Today is US Election
Whether we like it or not, it'll affect us
It's a nail biter for anyone who has been following the US election.
Whether we like it or not, Canadian's economy will largely be affected by what's going on down south.
I'm hosting a zoom call tonight at 6:30 Mountain Time to talk about the potential impact on our portfolios with the next US President.
You can join the call here:
https://us06web.zoom.us/meeting/register/tZ0odeupqjIpH9a7CbCfvlQqeizSs6XKFTDk
I'm not going to spill the beans here on what I will be sharing on the call tonight.
What I'll share in today’s newsletter is a thought exercise.
We do these thought exercises regularly as proper risk management on our portfolio for our partners and myself.
I urge you to do the same with yours.
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We rarely hear about successful investors like Warren Buffett get in trouble.
That is because he is the master at risk management.
Risk management is not sexy.
As a matter of fact, it's boring to most people.
Who wants to talk about the possibilities of losing money?
Yuck!
The famous line from Tom Cruise's character in Jerry Maguire:
"Show me the money!"
That's what most people want to hear.
Can you ever imagine Warren Buffett, a 94 year old seasoned investor going around his office shouting:
"Show me the money!"
Oh I would pay good money for that!
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How do you manage risk?
Warren Buffett once said, "The first rule of an investment is don't lose [money]. And the second rule of an investment is don't forget the first rule. And that's all the rules there are."
Often times, it's these 2 basic rules many have forgotten.
After all, who thinks about these 2 rules when "Show me the money!" is preoccupied in one's mind?
Okay, enough with the movie quote.
What is the thought exercise today that will help you with risk management?
Ask yourself this:
What IF the interest rate stays where it is OR go up in the coming months?
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Before you rush to say:
Eric, you're crazy to even suggesting this.
Every top economists I follow are saying interest rate will be lower a year from now than today.
I'm not suggesting I know something they don't.
I'm simply offering a thought exercise for you to consider.
Consider this is the same logic that just couple years ago, most people said:
There's no way the interest rate will go up that much.
The Bank of Canada will NEVER do that to the economy.
Never say never.
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All I'm saying today is to consider the impact on your portfolio.
Ask the "what if" questions.
These are the questions that will help you wrap your head around risks that you may have not considered before.
It's easy to miss them.
We are human.
We don't like to think about things that are bad.
But if you care about protecting yourself, and your projects, these are the inconvenient questions you need to ask yourself:
What IF rent goes down?
What IF property price goes down?
What IF the interest rate stays where it is OR go up in the coming months?
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Always remember, in the world of risk management:
Never say never.
Join me on tonight's call at 6:30 Mountain Time for more discussions on risk management as we wait to find out who the next US President is:
https://us06web.zoom.us/meeting/register/tZ0odeupqjIpH9a7CbCfvlQqeizSs6XKFTDk
If you like my work, I invite you to share it with others.
Happy investing,
Eric Chang
Canmore, Alberta
November 5, 2024
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