Chart: US Personal Incomes Actually Rose in April

Unemployment has skyrocketed. The economy has tanked. Yet personal income rose in April.

Personal income include all sources of income (including employment and government sources). So while wages fell due to rising unemployment, government benefits more than offset that decline resulting in the rise in personal incomes. Essentially, government benefits kept people (in aggregate) whole.

However, with lock-downs in place, expenditures (specifically consumption) dramatically slowed. As a result, the personal savings rate jumped to 32% in April!

Investing Wealth

17 Investing Guru Quotes

“There is only one side of the market and it is not the bull side or the bear side, but the right side.” — Jesse Livermore

“The trick is not to learn to trust your gut feelings, but rather to discipline yourself to ignore them. Stand by your stocks as long as the fundamental story of the company hasn’t changed.” — Peter Lynch

“The way I figure out the economy is literally from the bottom up and from company anecdotal information, knowing that housing leads retail and retail leads capital spending. From listening to the guys on the ground. When you talk to companies and to guys who run companies, you get a whole additional perspective on the economy.” — Stan Druckenmiller

“The whole world is simply nothing more than a flow chart for capital.” — Paul Tudor Jones

“Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” — John Templeton

“The sucker has always tried to get something for nothing, and the appeal in all booms is always frankly to the gambling instinct aroused by cupidity and spurred by a pervasive prosperity. People who look for easy money invariably pay for the privilege of proving conclusively that it cannot be found on this sordid earth.” — Jessie Livermore

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” — Peter Lynch

“The nature of the game as it is played is such that the public should realize that the truth cannot be told by the few who know.” — Jesse Livermore

“If you want to become really wealthy, you must have your money work for you.” — John Templeton

“Remember, things are never clear until it’s too late.” — Peter Lynch

“Every serious deflation I have looked at is preceded by an asset bubble, and then it bursts.” — Stan Druckenmiller

“The four most expensive word in the English language are ‘This time it’s different.” — John Templeton

“Don’t be a hero. Don’t have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead.” — Paul Tudor Jones

“Never invest in any idea you can’t illustrate with a crayon.” — Peter Lynch

“Looking at the great bull markets of this century, the best environment for stocks is a very dull, slow economy.” — Stan Druckenmiller

“At the end of the day, the most important thing is how good are you at risk control.” — Paul Tudor Jones

“Go for a business that any idiot can run – because sooner or later any idiot probably is going to be running it.” — Peter Lynch

ETFs and Funds

5 Top Dividend ETFs in Canada

Investing in Canadian dividend paying stocks has never been easier. To do this you can either buy one or two dozen individual stocks or you can buy an ETF that already owns a basket of dividend paying companies.

Of course, the convenience of buying an ETF comes with a small price. Between 10 and 60bps, the management expenses paid for simplified access do compound over time. Still, for many the ETF option makes the most sense.

Many people don’t have time to track many individual stocks. Some investors might have little to invest. Others might not even know what to look for when choosing an individual stock. For these people, an ETF might be the best way to invest in dividend stocks.

Personally, I like the way a broadly diversified dividend ETF can help me mitigate the risk of problems with any one individual company. An ETF also allows me to make asset allocation changes and new contributions with relatively few trades. Also, those who work in the investments industry know that ETFs remain off the compliance radar providing easier buy/sell execution.

I still bolt on a few individual dividend stocks here and there to enhance certain exposures. But ETFs remains the core to my dividend portfolio.

Below I list out five of the top dividend ETFs in Canada. I first provide high-level summary stats and then go deeper into each individual portfolio. Finally, I provide my conclusions at the end.

Summary Stats

BMO Canadian Dividend ETF (ZDV)

This ETF seeks to replicate the performance, net of expenses, of the Dow Jones Canada Select Dividend Index. The index is comprised of 30 of the highest yielding, dividend-paying companies in the Dow Jones Canada Total Market Index, as selected by Dow Jones using a rules-based methodology including an analysis of dividend growth, yield and average payout ratio.

