Cardboard box retirement homes & Dow Jones

The Dow Jones took a dive and a lot of people are scared about losing their retirement savings. One friend mentioned living in a cardboard box. But how scared should they be?

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Well, first of all, what is the Dow Jones? (I’m a word nerd – vocabulary is important.) The Dow Jones Industrial Average (DJIA) is a stock market index that follows the stocks of 30 companies on two other stock exchanges, the New York Stock Exchange (NYSE) and the NASDAQ. The 30 companies are large, publicly traded and American. The Dow Jones is meant to show how industry is performing in the US economy. (I could get more into the history, the composition and how the stocks are weighted, or I could just direct you to Wikipedia here.)

So what happens when it takes a dive? People get nervous. They think it’s a sign of bad things to come, and basically start selling off their stocks – they cash out while they can. That affects every other stock market in the world (rah rah globalization).

But all is not lost, folks. In fact, the effect of this dip is a lot smaller than you might think. Depending on how much time you have to recover before retirement, you’re probably fine. (Between the time of writing and posting this, it was already on the upswing!)

Turns out that while it fell by 1175 points, when you think about it as a percentage of all activity and value, it was a 4.6% decline. Yes it was “the biggest single-day point decline,” but as this article from the NY Times points out, we’ve had worse and recovered without a problem. (In 1987 it dropped by only 508 points, but that was a 22.6% drop. Ouch.)

A moment for the math – let’s say your stock market has been ticking along and has grown by 5 points. If it drops by 2 points, that’s 40% and that hurts. But if your stock market has shot off and has grown by 10 points, if it drops by 3 points, that’s 30%, which doesn’t hurt as bad.

The stock market has been doing well for a while now, so any negativity feels drastic – we’re just not used to it anymore. But 4.6% isn’t close to the 10% needed to qualify as an official market correction (when the stock market doesn’t look like the economy, so it swings to match it better).

But really, all this is talking about numbers on paper, not in real life. Unless you need your cash right now because your retirement party was yesterday and you’re hitting the road in your brand-new Winnebago tomorrow, you can relax a little. (We’ll talk about time another… er, time.)

Or at the very least, you can start looking at high-end cardboard. 😉

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Million-Dollar Manners

I’m sure you’ve heard of the Michelle Williams/Mark Wahlberg controversy. Quick summary if you haven’t: They had to reshoot scenes in their movie All The Money in the World when Kevin Spacey was replaced by Christopher Plummer (Canadian!). Michelle did it for the minimum per diem, less than $1000, because she saw it as the right thing to do. Markie Mark, on the other hand, asked for and received $1.5 million for the reshoot. He asked, he received.

Oliver Twist

He has now donated it to the #Time’sUp legal fund and their agency had donated an additional $500,000. I have no idea why her agent didn’t fight for her, but I’m guessing it’s because she didn’t ask.

Thankfully others, like Jessica Chastain, stepped up and asked for her, eventually leading to the donations. (Speaking of JC, have you seen Molly’s Game? I highly recommend it.)

Meanwhile it was revealed that Hoda Kotb, who replaced Matt Lauer as the Today Show co-anchor, is making $18 million less than the man she replaced for doing the exact same job. Now, I could see how he had been doing it for years and had built up to his $25 million salary, but when asked about it, she said, “I never talk money. It’s not polite.”

WHAAA? It’s not POLITE? Well then. I don’t consider a gender pay gap to be good manners either.

I always expect to negotiate, but I know I’m unusual in that. Many writers and editors don’t like the money part of the business, because like Michelle Williams, it’s not why they work. But it is a big part of the work, and life overall. If you get paid less, you have to work more, throwing the rest of your life out of balance. And if you accept less than what you’re worth, you set the bar too low for others in your industry.

As for the politeness part, I know that’s how it’s been for a long time. But the good old days were only good for a few people. If we don’t start talking about it, how will we ever learn or make progress?

Maybe if you ask, instead of being thought of as rude or greedy, the other person will admire your confidence and self-respect. Or maybe they won’t think of it at all, because it’s just business. It doesn’t hurt to ask either way.

