N.A. stocks continued to claw back ground this week, shrugging off social unrest in the U.S. and a slew of downbeat economic data. All three major U.S. indexes began the week with gains of less than 1% on the heels of a strong rally in May. In Canada, the TSX also closed higher, with the energy sector posting solid gains, as oil prices registered their largest monthly gains on record in May, regaining ground lost during the lockdowns in March and April.

Despite ongoing social unrest over the police killing of George Floyd and growing tensions with China, U.S. stocks continued their ascent on Tuesday as hopes for a swift recovery continued to buoy markets. By Tuesday’s close, the Dow surged 268 points, while the TSX added 158. Meanwhile the loonie strengthened to a near three-month high against the greenback on Tuesday, reaching 73.91 cents (US). Recent gains for the Canadian dollar have come as the U.S. currency has lost its safe- haven appeal.

The rally in N.A. equity markets really picked up steam on Wednesday, with the Nasdaq nearing record highs as investors continue to look past clashes between U.S. police and protestors.

In Canada, the TSX climbed to a three-month high in a broad-based rally. The positive sentiment didn’t help the materials sector, however, as gold prices continued to trend lower. Oil ended the day slightly higher–at one point breaking above US$40 a barrel– before retreating late in the session as doubts emerged over OPEC’s continued commitment to reducing crude supplies. As expected, the Bank of Canada held its overnight rate steady at 0.25%, noting that the economic impact of COVID-19 on the world’s economy “appears to have peaked.”

On Thursday, the U.S. Labor Department reported that 1.9 million Americans filed new claims for state unemployment insurance last week, along with 623,000 new claims for federal aid. Meanwhile Statistics Canada is expected to report on Friday that roughly half a million jobs were lost in May, a marked improvement from April’s loss of nearly two million. On Thursday the loonie retreated from Tuesday’s highs, weighed down by news of Canada’s $3.25-billion trade deficit in April, as exports fell by nearly 30%, the lowest level in more than a decade.

Finally, N.A. markets were mixed on Thursday, with the Dow and TSX finishing flat.

Read more…

source https://richarddri.ca/n-a-markets-continue-to-rally-despite-social-unrest/

Angie Drinic is the founder and owner of Dent-Cents, a dental coaching office in Toronto’s West End, which she incorporated more than 25 years ago. Currently, her firm focuses on the challenges of operating a successful and profitable dental practice through the handling of appointment cancellation issues, social media, team training and many other issues that dentists onfront. Angie and her team also provide a customized plan to help the dentists achieve and overcome these particular obstacles.

In today’s episode, Angie discusses ways in which she helps dentists attract new clients, including the use of social media. She also shares best practices for reopening dental offices after the pandemic closure, some common mistakes dentists are making during the pandemic, and Angie some valuable business advice for new and experienced dentists alike. The way in which Angie and her husband handle their wealth is also discussed, and, finally, she offers advice for those interested in starting their own coaching business.

Download the full transcript here

Highlights:

• Angie’s company coaches dentists and their teams to help them achieve their goals and to ensure patient loyalty.
• The most common way that Angie attracts doctors to become her clients is by running seminars around North America.
• Angie’s training sessions address the specific needs of the practice, including social media campaigns and marketing.
• The greatest number of new patients, and the most loyal patients, come from referrals.
• It’s important for dentists to not ‘disappear’ on their patients and staff during the pandemic, but to reach out to them and let them know they care about them.

Quotes:

• “ Since I could not find a job, I would create jobs.”
• “The number one difficulty is not even so much getting patients, it’s retaining them.”
• “I immersed myself and become part of the team and I do everything with them, get right down and dirty with them. Then, there’s a buy-in.”
• “My main focus is to be able to teach them how to fly and be successful on their own.”
• “When you create a winnable game, now there is engagement.”
• “I’m going to retire when I’m six feet under.”
• “Do your due diligence. Do your homework.”
• “If you want to get into this business and you haven’t worked in enough offices, start volunteering.”