Top 10 Holdings (30.00%)

iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ)

This ETF seeks to replicate the performance, net of expenses, of the S&P/TSX Canadian Dividend Aristocrats index. The index consists of common stocks or income trusts listed on the Toronto Stock Exchange which are constituents of the S&P Canada Broad Market index (BMI). The security must have increased ordinary cash dividends every year for at least five consecutive years, and the float-adjusted market capitalization of the security, at the time of the review, must be at least C$ 300 million.

Top 10 Holdings (19.95%)

iShares Canadian Select Dividend Index ETF (XDV)

This ETF seeks to replicate the performance, net of expenses, of the Dow Jones Canada Select Dividend Index. The index is comprised of 30 of the highest yielding, dividend-paying companies in the Dow Jones Canada Total Market Index, as selected by Dow Jones using a rules-based methodology including an analysis of dividend growth, yield and average payout ratio.

Top 10 Holdings (58.37%)

Vanguard FTSE Canadian High Dividend Yield Index ETF (VDY)

This ETF seeks to track, to the extent reasonably possible and before fees and expenses, the performance of a broad Canadian equity index that measures the investment return of common stocks of Canadian companies that are characterized by high dividend yield. Currently, this ETF seeks to track the FTSE Canada High Dividend Yield Index. It invests primarily in common stocks of Canadian companies that pay dividends.

Top 10 Holdings (73.68%)

iShares Core MSCI Canadian Quality Dividend Index ETF (XDIV)

This ETF seeks to replicate, net of expenses, the performance of the MSCI Canada High Dividend Yield 10% Security Capped Index. The MSCI Canada High Dividend Yield 10% Security Capped Index targets companies from the Parent Index (excluding REITs) with high dividend income and quality characteristics and includes companies that have higher than average dividend yields that are expected to be both sustainable and persistent.

Top 10 Holdings (77.75%)


For your convenience, I’ve re-displayed the summary stats below:

Judging by the sector exposures, XDV, VDY and XDIV provide more concentrated exposure to financials. VDY provides concentrated exposure to both financials and energy. If you desire an ETF more focused on financials and energy, VDY and XDIV are probably your best choice because of their exceptionally low fees.

The remaining dividend ETFs – ZDV and CDZ – provide a more diversified exposure to Canadian dividend paying stocks across a wider range of sectors. Although ZDV is a bit more concentrated in financials and energy, this provides it a yield boost. Finally, ZDV also charges a lower fee, making it my preferred ETF for broad exposure to a wide variety of Canadian dividend paying stocks.

Subscribe and get the latest on dividend investing and wealth creation:


This Might Be Your Last Job

Last night I spent some time searching for old classmates and work colleagues on LinkedIn and Facebook. I just wanted to see what some people were up to, out of curiosity.

As you might expect, many were living their lives – having kids, travelling, developing their careers. However, I noticed something disturbing.

A huge proportion of people from my past have simply dropped off the face of the earth. I sort of expected this when scouring Facebook. Facebook is a cesspool and somewhat pointless, so many people quit. However, I didn’t expect to see people simply vanish from LinkedIn.

She went from jet-setting with executives around the world to homeless.

Where did they go?

While actual profiles were still up, it was clear that many have not made any changes to their accounts in years. These are people supposedly in the prime of their careers – aged between 40 and 55. While a handful might have died (morbid thought), the rest just went dark.

I did some detective work and discovered a common explanation. Many people in the finance industry in the prime of their careers who are laid off never recover. They simply go from being a valuable contributor with a great income and 20 years of remaining career…to nothing.

Some were laid off from long-held positions. Others were laid off after leaving behind solid tenure for a higher-level job only for it to not work out. All went from the prime of their careers to the abyss.