Like Wayne Gretzky said, “You miss 100% of the shots you don’t take.” (Like how I threw a little sports in? And another Canadian?)

Take the shot. Wayne would, and everyone knows, Canadians are polite. 😉

I passed! Now I’m passing it on

Since my last post I’ve been studying like mad. Last Saturday I wrote the final exam for the Canadian Securities Course and yesterday I found out I passed. That’s it, it’s over – the brilliant idea I had in Spring 2016, started working on that May, wrote the first exam last December – tout fini.

(I really need better hobbies . Say, crystal meth. )

My friend Renée gave me this treat to celebrate.

Just kidding. Actually, I learned stuff. I worked my brain in different ways. Studying during my lunch breaks and on weekends kept me off the streets and out of trouble, which is important for a punk like me.

(Obviously I’m giddy from the Christmas sugar cookies. Bear with me.)

I’ve already started putting the knowledge to good use. I do a lot of volunteering, and this year for the first time I joined a finance committee for one of the organizations. Not only do I understand everything at the meetings, but I was able to productively participate in a discussion that led to a better asset allocation for its contingency funds – the money the organization depends on in emergencies.

That’s right – by learning about money, I was able to help people who really need it. I know it’s just a start, but it got real.

(Aside 1: Speaking of good causes, Interval House of Ottawa is building an animal housing area so that women and children can bring their pets when they flee. We know that many abusers also hurt the animals. We know that many women stay behind because they don’t want to leave their pets. We know there’s a strong connection between pets and mental health. Click here to find out more.)

(Aside 2: Also this year, my Breakfast Club Retro Dance raised $3500, bringing the three-year total to $10,700 to help kids start their school day with a nutritious meal through the school breakfast program. And the Food Bank drive I organized at the office brought in $425, which the organization can turn into $2125 worth of food through its partnerships with food industry donors. This raising money is pretty addictive – maybe I don’t need crystal meth after all!)

After the holidays (anyone else find it the season of obligation, stress and debt?) I’ll start thinking of other ways to use my new money powers for good.

See you in 2018!

Progress!

This morning I heard on the news that an American short seller had given Shopify, a large Canadian company, a negative review. That caused Shopify’s stock to drop 7-11% over two days.

It was glorious. Not the news itself – the fact that I understood what they were talking about!

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Shopify is based in Ottawa and has technology that helps people set up and run online stores, for a monthly subscription fee. It’s been doing really well on the Toronto Stock Exchange and the New York Stock Exchange, so this news is rather shocking. Right now, it means people looking to get in can take advantage of a slight sale on the stocks. (But if it goes on long term, people at the company may lose their jobs.)

The short seller is saying, basically, that the stock isn’t worth its price. (Click here if you want to hear why.) That means that if you own Shopify stock, it’s not worth as much as you thought, and could drop once everyone realizes it, wiping out some of your money-on-paper. (To me it’s all just money on paper until you need to cash it in for something. Like paying your nursing home bills in retirement.)

You may have heard the phrase, “buy low, sell high.” Well, a short seller does that too – but in reverse order. It’s complicated, but they’re betting on stocks going down, not up. They sell first, when it’s high, then to fulfill the order they buy when it’s low. So if they sell for $10 today and buy for $5 tomorrow, they’ve made $5. (If they’re wrong and it goes up to $15, they’re out $5.)

So after all these months of studying and sticking with the Canadian Securities Course I feel like I’ve actually learned something. It’s almost like conversational Spanish – I’ve finally moved a bit beyond “Una cerveza por favor.” ¡Olé!

(In other news, I’ve finally finished the course work for CSC. Now a month or so of studying, then I’ll book the final exam. Progress!)

For Love or Money

What fascinates me about money is the personal side — how people feel about it, what they do with it or without it. Nothing gets more personal than romantic relationships. Do you consider a potential partner’s income or earning potential while dating? What about debt levels, or spending and saving habits? Sure, we can say money doesn’t matter – but apparently it still does.

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My favourite Mr Darcy, who had 10,000 pounds a year, and was obviously in want of a wife.

