mercredi 25 avril 2018

My philosophy about money

I have a friend who seems to think that I live in a cheap house. He never said it directly, but he made a few muffled comments about it and I've realized that he probably thinks that it's not a prestige house enough for him.
On instagram and on many other places, you can follow new millionaires. You can follow some douchebag entrepreneurs with their plastic girlfriends, always filming themselves in fancy restaurants or on some beach. And you wonder why the fuck they publish 5 videos a day about what they ate, where they were. Their fucking life looks to be so empty, with all that cash.
You quickly realize that these are not real « rich » people. Real rich people are quiet. They don’t want to create a hype.
You can’t stay rich for too long if you fall into excesses. I deeply believe that everything is a question of discipline. I owe almost everything to discipline : my education, my job, my relative wealth. Luck and genetics have had little impact on where I’m at the moment. It’s probably 80% a question of discipline.
How could you become rich, or at least, comfortable?  
  1. Bring your lunch to your job;
  2. Don’t buy a big car. Ideally, use just one car for your family (another car will cost you at least 400 or 500$ a month (payment + gas + insurance + other fees), which is a lot of money you could put on the stock market);
  3. Buy a small house and don’t move;
  4. Don’t fall into consumerism. Take advantage of consumerism (when you buy things, you lose your money, when you buy stocks, you take advantage of the people who buy things);
  5. Save the biggest part of your income and invest frequently. But don’t forget to eat and dress well. You don’t have to look like a fucking hobo.
If you do that and you have a good income I don’t see how things couldn’t turn well for you. Avoid debts and big payments. It will strangle you and you’ll be unable to save enough money. If you can save 50% of your income each month, you can do a lot of mistakes in the stock market and your “adjusted” performance will be great anyway. And don’t tell anybody what you own. When you show your cash, people make comments, they’re jealous, they expect you to buy things for them. Money has to remain hidden, otherwise, there’s big expectations about your generosity. You don’t owe anything to anybody. You didn’t steal anybody to have this money. You ate fucking spaghettis while others were eating KFC, smoking cigarettes and fucking expensive whores from Russia.
Next year, I’ll be 40. It’s the precise year when things will change for me. I plan to change my relation to money from a perspective of security to a perspective of comfort. Obviously, I won’t change drastically, but I’ll face the other half of my life differently after many years of discipline.
You better sacrifice comfort when you’re young. Why? Because the opposite is crazy. Why spend everything when you’re under 40, then face a lot of stress, trying to save enough  money for your old days, after you’ve lived many years in a rich manner? You can’t change these habits easily.
I owe that philosophy to Stephen Jarislowsky. That’s how he concluded his book and that’s how I plan to live my life. For somebody else, the transition may be before 40. For many others, it would be after 40. But anyway, people should set a specific point of their life when they’ll rest like god on the seventh day and admire what they have created.

17 commentaires:

  1. You were born in one of the richest countries in the world that registers at the very top in terms of highest quality of life. You have the genetics of somebody who seems healthy and highly intelligent. Some people have the good fortune to be born in places like Algeria, India, Indonesia and Nigeria. Some folks grew up without the chance to go to school. Let's not even talk about people born crippled or mentally retarded. You say luck and genetics means nothing. I think luck and genetics means everything.
    You cannot help people with their luck or their genetics. Everything else that you CAN help them with comes down to what you discuss so well in this blog entry. The key is self discipline. If I was a maid in Sri Lanka, I would not be in a position to benefit from what you write.
    By the way, thanks for having the self-discipline to do your homework, to study the best companies in the world and to bring to our attention a company like Facebook. Earnings were out today after weeks of attacks in the press over privacy concerns. They earned $1.69 per share up from $1.04 per share the same quarter last year. The stock market was not looking too good lately. I think Facebook will give us all a lift. You were the guy who pointed us to a 400 billion dollar company that can still grow earnings by over 50%.
    Merci et Félicitations à tous les actionnaires de Facebook.

    1. Merci Angelo. Tu m’as appris l’existence de PATK il y a déjanté quelques mois. Mais aujourd’hui j’ai plongé.

    2. Todd Cleveland, CEO of Patrick Industries is up 30,000% in his first ten years (from $5 million market cap to $1.5 billion for PATK). 300-fold return. He is only 50 years old. He is just getting started. Nobody knows about him or Patrick Industries yet. The company is still small enough to keep growing for a long time. Bonne chance!
      Here is the most recent article on Patrick Industries on seeking alpha if you have not read it. It's from ten days ago:

  2. I would add two things. Depending on which city you are living, don't hesitate to find a property at a prime location and be patient to find the opportunity. Second, invest your work time for your own company or if you can, be a partner of the company you work for.

