Trevor Abes: Writer

Young Canadian Investor #28 — Why Stocks Go Up and Down

If you look up your favorite stock’s price on TMX and continually refresh the page, you’ll probably notice that the price fluctuates moment to moment and wonder why. Well, what it comes down to are buyers and sellers, the former looking for the cheapest price per share possible, the latter looking for the most expensive, according to their views on what the business underlying the stock is worth.

Bullish, as opposed to bearish. See below.

What happens is that a random buyer’s price coincides with a random seller’s price, triggering a transaction. They happen to hold similar views on the value of the underlying business so they’re able to do business with each other. What one investor is willing to pay is what the other is willing to receive. Now, if their agreed-upon price is a few cents higher than what the stock last traded at, you may notice a jump in price when you refresh the page, especially if a considerable number of shares changes hands. The same goes if the agreed-upon price is lower, possibly leading to a cheaper price on the next refresh.

Moment to moment stock price fluctuations also reflect the decisions of thousands of buyers and sellers acting on their financial needs. Having a view on a what a company is worth and how much you should pay for its stock will help you make a more informed investment, but if you need the money to pay hospital bills, you’re going to sell no matter what. Same goes for car repairs, a house extension because more babies are coming, or taking a trip somewhere to decompress if you really need to chill.

Longer term, though, and we’re talking decades, stocks go up —i.e. have a positive expected return on your money—because they reflect the value successful businesses create for their customers. A profitable track record is generally reflected in a higher stock price, and vice versa.

One nice thing here is that, while businesses are founded and folded every week, economies as a whole tend to grow over time, meaning the successful businesses outweigh the losers overall. So if you invest in a portfolio of stocks meant to represent every economy across the globe—at least those with public stock markets—you can partake in their growth and make yourself some money.

You can achieve this by investing in a diversified portfolio of index funds that own every publicly available stock in the world, or at the very least a representative sample. Have a look at my short guide to investing for young Canadians for step-by-step instructions. I’m also available to teach you 1-on-1 over Zoom if you prefer.

The hardest thing about investing is wrapping your head around the terminology. Even if it’s not with my help, don’t shy away from educating yourself and facilitating the fulfillment of your financial goals.

To end, it’s important to point out that there’s no way to know for sure why a stock moves up or down in the short term. There’s no electric sign somewhere announcing that Suncor stock dropped because investors are bearish, as opposed to bullish (see above), on the price of oil, or Canadian Tire stock rose thanks to consumers growing increasingly comfortable with doing their home improvement shopping in packed stores. All financial analysts ever have are educated predictions based on available information.

The only thing we know for sure is that the better a company is at making money and funding its own profitable growth, the better the chance that its stock will soar and make its shareholders wealthy.

Feel free to drop your questions in the comments!

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

New Directions In Essays

“New Directions In Essays” from my flash fiction collection, The New Frontiers Of Conceptual Art, about working at Indigo Books in Toronto’s Mount Sinai Hospital.

Print copies thru Amazon.

PDF copies through me.

Love Languages

An excerpt from “Love Languages” off of my book of poetry, The Breakup Suite.

Print copies available through Amazon.

PDF copies through me.

Young Canadian Investor #27 — Stuff You Can Invest In

This week I thought we’d go through the full spectrum of what people can invest in, just so you have a sense of what’s out there and what it can offer you. Should you necessarily have a little money in each of the following asset classes? Probably not, but we’ll get into that. Allons y.

Shares of stock or equity are little pieces of businesses you can buy or sell in marketplaces technically referred to as exchanges. Usually these exchanges are public, meaning anyone can buy as many available shares in as many companies as they can afford. I’ll say a little something about private equity below. Everyday individual investors like you or me tend to buy their stocks in bunches grouped together in mutual funds or exchange-traded funds (ETFs), which hold stocks curated based on specific investment strategies.

Some of these strategies are active, meaning they believe that through research you can pick winning stocks and avoid the losers. The rest of the strategies can be called passive, meaning they support the idea that owning every stock in a given industry or geographical area will make you money more often than research-based methods.

While there are more granular differences between ETFs and mutual funds you can explore here, you should at least know that shares of the former are bought and sold between investors on the aforementioned public exchanges, while shares of the latter are bought and sold directly with the investment companies that operate them.

Bonds are contracts between lenders and borrowers of money. Usually the way it works is the lender forks over some cash, and the borrower agrees to 1) pay the lender a certain percentage of the borrowed total in interest, typically twice a year, and 2) return the full borrowed amount after an agreed-upon period. For example, you could by a 10-year bond worth $10,000 that pays you 2% or $200 per year in semi-annual $100 payments. Everyday investors also tend to access bonds through mutual funds and exchange-traded funds, as they do every asset class below except art and jewelry to the best of my knowledge.