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Canada’s Emergency Assistance for Businesses

Getting your site on the front page of Google with Doug Lacombe

How good marketing tells a story with Robert Sanchez

source https://richarddri.ca/dental-coaching-with-angie-drinic/

Never Retire Profile of the Week

Jack Nicklaus

Having recently turned 80, Jack Nicklaus is a legend in the golf world known as much for his passion and relentless pursuit of excellence as his blonde locks and fluid swing. Since turning pro in 1961, the Columbus, Ohio native won a record 18 major championships, including the Masters in 1986—at age 46—to become the tournament’s oldest ever winner. Nicklaus also secured a total of 73 PGA Tour victories. As his professional career as a golfer was gearing down and he transitioned to playing on the Champions Tour, Nicklaus became head of what has become one of the largest golf course design companies in the world. He is also a bestselling author whose instructional book Golf My Way is widely viewed as one of the best of its kind. Fortunately for golf fans and players around the world, The Golden Bear never retired.

Jack Nicklaus

I’ve always felt that financial lessons are life lessons. That’s been a guiding belief of my career and my parenting. I view interactions with my children around money as opportunities to support their growth, share insights, and help them establish a solid foundation as they launch their own lives.

My two sons are already in the working world, but my daughter is still immersed in her journey as a student. As I did with my sons, I have an agreement with her about summer employment and how those earnings will be used during the school year.

For the last three years, she has worked as a counsellor at the Upper Canada College summer camp where she was also a camper. It’s an incredible camp. I wish I could go.

My daughter works in the hockey program for 10 to 14-year-old boys and girls. They spend half the day on the ice and the other half swimming and playing other sports like basketball and soccer.

She loves it and has made so many great friends there. It’s also right in our neighborhood, so she can walk or ride her bike to work. It’s a perfect arrangement.

The agreement she and I have related to her earnings is two-fold.

First, I am helping her learn the “pay yourself first” approach to savings by having her set aside 10% of her earnings up front. I’m also helping her learn the basics of investing. With my help, she picked a company she was interested in and invested in their stock. (She chose Alphabet, Google’s parent company.) Each fall, she takes 10% of her summer earnings and buys shares. She then monitors the progress of the stock during the year and sits through occasional conversations with Dad about how the markets are doing. (That’s what I call quality father-daughter time!)

Second, to help her learn to budget, she uses the rest of her summer earnings to cover personal expenses during the school year, such as Starbucks coffee, clothes, haircuts, parties, books and TTC fares.

I’ve been really pleased with how this approach has helped her learn some important financial lessons while also learning things about herself. Having to decide how to spend your money is also an important exercise in figuring out what really matters to you. Her experience is similar to what my sons went through. They both report that those early lessons with money helped them establish a solid base for their current financial knowhow.

As we are all acutely aware, summer 2020 has thrown a pandemic-sized wrinkle into my daughter’s financial life. Like most camps, UCC has decided that it is neither practical nor safe for them to operate this summer. It’s a decision being made at day and residential camps across Ontario.

While she processes the disappointment of her summer job disappearing, I am trying to think through how our financial arrangement will be structured this year.

She and I have already agreed that if she isn’t working, she will take at least one online course that helps her prepare for her upcoming first year at university. But what will we do about her ongoing financial education?

The Federal Government has created the Canadian Emergency Student Benefit (CESB) program. It applies to students from my daughter’s age up to recent graduates of a post-secondary program.

The benefit (explained in detail below) provides $1,250 for each four-week period between May and August 2020. In her case, because she is currently wrapping up high school, she will be eligible to receive the benefit for June, July and August.

She and I have already talked about her annual investment of 10%. But how will we approach her personal expenses at university? First of all, we don’t know exactly what her spending will look like. Also, this summer, she will bring in less than she would have earned as a counsellor.

If I make up the difference in her income, will I create a dynamic where she thinks I will always bail her out of financial challenges? Will I undermine her learning?

I also worry that the government grant will seem like free money. But I’m not sure what to do about that. Would there be benefit to talking with her about the larger economic issues at stake, or is that asking too much of a young person? For example, does it matter to her to understand what a government deficit is and to know how that impacts future taxes and spending? Or am I just whistling in the wind if I try to talk to her about the fact that this money is really more like a loan? (Talk about not-so-quality father-daughter time!)

These are issues I am grappling as she transitions from camp counsellor to CESB recipient.

For those of you in a similar situation, I’d love to hear how you are resolving these issues. It’s just one more in a long series of major challenges with the COVID-19 situation.
If your children or grandchildren are eligible for the CESB, here’s a summary of the nuts and bolts of the program.

Canadian Emergency Student Benefit (CESB) Overview

The benefit is available to post-secondary students, recent post-secondary graduates, and high school graduates who have been unable to find work due to COVID-19.
The benefit provides $1,250 for each four-week period between May and August 2020.

