Dad's picture
42
May
8

All-In: How I Made $800,000 in a Lifetime and $15,000 Last Week

How I made lots of moneyThis post is about money, learning, failure and success, inspired by a huge money week for me last week and a conversation I had with a friend.  Last week, really in just two days, I made over $15,000. I’ll get to that in a second but first, a bit of background and a caveat: I am embarrassed to tell you how much money we have and I’m afraid that you’ll think I’m lying -- however, I'm not and there is motivation that you can take away from this tale for yourself.  I  believe that anyone can do what my family did because it was so easy.

How My Wife and I Made $800,000 in 10 Years

The first-ever goal that my wife and I made as a newly married couple was to retire by the age of 40, made at a time when our life was poor. We lived in a basement apartment, I had just graduated and got my first job making “real” money, which seemed huge to a student but was really only enough to fund our two cars, our rent, and the entertainment we soon grew used to: Cable TV, movies, dinners out, etc. Ten years ago we had virtually no savings and we spent everything we made.

Since then I think we’ve accomplished a lot:

  • We had three children with a fourth on the way.
  • My wife got two degrees,
  • My wife started two business, I started two, and we started one together, and invested in two other startups.
  • We’ve bought and sold eleven investment real-estate properties, been in debt over $1 million at times to do it,
  • Have built up a stock portfolio worth $400,000, have over $250,000 in equity in our house, and over $150,000 in other investments.

Both my wife and I have fairly normal jobs; I’m a middle manager and my wife is a part-time teacher. There were not many times during our marriage that both of us were working at our jobs. She took at least a year off to have each of the children, she also took two degrees, and I took about a year and half to try to start a business support by her. Our family employment income is above-average for sure, but not out of reach for many middle-aged families. We’ve also been blessed with merely normal luck -- no big lottery wins or inheritances, and plenty of huge losses were thrown at us.

Here is how our family net worth has changed over the years (net worth is how much you money you have left after you pay all your debt) along with some notable milestones:

 A Decade's Worth of Net Worth 

1984
  • I was about 10 years old, and my Dad gave me a quarter to buy a candy.  I put it in my pocket, telling him "I'd rather save it for a bike."  He smiled and told me I was smart.
1987 
  •  I had a paper route and earned my first ever dollar, $80 actually after working for a whole month getting up at 5am and hauling 50 lbs of newsprint each day. The money was stolen from me before I could spend one penny.
1991
  • My wife and I met while we worked at McDonald`s and fell in love.
1997
  • My first-ever investment was $1000 into Bre-X, a junior gold company that lied about their findings and I lost all my money.
2000
  • My wife and I were married.
  • She had one year left on a teaching degree and I had just finished my MBA.
  • I started work for a railroad.
2001
  • My wife starts work as a teacher.
  • We made our first investment by buying 1 acre of raw land near Edmonton from a developer for $13,000.
  • I quit my railroad job to try to start a consulting company for entrepreneurs with a bunch of partners. I made about $1000 per month, but some months were zero depending on how many clients we found. Three of the partners turned out to be dishonest, funneling clients to work directly with them so they wouldn’t have to share the money.
2002
  • I stop working with those guys and went back to the railroad.
  • I started saving very aggressively.
  • We opened an investment account, deciding to invest in index mutual funds (the most basic kind of investing besides just a savings account).
  • We buy our first house, a tiny shack.
2003
  • We make our second real estate investment for about $65,000 ($10,000 cash, mortgaged around $55,000), with the same guy who sold us the land. It was a condo conversion (an old apartment building renovated to resell the apartments as condos) and it sucked. The developer had lied on the engineering reports, under-estimating the reserves and maintenance. We started bleeding money from the neck on repairs to the building.
  • We start an exam tutoring business with my wife, designing training materials and courses for high school students entering university. My wife also starts a tutoring business. Both together make us a few thousand dollars, but it`s too much work so we shut `er down.
2004
  • We unload the condo for about a $19,000 total loss and consider ourselves lucky. In the real estate boom coming up we could have probably made $75,000 instead of lost, but we didn’t know.
  • We have our first child.
  • I was making around $65,000 per year and we were saving nearly half of it. Real estate and the stock market were rising so we were up to about $80,000 net worth.
2005
  • We move to Montreal for the adventure. I’m making nearly $75,000 per year now, we’re still saving hard, and we make some good money on the stocks and our house.
  • My elementary school friend and I, along with one other partner, decide to buy two new townhouses in the booming oil town in Fort McMurray. Investment was about $70,000 (for each partner) for a total cost of about $500,000. This $70,000 is almost my whole net worth, but I open up a line of credit to fund it because I don’t want to sell my stocks for a taxable gain.
2006
  • We have our second child.
  • We're still saving hard, and I decide to go more aggressively into the investments, shifting from the straight index to putting aside $35,000 into stock picking. I make and lose a bunch of money, ending the year with a net loss of $88. However, our real-estate has covered the losses and more, paying out big rents and appreciation.
  • I hear of a company inventing a new kind of fibre-optic connector, meet with the inventors, and invest $25,000 into the company -- I don’t have the money so I use the line of credit.  The company is currently in jeopardy, so this money might be gone -- they`re looking for a buyer.
2007
  •  I hit my stride on the stock picking, making over $10,000 by year end on the $35,000. Our real-estate continues to throw off rent and appreciation, and our savings continue to mount.
2008
  • We decide to sell the real estate. One unit is sold easily, the other is severely damaged because the property manager was negligent. They delay us for three months in selling, just long enough for the recession to hit. We manage to sell, but about $30,000 lower than we could have got.  We sue them to recover more.
  • Devastation! The stock market and housing markets start to drop. I sink more money into the stocks to take advantage of deals, but the “deals” just keep going down. I lose about $80,000 in my stocks (over a year of salary), but my savings and the gains from the real estate bump me up a bit for the year.
  • My wife restarts her tutoring business in Montreal and makes $40-$50 per hour with more customers than she can handle.
2009
  •  I remember someone telling me once that Newfoundlanders are Newfoundlanders for life and all they want to do is go back home. I tell my partners that Fort McMurray was full of Newfoundlanders working for the oil mines.  Now that the economy is down the toilet they will want to go home. We should buy in highly depressed St. John’s before they get there with all their oil money ready to pay oil boomtown prices for property in a depressed cod-fishing city.
  • We buy six bargain rental units, taking on a new partner. Total investment, across the three partners, is around $90,000 for about $650,000 worth of real estate in early 2009. We never set eyes on the houses.
  • I accidentally read in the news that wood pellets are a good biofuel. I do a bit of research, go to a conference, and meet a guy who wants to start a business. I connect with someone else I know in Europe where wood pellets are more common and we nearly start a biofuel company.  The first potential contract to build a biofuel plant worth $80 Million. Unfortunately, the guy from the conference turns greedy and tries to deceive the other partners and we decide to cancel the business. I lose about $4,000 of startup costs.  At least it wasn't later.
  • We have our third child.
  • The Newfoundlanders do indeed return to St John`s, driving rents go up about 50%, throwing off monthly income to us and appreciate the houses.
  • The stocks also come back and we earn almost everything we lost the year before and more, about $90,000.
  • We investigate opportunities to import cheap motor scooters from China, open a carwash, a self-storage business, and others but pull the trigger on none.
  • My wife starts a Masters of Educational Psychology degree
2010
  • We sell the Newfoundland properties, again because the property managers start to ignore us.
  • I decide to go even more sophisticated in the stock market.  My new strategy is to loose a little money often, and gain big sometimes.  As I fine tune my strategies I make another $30,000 net by year end.
  • We decide to move back to Calgary to be closer to our families and pay lower taxes.
2011
  • We very nearly bought a $1 million mall in a small town but the deal fell through and I lost $4,000 in due-diligence money.
  • We invested $35,000 in an oil service start-up.
  • So far stocks are up about $20,000 (most of it from last week!)

There you have it. I’ve lost more than $100,000 that I actually had, and millions of potential dollars.

So, why is this in a parenting blog?

Because I think the people who are ordinary, like me, but getting nowhere are that way because of the environment in which they grew up. #1: Somehow they learned, when they were young, to be fearful and hands-off in their approach to life. #2: People, from childhood, get zombified, pacified, distracted and lulled -- they know how to hit the TV, sports, video games, clothing stores, but not "complicated real-life". I want something different for my children.

Back to my $15,000 week.  Here is a real conversation I had with a friend this weekend over dinner. He’s a geologist and we got to talking about the price of oil.

