Monthly Archives: July 2016

The first $100,000 is the hardest

Charlie Munger
Charlie Munger

Here is a quote by Charlie Munger, vice chairman of Berkshire Hathaway, Warren Buffett’s business partner.

“The first $100,000 is a bitch, but you gotta do it. I don’t care what you have to do—if it means walking everywhere and not eating anything that wasn’t purchased with a coupon, find a way to get your hands on $100,000. After that, you can ease off the gas a little bit.”

To have a portfolio of $100,000 has always been a professional goal. I have been in Canada for 18 years. The first 5 years don’t count as money making years because I was going to school, so it has taken me 13 years to go from $0 to $100K.

Most people, even those earning $100K per year, will never accumulate this amount of money. I feel extremely privileged to have arrived at this milestone.

How to accumulate $100K

The fast track: If you are a high earner or a successful small business owner, and you save 20% of your income or more, you could probably accumulate $100K in about 5 years or less.

Hanging out with friends
Hanging out with friends

The slow track: If you are a low earner, like me, you can only get there through a lot of discipline, sacrifices, perseverance, etc.

Since I arrived in Canada, I have been a janitor, a busboy, a waiter, an Uber driver, a cleaner, a dance teacher, an insurance salesman, and lately a money coach.

I buy most of my clothes at Walmart or any other discount store. I buy second-hand books and furniture. I buy automobiles which are 5 years old or older. I usually don’t go to bars. I mostly go to restaurants where the plates are $15 or less. I don’t consume much alcohol. I don’t smoke or have other expensive vices. My pleasures are simple. I like reading and writing, I like going to the park. I watch Netflix instead of going to the cinema. And specially, I like giving speaches at my local Toastmasters club.

In spite of my frugality, I live in a cool neighborhood (le plateau), I travel once per year,  I have an apartment which I love, I have a car, a windows laptop, and an android phone. And more important, I have a great community of friends. I have very little and yet I feel wealthy.

I am the kind of person who believes that wealth is available to all of us. If you want it, you can get it. Canada is full of opportunities. There are hundreds of courses a person can take, almost for free, on the Internet. Even a dance teacher like myself has the means to accumulate $100K

The next $100K

The next $100K
The next $100K

If I don’t do anything else to increase my wealth and if my investments grow at the rate of 8% per year, this is how long it will take me to get an additional $100K

To get from 100 to 200: 9 years
From 200 to 300: 5 years and 3 months
From 300 to 400: 3 years and 9 months
From 400 to 500: 2 years and 10 months

These are not real numbers because I have not included the effect of taxes, but you get the idea – money can work harder for me than I can work for myself.


The first step to accumulate wealth is to have a true desire to do it. Saying to yourself “it would be nice to have $100K” is not enough. Don’t listen to advertisers. Fight the urge to buy gadgets and expensive clothes, get a bicycle instead of a car, spend less on housing and frequent less expensive restaurants. If you set your mind to it, you can do it.

How to measure the stock market

bro“Today the market went up by 100 points.” This is a comment we hear in the financial news very often. But what does it mean?  What are they talking about? What are they referring to when they say “the market”?

They are talking about the average price of a group of stocks. Generally this group of stocks represents the economy of a particular country. For example, if we are in Canada and the newscaster says “The market went up by 100 points,” he is referring to the Toronto Stock Exchange index. If a newscaster says the same thing in the US, he’s referring to the Dow Jones Industrial Average (more on that later).

Let’s say that the whole financial market of an imaginary country is composed of only 10 companies. During the day some stock prices will go up, others will go down. At the end of the day the price of all those stocks is added and divided by 10. If the average is higher than the average of the previous day, the announcer would say that the market went up. If the average is lower, the announcer would say that the market went down.

Which indexes are the most relevant to us?
The Toronto Stock Exchange (TSX)

In Canada, the  most important index is the Toronto Stock Exchange (TSX). This exchange was created in 1852 and today is the 8th biggest exchange in the world. There are about 1,600 companies in the exchange and the price of the stocks represents the Canadian economy.

How would you make an investment that represents all the stocks on that index? You would buy an ETF which replicates the performance of the exchange. That ETF is XIU.

The Dow Jones Industrial Average (The Dow)

The Dow Jones Industrial Average is the best known and oldest average in the US. It was first published in 1896 and today is composed of the 30 biggest US companies.

The best way to invest in the Dow is by buying the ETF: DIA

The Standards and Poors 500 (S&P 500)

This index is composed of the largest 500 companies in the US. Because of the diversity of the companies held in this index, it’s considered to be the best representation of the US economy.

The best way to play the S&P 500 is through the following ETFs: IVV, SPY or VOO.

The Nasdaq

The Nasdaq is one of the major stock exchanges in the US. It is an important competitor of the New York Stock Exchange (NYSE). When it was created, all the transactions were done electronically while the NYSE was still taking orders by phone. The stock prices were quoted in the decimal system instead of the fractional system (for example $1 ⅛). And the stocks which trade in the Nasdaq are mostly information technology companies. The Nasdaq index is composed of over 3,000 companies and is now as well known as the Dow Jones and the S&P 500.

