Categories
Work

How to Not Get Fired While Working from Home

Day 40.

I still have a day job. None of my colleagues or staff have been laid off.

We’re the lucky ones. Even if you hate your job, be thankful for your paycheque.

Right now there’s an unspoken expectation that as long as everyone holds on tight things will go back to normal in a couple months. Back to daily coffee trips with the team. Back to conferences and staff meetings. Back to lunch in the foodcourt.

But I don’t think we’ll get back to normal. At least not anytime soon.

I know some of you would love to get packaged out of your job but – unless you’re set for retirement – now is not the time. You don’t want to enter a job market with a 30% unemployment rate. While you might be a rare unicorn, you also don’t want to start a business when 50% of existing small businesses are collapsing. Hey, if it came to it I’m sure you could make it work. But it would be more ideal to enter this situation after the economic shit-storm has passed.

Those of us lucky enough to be able to work from home might find ourselves in this predicament for much longer than originally expected.That means we need to virtually manage our careers.

The best case scenario for a vaccine is roughly 12-18 months. The reality is that vaccines for many viruses are extremely difficult to produce. For instance, in the mid-1980s some researchers thought they’d have an HIV vaccine within a couple years. No dice. It is possible that the hope for a vaccine is false, leaving treatment and social distancing as our remaining defences.

We can manage through this, but life might need to change for a while. Those of us lucky enough to be able to work from home might find ourselves in this predicament for much longer than originally expected. That means we need to virtually manage our careers.

It’s very easy to slip into the darkness when working from home.

While you might keep in regular contact with your primary network – your boss, your staff – people in your secondary network no longer run into you in hallways, meetings or elevators.

If you’re not great at spontaneous small talk, this is your time to shine.

Your secondary network includes people who have an indirect influence on your success or failure at an organization. They may be senior leaders or people in other teams. While in the office you might never really need to work with these people, they are reminded of your presence because of serendipitous encounters. These encounters are neither planned nor necessary, but they help to shape your personal brand in the office. That 30 second conversation in the elevator creates a lasting impression. We lose that when working from home.

If you’re not great at spontaneous small talk, this is your time to shine. With everyone stuck at home, we now must pre-plan and manufacture those serendipitous encounters. Very few do this, so it is a fairly easy way to stand out from the crowd.

It can be a challenge because it might feel forced. Personally, I think people say this because they don’t want to look like they’re trying too hard. This is where the art of relevance comes in. To manufacture serendipitous encounters, you need to create relevance. You don’t simply email the CEO to ask a random question.

Instead, here are some quarantine-friendly ideas for building your personal brand within your primary and secondary networks without coming across as a blatant ass-kisser:

Ask questions during conference calls.

Make sure people know you’re on the call and still work at the company by asking questions. Usually you know the agenda in advance so you can prepare a few before the call. Try not to sound stupid or like a shit-stirrer. Try to make your questions additive to the conversation.

You never know who might be on these calls. Imagine your next boss is on the call and you want to make a good impression. You do this by appearing engaged in the content and interested in using it to further the business.

Take initiative.

After a while of #quarantinelife, it’s easy to sit on your ass and wait for emailed requests to come in. Some eventually do, but as visibility fades and many of your colleagues disappear into the darkness new requests can slow to a trickle.

Use this to your advantage. Lead, don’t wait. Big or small, think of new tasks and projects and propose them to your boss(es). Better yet, think of an initiative that would benefit people in your secondary network and propose it to them.

Even if your ideas don’t all get executed, your initiative demonstrates that you’re not just sitting at home or in the park twiddling your thumbs. Show people that you can drive the business forward no matter where you are.

Book calls.

As unnecessary as many conference calls seem, they are a way of communicating “hey, I’m still here”. Participating in calls is one thing, but setting up calls makes people think you’re a mover and shaker. I know it’s bullshit, but corporate drones tend to believe meetings = progress. While in the regular face-to-face environment you can get away without setting up useless meetings, when working remotely you might have to suck it up and join the party.

Send updates.

Gone are the days of someone casually passing by your desk to see where something is at. Many will forget what you’re doing, some can’t be bothered to email you. Like I mentioned previously, others will have faded into the background and simply stopped caring.

If you want to remain relevant in this environment, let people know what you’re doing. Send updates to those who might be interested – your boss, stakeholders, clients, whoever. And when a task or project is completed stand on the rooftops and tell everyone about your amazing success. Yeah, many people don’t care a shit what you’re working on, but you’ll create the impression that you’re a producer. Indirectly, you’ll also be feeding your boss soundbites to use in his/her updates with his boss. Remember, there’s always a bigger fish.

Create solutions.

The new work paradigm comes with it’s own set of complexities. How do you interact with clients? How do you deliver content? How can employees collaborate remotely?

As these and other new challenges arise, instead of sitting back and letting your boss figure out workarounds and solutions why don’t you get off your ass and help? In some companies, you’ll be put on a pedestal if you know how to setup a meeting using Zoom. After 40 days, I’d hope most companies have already figured this out. But the longer this goes, the more unique challenges will arise.

Be the person that solves these new challenges and watch your personal stock price rise.

Final thoughts.

I hate to say it but we’re in some kind of economic depression right now. Income is super-valuable.

If and when the layoffs do sweep across the corporate world, you want to be last on the list (unless you don’t want to be last on the list…but I’ll save that discussion for another day).

It is very easy to lay off the person you barely know exists. It is very hard to lay off the person who you know and who contributes to the organization. In the current situation, many people will fit into category 1, simply because they’ve been treating this ‘work-from-home’ situation as a quasi-vacation.

