Conversations with Corrie

There are things I've talked about over the years that people don't want to hear. But I have a faithful dog who listens with interest and zeal, concentrating on every word. So I decided to talk about these things with her. Let me give you an example:

One of these pet subjects goes back to the beginnings of Canada and its adoption of a political system modelled after that of Mother England. I have always seen a basic structural problem with this approach. England's population is much larger, and the country much smaller, and therefore what well suited England and developed over many years has in Canada the physical problem of dealing with a country that is very large, widespread, with a diverse population and very different economies in different parts of the country. Let us think about this for a minute with Corrie.

Another pet subject concerns globalization. Massive and rapid changes are shaping our world. What will they mean to our daily life? How can our actions and reactions best be tempered and adjusted to meet the changing challenges that confront us? The dramatic nature of today's vast and rapid change demands that everything we do should be looked at anew. As author Thomas Friedman says  in his book The Lexus and the Olive Tree, we must overlay new prisms on our old glasses to gain a better insight into how and why we should be doing our investing today. Change brings opportunity, but with that it brings difficulty because it involves a whole new way of thinking. Globalization is a major change that is now in progress. In order to take advantage of it, we have to step back and sort out our thinking as to where opportunities lie, and how they can be integrated into our own personal goals.

I think "common cents" can still tell us most about what we should do to make investments, and how best to protect those investments and cause them to grow. I have used "common cents" investment strategies for more than thirty years. The same basic principles remain intact and valid today. 

The power of compound interest is a basic principle of acquiring wealth. I have talked to many wealthy people over the years who have told me that realizing the power of compound interest was a most important thing in their life. When the first European settlers came to America they bought rights and properties from the local inhabitants for a handful of beads. Now if you attributed a value to those beads of a few dollars, and you were to invest it and let it compound an interest rate of 10% per annum over the hundreds of years that  have transpired, you will find that the value has increased to more than the value of all the real estate involved. Money will double every 8 years when invested at 9%.

A little calculating tip: Divide the rate of interest into 72 to find out how many years it takes for capital to double.

On Goal Setting and Impossible Dreams

Personal Planning involves having specific goals -- things that you want to achieve in your life. And you must not let people tell you that anything that you have as a goal is impossible. The approach to a goal that is difficult is to step back, and think about all the things that you need that are smaller goals, that are a series of steps toward the larger, principal goal. This approach entails thinking about each of these smaller goals and what you need to do to achieve them, thus building steps to the larger goal that is what you really want to achieve. This is the way to pave the road to achieving the goals that everyone has told you are "impossible." 

Let's pause for a moment and think about how one does this. When I seemed suddenly to have three young children and I realized I wanted them to have the freedom of choice and multiple possibilities that wealth can bring, I decided to start my own business. Working for a salary was never going to bring me the wealth I dreamed of. I wanted the wealth that could be built in that era through real estate development. Yet I had no money to buy land and develop it with! My dream was "impossible." And so I had to evolve specific strategies to achieve it. I needed to option land with no money -- and I did this by offering the owners more than the land's current value, but with no down payment for the years it would take me to develop and sell the land. Development costs could be covered by banks and investors, when I created a vision and sold them on its soundness and future profitability. I needed to convince major tenants to anchor shopping centres before the first hole was dug, and I did so by working with architects, engineers and planners to create innovative and beautiful designs that addressed the specific concerns of potential tenants. I needed to convince city officials to work for instead of against developments by convincing them of the public benefits they would bring. Achieving these and other specific small goals allowed me to achieve my impossible dream.

On Luck

Now Corrie, let's talk a bit about luck. Lucky can mean someone who gets rich quickly. But if you rely only on luck, you may make it into riches, but such riches could just as suddenly disappear. On the other hand, luck is a great companion. If you are lucky come along with us, because we love luck. I believe in having clearly defined goals, accompanied by a sound plan as to how to achieve those goals. That is what enables one to recognize luck and to act on it.