The best way to play the Nasdaq is through the ETF QQQ


In the future, when you hear in the press that the market has gone up 100 points, you will have a better idea of what they are talking about.

They say that diversification is the only free lunch in finance and diversification is very easy by investing in the indexes. If you are Canadian, a possibility for your portfolio would be to purchase a bit of the Canadian index, a bit of the S&P 500 and a bit of the international index (We will cover the international index in a future blog).

Bernard Baruch by James Grant: Book Review

How did I find this book about Bernard Baruch’s life

Book cover of Bernard BaruchAbout one year ago I read an excellent book: Reminiscences of a Stock Operator by Edwin Lefevre. So far, that book reminds me of my favorites of times – it is about the life of legendary trader Jesse Livermore. I cannot recommend that book enough.

A few months ago I was listening to a podcast created by  the newspaper Investor’s Business Daily and in the podcast the spokesperson was talking about lessons to learn from legendary traders. The spokesperson said that lessons taught by Bernard Baruch were as valuable as the lesson taught by Jesse Livermore. I had never heard of Bernard Baruch before. I looked him up in, I found the book and I put it on my wish list. A few weeks later, my business partner gave me that book as a birthday present.

I had great expectations when I received the book. My enthusiasm was high and I was eager to get started.

Big disappointment

Spending time with my brother, his wife and two daughters
Spending time with my brother, his wife and two daughters

When I finally got to the book I felt a great disappointment. I felt that I was losing minutes of my life every time I turned a page.

The author, James Grant goes into a lot of detail about the life of Baruch’s grandparents, then about his parents, and finally he starts writing about Baruch.

As he narrates the story, he goes into exact dates and practically all the address where Baruch lived and worked. I could never figure out how knowing the exact addresses of Baruch’s office helps the narration advance.

The subtitle of the book is: “The Adventure of a Wall Street Legend.” However, the content of the book devoted to Baruch’s life in Wall Street was less than 20%. The rest of the book was devoted to Baruch’s life in politics and other services which he performed for the US. The subtitle was totally misleading.

Overall, I was extremely disappointed with the content as well as the narration of the book.

My recommendation

My recommendation is not to waste even one minute of your life with this book. That is my job, to shuffle among many business related books, so that I can find and offer you the ones which are worth reading.

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The frugal birthday party

Hanging out with my friend Elijah
Hanging out with my friend Elijah

Elijah’s birthday party

A few weeks ago, my friend Elijah sent me a Facebook invitation to his birthday party. It was at La Fontaine Park, a 10-minute walk from my place. It was one of those potluck style celebrations. Everyone brought  a little something: Beer, snacks, fruit, vegetables, etc. I brought a six pack of beer ($10) and some fruit ($5).  The party started at about 4 pm and ended at about 11:00 pm. People arrived and left when it was convenient for them. They drifted from one group of people to the other conversing and getting to know each other. It was an inclusive atmosphere and the cost for the venue was $0. I had an amazing time.

Another friend’s birthday party

Birthday party at a restaurant. Big echo, loud music, lots of money, inability to mingle with other people
Birthday party at a restaurant. Big echo, loud music, lots of money, inability to mingle with other people

I hope she doesn’t read my blog. Sometime ago, a friend invited me to her birthday party. I had a crush on her, so I jumped on the occasion without hesitation. The restaurant was big and it was full. There were as many tables as the restaurant owner could fit into the building. The echo of everyone’s voices was overwhelming. I was seated next to and across from people who I didn’t know. One of the people next to me was busy chatting on Facebook. I felt trapped in my seat. There was loud techno music in the background and I had to scream to speak to the person next to me. My friend came to chat with me for a few minutes and then she went off to another table. The food was great, but I had a miserable time. The cost of food and drink was about $60.

Dave’s Birthday party

My friend Dave is a master at the BBQ. Free venue, lovely atmosphere, easy to talk to every one, affordable.
My friend Dave is a master at the BBQ. Free venue, lovely atmosphere, easy to talk to every one, affordable.

My friend Dave decided to celebrate his birthday at a small Indian restaurant. The place was small and the echo was not overwhelming. There was some background music but not too loud. I was sitting next to people who I knew and we were having nice conversations. I was able to speak to friends one table over. The cost for this celebration was about $15 per person.

The ingredients for a good birthday party

Let’s be honest, a restaurant bill of $60 or more is painful for many of us. If your friends have to pay this amount to spend a few hours with you, you are being inconsiderate with your friends. In addition, some of your friends may not come. I have refused birthday parties because I don’t like the price of the restaurant.

How to make an inclusive birthday party

This is just my point of view, feel free to disagree, but I like public venues. Parks are my favorite, but any place where you can get together for free is great. The other option is to rent space in a community center or any place where you can get a good deal. Finally, there are thousands of restaurants in a city. Choose a restaurant with a good ambiance and where the food is not expensive. My personal limit is $20.

I celebrate my birthday every year at La Fontaine Park. Usually, I have between 20 to 30 people attend. We talk, we eat, we drink and we dance from 2 pm to 10:00. All of that for free.

How do you celebrate your birthday?

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