It is easy to set yourself apart and show your value right now, so do it.

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Categories
ETFs and Funds

List of All 17 Gold ETFs in Canada (July 2020)

Many investors are starting to get interested in gold again. You can invest in gold by purchasing actual bullion (bars or coins) from a dealer, by buying a fund that holds bullion, by buying a fund that invests in gold mining companies or by buying a fund that gains exposure to gold via the futures market.

Personally, as a strategic holding I prefer to use exchange traded funds that buy and hold fully-allocated gold bullion. I want exposure to the underlying metal, not necessarily to the factors driving the success or failure of individual gold mining companies. However, during a gold bull market both can perform well.

For Canadian investors, below I have listed out the gold ETFs and closed-end funds that trade on the TSX. For your reference, I’ve also listed how they gain exposure to gold, asset size, ticker and fund manufacturer.

Note: This table is best viewed on desktop

Categories
Investing Wealth

3 Lessons: Don’t Go Broke Investing

In the world of investing, there are tons of mistakes you can make. Many of these mistakes are so costly that people kill themselves over them. So please don’t take the following stories lightly.

The emotional reaction to watching a life’s work evaporate is stunning. Other than losing a loved one, I can think of no greater loss. It’s not the money that affects people. It’s the time, effort and mental anguish that the money represents. It’s the family time you gave up to deliver that project and make your asshole boss happy. It’s the meetings, company retreats, networking, backstabbing, stress and so on.

If you’re lucky, you make these mistakes when you’re young and have little to lose and lots of time to make up for it.

Below are three stories of great financial mistakes various Reddit users made in the markets. The first of which just happened yesterday:

u/optionsnewbie24

I went long on an oil etf Friday afternoon after oil took a huge hit Friday thinking it would recover. I had a 175k position. I’m looking at it today and it’s at 1885 dollars. I’ve lost it all. I’m not sure where to go from here. It was extremely risky and stupid and was my life savings. I’m 28 and make 45k. Most of that was money I saved from inheritance. Not sure where to go from here. I have proof of all the trades. This hurts. I also have a baby on the way and recently married. I was greedy and tried to increase my money and instead lost it all.

u/civgarth

I’m a former derivatives trader with ___. At 28 I found myself in a margin call of 300k. My fiance found me crying on the floor when she came home. We were due to be married in a few months. As a pro, I can’t frontrun and all my trades were shunted behind retail trades. I saw Nortel go from 120+ to 30. (I think though I could be wrong). This was in the year 2000.

Today at 44, with my wife (same lady), we’ve rebuilt our wealth many times over. As long as you learn what got you in your position, and are cognizant about the lesson each time you decide to do something, you will be fine.

Also, look for some help with the gambling. I was trained and paid to do this and still lost everything. It’s a zero sum game.

u/xenocidic

As a relatively new investor, I fell in love with a stock. I thought… Nutritional algae! That’s where it’s all going. (Narrator: It wasn’t.) So I bought. And I bought. And I kept buying, even as it kept going lower and lower. Dollar cost averaging, right? That’s what you do! Buy more…

All I have to show for it is the documents from the firm’s bankruptcy telling me my shares were cancelled and deemed worthless ($TVIA).

I don’t share these stories for amusement. Use them as lessons.

Lesson 1: Placing a massive bet on a single idea – no matter how confident you are – is always a bad idea. Treat each investment as something that could possibly go to zero. It doesn’t matter how much sense your thesis makes, how old the company is or how many people agree with you. Any investment can go to zero under the right circumstances.

Lesson 2: You can believe you’re doing the smart thing (e.g. dollar cost averaging) and still wind up losing money. Dollar cost averaging should be applied at the portfolio level, to ensure you remain fully diversified. It shouldn’t be used as a way reduce your cost base in a single losing position.

Lesson 3: Even pros screw up big time. You’re not a pro supported by a team of researchers and spending 10 hours a day analyzing investments. So stay humble and expect to make mistakes.

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Categories
ETFs and Funds Investing

Why Oil Price Went Negative Today

Today, the price per barrel of West Texas Intermediate reached a low of -$40.32. That’s right: the price was negative.

West Texas intermediate (WTI), also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing.

Everyone has the same question: How is this possible?

The reality is that there is simply too much oil being produced right now and not enough demand. Production is being curtailed globally, but that takes time. It’s not like a light switch that can simply be turned on and off.

The chart below shows supply and demand for the world oil market going back to 2000. As you can see, most of the time there tends to be minor variance between supply and demand.

In contrast, today the gap between supply and demand is extremely wide. This means there is a massive surplus of oil being produced right now.

That oil needs to be stored somewhere, and as storage capacity is maxed out fewer people are willing to take delivery.

With May 2020 WTI futures contracts expiring on April 21, oil producers are desperate to offload about 100 million barrels. With limited storage and plummeting demand, producers are now forced to pay others to take the oil off their hands. Nobody wants to take delivery and the oil has to go somewhere.

You read that right. Oil producers right now must pay others to take delivery of their oil. Of course, anyone taking delivery must have somewhere to put it and means to transport it. That all costs money. 

As the Covid-19 coronavirus economic catastrophe rages on, it is likely that energy markets continue to implode – at least until supply and demand can be more closely aligned.

Vanguard Energy ETF (VGE), Exxon (XOM), ConocoPhillips (COP), Chevron (CVX) and Canadian Natural Resources (CNQ) are getting hurt badly today. However, the United States Oil Fund (USO) is down even more, more closely reflecting the maturing May contract.