In order to qualify, a student must:

• Be enrolled in a post-secondary program; have completed a post-secondary program after December 2019; or expect to get a high school diploma in 2020 and have applied for a post-secondary program that starts no later than February 1, 2021.
• Be actively looking for work (if able to work).
• Not be receiving Employment Insurance or the Canada Emergency Response Benefit (CERB).

Some important things to keep in mind re the CESB:

• CRA will only verify if the student qualifies for the grant after the fact. (That means there is a possibility the student will be asked to return the funds to CRA if they are later deemed to be ineligible.)
• If CRA seeks to verify a student’s eligibility, they may be asked to provide supporting documentation later.
• Students must re-apply for each four-week period if they were unable to find work.
• The CESB is taxable. If a student is earning money during the year (as an intern or through a part-time job), they should determine if their income will be such that they will owe income taxes next spring.

A student can apply for the CESB by:

• Calling CRA’s toll free number at 1-800-959-2019. (They will need their Social Insurance Number (SIN) and postal code to verify their identity.)
• Accessing their CRA My Account if they have already signed up for one.

For additional information, visit the government’s website on the subject.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

The process of finding an Advisor can be overwhelming. Our process is designed with you in mind. Its structured framework helps you make an informed decision about engaging an appropriate advisor.

Get started here. 

Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

source https://richarddri.ca/summer-jobs-student-spending-and-the-canadian-emergency-student-benefit-cesb/

Optimism over an economic recovery continues to drive markets in the U.S. and Canada. Although U.S. markets were closed for Memorial Day, the TSX started the week off with a strong Monday session, climbing 162 points. However, the bond market provided an interesting contrast, as Canada’s 10-year government bond yield fell below 0.5% on Monday–an indication of just how weak the outlook for the Canadian economy has become.

Investor sentiment was once again positive on Tuesday as U.S. stocks rose sharply, fueled by signs that economic activity has resumed at a faster-than-expected pace in some parts of the country. By Tuesday’s close, the Dow was up 530 points, although gains were pared a bit in afternoon trading as tensions between the U.S. and China continue to grow–this time over possible U.S. sanctions.

N.A. markets climbed even higher on Wednesday as the S&P 500 closed above 3,000 for the first time since March 5, and the Dow breached the 25,000 mark, posting its largest two-day advance–1,083 points–in more than a month.

The rally continued in early trading Thursday as U.S. stocks climbed in response to declining U.S. jobless claims. However, gains eroded later in the day as a new standoff emerged between the world’s two superpowers after China voted to override Hong Kong’s autonomy, a decision that could prompt the U.S. to revoke Hong Kong’s special trading status and threaten its standing as an international financial hub. By Thursday’s close, the Dow was down by nearly 150 points.

Although stocks have been on an amazing tear, U.S. consumer sentiment is hovering near the lowest level in nearly a decade. Personal incomes in March suffered the steepest drop since 2013, and consumer spending fell at the fastest rate in over six decades. The numbers for April are expected to be even worse.

In other economic data, the U.S. Commerce Department reported Thursday that Q1 GDP fell at a 5% annual rate–the largest quarterly rate of decline since the last recession. And many analysts are expecting a much bigger contraction in Q2. Forecasting firm IHS Markit projected this week that Q2 GDP would shrink at an annual rate of 39%.

Read more…

source https://richarddri.ca/n-a-markets-continue-climbing-u-s-china-tensions-re-emerge/

Richard is his own guest yet again today as he discusses summer jobs for students, the financial
lessons they offer, and the prospect of such jobs in 2020 given the fallout from the pandemic. He
also explores the Canadian Emergency Student Benefit Program, its potential long-term
implications, and how to apply for it.

Download the full transcript here

Highlights:

– Student summer jobs offer many lessons, three of which Richard emphasizes with his children
– Pay yourself first and put that money away for a long term goal
– Learn to invest
– Become better at budgeting your expenses
– Any benefits the government offers to Canadians, such as the Canadian Emergency Student Benefit, may have long-term ramifications such as increasing taxes in the future, or even decreasing the amount of spending on programs that it is able to do in the future

Quotes:

“ I believe that summer work for students provides them an opportunity to learn some very valuable life lessons…pay yourself first, learn how to invest, and become better at budgeting expenses.”

“What I’d like her to consider is that this benefit is more of a loan rather than free money.”