Real Estate Investment Trusts (REITs) are funds that invest in different kinds of real estate with the purpose of returning most of the properties’ income to shareholders. They are beneficial because they allow you to sidestep the hassles of managing properties and tenants directly. All you have to do is buy shares while the staff behind the REIT takes care of all the dirty work.

There are arguments on both sides about whether or not investors need exposure to REITs. The yays will say they’re a way to further diversify your portfolio, especially if you don’t have 100k around to make a down payment on a property of your own. The nays will point out that, unlike the steady income that comes from owning and renting out your own property, REITs can move up and down violently just like stocks, putting a dent in the diversification argument.

Private Equity refers to shares of stock that are only privately available for sale. In other words, you’re only going to be allowed to buy if someone from the company thinks you’re the right partner and reaches out to you. While you may not be able to buy private equity directly, you can buy shares of public companies that specialize in buying and selling these private companies—such as ONEX Corporation and Clairvest Group—which would fall under the rubric of active as opposed to passive investing.

The benefit of owning private equity is that it isn’t priced millisecond to millisecond like public equity is; private companies may only value themselves and let you know the value of your investment once per year. A private equity investment also tends to have a holding period contractually tied to it, sometimes over a decade or more. These qualities are good news for the nerves, because they prevent investors from checking stock quotes 50 times a day, spooking themselves, and selling an investment when they should have just held on. This kind of overreaction is an everyday reality for public equity, which can be bought or sold whenever you deem it appropriate during regular market hours (M-F, 9:30am-4:00pm).

Precious Metals include gold, silver, and platinum for the most part. Investors like to hold them as a hedge against inflation. A hedge is insurance against an occurrence, such as inflation. Inflation is the sustained rise in the prices of goods and services; in Canada, that works out to about 3.3% per year including applicable taxes. Precious metals function as a hedge here because, as inflation makes each dollar worth less every year, metals will be worth more dollars as a result, meaning their prices will rise.

Then there are more alternative investments some opt for citing a variety of reasons like diversification, passion, or having an edge like superior knowledge/research compared to the average investor. These asset classes include Art, Jewelry, Cryptocurrency like Bitcoin and Ethereum, and arguably Private Equity, though it’s becoming more mainstream so I included it above. Do you, as a young Canadian investor, need to dedicate a sleeve of your portfolio to alternatives to succeed at making money long term? No. Not unless you’re interested in something and motivated to do the research and form your own opinions. Otherwise, stocks and bonds will do fine to meet your financial goals. Yes, the more asset classes you own, the more diversified and sheltered from loss you’ll be, but that doesn’t excuse you from knowing what you’re walking into by learning exactly how they work.

If you’re ready to learn about stocks and bonds and start investing in them for yourself, you should read my investing guide, Nine Steps to Successful Investing: A Guide for Young Canadians. To sum it up, it’s a matter-of-fact stroll through the investing process, from figuring out your financial goals, to opening your account, to purchasing shares of a diversified set of passive funds tailored to your financial situation.

Feel free to drop any questions in the comments.

I’m available to teach you 1-on-1 over Zoom if you prefer.

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

An Introvert’s Guide to Falling in Love With an Extrovert

A reading of “An Introvert’s Guide to Falling in Love With an Extrovert” from my new collection of poetry, The Breakup Suite.

Grab your print copy thru Amazon.

PDF copies available thru me.

Thanks for watching.

The Answer to Dancing is Yes

Everyone has something substantially wrong with them

At brunch, overcast, maybe you decide to say yes

To the adventurous and inadvisable

Further feeding your little infatuation problem

Superimposing your imaginings of things onto real things

Hoping to chisel your vision into actuality

Unmodulated by platitudes and spared the need for gurgled battle cries

 

Then there they are, in your bed

Having just ridden the subway together

From that show with the description that read good enough to attend

 

They say, I watch the news for my safety

You say, I’ve been told goals should be small

Numerous and directionless

To still have life left in them when you run

Out of original mid-life crises

 

You both hold beliefs that would scare the other

Into a different person

But your limbs and ideologies bend

In the same agreeable way

Which is close enough

When what is absent is a game

Whether you memorize an ending

Or you’re your own accomplice

And call it a new beginning

 

You say, so long as I get to flex my perspective

In seemingly insignificant ways, like

How I stock the fridge for midnight ruminations

Gash ice cream with a melon scoop

Knife a pillow to keep certain memories intact

They say, I don’t need confirmation of your desire

To exercise your right to know yourself

If it involves damaging me

I’m prepared for it to happen

Little Warm Glow

A reading of “Little Warm Glow” from my new collection of poetry, The Breakup Suite.