Chart
Data by YCharts

Is this epic collapse an epic opportunity?

Beware if you’re considering buying an ETF that buys oil futures like the United States Oil Fund (USO). These types of ETFs shouldn’t be used to get long-term exposure to oil.

Chart
Data by YCharts

Oil ETFs tend to invest by purchasing futures contracts (i.e. they don’t actually buy barrels of oil). When a futures market is in “contango” (see chart below) futures contracts expiring near-term have a lower price than those expiring farther out into the future. The oil futures market is currently in record contango. Indeed, there is currently (mid-day April 20th) roughly a $50-60 spread between the May and June contract. 

Even if prices along the futures curve for Oil remains constant, when the market is in contango an oil ETF that buys futures contracts will experience a negative roll yield as future contracts approach expiry and converge with lower spot prices. This is a great way to lose money over the long term. Oil ETFs that invest in futures contracts are best used for very short term trades.

If you are brave enough to invest in energy right now as a long term play, I would instead choose an ETF that invests in actual producers. 

If you found this article helpful, please forward to a friend or colleague you think might benefit.

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Categories
Real Estate

11 Signs Canada Housing On Verge of Collapse

A recent Bloomberg article provided a view of the deteriorating condition of the Canadian housing market. It’s dire and in my opinion will get worse because the economy is being pushed to the edge by the Covid-19 coronavirus crisis.

Housing crises are slow-motion train wrecks, so don’t expect the pain to be immediately obvious, like in the stock market. While this might seem to make it more manageable, it actually extends the economic pain. If you are unfamiliar with what a housing-led economic implosion looks like, you should brush up on what happened to the US after 2006 and Canada after 1989.

The US housing collapse took years to eventually bottom, resulting in massive economic dislocation, human suffering and a near-collapse of the global financial system. Coming out the other side of the collapse was a long, slow uphill battle for most.

Canada saw the same after its real estate bust in the early 1990s. Years of stagnation and relatively high unemployment.

Of course, in both the US and Canada the real estate bust eventually created massive opportunities for many.

The following key stats from the Bloomberg article illustrate the immediate vulnerability of the Canadian housing market and the overall Canadian economy:

1) Nearly one in three workers have applied for income support.

2) Canadian households are among the world’s most indebted.

3) Real estate has become Canada’s largest sector. Including residential construction, it accounted for 15% of economic output last year; energy accounted for 9%.

4) The City of Vancouver fears it’s heading for insolvency after it surveyed residents and found that 45% of households say they can’t pay their full mortgage next month and a quarter expect to pay less than half of their property tax bills this year.

5) Canadian households owe C$1.76 for every dollar in disposable income. In Vancouver, that spikes to about C$2.40

6) Canadians owe C$2.3 trillion in mortgages, credit card, and other consumer debt, about equal to the country’s GDP, which is an even higher ratio than the U.S. had before its housing bust.

7) If only 2% of the housing stock were to be listed for sale, it would trigger the kind of supply shock behind a 1990 crash, according to Veritas. That’s most likely to come from investors, half of whom weren’t generating enough cash to cover the cost of owning their rental properties, Veritas found in a survey last September.

9) 30% of apartment rent due April 1 went uncollected, according to estimates by CIBC Economics.

10) Nearly a third of Canada’s Airbnb hosts — who jointly had 170,000 active listings in late 2019 — need the income to avoid foreclosure or eviction, Airbnb said in a letter to the Canadian government last month.

11) Nearly 6 million Canadians have applied for income support. Lenders had deferred nearly 600,000 mortgages, about 12% of the mortgages they hold, as of April 9.

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Categories
Life Wealth

True Stories from the Covid-19 Front Lines: Small Business Collapse

I am posting this information to show you the devastation facing millions of small business owners right now.

The headlines make it seem like the government is providing tons of support. However, for most small business owners the support is failing them. These people are the lifeblood of the economy, yet are on their own fighting for their lives.

Authorities predict about 50% of small businesses will disappear before the Covid-19 coronavirus economic crisis is over. This is not something the economy can quickly recover from. It will take significant time, effort and risk appetite for entrepreneurs to once again start new businesses and hire staff.

I’m afraid the neighborhood landscape will look very different once this quarantine is over. Local drycleaners, restaurants, yoga studios, pet stores. Half gone.

Here are their stories:

u/rexruther99

The future is truly uncertain for small business owners.

I own a bar in Downtown Atlanta. It’s not really a residential area and 80% of our business comes from traffic going to nearby stadiums, arenas, hotels, and concert venues.

We are closed right now, and I don’t see how we could survive as a business without international travel opening back up, restrictions being completely lifted, AND people are eager to get close to each other once again without fear. I would say we have *at least* a year before that would happen.

Not to mention, this happened right at the end of the slow season. So we had completely depleted our resources and had acquired a little (~15,000) additional debt to cover us until we got to the busy season again that starts right around the middle of March.

Now bills are stacking up, I have no money, and the PPP loan really won’t help my business until we know when we can open again (so we can use the forgiven portions of the loan to help float payroll cost as we get back on our feet).

This is just a bad, bad situation. I don’t know what to do either. I don’t know if it’s smarter to begin the process of putting the business out of its misery now or “wait and see” while more bills pile up and more debtors coming after me.

I definitely feel abandoned. Like I fell off the ship that is the USA along with many others. Now we’re all stranded in the water flailing, screaming for help while the ship slowly but steadily sails away, leaving us.

u/Silvex020

The biggest problem for many businesses is the Lease. It no longer makes sense.

Revenues fall? Well, you can always cut some staff to lessen the payroll burden, and figure out other ways to survive until customers return.