“I think it’s just one more in a long series of major challenges that we are facing, but together I
think we can get through it.”

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Seven Tips to Handle a Bear Market

What to do if you lose your job

Taking a “Softer” approach to hiring with Anthony Aleman

source https://richarddri.ca/summer-work-for-students/

Never Retire Profile of the Week

Jim Peebles

Winning the Nobel Prize in physics elevates a person into a very select group that includes Albert Einstein in 1921 and, as recently as 2018, the University of Waterloo’s Dr. Donna Strickland. But receiving the award at age 84 is an achievement unto itself. Born in 1935 in Winnipeg, Manitoba, Jim Peebles was recognized last year for theoretical discoveries in physical cosmology, which is concerned with the origin and evolution of the universe. Fittingly, Peebles is the Albert Einstein Professor of Science, Emeritus, at Princeton University, where he received his PhD in 1962 and where he has stayed his entire career. Always interested in what he calls “underappreciated issues,” Peebles has been commended for laying the foundations for almost all modern investigations in cosmology, transforming a highly speculative field into a precision science. For the sake of knowledge itself, it’s good that Jim Peebles has never retired.

Jim Peebles

In my book The Ladder to Financial Independence, I outline six key steps for reaching that goal: commit to your financial goals, maximize your earnings, maximize your savings, invest well, protect against financial risks, and prepare an equitable and tax efficient exit strategy.

Here, I want to focus on number four – invest well. In particular, I’ll outline the reasons for rebalancing an investment portfolio.

Many clients and readers understand that the Dri Financial Group invests in stocks based on the buy/sell indicators produced by models we have created and back tested over many years, such as the Richard Dri Canadian Dividend Model that has been back tested since 1989. We don’t own a crystal ball. Nor do we follow the advice of TV “experts.” Instead, we follow the rule-based investment strategy that is the cornerstone of our models.

Sometimes, we’re told that the models are boring because we trade very little and never buy “high profile” stocks (like Bitcoin, Twitter, Uber, Peloton). We buy stocks that many have never heard of, like Cascades, a Canadian packaging company, or InterRent, which specializes in residential real estate and owns approximately 8,800 apartment units worth almost $2 billion. Maybe they’re not flashy, but these stocks have the same characteristics found in the best performers of the past 35 years. The second most boring aspect of our investment strategy is our policy of “rebalancing” our asset allocation and individual positions. I often hear, “Why would you sell a stock that is up and transfer the funds to a stock that is either down or not up as much?”

There’s plenty of proof for this strategy, but for clients who don’t care for numbers and charts, allow me to give an example. I call it the Nortel Pain.

Back in the late 1990s, when I was a young and carefree wealth advisor (okay, I’ve never really been carefree!), a 40-year-old Nortel employee hired us to help determine if she could retire. We began an investment portfolio review and a retirement projection. It didn’t take too long to realize that approximately 50% of her net worth was tied up in one stock, which also happened to be her employer: Nortel.

In case you forgot what happened at Nortel, here’s how Wikipedia summarizes the company’s dramatic and painful bankruptcy:

“At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX), employing 94,500 worldwide, with 25,900 in Canada alone. Nortel’s market capitalization fell from C$398 billion in September 2000 to less than C$5 billion in August 2002, as Nortel’s stock price plunged from C$124 to C$0.47. When Nortel’s stock crashed, it took with it a wide swath of Canadian investors and pension funds and left 60,000 Nortel employees unemployed.”

Once we had completed our analysis, we explained our concern with the significant exposure to one stock. Our client owned Nortel in her employee stock ownership plan (ESOP) and in her RRSP. Obviously, we didn’t forecast a Nortel bankruptcy. But we were worried that if anything happened to Nortel, she could be financially ruined. We suggested gradually reducing the exposure to Nortel and diversifying into other stocks and other industries.

In response, she said something like, “I have worked for Nortel for 20 years. It has made me a millionaire, and I will NEVER SELL NORTEL.”

We tried to explain how dependent her retirement was on the success of one company and one industry, but she would not take our advice, and we parted company. Shortly after our meeting, Nortel’s value started crumbling, and I couldn’t help thinking of this person. I hope she took my advice and sold even a small portion of her Nortel position.

I use the Nortel example to hit home the need for rebalancing, but I could have chosen other examples of pain caused by over weighting and concentrating in one or very few positions. In fact, business owners also fall into the under-diversification trap, because they often have most of their holdings in the company they own and run. We constantly explain that reinvesting every dollar produced by their company may be a great investment, but if it runs into difficulties (for example, caused by a pandemic), a properly diversified investment portfolio will cushion the financial pain.

