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Business

“You Have To Take The Emotion Out Of Investing” – Are You Considering Buying In?

Published

4 years ago

12 minute read

Are you? You may not be the only one. We have seen stock markets like the Toronto Stock Exchange take major hits over the past two months due to the effects of Covid-19 taking its toll on almost every industry. With some recent rises in markets continuing to build investor confidence, we are still left in the unknown for why this is happening. Living through a historically unprecedented time uncovers a long list of questions and concerns for our livelihood as individuals, quality of life for the future, and how best to navigate through this time. I’m sure during the Irish potato famine in 1845-1849, there were many people asking – what’s going on with all the potatoes? 

In a survey undertaken by the group “500 Startups” based in Silicon Valley, surveyed a group of investors to report on how they have been affected by the pandemic. The investor group consisted of venture capitalists, angel investors, corporate venture investors, and family office investors. The report showed 83% having their investment activity and plans be affected by Covid-19. As seen in the chart below, 62.6% of the group feel that startups and early-stage investors will be feeling the effects of the pandemic for 1-2 years. Their advice to startups during this time is to simply decrease costs and to increase their runway for how long they can stay in business. 

Data taken from 500 Startups report on The Impact of COVID-19 on the Early-Stage Investment Climate

 

We spoke with Kevin Skinner, an investment advisor for Servus Wealth Strategies, who gave us some insight and knowledge pertaining to open concerns for novice investors who may be seeking to enter the market or simply are in the dark for what to with their holdings. Kevin has been working in the financial services industry for over a decade and is a top investment advisor in their St. Abert branch. 

Considering what we have seen so far in stock markets, Is it a good time for new long term investors to buy now or continue to wait?

Striving away from the idea that fortune-tellers exist within trading, which is not true, a good education on markets is always a good pre-market investment of your own time. In regards to those looking to be a long term investor, he mentions:

“If you’re a long term investor the adage is that it’s always the best time…so question number one has to be, can you afford to invest the money right now…the second question is, what else can you do with this money. If you have $10,000 in the bank and $10,000 in credit card debt, always better to pay off the debt than you are investing that money.”

We want our money working for us right? Having a solid grasp of how your money is working for you may allow you to make a better-educated investment without adding any financial risk. The idea that there are smoke signals in the market to tell you it is the right time to invest, he mentions:

“If it was that easy, I would be sitting on my private island somewhere enjoying the world…It really is about investing correctly and investing to your plan. If your plan is to have the money for the long term, You need to have an understanding of your risks and your comfort.”

What if I have money to invest right now, should I wait for the bottom line? 

Kevin advised the dollar cost average tool to take the emotion out of investing. With so much volatility in the market, we revisit the concept that fortune-tellers exist to tell other investors when to buy; there is no way to fully identify the risks. To ensure you’re getting good value for your money, Kevin offers an example of the dollar cost average approach:

“Take your pool of money, call it $12,000. You invest $1,000 a month in a particular fund. You catch the market as it wobbles, so you don’t necessarily buy it all at the bottom, you’re definitely not buying it all at the top. You’re averaging your cost date and to get a good value for what you’re buying.”

Do you have an opinion on panic selling at a loss? 

Straight out of the gate, Kevin is a firm believer that anything that involves the word “panic” is never a good thing. Investopedia’s definition of panic selling refers to the sudden, wide-scale selling of a security or securities by a large number of investors, causing a sharp decline in price. We have seen this as a result of the COVID-19 pandemic. Panic selling can be directly related to having an emotional connection to your investment, but to ensure the doom and gloom doesn’t get the better of you, having an objective view allows you to stay logical and stick to your plan. Kevin mentions: 

“you have to do whatever you can to pull that emotion back out. Panic selling immediately is focused on the emotional side of it. You have to remove the emotion from investing.”

Not as easy as it sounds right? We are going through an emotionally ramped up time during this pandemic, not to mention dealing with all the other unknown realities of how our economy will bounce back or when the non-essential business will be reopened. Kevin recommends choosing places to move your investments to take the panic out. 

“You don’t call a realtor when your house is on fire. That’s where we’re at in the market right now, we know the house is on fire. We don’t know how long it’s going to last, how bad it’s going to be, or what it’s going to look like when it’s put out.”