    But what are you going to do about your crazy lease? You can’t downsize and ask the Landlord, “I’m only getting half the customers vs what I used to… can I change the Lease so that I’m renting only half the store now and pay you half the rent?” The LL will of course say no, especially if you Personally Guaranteed (which is most of the times for small businesses because if they don’t the LL won’t lease the space to you).

    Also, if the LLs have a mortgage on their property, even less likely they will adjust your lease since LLs have to pay their bills too. Which is why the commercial real estate market will tank.

    If I were you, i’d seriously consider bankruptcy (or closing shop if you have a Good Guy Clause in your lease). Survive the downturn. Meantime, scrounge up whatever you can and launch a new business when the time is right (once the LLs take a beating, new leases/rents will drop significantly and people will be able to find great opportunities).

    u/Farm_Boss826

    I qualify for all the loans approved by the government and have applied for the EIDL, PPP past Saturday and Monday respectively, and for the $10K (three day express funding) since March 30th. It has been now nine business days since I applied for $10k express, however, I haven’t heard from anyone. I believe at this point they are not worried about businesses with 10 employees or less. Each day trying to stay afloat makes the debt bigger. SBA classification for small business stand for 100-500 employees which makes me think there is no way they will come to the rescue of a tiny micro business of 10 or less employees. I am losing hope every hour, I am within days of running out of oxygen.

    The truth is anywhere from 30 to 50% of the small businesses will not survive this pandemic.

    u/jims2321

    The truth is anywhere from 30 to 50% of the small businesses will not survive this pandemic. A lot of the financial assistance is focused on getting thru the lockdown and the economy shutting down. But little has been focused on what happens afterwards. Do not believe what this administration is selling. The economy is not coming back instantly, nor in a few months or even this year. I have seen articles by economist saying that the US economic will snap back in the 2nd half of the year.

    It is the consensus from the medical community that continued social distance is going to be with us for the foreseeable future until a reliable vaccine is available. Which directly contradicts what the government wants.

    u/evergreenyankee

    At this point it is like screaming into the void – somewhat cathartic but ultimately useless.

    People in my state are basically 100% against anything opening up before June. There is no help, and no help is coming. No one in the general public gives a fuck about what small business owners are facing right now, or more importantly, the looming economic doom that is on the horizon because of that. Even with agriculture being “essential” we can’t get the required inputs for production because everything is shut down and we can’t get the employees to come in because everyone is paralyzed with fear. No one wants to compromise on measures to ease up on things a bit before May 20th in my state, which in this growing region the window will be missed and the damage will largely be done (although the effects of which won’t be felt until August or September). A friend of mine killed himself the other day because he couldn’t take the burden and the abandonment by everyone, not just the government but mostly the abandonment of support of the public to allow some businesses to reopen with precautions.

    At this point I have already given up. I’m doing what I can to provide for myself and my family, and when the bankruptcy comes I’m going to use this as a chance to start over in a state or country that is more hospitable to liberty and more supportive of small business owners.

    u/MasterChief813

    I’m feeling miserable myself. I’m running a hotel in middle ga and we’re hemorrhaging money. Last year was slower than usual but we got by. This year started slower than normal and turned into the catastrophe we’re in now.

    I’ve applied for the EIDL advance (was told it will take a week to get back to us if we’re lucky) and the PPP (I’ve been waiting for BB&T to send us an application for 5 days now). The rules for PPP are such a clusterfuck that I have no doubt that it will take a lot of back and forth before we get approved (i.e. they are using payroll # of employees from January and in my industry we have high turnover so I have to find 3 more employees to hire if I get approved since I’m down 3 housekeepers from Jan and I want to the loan to be forgiven given that we’re barely making any money on hotel rooms right now).

    Don’t get me started on getting the mortgage on a hotel paid every month. Thankfully there is enough money in reserves to get by but if this continues then we are totally screwed.

    u/BrioRainbows

    My business is in live events… we have no clarity on when our business will come back. We might have to wait possibly a year or more? Many in the 2.5 trillion dollar live global events business will go under. MSM is promoting this rosy picture of trillions of dollars in assistance, we’ll all get back to work in a month or two… stock market zooming back up. Not true for many of us… I don’t think anyone knows how bad it’s really going to get and the current optimism and stock market is not reflecting what’s really happening on main street.

    u/MeatPopsicle_AMA

    I own a bakery/cafe in a small town that is almost 100% reliant on tourist money. The main tourist draw is closed until September, at least. The PPP money will be minimal for us- barely covers 2 months rent if that. EIDL seems to be a bust. My partner is optimistic that once things get back to “normal” our local regulars will show up, but I doubt many folks will have disposable income to keep us going until the festival opens. It’s not looking good for us. If it was just me I’d walk away and deal with the consequences of breaking my lease, but it’s not just me.

    u/madonnaofroses

    Woke up with some anxiety this morning. Still no emails from the SBA regarding my EIDL loan. Since it was just my partner and I in our LLC with no employees, we couldn’t apply for the PPL either.

    Made myself some coffee and sat outside for a and listened to the birds for a few.

    I have a small but beloved massage therapy business here in downtown Jersey City. My business partner voluntarily withdrew from the LLC last week, has taken the couch (good thing I bought everything else) and will not be renewing the lease with me in May.

    Technically, I won’t be able to renew the lease either if the EIDL loan doesn’t come through and I’m saddened by all the effort and money I put into our business the past year only for me to have close doors. I wasn’t done yet. We were building the foundation of things still.

