Optimism #90 - July 23, 2025
Hello clients and friends,I hope you are enjoying the summer.
Insiders are buying at Nexus Industrial REIT, Whitecap Resources, Tourmaline Oil, NuVista Energy and Peyto Energy. Interesting that except for one, they are all oil and gas companies.
There was a dividend article in the Globe and Mail this past weekend and I think the writer really doesn’t get it. I generally like his work but I think maybe he is just too young to understand dividends. Entitled The cult of dividend investing faces a crisis of faith, they miss the point that investing is about people and not just numbers. (Does this make me a cult leader?) It’s about understanding what you own, being comfortable with the holdings. Further, it’s about tax treatment and predictability of income in the midst of constant volatility. They touch on the predictability piece but don’t do it justice. I honestly think they hate the idea that ordinary people with no formal investment training can do as well as some of the professionals, and often better, just by sticking to better quality, buying the dips and being more patient.
There is a very good podcast called Diary of a CEO, where Kevin O’Leary is interviewed. I dislike him less after listening. He goes on in one part of how his mother held dividend paying stocks for 55 years and the profound difference it made in his life as a child and young adult.
Further to this, it’s not all about performance, not for everyone anyway. We had a guest for dinner last week and he said he told his money manager that if they make 20% return in any year they are fired.
Last weekend the Globe had an article by Larry MacDonald, about a woman who bought ten top quality all Canadian dividend growers and has knocked it out of the park. Most of you are doing the same thing and it is working brilliantly. Well done.
When people change employers, sometimes they leave their pensions behind.
We made a video of a 33-year-old who left his job as a public-school teacher to become self-employed.
In this extreme case where the individual is far from retirement, we show, given realistic assumptions, that he is about four times better off taking the commuted value.
The opposite can be true as well, so we must be diligent. As we get closer to retirement, the math is not always in favour of taking the cash in lieu of a life of pension income.
In quick summary, the pension is defined by a formula, so it will not grow between his last day of work and his age 60, 27 years from now.
Further, the cost of living, assuming 3% per year which is historically reasonable, will more than double. So by leaving his pension with the employer, it in effect will be cut in half.
If you know anyone who has a Defined Benefit pension with a past employer, please share this.
I just paid another $67.23 for $9.37 worth of natural gas from Fortis. I see the humour, but only as an investor, certainly not a consumer.
Brian Portnoy’s book, The Geometry of Wealth defines money as ‘funded contentment’. The book is about … how to shape a life of money and meaning.
He makes wonderful statements like ‘“Volatility is the emotional cost of achieving the growth we seek.” Lot’s of good stuff here if you are interested.
Somewhere on Instagram this weekend I saw “ wealth is the money you never spend”. I read it to mean we enjoy the benefit and often the income from the asset, but we never part with the asset.
I thought it was brilliant and hope you do as well.
PS. One of you on our mailing list informed me that they are still receiving some sort of spam email. My apologies again, they are not coming from us. Please be vigilant.
Have a wonderful summer.
Derek Moran