Grab your print copy thru Amazon.

PDF copies available through me.

 

How To Do the Hard Thing

I’ve honed my approach to difficult situations by a mix of willingly diving into them and running away from them enough to realize I should have just dove in. 

I think it’s a good skill to have, not fearing extremes of feeling, and adopting a curious attitude toward how they mess with your mind. 

This is especially true when you’re young and have to put up with situations and people besides yourself you have no choice but to be in/around to avoid poverty or preserve your independence.

The way I see it, it comes down to fending off your anxieties, limitations, and bs from others for as long as it takes to get yourself to a place where you can choose to do what you want.

Your choices will ideally be ones that don’t trigger your anxieties, allow you to sidestep or comfortably overcome your limitations, and include only people you are compelled and motivated by.

When it comes to anxieties and limitations before you have options, fostering a fondness for yourself, however hard a balm that is for you to apply, is the only thing that can claim any kind of long-term reliability. One way this could manifest is by unlearning what you were raised to think you couldn’t do, then proceeding to try your hand at a multitude of projects tied to these things and failing your way until something sticks. 

You’re probably busy doing that already. The failure here a badge of honor you’re too proud to have to let talking down to yourself become a thing, even though it will occasionally rear its head. 

A big part of the unlearning for me is looking fears and anxieties in their faces and getting comfortable with them as tenants in the borrowed space of my mind as I proceed to do what I want. There’s a difference between running away from something, which implies you should have stayed put, and walking away from something that isn’t for you. The ultimate arbiter of what that difference entails is you.

If you don’t have the option to work in your chosen field, selectivity where possible will help ensure a sustainable work environment: small intimate team instead of having 100 co-workers; customer service or its absence; that kind of thing. This year is my year to be more mindful in this area, as I finally have a little buffer to prioritize my mental health in professional settings instead of taking the job because I need the money.

When it comes to bs from other people, I favour the realization that we were all thrown into this world without a choice and left to make our own sense of it. Make no mistake, my skin wasn’t always thick enough to follow through on opening my mind to the many ways people make life sustainable. I’ve quit on great people and professional prospects on principle because I was uncomfortable with one specific person. It felt right in the moment, but I now feel differently about how much extra time this strategy tacks on to financial independence and being the sole owner of your time.

The sooner you foster empathy for people you vehemently disagree with, the faster you’ll get to a point where you can reliably avoid them. And perhaps only seek out their company to be ideologically prudent and steer clear of echo chambers. Not so much when you resist every instance of discomfort along the way, lengthening your path to living as you see fit. I believe this the most when I let myself see that we’re all acting in our own self-interest while trying to be as nice as we can to everyone that joins us for the ride. Most of the time, it’s better to have been a part of someone’s plan than to have missed the dance completely. 

Young Canadian Investor #26 — When You Shouldn’t Invest

Yes, investing your money in stocks and bonds is a no-brainer most of the time. Why? Because the money you invest will grow over the long-term into a nest egg that you wouldn’t have otherwise had, and you, just like the rest of us, have dreams that require ample funding. Let’s put the breaks on that for a second, though, to consider a handful of situations where investing isn’t the best idea if you’re looking to live your best life.

Busy living.

When you’re in debt. This isn’t to say that you shouldn’t invest if you’re currently paying off debt, just that you need to have a handle on the debt payments first. If you can’t project into the future and tell me more or less when you’ll have paid off what you owe, you probably shouldn’t be investing. There’s no point in stacking money up for your future when the interest rate on your student loans or credit card is cutting into your bottom line. To put some numbers on it, it’s reasonable to expect a diversified stock portfolio to earn you around 7% per year over a few decades, while most credit cards charge you somewhere around 20% in interest. No matter how hard you try, 7 in the black will never make up for being 20 in the red.

When you’re lacking in human capital. Your human capital is the sum of skills you possess that allows you to go out into the world and have a professional life. I write a lot and have some investing knowledge, so that’s the wheelhouse in which I look for work. Your own areas of expertise will differ, but are no less important to how you’re going to use your time. When you break it down, there’s really no comparison between investing $1000 at a long-term 7% yearly return and using that money to learn a new skill that will up your income by 10 or 20k per year. Thanks to the Internet, you may not even have to spend any money. Places like YouTube, LinkedIn Learning, and Skillshare offer plenty of free content to feed your mind.