    I’m still kinda positive about things in my heart but I’ve mostly given up on that EIDL loan. It was kinda nice to come on here and see others share my disheartened feelings as well. Got to be realistic at the end of the day and be able to adapt or cut losses.

    Tragic to have read someone took their life last week in the chaos.

    Still grateful my family and I have our health and if you’re reading this, I hope you still have that too and will continue to have it until this is over.

    God bless.

    u/PleasureDoingBiz

    I’m in Mexico, which in official terms, has reacted way worse than how the USA has, according to many criticisms.

    The President (AMLO, as we call him) textually said “don’t stay inside… I’ll let you know when you really have to stay inside.” I could write several paragraphs describing his reasons and the background, but all you need to know for context is that he divides opinion just like Trump does. And he’s trying to wash his hands from the economic recession. Just days before they acknowledged the pandemic, the US dollar jumped from around 18 Mexican pesos to 24.

    The government stance on business is this: There are no governmental aids. You’re expected to pay all taxes as normal, all bills such as electric or water. Businesses are told to close (even though the citizenship is told not to stop going out), but it’s not enforced. However, a worker that contracts coronavirus in whatever circumstances and isn’t being paid in full to stay home, can sue their employers for getting the virus. So they pretend every single business is a massive corporation that can pay full wages indefinitely. To add to this take into account that 90% of Mexicans live day-by-day and can’t afford to go a single day without pay, or else they and their family don’t eat that day.

    I have a couple small businesses where I sell flooring and window covers, plus a few other related products like awnings. Traditionally we sell in person, but I had worked a long time on trying to build an eCommerce sales channel, to some success (boomer mentality runs rampant in Mexico, where even Zoomers doubt the legitimacy of eCommerce). However, we install our products and most people aren’t interested in DIY and would rather have the technician perform the installation.

    It’s a family business, my dad owns and runs the factory that supplies about 75% of the products I sell. The factory is still operating at a limited capacity, as it has a relatively small team with large space. But mainly, the workers asked my dad to continue working because they can’t survive without steady salary. About 90% of what we call small sales vanished overnight when Mexico announced the first case, which was about three weeks before the government even talked about the pandemic. These small sales provide most of the cash flow and account for about 60% of revenue on an average month.

    My own sales dried up by about 85%. Only wealthy clients are buying, since they can survive their entire lifetime without working again (or thereabouts) and are now getting bored of looking at the same decor in their homes.

    I’m trying to complement my earnings with Appen (have waited two weeks for project validation, still waiting) and I recently opened another business thanks to my cousin. We are selling construction materials remotely (again, normally done in person) as construction hasn’t halted yet.

    AMLO is trying to pit business-owners (whom he has referred to as the cancer that’s killing Mexico even long before he was elected; he makes no distinction between tiny stores and cafés than multimillionaire CEOs) against the workforce and vice versa.

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    Categories
    Investing Work

    RBC and CIBC Commit to No 2020 Layoffs: 5 Reasons Why This is a Smart Business Decision

    Summary.

    • RBC and CIBC CEOs recently publicly stated they do not intend to make any Covid-19 related layoffs in 2020.
    • Many are interpreting these statements in different ways. But I think most are missing the point.
    • The decisions by the RBC and CIBC CEOs actually make smart financial business sense.

    The CEOs of Royal Bank of Canada and CIBC recently made public statements both suggesting their companies will not make Covid-19 related layoffs in 2020.

    The statements can be seen here for RBC and here for CIBC.

    I’ve read the public reactions (e.g. comments on various news sites) to these statements and they vary quite widely. Many suggest RBC and CIBC doing the ‘right thing’ by being good corporate citizens. Others argue these companies are not charities and should do what’s right for the bottom line, and instead allow shareholders to decide how they direct charitable efforts.

    While I’m sure the impact to society and individuals was considered, the decision to retain employees is ultimately probably a good financial decision that benefits RBC and CIBC shareholders.

    1. These are quasi-government entities.

    Let’s make no mistake. As systemically important institutions tied to the lifeblood of the Canadian economy, both RBC and CIBC are highly controlled (via regulation), monitored and supported by the Canadian Government. There are so few large banks in Canada that it has to be this way. It is for the benefit of the country to have solid, stable banking institutions. 

    Given that, Canadian banks are not typical cut-throat enterprises that can simply eliminate thousands of jobs without political (and public relations) repercussions.

    While I have no evidence of this, I suspect the tacit need for a government backstop factored into the consideration for avoiding layoffs. I would argue it is part of an implicit (or possibly explicit) agreement that Canadian banks can’t receive taxpayer money with one hand and push taxpayers en masse to the unemployment lines with the other.

    In fact, with the extreme volatility, I wouldn’t be surprised if over the past few weeks the big Canadian banks actually received some kind of direct or indirect support from the Federal Government and Bank of Canada. Assuming government or central bank support was delivered over the past couple weeks, I also wouldn’t be surprised if it came with clear direction from the Feds that banks cannot lay anyone off this year.

    If you were running the government, wouldn’t you include this clause as part of the deal?

    2. Layoffs kill morale.

    Even if an employee survives a round of layoffs, they’re left forever wondering if they’re next. More personally, they miss their colleagues and the new void becomes quite apparent in the office. 

    Compound that with the fact that remaining staff must pick up the work of those let go. The work doesn’t stop just because there are fewer staff. Often, those remaining envy the departed. 

    By the time the dust settles after a round of layoffs, many remaining staff have one foot out the door. Many will also perform worse – either by choice (due to eroded morale) or by force (because so much additional work has landed on their desk). The remaining top performers will quit, leaving only those who couldn’t find anything better.