I say “still does” because for a long time (pre-Pill, but especially pre-1900s), for a large part of society (middle- and upper-class women), their sole job in life was to marry well. Mainly because they weren’t allowed any other job. Jane Austen, who never married herself, knew this very well and wrote several novels about the situation in a time when female writers were rare. According to the article What Jane Austen Tells Us About Dating Today (which has a fabulous example of a Lizzy Bennet & Mark Darcy Tinder exchange):

“For a woman, accepting the wrong proposal (and it always was a case of accepting, rather than initiating) could prove still more devastating. Forbidden from inheriting and faced with towering obstacles if they sought to earn their own living, middle-class Regency women — even those blessed with large dowries — had to hand control of their financial, social and emotional wellbeing over to their husbands. They had few legal rights as singletons. But once married, in the eyes of the law they ceased to exist altogether, becoming possessions instead of individuals. A spinster, meanwhile, was forever dependent upon the goodwill of (male) relatives.”

Now, we’ve come a long way but let’s face it — women still make less than men. Except when they don’t. The economic crash in 2008/2009 changed things for many families in North America. When a lot of men lost their jobs, their female partners became the main breadwinner. That, added to more women getting more education and higher paying jobs, caused a shift.

Women have more control over their futures and more choice – and they’re getting more picky about those choices. In the article Why American Men are Getting Less Marriageable, economics and social dynamics are hitched: “employability and marriageability are deeply intertwined.”

“Either men don’t like their female partners earning more than they do,” Dorn says, or women feel like “if the man doesn’t bring in more money, then he’s an underachiever.”

I’ve joked that when it comes to dating in my 40s (I’m divorced), I want a guy’s bank statement, a criminal record check and three references (and his mother doesn’t count). We can pretend these things don’t matter, that when it comes to true love something as crass as money makes no difference, but until we recognize that it still does, we can’t deal with it honestly and openly. There’s a reason most couples fight over money more than anything else – it’s an unavoidable part of our lives and it’s so emotionally charged.

I’m not saying it’s right, I’m saying it’s real. So what it comes down to is —

What would Lizzy Bennet do?

My day job — 12 years of working for myself

I’m a communications consultant (writer and editor) and I take on different contracts. Not only do I have a steady gig but I also take on side projects, which means I’m often working evenings and weekends. And you know what? I love it. But it means sometimes I have to take time away from this blog to focus on things like relaunching my website!

I’m celebrating 12 years of being in business with Dossier Communications. Twelve years ago I walked away from yet another bad job and went at it on my own. To celebrate, I revised my website. If you want to know about my writing, editing and marketing communications services, check it out: http://dossiercommunications.ca/services/

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I promise to get back to this blog soon. I miss you too.

What I’m learning

It’s been a while, I know. I took a break for the holidays, then I went on holiday. Now I’m here with no excuses to put off the second part of the Canadian Securities Course. It occurs to me though that an outline of the topics covered might be of interest, if only so you have an idea of what I’m learning about.

Volume 1 and the first exam covered:

The Capital Market
The Canadian Securities Industry
The Canadian Regulatory Environment
Economic Principles
Economic Policy
Fixed-Income Securities: Features and Types
Fixed-Income Securities: Pricing and Trading
Equity Securities: Common and Preferred Shares
Equity Securities: Equity Transactions
Derivatives
Financing and Listing Securities
Corporations and Their Financial Statements

Not a whole lot of everyday practical tips here, or anything I’d really consider personal finance. Volume 2 covers:

Fundamental and Technical Analysis
Company Analysis
Introduction to the Portfolio Approach
The Portfolio Management Process
Fundamentals of Managed and Structured Products
Mutual Funds: Structure and Regulations
Mutual Funds: Types and Features
Segregated Funds and Other Insurance Products
Hedge Funds
Exchange-Listed Managed Products
Fee-Based Accounts
Structured Products
Canadian Taxation
Working with the Retail Client
Working with the Institutional Client

Hedge funds – that sounds sexy. There are exchange-traded funds (ETFs) in my future too. I’m up to Chapter 15 and I’ve actually found some practical tips! But that’s a story for another post – I’m off for a study break to watch another episode of the TV show Bitten (based on a really good book series by Canadian author Kelley Armstrong).