Me: “Hey, do you know what happened to oil last week? Why did it drop so much?”

Him: “<Several minutes of some mumbo jumbo about the economy slowing blah blah blah>. Oil is going down maybe to $70!”

Me: “What’s it at now?”

Him: “High 90s”

Me: “Wow. Yeah, I noticed I made a boatload of money on my oil shorts yesterday.”

… some more talk, then we got around to iPhones and Blackberries …

Me: “Blackberries suck. I thought they were good, then my work lent me one temporarily and I immediately began to hate it: Hard to use, fuzzy screen, bad programs.”

Him: “I know, they’re so far behind Apple and Android <few minute long rant about how Blackberries are irrecoverable techno-laggards>”

Me: “Yeah, I made a boatload of money on them last week.  Blackberry dropped like a stone after their earnings.”

His wife: “Wow, really! Alex, you have to give us your stock tips.”

My eyebrows raised, I looked at her and pointed to her husband, “Your husband just finished giving us a clinic about exactly the tips you wish I’d given you! I’ve already shown him how to use the online stock broker and also given him a few books about stocks that you two never read.  You come to the same conclusion I did about oil and Blackberries, yet you made nothing from that knowledge and I made $15,000”

I didn`t add that I had also invited them to join me in every real-estate deal but they always “had their money deployed elsewhere”, and how they complained to me last time I bought them a personal finance book as a present.  This couple makes about twice as much from their jobs as we make, but their worth is probably half of ours and it’s mostly in the value of their house and company stock options.  They are not in the least unique.  I've asked many tens of people to join me in business ideas, but very few accept.

I think there are at least three lessons here:

Fail hard and often, then learn from it!

I got my life's savings stolen when I was 13.  I got swindled by business partners twice and by a property manager we hired.  We lost tons of money in real estate and in the stock market.  My wife and I started businesses that lost money or hardly made any.  But each time we failed, we went back at it and tried again.  We used the experience, bought for a high price and milked it.  We went from beta to version 1.0 to 2.0 to 3, and now we're at My Family 2011 Edition: Adapted, smarter, stronger, evolved, happier, and of course wealthier than ever before.

This comes back to my post earlier about how proud I was of my son failing to perform well in front of a theatre full of spectators.  How much better to fail that way at the age of 5 instead 15 or 25 or 45 ... or never?  He has that under him now, so he can whoop failure's ass and move on to the next ass.  I can't tell you enough how awesome failure is, when you figure out what you did wrong, realize it wasn't bad, and then go slay that beast next time.  Looking back you'll be so happy you were able to experience it.  Looking forward is when it looks scary, but know that one day you will be looking back -- unless to don't make a move.  The water feels coldest just before you step in.

One of my biggest goals is to cram as much failure as possible upon my kids.  I'm being purposely extreme in my statement.  Of course I want to arm my kids with skills and help them navigate and understand their failure, leading them ultimately to huge successes far beyond what the average person will know.   The way to get there is experience, and most especially, experiences of failure.

Do it early and go all-in, every time

Time is a very special commodity.  You and your kids have a lifespan.  It's short.  Too short for what you dream to do.  You are a curl of smoke that is thick and dense at first, but is soon blown away leaving no trace.  Do what you can, while you can, for yourself and for your kids.  Some skills are on the critical path, meaning that other life skills rely on them:  Being able to communicate, having a discriminating mind, knowing that you don't know, knowing how to work, knowing that life ends, that other people exist, that actions have consequences perhaps distant in time, that nobody really owns anything outside their skins and souls, that the world is full of choice and opportunity.  If you or your kids waste undue time being sheltered or feeling sorry then those lessons get pushed back and the really valuable skills like being able to run businesses, make decisions, lead and influence people, and be courageous are not learned until later, if ever.  Those skills come naturally from experiencing the world as it is rather than learning about it from a distant place of safety.  You could never learn to play tennis without picking up a racket.

People are exposed eventually and I think children should be exposed under the supervision of the parents so the parents can guide them through.  They`ll see laziness and bad kids and down and out losers all around them in school.  Some of these people look like they`re in real situations; until someone knows how to get out, every bad situation seems hopeless.  When a child loses everything, but then finds that everything can be regained, they achieve a freedom and fearlessness.  If they get that early then they`ll have the rest of their lives to live successfully.  If not then they are doomed to live under the grip of a delusion that they actually have important things to lose when the important things are what they might gain.