    If you were running RBC or CIBC, is this the type of organization you’d want?

    3. Laid off employees take value with them.

    During a period of massive layoffs, the baby is often thrown out with the bathwater. Good employees are forced out with the bad.

    As employees leave, they take massive amounts of intellectual capital, forever lost by the company. Worse, these employees are often eventually re-hired by competitor firms that benefit from the intellectual capital at the expense of the firm that originally conducted the layoffs.

    Intellectual capital not only refers to knowledge of history, processes or functions. It includes client relationships and other forms of intangible goodwill.

    When people leave a company things break, clients are lost and elements of value are forever destroyed. This greatly reduces a firm’s capacity to actually perform, delight clients and compete.

    4. There will be a time to re-hire.

    Layoffs tend fluctuate with the business cycle. When times are bad companies require fewer staff. However, when business improves more staff is needed. 

    Therefore, looking past the current economic recession it is inevitable that RBC and CIBC would have to re-hire staff sometime in the future, if they decided to let people go in the first place. At that time, these companies would be competing with every other employer for good talent. This would prove difficult and costly, likely impacting the ability to serve clients.

    Ultimately, the solution (layoffs) to a temporary issue (recession) could result in long-term staffing and business performance problems. Given the choice, many companies therefore are better off retaining their talent throughout the cycle.

    5. Layoffs are expensive.

    This might seem counter-intuitive to many, but it costs money to conduct layoffs.  

    For example, the cost to layoff (and eventually replace) a full time employee earning $30/hour is about $20,000 (source: calculator). This estimate isn’t all-inclusive, however. The big missing variable is severance, which can be a hefty sum depending on tenure, age, common law precedent (these companies mainly operate in Canada), etc. Severance pay can add up to 1x, 2x+ annual salaries in some cases. This is why many big companies create a large reserve to pay for planned layoffs.

    In addition, there are other potential costs related to lawsuits, administration, and so on.

    Clearly, it is not cheap to let staff go. When all factors are considered, layoffs are a very expensive (financially and strategically) proposition and any benefit is quickly eroded.

    Final thoughts.

    So when do layoffs make sense? I would argue that the organizational structure of a large company should be relatively indifferent to the business cycle. Of course there are some variable elements, but I think, whenever possible, staffing should align to long-term strategy. If a certain level of staffing isn’t required to achieve long-term goals, it might make sense at that point to cut staff.

    Given these 5 points, I think the decisions made by RBC and CIBC go beyond virtue signalling and social responsibility. They make smart financial business sense. 

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    Categories
    Wealth

    39 Wealth Building Hacks by Naval Ravikant

    Whether you’re an entrepreneur, corporate manager or a student, if you want to build wealth you need to read this. Honestly, I have never seen such a dense compilation of wealth-building hacks in a single list.

    This is gold.

    The following list of 39 wealth building hacks was created by tech entrepreneur and investor investor Naval Ravikant.

    Naval is an Indian American entrepreneur and investor. Naval is the co-founder, chairman and former CEO of AngelList. He has invested in over 100 companies including Uber, FourSquare, Twitter, SnapLogic, Yammer, and Clearview AI. Ravikant is also a Fellow of the Edmund Hillary Fellowship. He was listed as 4th on CoinDesk’s “Most Influential in Blockchain” 2017 list.

    How to Get Rich (without getting lucky):

    • Seek wealth, not money or status. Wealth is having assets that earn while you sleep. Money is how we transfer time and wealth. Status is your place in the social hierarchy.
    • Understand that ethical wealth creation is possible. If you secretly despise wealth, it will elude you.
    • Ignore people playing status games. They gain status by attacking people playing wealth creation games.
    • You’re not going to get rich renting out your time. You must own equity – a piece of a business – to gain your financial freedom.
    • You will get rich by giving society what it wants but does not yet know how to get. At scale.
    • Pick an industry where you can play long term games with long term people.
    • The Internet has massively broadened the possible space of careers. Most people haven’t figured this out yet.
    • Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.
    • Pick business partners with high intelligence, energy, and, above all, integrity.
    • Don’t partner with cynics and pessimists. Their beliefs are self-fulfilling.
    • Learn to sell. Learn to build. If you can do both, you will be unstoppable.
    • Arm yourself with specific knowledge, accountability, and leverage.
    • Specific knowledge is knowledge that you cannot be trained for. If society can train you, it can train someone else, and replace you.
    • Specific knowledge is found by pursuing your genuine curiosity and passion rather than whatever is hot right now.
    • Building specific knowledge will feel like play to you but will look like work to others.
    • When specific knowledge is taught, it’s through apprenticeships, not schools.
    • Specific knowledge is often highly technical or creative. It cannot be outsourced or automated.
    • Embrace accountability, and take business risks under your own name. Society will reward you with responsibility, equity, and leverage.
    • The most accountable people have singular, public, and risky brands: Oprah, Trump, Kanye, Elon.
    • “Give me a lever long enough, and a place to stand, and I will move the earth.” – Archimedes
    • Fortunes require leverage. Business leverage comes from capital, people, and products with no marginal cost of replication (code and media).
    • Capital means money. To raise money, apply your specific knowledge, with accountability, and show resulting good judgment.
    • Labor means people working for you. It’s the oldest and most fought-over form of leverage. Labor leverage will impress your parents, but don’t waste your life chasing it.
    • Capital and labor are permissioned leverage. Everyone is chasing capital, but someone has to give it to you. Everyone is trying to lead, but someone has to follow you.
    • Code and media are permissionless leverage. They’re the leverage behind the newly rich. You can create software and media that works for you while you sleep.
    • An army of robots is freely available – it’s just packed in data centers for heat and space efficiency. Use it.
    • If you can’t code, write books and blogs, record videos and podcasts.
    • Leverage is a force multiplier for your judgement.
    • Judgement requires experience, but can be built faster by learning foundational skills.
    • There is no skill called “business.” Avoid business magazines and business classes.
    • Study microeconomics, game theory, psychology, persuasion, ethics, mathematics, and computers.
    • Reading is faster than listening. Doing is faster than watching.
    • You should be too busy to “do coffee,” while still keeping an uncluttered calendar.
    • Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore it. If outsourcing a task will cost less than your hourly rate, outsource it.
    • Work as hard as you can. Even though who you work with and what you work on are more important than how hard you work.
    • Become the best in the world at what you do. Keep redefining what you do until this is true.
    • There are no get rich quick schemes. That’s just someone else getting rich off you.
    • Apply specific knowledge, with leverage, and eventually you will get what you deserve.
    • When you’re finally wealthy, you’ll realize that it wasn’t what you were seeking in the first place. But that’s for another day.