Here are four considerations when it comes to rebalancing.

Asset allocation

Every new client engagement begins with drafting an Investment Policy Statement (IPS), and we review the IPS of existing clients every three years. Part of the IPS is the formation of the client’s overall asset allocation.

The asset allocation is based on the client’s willingness, tolerance and capacity to accept risk. Although the three categories of risk sound the same, they are not.
1 https://en.wikipedia.org/wiki/Nortel

A person’s willingness to accept risk could be tied to their age. A 25-year-old may be much more willing to accept risk because they have time to recover if the market falls. On the other hand, a 65-year-old investor near retirement may not be able to recover from a market decline. Risk tolerance is more difficult to assess. Some investors may believe that during weak markets (such as March 2020); they will stay calm and might even add to their portfolio. But in reality, it takes every ounce of self-discipline not to panic and reduce or sell stock positions. Many investors don’t know their true risk tolerance until they have survived a bear market. Until then, we suggest assuming a more conservative asset allocation.

Risk capacity is mathematically determined. If an investor plans to retire in 2020 (against the Never Retire philosophy!), we can reverse engineer the investment return required to meet lifestyle expenditures. If the investor can withdraw their annual lifestyle expenditure from their portfolio with an investment of, say, 2%, then they may not need to buy assets like stocks and can slant their portfolio toward conservative investments such as short-term government bonds.

Ultimately, a comprehensive analysis of the three categories of risk will determine asset allocation. For this article, I will assume the investor has selected a portfolio of 60% equities and 40% fixed income.

As the value of the stock and bond component goes up or down, the actual asset allocation will move away from its starting position. In the IPS, we state that rebalancing a client’s asset allocation occurs when an asset class changes by +-10% . In our example, if actual asset allocation moves to, say, 50% equities and 50% fixed income, our review process will flag this and force a rebalance: sell 10% of fixed income and buy 10% of the equity component.

Note, sometimes the investor’s situation changes, and a new asset allocation should be selected before rebalancing is engaged.

Individual stock positions

In addition to the macro rebalancing, we believe that individual stock positions should be kept in a tight band. For example, if CNR goes up in value and represents more than a 5% weighting in an investor’s equity allocation, we suggest that this position be reduced/trimmed down. Again, we recommend investing the proceeds into a stock that has declined in value and is below the 5% weighting.

Since we limit each equity position to a 5% weight and trim down when this is exceeded, our process prevents one stock from ruining our portfolio. Even if one stock goes to 0, we would lose 5% of the equity position. If our asset allocation was 60/40, our total portfolio would drop by 3% – definitely a loss, but not disastrous.

We have been rebalancing investment portfolios for many years, and I have heard many arguments against this process. Here are the two most common.

Tax tail wagging the dog

The most common reason to question the rebalancing process is the tax ramifications of the selling transaction. In most cases, rebalancing causes a capital gain in the investor’s non-registered accounts.

Obviously, no one likes to pay taxes unnecessarily or prematurely. However, my investment philosophy is to maximize investment returns first and while keeping the tax consequences a low as possible – in this order, always.

Hence, if the investment model triggers a SELL, or if the asset allocation is more than 10% from the target, or if an individual stock is over weighted, we will place a trade to correct the imbalance and worry about the taxes later.

Please don’t misunderstand me: we are concerned with taxes. But we are more concerned with the investment returns.

Our favourite method of mitigating the taxes caused from rebalancing is called tax loss harvesting. This means that we may sell a portion or all of our underperforming stocks before the end of December and buy them back after waiting the necessary 30 days.

Reversion to the mean

Many investors are reluctant to sell or reduce a winning position and invest funds in a stock that has not performed as well. I am often asked, “Why are we selling our winners and buying a loser?”

Investors tend to extrapolate from what they have gotten in the past. As result, when a stock market is increasing, investors expect the trend to continue. However, it is likely that the price of the market is “discounted” or “priced in.”

For example, most investors feel more comfortable buying a stock after it has posted a good investment return, despite being more expensive from its historical perspective. In addition, investors often consider stocks that have not gone up in price as poor investments, even though they may be historically inexpensive.