After getting the axe, some of my former colleagues tried to start a business (many failed), others accepted jobs far below their experience level. Many appear to be simply wearing down their severance and savings, possibly leaning on the kindness of others.

I’ve even heard of one high-powered senior marketing manager who ended up on the streets. She went from jet-setting with executives around the world to homeless.

It could happen to anyone

None of these people expected nor deserved this. They weren’t terrible at their jobs nor bad people. They simply were not liked by the right people or were just a number on a spreadsheet.

Due to circumstances outside of their control – and sometimes less than perfect relationship with a key industry influencer – these people became untouchable. Unfortunately, relationships seem to matter more than work quality. And those who didn’t nurture relationships with certain people lost career momentum. I’ve said this many times: the corporate world is for extroverts.

This is the sort of thing you might expect from the music or movie business. Many actors who were household names a decade ago are nowhere to be seen today. We so casually refer to them as ‘has-beens’ without realizing this is a terrible predicament to face, and one that could affect anyone in any industry. However, it appears especially common in the finance industry.

Don’t take this lightly

Once you get beyond a certain level, it becomes increasingly difficult to find a job. Unfortunately, middle-manager jobs aren’t plentiful and executive-level jobs only go to the chosen few. I can only imagine my colleagues’ combination of depression and desperation as they realized their careers were over.

If you are in your 40s or older, behave as if your current job might be your last. Let’s hope it’s not, but be prepared because I’ve seen the sad story repeat over and over.

Knowing your career might end sooner than expected, you need to aggressively save and build alternate income streams. Have a plan for if/when this happens to you. Don’t assume the path you’re currently on will be available to you for the rest of your working life. This might be your last job.


Where are the Black People in Finance?

I’ve worked in finance for 20 years. I could probably count the number of black men and women I’ve worked with using my two hands.

The number of black people in middle manager or senior roles? I’d only need one hand to count them.

8.9% of the Toronto population is black. Yet, the representation in the managerial and executive ranks of the Canadian finance industry is much less than 8.9%.

Systemic exclusion in the finance industry

I haven’t witnessed any blatant discrimination based on race. Quite the opposite – all of the financial institutions I’ve worked for had strict HR policies prohibiting discrimination in the workplace. Every year, most institutions make all their employees go through some form of online training to avoid these issues.

So where are the black people in finance?

Note the first sentence two paragraphs above: “I haven’t witnessed any blatant discrimination based on race.” I think 90% of people in my industry would say the same. This results in a paradox – the issue of systemic racism in the workplace is made worse because most people don’t think an issue even exists. This is a big problem because it causes people to misunderstand what’s actually happening.

Racism in the modern workplace has gone underground. It has become part of the plumbing that goes unnoticed, yet remains a core component of the overall system. Given the lack of black representation, it is fair to conclude that there exists some form of systemic discrimination in the world of finance. However, since it is systemic it is less visible and more persistent.

Don’t believe me? Next time you see a financial institution posting on social media about racial inclusion, take a look at that company’s board of directors and executive team. You’ll be hard pressed to find a single black, East Asian or South Asian person.

The system is set up against black people

One might argue that black people simply don’t even try to enter the world of finance, explaining why there is such little representation at the executive level. But why would they want to?

While it’s true that black people shouldn’t technically be discriminated against during the hiring process, there are plenty of other excuses for why a black person might not ‘fit the job requirements’ – aka ‘the mold’. Faced with this reality, many choose to avoid the industry altogether.

In contrast, white anglo-saxon protestants can drunk-stumble into finance jobs because their parents set them up, their friends work in the industry and they simply fit the mold. There is a finance archetype. Anyone outside of that clique needs to work extra hard to get in only to compete with people who were born with an advantage. So why the fuck would a black person even want to join that world in the first place? Who plays a game knowing the deck is stacked against them?

