The Resolution: October 2018

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Well folks, well more than half way through the final quarter and November itself, and here I am letting you know how my spending went in October!  Ugh.

Props to all them real bloggers out there that keep their practice alive day-in-day-out.  There’s no question my commitment to keep writing has waned in recent months, and I think it’s safe to say that my spending has been inversely correlated during that time.  I am going to assume that this correlation is actually a causal factor and do my best to get back to blogging about my spending, finances and thoughts on the matters more diligently and regularly.  After all, this all started as a reminder to myself of my goals and intentions regarding my lifestyle, finances and environmental and social impacts.

It hasn’t been all lost in the name of sloth, however.  I have been generally refocused on my photography passion and have learned a lot in the last few months, including an ongoing re-vamping of my website and a longer term ‘business plan’.  A little evidence:

Something Good – A Green Month

In a month where my native country of Canada and adopted country of Mexico made the logical and common-sense steps both into and towards the legalization of recreational Marijuana, I also managed to finish in the green.  That is, I met my spending goal for October.  Having spent $1,496.12, I came in just under the crossbar, making it the 5th month out of 10 so far in 2018 in which I’ve achieved this.  Below is a summary:

October Spending.png

I have been falling further and further behind, no doubt, and am currently on track to spend $20,643.13 CAD this year and finish $2643.13 behind my current goal of $18,000.

Something Bad – Blowing it in November

Now I can’t take too much credit for my success in October.  After all, I completed an entire work shift during that month, from the 10th-31st, which means my day-to-day expenses were particularly low.  November has been a bit of a different story, which kicked off with an expensive but necessary repair to my truck.

As we’ve learned repeatedly throughout the year, it is not really valid to say that things just come up.  That is, in both everyday life and our personal finances, we must expect the unexpected.

Something Learned – Buy-and-Hold or Play the Dips?

Most of my net worth lies in real estate, and my current equities portfolio (outside of my RRSP – the Canadian equivalent to a 401K) is quite small, with most of it being tied up in the admittedly risky medical and recreational marijuana industries.  I own HMMJ, an ETF available in Canada built to track the weed market.  When I first wrote on the topic near the turn of 2017, I was just starting to come back down to earth from a wild December for these stocks, where values surged and new retail investors such as myself were convinced the ceiling was limitless.

Needless to say, things changed since then, and I learned that when I watched the individual stocks that I owned really closely, I ended up making more poor decisions than good ones.  Even after listening to endless ‘buy-and-hold’ investors demonstrate why it was the best approach to building wealth for a number of reasons, I couldn’t help but try to cash in on the surges, dump stocks to avoid the dips and desperately buy back at higher prices in fear of missing out on further gains.

But when your entire perspective on the markets is a matter of weeks with very bull-ish behavior, it’s nearly impossible to comprehend the other side of the coin, especially when you haven’t had any practice managing the very powerful emotions that drive investors and traders, greed and fear.

In the start of 2018, things cooled down, and Weed stocks took on more reasonable (although arguably still outrageously high) valuations.  Around this time, I generally sold most of my individual stocks, making some significant gains in such a short period of time even though I failed to sell ‘at the top’, and bought HMMJ, vowing to hold it ‘forever’ and to stop watching stocks so closely and allowing my emotions to impact my short-term financial decisions and, by extension, my long-term financial outcomes.

Ultimately, it was a wonderful time to jump in to the stock markets as there was so much action in that first month that I learned a lot along the way that may have taken years in more stable times or industries.  This pattern repeated itself in October of 2018, with weed stocks surging again to all-time highs.  HMMJ was slightly higher then than it was back in December 2017, and in some ways the same emotions took over.

I ended up holding, but am still able to look back and say “I should have sold” even though I should know better by now as well.  I should know that hindsight is always 20/20, and that we can always identify the right decisions in retrospect.  I should know that if I had sold at what I thought was the top and things had continued to go up, even a little more, I would have freaked out.  Because we hate missing out on good times.  FOMO, I believe the kids are calling it.

Now suddenly these lessons seem more relevant than ever in the last few years.  Following the least volatile year in the stock market in history, 2018 has been relatively tumultuous.  Even folks who have been in the markets for up to 10 years don’t know much about a real downturn, yet some have been made a name for themselves writing about their financial successes and ability to retire early.  Very few ‘new’ investors have the humility to recognize that these have been the best 10 years in history for the stock markets, and that they are just as much lucky as much as they are savvy.

We succeed in investing by doing almost exactly the opposite of what our emotions tell us to do.  That is, buying when you want to pull the ‘chute and holding or selling when things are surging and everyone is dying to buy more.

Like most things in life, it’s simple, but it’s not easy.

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