  3. So true about keeping money a secret. I have seldom made new friends talking about thriftiness and-or investment. Internet is mostly where I can socialize on this topic. Somehow many people still perceive frugality and ideas about anti-consumerism as being a cheapskate.

  4. Earnings out for one of my favourite stocks today. Please keep in mind they can register these growth numbers and they go for a next year p/e of 11 and have a ROE of 30%. This is the ultimate compounding machine in the industrial sector and the best performing stock in the whole stock market universe since the financial meltdown of 2008.

    today's news release from Patrick Industries (PATK):

    For the first quarter of 2018, Patrick reported operating income of $41.8 million, an increase of 75% or $17.9 million, from $23.9 million reported in the first quarter of 2017. Net income in the first quarter of 2018 increased 72% to $30.1 million from $17.5 million in the first quarter of 2017, and net income per diluted share increased 60% to $1.20 from $0.75.

    When the 50 year old CEO of this company took over in the financial meltdown of 2008, PATK was a $5 million market cap company. Since then they have acquired dozen of other companies. They dominate in building materials for recreational vehicles and they have branched out into other areas. here's the full report from this morning:

  5. One the reading that really defined my philosophy about money is from Bernard Mooney itself :

    Basically, you have to think how much will it really make you happier to buy something (return on

  6. 31 second youTube video of The Simpsons entitled:

    I'd Be Happier With The Dollar (The Simpsons)

  7. I love this. This is excellent

  8. Is Vicario around? Anybody else out there that could take a position of a couple of million dollars on a micro-cap stock going for a next year p/e of around 8?
    I was talking to the chief financial officer of Sangoma Technologies Thursday afternoon. They have a guy dumping one million shares at a time in the open market. He bought his shares for around 33 cents per share a while ago and he still has 2 or 3 million shares. Most funds cannot buy the shares of companies with a market cap of ~ $40 Million or $50 million. This could be a good opportunity for a small fund that CAN take a good sized position in a micro cap. They just raised $13 million in cash at $1 per share to continue their buying spree and their next year p/e is about 8 at today's prices. This is a company that will keep buying other companies until they are big enough to get to $100 million+ market cap and be noticed by the fund managers and then they can achieve p/e multiple expansion. They have bought out five companies in five years. They just raised over $13 million to keep acquiring. Is there a fund manager out there who can take out this cowboy's position in one shot and at a discount?

  9. @penetrator are you the new Mcsween but with investing skills:)

    1. I don’t think that McSween will change after he’s 40 or even 50.

    2. Yup he is preaching total cheapness, but he will still invest in royal bank at 50 years and collect his 4% dividend. Saving money is one part of the story, but knowing how to make money is another thing

  10. For those of you that read french LASSONDE (one of the truly great stocks in Canada made a big move recently). Here's the link to the article in Les Affaires:

    and for those of you that do not understand french, the first two paragraphs of the article are offered here courtesy of bing translator. here you go:

    Lassonde Industries (TSX: LAS. A), headquartered in Rougemont, concluded yesterday evening an agreement to acquire OLD Orchard Brands, LLC, a family-owned fruit juice and beverage company based in Sparta, Michigan, for an amount of US $ $146 million.

    According to Mr. Jean Gattuso, president and chief operating officer of Lassonde Industries, this transaction is consistent with our strategy for sustained growth and improves our overall position in the United States. Old Orchard is known for its good reputation and has good brand loyalty, especially in the central region of the United States. The Old Orchard brand is complementary to our existing brands and, in addition, the transaction will allow us to expand our product offering by adding a frozen juice line that offers interesting growth opportunities.//

    Here's a detailed article in english courtesy of yahoo finance:

  11. Jarislowsky is great!
    His book 'The Investment Zoo' is what I base most of my investment decisions on. He is also a dividend investor. Great post my friend!

  12. Then again, perhaps you were just lucky as Buffet observes about the unfairness of fate:
    “My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery. (For starters, the odds against my 1930 birth taking place in the U.S. were at least 30 to 1. My being male and white also removed huge obstacles that a majority of Americans then faced.) My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I've worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mispricing of securities with sums reaching into the billions. In short, fate's distribution of long straws is wildly capricious.”