Since they don’t fit the mold, black people who do get into finance likely face – at a minimum – unconscious bias. While I haven’t seen anyone officially miss out on a promotion because of their race, I’ve seen it happen because people don’t fit the mold. The deviations from the mold can be very minor – someone’s attitude, mannerisms, clothing, hair, etc. stray 10% from the archetype. So if that archetype includes white skin, wouldn’t that be considered systemic racism?

It’s very hard to pinpoint an actual racist action within these modern corporations. However, I can tell you it’s happening by matter of deduction. But it’s done in a way that is so subtle even those perpetrating the discrimination probably don’t realize it.

Many executives subconsciously feel the finance industry is for outgoing, thin, clean cut white kids with well-off parents who could afford to send them to expensive universities and connect them with jobs. It’s these expectations of what’s normal that create an exclusionary environment for anyone that doesn’t fit the mold.

Most corporate leaders would argue vehemently they aren’t ‘racist’. Yet, this is what makes racism ‘systemic’. It’s often not a cold, conscious decision by an individual – it’s part of the process. It’s part of the ugly system.


The Destruction of America’s Middle Class

America was once a beacon of light for dreamers around the world. The land of opportunity presented a way for people to earn more money and increase living standards by joining the middle class.

Today, many can dream but never come close to the opportunity they were sold. So what happened to the American middle class dream? Why is wealth disparity and inequality widening?

America as a whole is far richer than it was a decade ago. But as a population – as individuals – for a troubling proportion it is getting poorer.

There are three potential explanations for why the American middle class has collapsed. I’ll briefly explain each and provide supporting graphics below.

  1. Deregulation: The deregulation of America since the early 1980s – a pillar of Reagan policy – systematically removed protections for American workers, transferring power (and wealth) to the owners of capital. This benefited the wealthy and corporations at the expense of average people. At the same time, automation and offshoring replaced jobs once performed by humans, further weakening labor and the middle class.
  2. Living Costs: A result of deregulation, costs for many services critical to one’s standard of living have risen disproportionately to incomes. Namely, health care and education costs have grown far faster than incomes, eroding the ability for average citizens to build and maintain the wealth required to be considered middle class.
  3. Weak Innovation: Since the Industrial Revolution, the combination of wealth generating innovations afforded society the flexibility to provide for all citizens on more equal terms. These innovations included electricity, combustion engine, refrigeration, indoor plumbing, telecommunications and computing. The great wealth derived from these innovations and their many offshoots meant that money could be pooled to raise the standard of living for all segments of the population, helping to create the middle class. Things changed towards the end of the 20th century. Since the 1970s, the American productivity growth rate has been on a secular decline. This is not to say new innovations don’t exist. Rather, today’s innovations don’t have the same revolutionary impacts as those from 50, 75, 100 years ago. Many of today’s innovations are incremental in nature, enhancing efficiency and lowering costs. However, humanity is still largely run on technology invented many decades ago.

Check out the charts below for details on this transformation:



Why Executives Want to End Work From Home

What if you could have 12.5% more life?

Most people agree that they are more productive working from home. Work gets done faster because there are fewer interruptions and people are allowed to prioritize without distraction.

Moreover, by working from home most people cut their commute by about 2 hours each day.

(Frankly, I’m not sure how I’ll ever deal with rush hour traffic again now that I’ve seen the other side.)

Assuming you sleep 8 hours a day, by cutting out your commute you gain 12.5% more quality free time. That is significant.

Although I won’t attempt to quantify it, you also gain time by being more productive working from home. Realistically, you’re gaining more than 2 hours a day (i.e. more than 12.5% extra quality free time).

This extra time is a life-changing gain you can reinvest in your work, side projects, hobbies or family. Used wisely, these time investments can help you generate a second income stream, improve family ties and live a more fulfilling life.

You gain more than time

In addition to time, working from home improves your health and saves you money. No more coffee room ambushes, late buses, face time, toilet searches or itchy pants. More time for working out, eating vegetables and hanging out with people you actually like. All this is good for you.