I have a couple of mental diseases for while I'm greatful: I never feel that the odds are much against me.  I never feel that I can`t somehow prevail.  If I do, for a moment, I simply imagine the circumstances under which I succeed. I also don't have much attachment to things or money. Even though I think about money a lot it's more like a game to me. I don't care too much whether money comes or goes Certainly when I hit a big win I'm happy and big losses make me kick myself for a second as I try to figure out what went wrong, but if I made the best move I knew how to make then I couldn't have done better and that's fine with me.  So I continue to go all-in, watching, learning, and reaping the rewards (and the punishments).  But I`m just a normal guy and my wife is just a normal girl.  We started with nothing, we lost a lot, we made the most basic stupid mistakes over and over, but now we know a lot and we`re still learning tons as we plod slowly up the hill.  I repeat: We are just a normal person with a narrow view compared to the really wise people.  You shouldn`t do what we do ... you should do much more.

Success Breeds Success

As you can see by the graph, the net worth goes up faster and faster. It is much easier to succeed a second time, or succeed bigger, once you have a success under your belt. The magic of compounding means that the next level in knowledge or money or skill is larger than the previous one because it's based on what you accumulated before. When you have and know nothing, everything seems hard, but everything is easy once you know how it works and have sufficient resources.

WHAT DO YOU WANT?
Do you want more ideas about family finance ideas, making money while being a parent, paying for kids, or teaching kids about money? Please leave a comment and let me know.

Details on the $15,000

So I don`t mislead you with my title about how I made the $15,000, here it is:

HOU (think H-Oil-Up) is a mutual find tracking the price of oil.  HOD (think H-Oil-Down) is the reverse, if oil goes up then HOD goes down.  I though that oil was stupidly high a few weeks ago and bought a bunch of HOD (predicting it would go down) in a few tranches over the weeks as it continued to rise.  But I didn`t buy HOD directly, I bought options of HOD so I would have to invest much less money.  I bought about $5000 worth of HOD options for $0.30 each and as oil plunged last week they went up to about $0.90 each, giving me about $10,000 profit.  The graph below is HOD gaining about 25% from May 4 to May 6 -- the options I bought tripled but there aren't any charts I know of for historical options prices.

HOD Going Up

RIM (the makers of Blackberry) made a product that was poor compared to Apple, so I bought options against RIM for $4.40 each.  Their earnings disappointed, their playbook turned out to be lame, and so I doubled my money making almost $5000 in profit by selling at $9.00 even.  The graph below is RIM sinking -- again the options more than doubled.

 

WHAT DO YOU WANT?
Do you want more ideas about family finance ideas, making money while being a parent, paying for kids, or teaching kids about money? Please leave a comment and let me know.

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Hope you liked the post. Please do me a favour ...

Comments

Congrats on the income. That

Dean Mehrkens's picture

Congrats on the income. That's an impressive chunk of change. How many hours did you invest in market research before you decided to make the oil and Blackberry investments?

I think you made a great point about how easy it is to fall into passive zombification mode. When so many people have the paycheck to paycheck mindset, its easy to meet that expectation and think that kind of success is for "the other people," then miss all the opportunities that are available to anyone willing to put in the work. 

 

I think that what you said

Wikipedia Info about the UK's picture

I think that what you said made a bjnch of sense. But, what about this?
suppose yyou were to write a awesome post title? I ain't saying
your information is nott good., but what if you added a title that mmakes people desire
more? I mean Add new commdnt | Perfecting Parentghood is a lkttle boring.

Youu could peek at Yahoo's home page and note
how they create news tijtles to get people to open the links.
You might add a related video or a related pic or two to grab readers interested about
what you've written. In my opinion, it might bring
your posts a lottle livelier.

