[This fragment is available in an audio version.]
We’ve started to actively manage some of our family investments. It’s entertaining me, and I notice people really like talking about money, so why not talk about it here? This is the start of a new blog category.
[Important: I have no training or expertise in managing money, am not trying to influence or convince anyone, and you would be very foolish to treat this as investment advice, because it isn’t.]
[Also important: I think it’s important that you know about the financial interests of anyone whose words you’re reading, and any potential conflicts of interest. I will likely write positively or negatively about areas where I’m invested, and I think I owe my readers disclosure. So I might as well make blog fodder out of it.]
Background · I’ve been employed in the high-tech sector since 1981, my spouse since 1990 or so; salaries are good, stock options pay off sometimes, and we’ve had strokes of luck. We think we have enough saved up to get us by and educate our kids.
So we’ve parked the savings with a smallish money-management firm who build customers a conservative, balanced, and diversified portfolio in exchange for a very small fully-disclosed fee. The effect is that the money (net of fees) grows, not as fast as the stock market does when it’s on a tear (as at the moment) and when the market’s tumbling, shrinks a lot less.
This approach has worked OK for us — my involvement is limited to glancing at the balance once or twice a month — but I’m not claiming it’s the only way; I know people in similar situations who get good results working with giants like Fidelity and Vanguard.
We have a family corporation because back in the Nineties when I was an indie, IBM wanted me to consult for them but wouldn’t do the deal if we weren’t a company. Lauren’s used it since then to facilitate her consulting practice. Then, this year, the company had a little windfall when a US M&A deal unexpectedly turned some shares I’d earned at another advisory gig into cash.
So, rather than put the new eggs in the existing money-management basket, and because it wasn’t that much money, we decided to run it ourselves.
By the way: Canadian tax law means that a great big chunk of the windfall will eventually go off to Ottawa. Which I’m OK with; being Canadian is, on balance, a good financial bargain.
When we talked about managing this money ourselves, we agreed on a set of principles aimed at minimizing stress and maximizing peace-of-mind. Here they are.
Principle: Be careful · We’re cautious, no gambling instinct at all. So there’ll be no big white-knuckle bets like short-selling or option-writing.
Also, we believe in the conventional wisdom about buying low-cost ETFs not shares or mutuals, about diversifying, about not trying to time the market, and so on.
Principle: Do no harm · We are not gonna route money to anything that’s a significant contributor to the climate emergency.
Similarly, we’ll try to avoid supporting oppressive governments such as China’s and technologies which aim to achieve damaging ends, such as AdTech, surveillance, or the gig economy.
I’m starting to see interesting progressive investment opportunities; we’ll watch that space.
Principle: Support the transition · We think that fortunes will be made in transitioning the energy economy to clean, renewable sources. Others will be made remediating the damaging effects of climate change. Also, the planet needs these things to happen. So they feel like two good sectors to invest in.
Principle: Short bad tech · We have unusually deep exposure to the technology business. Still, I’d be nervous about trying to pick winners.
But, looking back, I’ve been good at spotting technology crazes that were empty at their core and failed to deliver value, and also big well-regarded companies that were making bad technology bets. On social media, I’ve sneered freely at various technologies I didn’t like. Now I can put a little money where my mouth is.
Going forward · I expect there to be occasional short blog pieces in which I discuss individual investment moves. I hope they start arguments. I’ll be honest when we turn out to have been wrong, and try to (at least mostly) restrain my gloating when we’re right.