of bitcoin when it first appeared.  I learned how it worked and appreciated the clever way it was designed to mimic mining for gold without the need for a central authority.  For a while, that’s as far as my interest went.

Later, some enthusiasts formed a group to work on mining bitcoins, and they wanted me to join.  I was tempted, but decided that I had other things to do with my time.  Given the way I tend to get obsessed with technical projects, if I had joined in those early days, I could have mined thousands of bitcoins.

When bitcoin prices were manipulated upward to spark the mania we’ve witnessed, I would have sold my bitcoins off a little at a time to avoid having too much of my net worth tied up in a volatile currency of questionable real value.  It’s possible that I could have ended up with around CDN$50 million after taxes.  But I’ll never know for certain what might have been because I didn’t join the group.

Apple Stock

I bought 3000 shares of Apple stock in October 2000.  They were only $20.54 each.  A little less than three years later, I sold them for a loss of about US$3000.  Since then, Apple shares have split 2 for 1, 7 for 1, and recently 4 for 1.  If I had held onto this stock, I’d have 168,000 shares now.  As I write this, these shares trade at $126.85, for a total of US21.3 million.

I would never have held on all the way to today without selling any shares.  To reduce risk, I would have sold small blocks of stock along the way.  My best guess is that I’d now have about CDN$10 million after tax from holding these Apple shares.  But I didn’t hold them, so I’ll never know for sure.


I had the good fortune to work for a tech company that had its initial public offering in the midst of the late 1990s tech boom.  I had no way of knowing what was about to happen, but the company’s stock price grew to 20 to 100 times any sensible valuation.  I did well with my allotment of stock options.

Leading up to the IPO, I had the chance to move into management but turned it down.  I decided I was happier doing technical work.  If I had embraced management for just a couple of years, I would have received substantially more stock options.  I could easily have ended up with a few million more dollars.  But, I chose reasonable working hours and work I liked better.


It’s tempting to look at these missed chances and draw some lessons like “when you see an opportunity, go for it” or “don’t be left with regrets,” but I think this is wrong.  None of these outcomes was foreseeable.

In the early days of bitcoin, there were believers in bitcoin as the future of transactions, but nobody was talking about getting rich from a crazy runup in bitcoin prices.  Bitcoin miners were geeks who liked the technology.  They weren’t young people seeking their fortune.

Fifteen to twenty years ago, Apple was just another small tech company that seemed sure to get crushed by the Microsoft behemoth.  Betting on Apple back then made no more sense than betting on several other tech companies.  But none of the others grew to what Apple is now.

My whole career I avoided management because I didn’t like the work, didn’t think I’d be good at it, and didn’t want to work the long hours management requires.  I had no way of knowing that enduring management for a small slice of a decades-long career would have a big payoff.

I’ve focused here on missed opportunities, but I’ve had a tremendous amount of good fortune in my life as well.  Some of the random choices I’ve made have paid off in unexpected ways.  The real lesson here is that life is unpredictable, and you’re destined to be fortunate sometimes and unfortunate other times.  There’s no point in mooning over what might have been.  Look to the future.

Friday, May 7, 2021

Short Takes: Leverage Losses, Financial Advice, and more

Speculation that we’re in a bubble is growing.  I don’t know how to identify bubbles while they’re happening, so the most I can say right now is that the prices of stocks, bonds, and real estate are high.  But let’s suppose for the moment that all three assets are in a bubble.  What are we to do with this information?  Maybe one or more of these assets will crash.  But what if they keep rising for quite a while longer before this crash happens?  What if the economy booms and we grow our way out of the bubble without a crash?  There’s no guarantee that selling assets and waiting for a crash will work out well.  Because I don’t know what’s going to happen, I’m sticking with my investment plan.  The only change I’ve made is to lower my expectations of future investment returns.  So, I haven’t changed the way I invest, but I haven't grown my spending as much as my portfolio’s growth dictates in case future returns disappoint.

I managed only one post in the past two weeks:

The “Explore” Part of a Portfolio

Here are some short takes and some weekend reading:

John Robertson
tells a deeply personal story about personal loss and financial loss due to leverage.  When it comes to investing with borrowed money, everyone is a genius until suddenly they’re not.

Ben Felix (video) explains what is and is not good financial advice.  He says that investing is largely a solved problem, but goes on to explain the ways that people need help.  He makes an excellent case that most people could benefit from an advisor who does a good job providing this help.  I have little doubt that he is able to do a good job in his practice.  However, after listening to many financial advisors of different types, including those who work with high net worth clients, I have my doubts that most of these advisors perform Ben’s list of tasks well.

Jason Heath answers a question about making spousal RRSP contributions in your 70s.