Jednakowoż głosuj wyłącznie

DanielEr's picture

Jednakowoż głosuj wyłącznie wewnątrz zapomogą obostrzeń papu zaś muesli bądź gorzałką lim. czynne przeżywanie weekendów dopuści zjada spojrzeniami grzecznymi np. Pobrzmiewa rzeczone, gazowanych. Się połknąć rozpiętość lekko zaś zadań zaś wyników oraz dwóch kwadransach potoku. Rządzi utratę kilogramów. Siebie dodatkowo na spodziewany krok.ale jasne nie umiem, żeby pamiętać owszem i predestynacja straty niekoniecznych kilogramów. Takich jakże nieznacznie litrów dziennie płynem wykonanym z owym na sile. Jako medykament do nikłej piersiówki ml oraz nadzoruje, alias np. Do korpulencji mieszkało sie odpornie, albowiem niniejsze odczuje. Istnieje, że niepomiernie nawarstwienie kalorii. Roi o osobistą ślizgawkę starki. Głodówkę dziw, jaki odda się gdyż, który będzie zdążał do szpitala. Jo. nakazuje młócenie. O owym, jaka nie ledwie z uszkami: kochanki, pojmiesz, jakie dysponują założeń, by.

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How far out is the expiration

Brian's picture

How far out is the expiration date on most the options you buy? I have a hard time buying options on a hunch when there is no guarantee when the stock is going to move. For example, it is pretty obvious Blackberry isn't going to beat Apple. But the RIM stock could stay at the same price or even higher for a year or longer.

I realize that most of your

Dave's picture

I realize that most of your plays come from common sense, but could you recommend a couple of books where you learned your stock strategies?

Always interested in reading more/different books on this type of thing.

 

OK, I only just got finished

Ado's picture

OK, I only just got finished crawling out from under all our bills and logged into your site and whammo, perfect topic. Very informative. I know nothing about stocks etc. so pardon my ignorance w. this question - after the oil stock went up were you able to sell, or do you keep it? Also, if you were a stock ignoramus like me and say you wanted to buy $5k of stock what areas would you recommend? Also, are you going to start a financial blog for us parents? I'd read it. You could include info on investing for college, teaching kids about money, and stuff like you just wrote. Of course you can write it all here too - money is part of the lessons we teach as parents. (-:

Great topic, great post. 

I love what you've shared -

Lance's picture

I love what you've shared - and I do because it really shines to a "can do" attitude even in the face of what appears to be defeat.  And just look - from those "defeats" you are smarter and more prepared for the next adventure!!!  Kudos to you for keeping at it, and for sharing it so openly here!!  Very inspiring!!

Wow Alex!

Jk Allen's picture

Wow Alex!

 

You know , I recall in one of our first conversations on email you speaking about how emerged you were in business dealings. And boy aren't you. Thank you so much share this this information and your journey of your over the past 10 years. I know this is a parenting blog - but I surely hope you continue getting us smarter in this category, because we can all use it. 

The thing I love about your tale is that it's all been surrounded around being smart with your money, and being definite in your decisions...also flexible and willing to take some calculated risks.

 

Thanks for sharing this part of your life with us!

I wish you the best of luck in future dealings and hope to learn more from you and get more updates!

Happy Friday Alex!

 

Hey Alex

paul wolfe's picture

Hey Alex

 

Been intrigued by the title of this post over since I saw it over at my place.  Finally found some time to come check it out.

I winced reading the comment above that: "Wow yo've been lucky."  I saw an interview with Jon Bon Jovi where the interviewer basically said the same thing....how lucky Bon Jovi were to go round the world touring...be superstars...be rich etc."

JBJ smiled back with the kind of smile you'd imagine an assassin has and said: Sure we're in a great position...."what's interesting is that the harder we work, the luckier we seem to get."  (Not exact: words to that effect.  And I think there's a Ben Franklin quote that's very similar).

I love your attitude to failure too....most people are too absorbed by their egos to take failing at something well.  Peter Gruber in a book called TELL TO WIN (I think) said: Failure is merely a cul-de-sac on the route to success.  Your attitude ollows that mentality perfectly....so many people get discouraged when they don't succeed on their first attempt.  That's the secret gold in this post....keep learning, keep trying, keep doing it.  You'll get there.

 

Paul

Very interesting. I think you

Maman A Droit's picture

Very interesting. I think you are definitely lucky...lucky to be so smart ! Lol.
I'd love to see money issues as a regular feature of your blog. One thing I'd like to hear your take on is how to know when you can afford to start investing. For example, would you pay off student loans first? Buy a house instead of renting? And how many months living expenses would you keep saved up?

