Monthly Archives: January 2010

My Interests are Teasingly Diverse

I set off from my last post ready to dive into Kapuscinski’s the Shadow of the Sun. This is no reflection of the book but I was quickly distracted. I was distracted by Canada’s looming 2009 RRSP contribution deadline. Every year I, like many others I’m sure, claim that next year will be different. Next year I will have a plan, I will be more on top of things.

Of course this year was no different; I was bombarded by TV commercials touting their own mutual funds/GICs etc before I had even given my own portfolio a passing glance.

Enter dad (no, not in the obnoxious dad-will-tell-me-what-to-do-or-give-me-the-money-to-do-so-kind-of-way).  At the age of 12, my dad gave me the Wealthy Barber, at 16 it was How to Protect Your Nest Egg and at 20 is was the Power of Index Funds.  For Christmas this year, my dad gave me The Little Book of Safe Money. I have to admit I kind of rolled my eyes when I got it; I figured I have the basics down pat by now and the title doesn’t exactly make it sound like a page turner.

Interestingly enough, this is exactly the reason a lot of people have trouble sticking to the guidelines laid out in this book: they are not exciting. There is no thrill, there is no gaming, no playing the market to gloat about to your friends. It’s hard to compare, “I just buy and hold index funds with an MER less than 0.75% while ensuring an appropriate asset allocation for my retirement goals” to “I took my tuition money in college and bought a penny stock on a whim. I dropped out of university but I sold the same stock when it was trading over $30/share and retired at 35.

I don’t know if any penny stock has ever become a major company but there are always stories going around that make you think, maybe if I just bought one lucky stock, I could retire early, have everything I ever dreamed of. For every story like that remember: the story-teller is almost assuredly exaggerating, for one ‘lucky pick’ there were surely many many unlucky ones and for every person who strikes gold many more come out with nothing but a handful of coal.

So, although this book did simply reaffirm alot of what I already knew, a lot of what my father had already impressed upon me relentlessly over the years, there were a lot of good take-homes.

1) Diversify. Okay, we all know this adage right? But, did you every think to include yourself as an egg in the proverbial basket? Well, the author of The Little Book of Safe Money, Zweig, thinks you should. You are the single most valuable asset in your portfolio: avoid putting your financial capital in the same basket as your human capital. This translates simply to, don’t heavily invest in your own company’s stock and do not invest in the industry you currently work in for if that industry starts to suffer you are more likely to lose your job or suffer a pay cut while also seeing your stocks plummet (just ask anyone at Enron if they would agree with this). As a hedge, why not invest in an industry that should do well when yours isn’t?

2) In addition to paying attention to asset allocation (generally percentage of income to growth funds) in your retirement portfolio, remember to ensure a level of liquidity. This equates to another method of diversifying. Cash, stocks, bonds, mutual funds and the like are generally the most liquid. If all of your money is in this form, it is time to start putting some in more illiquid investments, i.e. real estate. Conversely, if all your money is invested in real estate, you need to start putting some of it in more liquid assets.

Zweig goes on to discuss methods for cutting costs in your daily life,  the psychology of investing, the danger of ultra etfs and more. I’m sure Mr. Zweig would appreciate if I stopped divulging the wise words of his book here. Moral of the story is: this is great read for anyone from an investment virgin to the most sophisticated investor (and judging from recent debaucheries such as the Bernie Madoff scandal, the more ‘sophisticated’ an investor you consider yourself, the more you would benefit from reading a book like this).

So I’ve Never Actually Read Pushkin

Perhaps this is not the best way to start a literary blog: naming it after an author I’m afraid of.  I’m afraid of all Russian authors actually.  I don’t know what it is, if it’s a lost-in-translation kind of thing or the fact that a lot of the classics tend to push four, five and six hundred pages making them too much of a commitment…

I own a lot of the greats of course. For what library is complete without the likes of Anna Karenina (2 copies thanks to Opie), the Master and Margarita, Crime and Punishment, Dead Souls, etcetera, etcetera.

I contemplate these place holders on my bookshelves from time to time. Facing them like one must face any fear – head on – willing myself to just open one and trudge through.  I guilty reach for my well-worn copy of Motley Crue’s the Dirt instead, an easy escape in more ways than one.

Just as beef bourguignon was Julie’s Everest in Julie and Julia, Pushkin will be my raison d’etre for this blog. But first I’ve got to get to base camp.

And so, with nice, easy,  baby steps, I’ll start with a Polish author.

Yesterday, a girlfriend lent me the book The Shadow of the Sun by Polish author Ryszard Kapuscinski. Her tag line was, “It’s about a journalist who goes to Africa”. Done. I’m in. Sign me up. For whatever reason I’m a sucker for all books written by or concerning journalists just as I am for all books about Africa. The two combined, I’m in heaven. Now, I hope I’m not setting myself up for disappointment with this book but I can tell it is going to be great. Just holding the book is satisfying. Even the cover is intoxicating – I can stare at it endlessly, imagining my own tales, my own visions of grandeur neatly held within.

Not to mention the author’s bio. This is definitely the kind of guy you’d tune into see on CBC’s the Hour if he was still alive (Kapuscinski died in 2007). Here’s a teaser: Kapuscinski was sentenced to death four times over the course of his life. Sounds like the Polish Hunter S. Thompson to me, which is more than enough reason to read a book if the intoxicating cover wasn’t enough for you.

I’ll get back to you when I’ve made some headway on the book. I might need a few more minutes before I start, just me and the cover.

In the meantime, if you’re looking for other great reads along the journalist, Africa or journalist-meets-Africa line, here’s a couple of suggestions: What Remains by Carole Radziwill, Don’t Lets Go to the Dogs Tonight by Alexandra Fuller, Paris to the Moon by Adam Gopnik and, of course, Long Walk to Freedom by Nelson Mandela.