 

Can you offer any comment on the fear of more lows, or what are the key indicators that we should be aware of?

We have seen stocks rise over the past week due to economic stimulus measures and the actions being taken to gradually reopen global economies. Experienced investors are forward-thinking individuals, they take into consideration the risk-reward for having objective optimism in certain industries. Kevin encourages to take the view that the rises we have seen are temporary for now, he mentions:

“Know that there’s another drop coming. Know that we don’t know how bad it’s going to be. And we don’t know how long the recovery is going to take. which is why we’re saying it’s going to be 2021 at least before the flooding of the market recovers”

We are expecting a long and slow road to recovery, but finding the bottom line can be almost impossible. Ask yourself, what happens to market optimism if a vaccine is made available tomorrow? Does that mean the market will become flooded with investors? It is impossible to know; by choosing a trusted investment advisor they can assist with taking the emotion out of your investments, and you can lean on their knowledge of markets to offer that objective optimism. For individual investors, it is useful to be aware of the activity in that sector to aid in growing your confidence, or the counter, it may give you key information to avoid a bad buy right now.

How have you been navigating through this time?

Kevin is one of many continuing to work from home during this period of self-isolation. With any new environment carries challenges. He is thankful for Servus Credit Union for the support he has received and the efforts put forward by the whole team. He has been spending some time in the welcomed sunshine playing sports with his 12-year-old son in his driveway.

What has Servus Credit Union been proactively doing to support its customers right now? 

Servus Credit Union released their response to COVID-19, issuing kind words to their members that they are here for them during this time. Their CEO, Garth Warner also released a personal letter to all of their members speaking on behalf of the team doing everything they can do to support their members. Kevin mentions:

“Our members are truly members, they’re all owners. Everyone who deals with the credit union holds a piece of the credit union. Right now we’re trying to keep our whole business, our owners, and our members afloat…so whatever we do, is what’s best for us as an organization which means it’s also what’s best for our members”

What are you personally looking forward to after this period of self-isolation?

“I coach sports. Of course every kid’s sport is canceled right now. We lost the end of our sports seasons for the winter, we’re going to miss the beginning of our sports season for the spring. And that’s what I miss most is getting outside with the kids and just having fun.”

If you would like to learn more about Servus Credit Union, Servus Wealth Strategies or Kevin Skinner, visit their website or social links below.

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Automotive

New Analysis Shows Just How Bad Electric Trucks Are For Business

Published on May 8, 2024

By

From the Daily Caller News Foundation

By WILL KESSLER

 

Converting America’s medium- and heavy-duty trucks to electric vehicles (EV) in accordance with goals from the Biden administration would add massive costs to commercial trucking, according to a new analysis released Wednesday.

The cost to switch over to light-duty EVs like a transit van would equate to a 5% increase in costs per year while switching over medium- and heavy-duty trucks would add up to 114% in costs per year to already struggling businesses, according to a report from transportation and logistics company Ryder Systems. The Biden administration, in an effort to facilitate a transition to EVs, finalized new emission standards in March that would require a huge number of heavy-duty vehicles to be electric or zero-emission by 2032 and has created a plan to roll out charging infrastructure across the country.

“There are specific applications where EV adoption makes sense today, but the use cases are still limited,” Karen Jones, executive vice president at Ryder, said in an accompanying press release. “Yet we’re facing regulations aimed at accelerating broader EV adoption when the technology and infrastructure are still developing. Until the gap in TCT for heavier-duty vehicles is narrowed or closed, we cannot expect many companies to make the transition, and, if required to convert in today’s market, we face more supply chain disruptions, transportation cost increases, and additional inflationary pressure.”

Due to the increase in costs for businesses, the potential inflationary impact on the entire economy per year is between 0.5% and 1%, according to the report. Inflation is already elevated, measuring 3.5% year-over-year in March, far from the Federal Reserve’s 2% target.

Increased expense projections differ by state, with class 8 heavy-duty trucks costing 94% more per year in California compared to traditional trucks, due largely to a 501% increase in equipment costs, while cost savings on fuel only amounted to 52%. In Georgia, costs would be 114% higher due to higher equipment costs, labor costs, a smaller payload capacity and more.