    After the above list went viral, Naval created a follow-up video (1hr) to explain his thoughts:

    In the video, Naval recommends the following book: Influence by Robert Cialdini

    Categories
    Real Estate Wealth

    What You Must Know Before Deferring Your Mortgage

    “No part of the mortgage is forgiven, as many people assume.”

    Given massive economic stress on millions of Canadians, Canadian banks are now offering the option to defer your mortgage for up to 6 months. If you’re considering deferring your mortgage payments, there are few key points you need to know.

    Mortgage deferral is a fair option for those temporarily in a cash-squeeze as people remain locked-up in their homes. However, no part of the mortgage is forgiven, as many people assume.

    The mortgage deferrals simply rearrange financing, potentially leaving you with more debt in the end.

    According to the Canadian Mortgage and Housing Corporation (CMHC), which oversees insured mortgages in Canada:

    The mortgage deferral agreement does not cancel, erase or eliminate the amount owed on your mortgage. At the end of the agreement, you will have to resume payment according to your regular payment schedule.

    NOTE: The interest that hasn’t been paid during the deferral period continues to be added to the outstanding principal of your mortgage. This can affect the total amount you owe in accordance with the original payment schedule.

    In other words, you will need to repay the deferred principal amount plus interest on that amount plus interest accrued on the interest.

    After the mortgage deferral, you will likely be presented a variety of options by your mortgage lender. The two main options will probably be as follows:

    1. Repay the deferred principal and interest as a lump sum and continue with your regular mortgage payments. This will help you avoid paying interest on the interest, but obviously means you need a big chunk of money.
    2. Add the deferred principal and interest to your mortgage principal, and either increase your monthly payments (to accommodate the higher principal amount) or extend the length of your mortgage amortization. With this option, you will be paying interest on the interest deferred during the deferral period.

    For many people there is no other choice but to defer mortgage payments.

    If you defer your payments your cash-flow will improve. I suggest putting aside as much money as possible while you have the opportunity. Use this chance so you have more flexibility at the end of the deferral period.

    If you must defer, you will need to seriously consider whether your situation will change after the deferral period. Will you be able to pay your mortgage after the deferral period? Consider your options and stay in contact with your mortgage provider if you don’t think the 6 month deferral will be enough.

    Deferrals won’t last forever. Use this deferral period wisely.

    Categories
    Investing

    14 Ideas from Howard Marks to Help You Invest in this Bear Market

    If you are wondering how to invest during this bear market, this article is for you.

    Investing during a bear market isn’t easy. However, it is when good money can be made. Although it might feel like the world is falling apart and markets are riskier than ever, in reality the risk of investing is actually reduced AFTER stocks have already plummeted. In contrast, the most risky time to invest is when investing feels most comfortable.

    Do you wait for the bottom? What if you’re too early or too late? How do you even know when a bottom has occured?

    Howard Marks, Director and Co-Chairman of Oaktree Capital shares his valuable insights on how to invest during a bear market. He is a market veteran so he’s seen a few bear markets and financial crises in his day.

    howard-marks

    Howard Marks, CFA
    Director & Co-Chairman
    Oaktree Capital

    Since the formation of Oaktree in 1995, Mr. Marks has been responsible for ensuring the firm’s adherence to its core investment philosophy; communicating closely with clients concerning products and strategies; and contributing his experience to big-picture decisions relating to investments and corporate direction. From 1985 until 1995, Mr. Marks led the groups at The TCW Group, Inc. that were responsible for investments in distressed debt, high yield bonds, and convertible securities. He was also Chief Investment Officer for Domestic Fixed Income at TCW. Previously, Mr. Marks was with Citicorp Investment Management for 16 years, where from 1978 to 1985 he was Vice President and senior portfolio manager in charge of convertible and high yield securities. Between 1969 and 1978, he was an equity research analyst and, subsequently, Citicorp’s Director of Research.