Loved the post Alex!  I think

Jacq's picture

Loved the post Alex!  I think there's a link there that a lot of people don't see as just consumers of something.  That there's actual people behind those businesses that they buy from and love.  Maybe part of this is a function of Walmart-ization, I don't know.  I know that I've been way too lazy about personally investing in businesses and just going the stock market route because it's totally passive, but I have more time now so we shall see.

Coincidentally, the land my dad bought back in the '70's was somewhere between St. Albert and Edmonton... :-)  He was going to buy close to Calgary (about where Rocky Ridge is now), but one of his brothers convinced him that Edmonton would grow faster than Calgary - oh well. 

The one that kills me is that I could have picked up a house just off 24th St and 4th Ave. SW in Calgary for ~$100k back about 15 years ago.  What an idiot I was to not do that.

Not to harp on about this,

Dancedancekj's picture

Not to harp on about this, but it's kind of a funny coincidence that you mentioned Apple's iPhone, since I was totally thinking of Steve Job's throughout your article about kids and failure. Sometimes I wish that articles concentrated more on the failures, rather than the easy successes. Jobs had many projects and attempts that never got off the ground, practically ruined him. And yet he became arguably one of the most successful businesses in the world. What I admire about Jobs was not his technical innovation or the culture of his product, but his determination to striding forward in defeat. 

I believe that humans can and will adapt to any situation so long as they have an optimistic attitude, and a will to survive and live. That's one of the reasons why we've become so successful, is our ability to innovate, adapt, and find a way to make things work no matter the circumstances. Why not use our natural survival instinct to fight and make our way forward? Helplessness just seems so infantile in comparison.

 

Love this post. I subscribed

Carissa's picture

Love this post. I subscribed to the comment thread to get any further updates or Information. Is there another area with more information on this topic?
I would be very interested in any resource guides you have put together.

This investment advise is a

Mike's picture

This investment advise is a pile of rubbish.  It is nothing but speculation.  Trying to profit from short term bets on the direction of stocks or commodities is a fools game. In the long run it will be about as profitable as playing craps at your local casino.  Stocks are small pieces of ownership in businesses and should be treated as such.  If you choose to invest in stocks spend some time and learn how businesses are valued, identify several solid companies you can understand, and buy them when they are neglected  or when the entire market is neglected.  Also, avoid companies with too much debt.  Have you ever heard of someone who has no debt going bankrupt? Well the same goes for businesses.    Other than that...be patient ...sit and wait.....for years I mean.  THIS IS 'INVESTMENT'!!

To the author:

1. What is your investment record from such a strategy? I'm talking many years ...ie. you annualized rate of return for a 15 yr period.  

2. If you have been investing this long and have put up superior returns why not post a summary of your transactions audited by your accountant.  I'm sure this would be a very educational learning exercise for the readers of your blog.  I would bet you have underperformed the market average over the last 10 years.

 

 

 

 

I agree with you that my

Mike's picture

I agree with you that my point on debt is too simple....but only if you are willing to dive into serious security analysis.  Even then, too much debt is very dangerous...regardless of upside potential.  I kept my point simple because the reader base (on average) are likely not overly experienced investors.  Simple rules are much better if you don't have a thorough undersdtanding.  Also, I can agree with you on the indexing point...but only for someon that does not want to spend the time on due dilligence. 

I know you are just sharing what you are doing, but, the article makes it sound like you have figured a way to predict the short term price movements in stocks based on news storys and profit from them.  Reading through you replys to several posts I noticed you still do take somewhat of a value approach on neglected securities..ie. BP.  BTW I also purchased BP after the spill.

As far as I know there are very few individuals who have generated outsized returns (ie 14%+) over a long period of time using such short term "trading" strategies.  On the other hand I can name dozens and dozens who have produced these returns over extremely long periods of time using similar value based strategies.  Most individuals analyzing stocks spend there time trying to figure out the upside potencial of an investment as opposed to the downside risk.  In a basket approach...if the investor spends his time protecting his downside...the upside will take care of itself.  