The EPA also recently finalized rules mandating that 67% of all light-duty vehicles sold after 2032 be electric or hybrid. Around $1 billion from the Inflation Reduction Act has already been designated to be used by subnational governments in the U.S. to replace some heavy-duty vehicles with EVs, like delivery trucks or school buses.

The Biden administration has also had trouble expanding EV charging infrastructure across the country, despite allotting $7.5 billion for chargers in 2021. Current charging infrastructure frequently has issues operating properly, adding to fears of “range anxiety,” where EV owners worry they will become stranded without a charger.

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Business

When politicians gamble, taxpayers lose

Published on May 2, 2024

By

From the Canadian Taxpayers Federation

Author: Jay Goldberg

Trudeau and Ford bragged about how a $5 billion giveaway to Honda is going to generate 1,000 jobs. In case you’re thinking of doing the math, that’s $5 million per job.

Politicians are rolling the dice on the electric vehicle industry with your money.

If they bet wrong, and there’s a good chance they have, hardworking Canadians will be left holding the bag.

Prime Minister Justin Trudeau and Premier Doug Ford announced a $5-billion agreement with Honda, giving another Fortune 500 automaker a huge wad of taxpayer cash.

Then Trudeau released a video on social media bragging about “betting big” on the electric vehicle industry in Canada. The “betting” part of Trudeau’s statement tells you everything you need to know about why this is a big mistake.

Governments should never “bet” with taxpayer money. That’s the reality of corporate welfare: when governments give taxpayer money to corporations with few strings attached, everyday Canadians are left hoping and praying that politicians put the chips on the right numbers.

And these are huge bets.

When Trudeau and Ford announced this latest giveaway to Honda, the amount of taxpayer cash promised to the electric vehicle sector reached $57 billion. That’s more than the federal government plans to spend on health care this year.

Governments should never gamble with taxpayer money and there are at least three key reasons why this Honda deal is a mistake.

First, governments haven’t even proven themselves capable of tracking how many jobs are created through their corporate welfare schemes.

Trudeau and Ford bragged about how a $5 billion giveaway to Honda is going to generate 1,000 jobs. In case you’re thinking of doing the math, that’s $5 million per job.

Five million dollars per job is already outrageous. But some recent reporting from the Globe and Mail shows why corporate welfare in general is a terrible idea.

The feds don’t even have a proper mechanism for verifying if jobs are actually created after handing corporations buckets of taxpayer cash. So, while 1,000 jobs are promised through the Honda deal, the government isn’t capable of confirming whether those measly 1,000 jobs will materialize.

Second, betting on the electric vehicle industry comes with risk.

Trudeau and Ford gave the Ford Motor Company nearly $600 million to retool a plant in Oakville to build electric cars instead of gasoline powered ones back in 2020. But just weeks ago, Ford announced plans to delay the conversion for another three years, citing slumping electric vehicle sales.

Look into Ford’s quarterly reports and the danger of betting on electric vehicles becomes clear as day: Ford’s EV branch lost $1.3 billion in the first quarter of 2024. Reports also show Ford lost $130,000 on every electric vehicle sold.

The decline of electric vehicle demand isn’t limited to Ford. In the United States, electric vehicle sales fell by 7.3 per cent between the last quarter of 2023 and the first quarter of 2024.

Even Tesla’s sales were down 13 per cent in the first quarter of this year compared to the first quarter of 2023.

A Bloomberg headline from early April read “Tesla’s sales miss by the most ever in brutal blow for EVs.”

There’s certainly a risk in betting on electric vehicles right now.

Third, there’s the question of opportunity cost. Imagine what else our governments could be doing with $57 billion?

For about the same amount of money, the federal government could suspend the federal sales tax for an entire year. The feds could also use $57 billion to double health-care spending or build 57 new hospitals.

The solution for creating jobs isn’t to hand a select few companies buckets of cash just to lure them to Canada. Politicians should be focusing on creating the right environment for any company, large or small, to grow without a government handout.

To do that, Canada must be more competitive with lower business taxes, less red tape and more affordable energy. That’s a real recipe for success that doesn’t involve gambling with taxpayer cash.

It’s time for our politicians to kick their corporate welfare addiction. Until they do, Canadians will be left paying the price.

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