    Below are several quotes taken from Howard Marks’ recent market insight pieces available on the Oaktree Capital website:

    1. These days everyone has the same data regarding the present and the same ignorance regarding the future.
    1. Future scenarios comprise a large number of variables: today even more than usual. It’s relatively easy to build a spreadsheet listing the many things that will contribute to the future and rate them as likely to turn out well or poorly. But merely toting up the plusses and minuses won’t tell you whether the future will be favorable or unfavorable. The essential element is figuring out which ones will be most influential. That’s often where optimistic or pessimistic biases come in. The optimist takes cheer from the favorable outlook for the positive data points, and the pessimist is depressed by the unpleasant possibilities for the negative ones . . . even if they’re both working from the same underlying spreadsheet in terms of elements and ratings.
    1. I don’t think I’m likely to have superior knowledge regarding the outlook for the virus, its impact on the economy, the success of Fed/government actions or the direction of oil prices. I organized and discussed the possibilities for each of these things in the March memos, but I’m unlikely to be a better predictor than anyone else.
      1. Buy, sell or hold? I think it’s okay to do some buying, because things are cheaper. But there’s no logical argument for spending all your cash, given that we have no idea how negative future events will be. What I would do is figure out how much you’ll want to have invested by the time the bottom is reached – whenever that is – and spend part of it today. Stocks may turn around and head north, and you’ll be glad you bought some. Or they may continue down, in which case you’ll have money left (and hopefully the nerve) to buy more. That’s life for people who accept that they don’t know what the future holds. But no one can tell you this is the time to buy. Nobody knows.
      1. The best time to buy generally comes when nobody else will; other people’s unwillingness to buy tends to make securities cheap. But the factors that render others averse to buying will affect you, too. The contrarian may push through those feelings and buy anyway, even though it’s not easy. As I put it, “All great investments begin in discomfort.” One thing we know is that there’s great discomfort today.
      1. “The bottom” is the day before the recovery begins.Thus it’s absolutely impossible to know when the bottom has been reached . . . ever.Oaktree explicitly rejects the notion of waiting for the bottom; we buy when we can access value cheap. Even though there’s no way to say the bottom is at hand, the conditions that make bargains available certainly are materializing. Given the price drops and selling we’ve seen so far, I believe this is a good time to invest, although of course it may prove not to have been the best time. No one can argue that you should spend all your money today . . . but equally, no one can argue that you shouldn’t spend any. The more you want to garner potential gains and don’t mind mark-to-market losses, the more you should invest here.On the other hand, the more you care about protecting against interim markdowns and are able to live with missing opportunities for profit, the less you should invest.
      1. One way to think about the balance between offense and defense is to consider the “twin risks” investors face every day: the risk of losing money and the risk of missing opportunity. At least in theory, you can eliminate either one but not both. Moreover, eliminating one exposes you entirely to the other. Thus we tend to compromise or balance the two risks, and every individual investor or institution should develop a view as to what their normal balance between the two should be.
      1. Now, however, as opposed to the conditions of 2, 6, 12 or 24 months ago the risks in the environment are recognized and largely understood, prospective returns have turned from paltry to attractive (for example, the average yield on high yield bonds ex. energy has gone from 3½% to almost 9%), security prices have declined, and investors have been chastened, causing risk-taking to dry up.
      1. Given these new conditions, I no longer feel defense should be favored. Yes, the fundamentals have deteriorated and may deteriorate further, and the disease makes for risk (remember, I’m the one who leans toward the negative case). But there’s a big difference between a market where no one can find a flaw and one where people have given up on risk-taking. And there’s a big difference between one that’s priced for perfection and one that allows for bad outcomes.
      1. …we never know when we’re at the bottom. A bottom can only be recognized in retrospect: it was the day before the market started to go up. By definition, we can’t know today whether it’s been reached, since that’s a function of what will happen tomorrow. Thus, “I’m going to wait for the bottom” is an irrational statement. If you want, you might choose to say, “I’m going to wait until the bottom has been passed and the market has started upward.” That’s more rational. However, number one, you’re saying you’re willing to miss the bottom. And number two, one of the reasons for a market to start to rise is that the sellers’ sense of urgency has abated, and along with it the selling pressure. That, in turn, means (a) the supply for sale shrinks and (b) the buyers’ very buying forces the market upward, as it’s now they who are highly motivated. These are the things that make markets rise. So if investors want to buy, they should buy on the way down.
      1. The old saying goes, “The perfect is the enemy of the good.” Likewise, waiting for the bottom can keep investors from making good purchases. The investor’s goal should be to make a large number of good buys, not just a few perfect ones. Think about your normal behavior. Before every purchase, do you insist on being sure the thing in question will never be available lower? That is, that you’re buying at the bottom? I doubt it. You probably buy because you think you’re getting a good asset at an attractive price. Isn’t that enough? And I trust you sell because you think the selling price is adequate or more, not because you’re convinced the price can never go higher. To insist on buying only at bottoms and selling only at tops would be paralyzing.
      1. So it’s my view that waiting for the bottom is folly. What, then, should be the investor’s criteria? The answer’s simple: if something’s cheap – based on the relationship between price and intrinsic value – you should buy, and if it cheapens further, you should buy more.
      1. I don’t want to give the impression that it’s easy to buy while prices are tumbling. It isn’t, and in 2008, Bruce and I spent a lot of time supporting each other and debating whether we were buying too fast (or too slow). The news was terrible, and for a good while it seemed as if the vicious circle of financial institution meltdowns would continue unchecked. Terrible news makes it hard to buy and causes many people to say, “I’m not going to try to catch a falling knife.” But it’s also what pushes prices to absurdly low levels. That’s why I so like the headline from Doug Kass that I referred to above: “When the Time Comes to Buy, You Won’t Want To.” It’s not easy to buy when the news is terrible, prices are collapsing and it’s impossible to have an idea where the bottom lies. But doing so should be the investor’s greatest aspiration.
      1. The bottom line for me is that I’m not at all troubled saying (a) markets may well be considerably lower sometime in the coming months and (b) we’re buying today when we find good value. I don’t find these statements inconsistent.

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