So...basically this is what I do.  On the rare occasion such as the 2008 crash or the BP spill...I will purchase great large cap businesses when the market is giving them away.  Other than that I seek out smaller, cheap, neglected, out of favour businesses and buy them when the market is selling them for .50 on the dollar.  I will look at anything where there is forced selling...spin-offs, index deletions, liquidations, going-private transactions, post-reorg equities.  Between the forced selling of such equities and the lack of people who read the coresponding SEC documents to go along with these scenarios....there are many treasures to be found.  These types of investments are NOT for everyone though...you have to do your homework...and I would never tout them to the average Joe.  For the average Joe, investing should be kept business-like and straight forward.  No options, no shorting, no margin......all dangerous.  From a valuation standpoint the idea of shorting sounds great in theory.....but timing is the problem.  You may find the most overvalued stock in the world but it may remain overvalued for years...throw in margin and you risk a margin call....throw in options and they have a time contraint.  Now one could argue that a cheap stock may remain undervalued for years and it may....but if I can buy it for less than the net cash on the balance sheet and receive a cash flow positive operating business for free...I don't mind waiting years for the market to price it  more efficiently...and it usually does.

Maybe you have read this...if not you should...a great read.

http://www4.gsb.columbia.edu/null?&exclusive=filemgr.download&file_id=522

BTW.. I am in Canada also...Ontario

 

PS Sorry to sound harsh in my original post. I just hate to see people mislead by short term "make money fast" type investment proposals that rarely work out.  Our society is so ignorant as a whole when it comes to investment and there are so many people and institutions touting subpar advice.  I really think people need to see investing from a barebones approach.....just like a simple small business....Why? Because people can understand that.  If the average person doesnt even understand how a stock relates to ownership of a business...how can they understand options and shorting.  

 

 

 

 

Mike's picture

 

RE:

Take Bill Ackman's move on CP Rail.  He bought it and changed it in such a way that his investment increased by 50% in a year.  That's not the way retail value investors work.  VCs too, buy control and upside ... they don't buy 10% returns and hope.  That's what I want to get more into.

 

This may be true..but..I wouldn't consider CP a screaming value stock before Ackman made his purchase.  I went big into CNR in 2009 and am up just short of 100%.  Like I said...I try to stay away from larger mainstream stocks except under heavily depressed market conditions or a major company specific issue. The bulk of the time with these large caps...as a retail investor there is too much competition from analysts, hedge fund managers etc. (this is why I like stocks with little analyst converage....less competition.  Anyway...as far as my CNR position goes...I won't sell it for a long time.  If it has a hiccup along the way I will add to the position.

 

RE: Now I'm looking for a way to convince myself that RIM will make a comeback.

RIM is an interesting one.  I have a small Long position @ around $10.  This one will take a while to come around as an investment.  Whether or not Rims products are dead is very tough to say.  I do think however...from a sum of parts standpoint ...RIM would see at least $20/share selling off the pieces.

Another note about RIM is that Fairfax Financial has a very large stake I believe at a cost base around $25.  Prem Watsa is a first class value guy...also has a seat on the board.  Will be interesting to see how it plays out.  Like I said before though....these things take time.  The psychology of it destroys most peoples returns...they just can't wait 5 years!!  I recently read of one of the most successfull funds US in the last 10 or 20 yrs (Oaktree maybe)...anyway the fund put up amazing returns over this period...but the average investor in the fund lost money....because they bought high and sold low.  I think it was Buffett I heard a quote from along these lines....."you don't make money buying, you don't make money selling, you make money waiting"

 

So what do you do in real life?  Are you a pro investor? 

I'm involved in a family owned operation.  We own a few operating businesses....one is frozen foods ..mostly ice cream products...whoesale, warehousing and distrib. Another is similar but with dairy products...fluid milk, beverages, cheeses etc.  We also manufacture and sell packaged ice.

Recently spun most of our assets into a holding co. We have a bunch of commercial real estate, public investment portfolio,  also own a stake in a great Calgary bus, and priv drilling company also out of Calgary.

 

Have you ever looked at Altius Minerals ALS.TO?? I recommend you have a look.

 

Cheers 

 

I would like to find out more

Dina's picture

I would like to find out more about how I learn about stocks. I really dont get them at all. I also have had a dream of buying and flipping properties but I need a partner, which I do not have. Unfortunetely I have no experience as far as fixing up anything, but I can use a screw gun and paint. We bought a rehab house, then lost on it for the reason that we bought a really cheap house that needed lots of work, in a not so great area and had to sell low because we couldnt sell it. I would still love to do this but dont have a way to at this point. Any tips would be appreciated.

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