When you’re bored. So you’re looking for some entertainment and the thought of buying Bitcoin or a few shares of Tesla sounds like just the remedy. This isn’t necessarily a bad thing if you do your due diligence, decide the investment is promising, and limit it to an appropriate percentage of your portfolio. The problem is that kind of work isn’t everybody’s idea of fun. Most people usually just want to drop the money casino-style and see what happens; not exactly a sound investing strategy to get you to a financially secure place. If you want to have fun, have fun, just don’t confuse investing with gambling.

When the chance at living is too sweet to pass up. Last but not least, you already know that life is short and that, to look back fondly on it, you need to go forth and take risks and pursue whatever you heart impels you to. What is right in the eyes of society may not sit well with you and the memories you’d like to accumulate. Does it make financial sense to drop five grand on a trip with the right person or to pursue your far-fetched dream of becoming a full-time poet? How about turning down a decent job in exchange for a day-to-day environment that will stretch your pockets thinner but will get you considerably closer to happy? Perhaps not because your portfolio will be worse off for it. That doesn’t matter at all, of course, so long as the experiences make it easier for you to accept and love yourself when you’re alone with your thoughts.

While we’ve learned about a few reasons why you shouldn’t invest, chances are it should still be a regular part of your life. You’re young, after all, and have the decades in front of you that you need for stocks to appreciate in value. When you’re ready to get started, you can give my short investing guide a read. It’ll run you through the investing process in plain language, step by step, so you can check this major part of adulthood off your list.

Moving Out

A reading of “Moving Out”, a poem from my latest collection called The Breakup Suite.

Grab your print copy thru Amazon.

PDF copies available through me.

First Thanksgiving, a poem from The Breakup Suite

Here I am reading “First Thanksgiving”, a poem off of The Breakup Suite. 

Print copies available through Amazon.

PDF copies available through me.

Young Canadian Investor #25 — Why You Can and Should Invest on Your Own

As you’ve learned over the last 24 articles, there’s a lot to absorb before you can invest your money comfortably and confidently into the world’s stock and bond markets. You need to make decisions about which financial goals to pursue, for example, as well as how long you have to save before those goals can hopefully be met. That means taking a stand about how your future’s gonna look a few decades down the line and committing to it, even though you’ll likely be slapped around by life enough to periodically reconsider your priorities.

Then there’s the whole technical side of things where you get a grasp on what stocks, bonds, and index funds are, and how the different investment accounts on offer may or may not suit your situation.

It adds up and I get how the overwhelm can start to creep in. That’s why I understand if, after all this reading, you’re still feeling hesitant about opening your account and investing. Even though you know how fortunate we are as Canadians to have access to TFSAs and RRSPs, and you can see the benefits of saving money that’ll grow on its own over time, such as fulfilling dreams of all sizes, it’s still somehow not as easy as just doing it.

To that end, I came up with a list of aspects of the investing process that might cause newbies to give up or lose confidence + my own two cents as to possible solutions.

  1. The mechanics of inputting buy and sell orders for your investment funds is not everyday knowledge. You need to type numbers in that represent real money and you don’t want to make a costly mistake. That’s a normal feeling. Thankfully, portfolio manager Justin Bender has got you covered with his instructional videos on that exact subject. He has videos for pretty much every major brokerage in Canada and you’ll benefit from his approachable explanatory style.
  2. It can be a tall order to demystify how the stock market actually works. All those stock tickers, performance metrics, and constantly changing prices can be hard to crack. You should always seek out educational help tailored to how you learn. If you absorb knowledge more efficiently by reading, you can take a look at my investing guide for young Canadians. If you’re more of a visual learner, this TED video might help to fill in some gaps.
  3. Another scary part of tackling the craft of investing on your own is not having an expert check over your work and give you the go-ahead. If you can’t seem to get past this barrier and take the plunge, set up an appointment with a financial advisor in person to open your account when covid allows and have them run you through the investing process. If you’re a customer with their bank, it’s their job to help you. Just be wary of any sales pitches and stick to your plan, whether that’s engaging in active investing or setting up your portfolio of diversified index funds.

Forever is quite the stretch and the prospect of having to tend to your investments on your own for that long can seem daunting. But I know you can do it. You know why? Because you’re taking time out of your day to read an article about investing. That means you’re already part of the chosen few who are capable of investing for themselves. You wouldn’t be here otherwise. So long as you take your time and give yourself room to learn, you will prevail.

As always, if you have any questions at all, fell free to drop them in the comments.

I’m also available to teach you 1-on-1 over Zoom if you prefer.

Disclaimer: This article is meant for general education purposes only. It does not constitute financial advice as I am unaware of your personal situation. Consult with a professional who abides by a fiduciary standard before making any investment decisions.

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