Selling off all or part of those stocks that have done better than average and buying enough of those positions that have done worse than average in order to return the actual mix to the target mix will likely both raise returns and reduce risk.

In conclusion, we have back tested our models with and without rebalancing (trim up/down) and found evidence that the long-term returns are stronger when we rebalance as indicated above. This is why we will continue our practice of balancing our client’s portfolios.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

The process of finding an Advisor can be overwhelming. Our process is designed with you in mind. Its structured framework helps you make an informed decision about engaging an appropriate advisor.

Get started here. 

Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

¹https://www.all-greatquotes.com/too-often-we-dont-realize-what-we-have-until-its-gone

source https://richarddri.ca/why-you-need-to-keep-rebalancing-in-mind-at-all-times-and-how-to-do-it/

While economic data continues to paint a dark picture for the global economy, N.A. markets resumed their ascent this week as many investors continue to hold out optimism for a strong recovery, or perhaps a medical breakthrough in the fight against coronavirus. On Monday the Dow jumped more than 900 points on initial hopes for a potential vaccine after drug maker Moderna reported signs of progress in its initial human trials. Also lifting sentiment was a sharp uptick in crude prices, which rose 8% in light of rising global demand and record supply cuts. However, Monday’s exuberance faded on Tuesday as a report cast doubt over data quality in Moderna’s trial. By Tuesday’s close, the Dow was off nearly 400 points, while the Nasdaq dropped 50. In Canada, the TSX jumped nearly 250 points as investors led a catch-up rally following the Victoria Day holiday.

The three major U.S. indexes recorded their fourth gain in five sessions Wednesday as investors once again looked toward a swift recovery, buoyed by rising oil prices and additional pledges of help from the Federal Reserve. By Wednesday’s close, the Dow surged 369 points, while the S&P 500 added 49 points, as all 11 S&P sectors recorded gains.

However, N.A. markets opened lower and stayed in the red Thursday as jobs data continue to paint a troubling picture. In the U.S., workers filed 2.4 million new jobless claims last week, a slight drop-off from previous weeks. And yet the numbers are staggering, with U.S. claims over the past nine weeks topping 38 million. And that total doesn’t account for the hundreds of thousands of self-employed and gig-economy workers. Meanwhile, Canada lost more than 226,000 jobs in April as the economy shut down, with trade, leisure and hospitality among the hardest-hit industries. Also weighing on sentiment Thursday were new concerns over growing trade tensions between the U.S. and China. Finally, oil prices rose 3% Thursday, advancing for the sixth straight session as producers continue to curtail supply.

Read more…

source https://richarddri.ca/markets-holding-out-hope-for-strong-recovery/

Never Retire Profile of the Week

Warren Buffett

Born at the beginning of the Great Depression – about a year after Black Tuesday – it seems as though Warren Buffett has never not been an entrepreneur. At age 7, he took a book out of the Omaha public library called One Thousand Ways to Make $1000, and from that moment on created business after business until becoming the Buffett we know today: director of Berkshire Hathaway, savvy investor, extraordinary money manager, influential global thinker, engaging storyteller, dedicated philanthropist, and one of the world’s richest individuals. Long committed to giving his entire fortune away to charity – less small gifts to his children – Buffett announced in 2006 that The Gates Foundation would receive 83% of his worth over time. Today, Buffett continues to fund and support various charities and has no plans to retire from a life of active philanthropy.

Warren Buffett

Last year, a dear cycling friend took me aside to tell me he had just been diagnosed with multiple sclerosis. He was giving up cycling because he struggled with balancing himself on a bike. He shared details of his new reality, which included doctors’ appointments, experimental drugs, and a reduced life span. I couldn’t help but feel sorry for everything he would miss in life.

At the end of the season, the riding club hosted a BBQ and my friend attended. I couldn’t believe how good he looked and how positive he sounded. He seemed so transformed that I had to ask if he was cured of MS. He laughed and said, “Hell no. But it’s the best thing that ever happened to me.”

I was stunned and asked what he meant. He told me that during the summer, he spent more time than ever before learning about the lives of his adult children, laughing with his wife, and having coffee with his mother. MS forced him to be present and fully engage in everything he does. For that, he felt it was the best thing that ever happened to him.

I heard what he said and his story made sense to me at the time. But I didn’t really understand.

I think I do now. COVID-19 has uprooted our lives and caused economic troubles – for individuals, regions and countries. It has demanded that we examine every aspect of our lives, not just to stay safe but also to understand the reach and impact of this pandemic in so many different arenas.