I haven’t eaten food court food in months.
I’m pretty sure I’ve added 5 years to my life.

Then there’s the money saved on lunch, dry cleaning, coffees and office attire. I’m barely trying and I’ve cut my spending in half. Working from home can help you reach your financial goals – emergency fund, retirement savings, financial freedom – much faster.

You get my point.

While there are some downsides to working from home, there are many upsides. This is why most people don’t want to return to the office.

So why do executives want to return to the office?

The only people I know who are really pumped about getting back to the office are executives or other people with senior ranks within an organization. This is because most executives are extroverts.

Extroverts are awarded extra points by society. They are automatically considered to have leadership qualities because they love to schmooze with people. Justified or not, for this reason extroverts tend to rise to the top of organizations.

Extroverts tend to get off on meetings, impromptu chats, after-work drinks and coffee dates. This is their key to success within an organization. Regardless of the quality of their deliverables, their extroversion helped them become likable, relatable and promotable ‘leaders’. Before we all started working from home, this was their game and they played it well.

The funny thing is some extroverts mistake talking and socializing as ‘work’. Sure, the talks might be related to work, but most are pointless circle-jerks that accomplish nothing. And many conversations or meetings that do accomplish something could have easily been replaced by a 5 minute email.

Many of these people thrive on the inefficiency of daily corporate bureaucratic life. Have you ever felt like you’ve had the same meeting over and over for months? This is the ‘more talk, less do’ strategy unconsciously driven by many extroverts. Of course, work does eventually get done. But my observation is that it gets done because it is delegated to disciplined introverts who value output over endless chats.

Working from home changes the game.

Suddenly, the formula for success is flipped upside-down. Without a channel to direct the incessant shit talk, those in your face extroverts fall apart and conscientious introverts are the ones keeping the company moving. Indeed, this is the opportunity for introverts to demonstrate where value is truly created.

When stuck behind a desk at home, many extroverts simply cannot function. If you don’t already know who they are, they are the ones who are booking all the virtual team meetings and conference calls. They’re trying to justify their existence in this new work from home world.

Note: For dramatic effect I’m probably being overly critical of extroverts. They do have a role to play and many do deliver fantastic results. However, I have particular ‘extroverts’ in mind as I write this article. You probably know a few that fit the description. But you probably also know a few that are truly genuine, caring people that make things happen. Also, not all introverts deliver. Some are totally useless and get tripped up by their own introspection.

Introverts: Use this opportunity wisely

While the corporate office environment is ideal for extroverts, the work from home environment evens the scale between introverts and extroverts. Now’s the chance for introverts to step up, deliver and show the world what they can do.

Create value for your business and promote your work. The chains are unshackled, so when emailing a new report (or whatever) CC a few more people than usual. Share it with all the people in your organization that might be interested.

At the same time, use this opportunity to break out of the introvert shell by speaking more on conference calls. It feels safer than in-person meetings, so do it. In fact, if you really feel inclined, book a few of your own calls to showcase your work.

Finally, don’t let the loudest, most talkative people at the company dominate the conversations. Let it be known how you’re benefiting from working from home and how it ultimately benefits the company. If the executives are the only ones speaking on behalf of staff, returning to the office will be the only option.

Income Investing

May 2020 US Dividend Increases

Corporate executives have an ability to send ‘signals’ to the market about the health of their organization. One such signal is dividend policy.

In particular, if a company increases its dividend – particularly in a bad economic environment – it signals management’s confidence in the company’s future prospects. It also indicates the company has the cash to continue paying its dividend.

If I’m going to invest in a company right now, I want to know that the company’s executives are confident. While I wouldn’t rely on this single factor to make an investing decision, I believe it provides good corroborating evidence for an investing thesis that might already exist.

May of 2020 was one of the worst months ever for the US economy. Yet there are a handful of large cap US companies that are increasing their dividends, which I have listed below:

(Best viewed on desktop)

[table id=7 /]