Despite the misfortune we are witnessing daily, which cannot be understated, the coronavirus outbreak also offers an opportunity for reflection and learning. In my case, I’m starting to see that it has provided me with several lifelong blessings.

Allow me share a few.

1. My relationship with friends

I recently read this online: “Too often we don’t realize what we have until it’s gone. Too often we’re too stubborn to say, ‘Sorry, I was wrong.’ Too often we hurt those closest to our hearts and we let the most foolish things tear us all apart.”

After six weeks of self-quarantine at home, what I miss the most are the “mundane” interactions with family and friends, like ordering my favourite drink at Starbucks and joking with the barista. Or my Saturday morning espresso buddies. Or drinking beer with my cycling friends after a long ride. I could go on, but you get the picture. I miss all the human interactions I took for granted. I assumed they would last forever, so I never gave them a second thought.

I sure am thinking about them now.

How could I not realize how important these “meaningless interactions” were to my mental health? Many of us never considered this question and may not be sure how to answer even today. I can say that I was blind to the many gifts I received from other people.

My new, post-COVID-19 persona will try to live more in the present and fully engage with everyone I meet. At the end of each day, I have been writing down three positive encounters, explaining why these people were important to me and reflecting on how I, too, can be important to them. I will continue this practice after the pandemic passes.

2. My relationship with family

As my readers know, I have two adult sons and a teenage daughter. We speak often, but recently I noticed that our conversations were very general and didn’t go into any real depth. I would ask, “How are things going”? and the answer would be, “Great Dad, how about you?”

During the last six weeks, I stopped asking general questions and instead became more detailed. For example, my middle child has a new girlfriend. I asked him, “How is this relationship different than the past ones you have been in?” I was shocked at the detail of his answer, and the conversation led to many follow-up calls.

Here’s another example. My oldest son’s employer had been planning to transfer him to New York City early in 2020, and now his move is obviously on hold indefinitely. In my lack of sensitivity, I failed to ask how he felt about the postponement of his career. How could I have been so blind to his obvious pain and worry? Was I too busy? Was I too selfishly involved in my own life? I don’t know, but I missed his disappointment for several weeks. Finally, I began asking about his feelings around the move and how he was keeping himself relevant during his wait. Again, I was shocked by the depth of his answer.

Have I been placing a greater value on money and success than “stopping to smell the roses”? I think so.

My post-COVID-19 persona will work on improving my relationship with the kids, my brother and my parents.

3. My relationship with spending

Well-known American financial author David Ramsey once wrote, “We buy things we don’t need with money we don’t have to impress people we don’t like.”

By spending the last six weeks working from home, only leaving to buy groceries, I realized that my family and I have accumulated a lot of stuff. My bedroom closets and drawers don’t properly close. My basement has two rooms entirely full of things I don’t need today but might in the future. My kitchen is equipped with every conceivable dish, glass, pot and utensil that a world-class chef would own.

It’s odd (or is it irresponsible?) that I never questioned buying the second or third version of the same thing.

I have written before about my participation in many charity events, such as the Princess Margaret Ride To Conquer Cancer. To support my riding hobby, I own three different racing bikes: one to use indoors with a trainer, a second as a back up in the event my good bike is down for repairs, and the third for my personal use on outdoor rides.

If you are familiar with the sport, you know how expensive racing bikes are. I estimate that my three bikes cost over $20,000. In addition, riders need clothing for spring, summer and fall. It’s not usual to spend $200-$500 on one full outfit, and riders need multiple sets. If you watch the Tour De France, you’ll see that it’s a fashion show as much as a race. So of course, my clothing and my selection of bikes reflect how I want to be “seen” on my ride, as much as ensuring my safety.

There are also the winter training fees, the club membership dues, and the trips. Last year, I spent one week riding the trails of beautiful Lake Cuomo in northern Italy. I will not share the cost of that trip! And no, it’s not a tax deduction, in case you were wondering.

I’m using my obsession with cycling as an example of spending without necessarily thinking. I could give many other examples of overspending on “stuff” and justifying purchases as essential.

Has thoughtless buying crept up for you?

My new post-COVID-19 persona will purchase goods and services more thoughtfully and deliberately. Here is my new rule: If I already own a functional product, I will buy the new product only if I am willing to remove or give away the existing one. For example, if I want a new pair of shoes, am I prepared to rid myself of one old pair? This becomes a one-for-one trade and prevents the accumulation of stuff.

I am choosing to view the adversity we are all experiencing an opportunity for growth, and I’m guessing that COVID-19 has brought some unexpected changes to your life too. To ensure that something positive comes out of this deeply distressing situation, my wish for all of us is that we take this time to reflect on our relationships with friends, family and spending.

Did this article resonate with you? What did I miss? Send me a note and let’s start the conversation.

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Call me if you in want to map out how you can Never Retire. You can also subscribe to our Never Retire Newsletter, contact us to order a complimentary book, register for one of our events, and call us to meet with a Certified Financial Planner. We offer you a range of services from a financial plan to investment advice or helping you take advantage of our investment models. Call me at 416.355.6370 or email me at richard.dri@scotiawealth.com.

¹https://www.all-greatquotes.com/too-often-we-dont-realize-what-we-have-until-its-gone

source https://richarddri.ca/3-blessings-covid-19-has-offered-me/

Today’s episode features Richard acting as his own guest once more and this time he is offering advice on how to handle a bear market. He begins by first outlining just what constitutes a bear market, and then proceeds to offer 7 tips on what you should and perhaps shouldn’t do during a market downturn such as the one that has just taken place in March 2020.

Download the full transcript here

Highlights:

• Probably the most important tip is to stay the course, but only if you’ve stress-tested your asset allocation and you know that you can withstand a market downturn.
• Many studies have shown that if you consistently rebalance your portfolio, your long-term investment performance will improve.
• It is recommended that you have a minimum of three to six months worth of cash reserves, which you don’t touch unless you really have an emergency.
• Harvest your tax losses.
• Try maintaining your philanthropic commitments.
• Have a momentum strategy.

Quotes:

“You will thank yourself for not having made any radical changes to your portfolio during the market declines.”

“Instead of panicking and selling your individual stocks, use the historical evidence that is out there.”

“Make sure you have enough cash for this particular event that is an emergency.”

“If your main concern is a decline in the value of your stock portfolio, consider yourself fortunate and maintain your charitable gifting.”

“ At the Dri Financial, we developed an investment strategy that buys the market when the S&P TSX trendline is upward and sells the market when the trendline is downward.”

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Listen to more podcasts by Richard Dri:

Financial Planning and the COVID-19 Pandemic: A Conversation with David Victor

My Disaster Plan

10 important issues that all investors need to remember in tough times

source https://richarddri.ca/seven-tips-to-handle-a-bear-market/

Downbeat data and sobering assessments from U.S. health officials and Fed Chair Jerome Powell dragged N.A. indexes down this week, as many investors begin bracing themselves for what could be a prolonged recovery. U.S. stocks were little changed Monday, with the Dow slightly down and the S&P flat, as investors weighed the benefits of reopening the economy against the prospect of surging coronavirus infections and renewed lockdowns. One bright spot, however, was the Nasdaq, which on Monday recorded its sixth consecutive winning session, its best streak since December.

N.A. markets were down on Tuesday as the U.S. Labor Department reported that its consumer-price index fell by 0.8% last month–the largest monthly decline in the index since December 2008, due to plunging demand for gasoline and services during the lockdowns. Also adding to the negative sentiment was testimony from top U.S. health officials, who warned during a Senate hearing of the dangers of reopening the economy without a national testing strategy. By Tuesday’s close, the Dow dropped more than 450 points, while the TSX surrendered 222.

On Wednesday, the Dow tumbled more than 500 points after Fed Chair Jerome Powell revealed growing alarm about the path to recovery, calling the outlook “highly uncertain and subject to significant downside risks.” He also stressed the need for more fiscal support.

Meanwhile sentiment for TSX stocks took a hit over news that Norway’s US$1-trillion wealth fund had blacklisted some Canadian energy companies for producing excessive greenhouse gas emissions. By Wednesday’s close, the TSX was down 378 points.

It was a volatile Thursday for U.S. markets as investors weighed weak economic data and rising tensions with China against the push to reopen local economies. The morning began with more dour U.S. data, with 3 million more initial jobless claims for the week ended May 9, bringing the total of newly unemployed to over 36 million. After sliding more than 400 points after the opening bell, the Dow mounted a furious comeback to end the day up more than 375 points, while the TSX ended flat.

Read more…

source https://richarddri.ca/economic-health-realities-weigh-on-n-a-markets/