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Selfish Men and ‘Their’ Money.


I consulted to a man once. Late 2005. He was in his late 70’s then and his health was fragile. We spoke several times over some months. A handyman by trade, he had all ‘his’ life savings, about $700,000, in just four income trusts. He thought he was diversified. He had more than doubled ‘his’ money over the previous handful of years. He thought he knew it all. It was tough to argue with his success. He passed away the next summer.

Then, on October 31, 2006, Canadian Federal Finance Minister, Jim Flaherty, announced a new 34% tax on income trust distributions. The next day, the entire income trust market corrected. Income trust investors were devastated. And not just financially.

This man’s wife was a lovely, sensitive woman. In her 70’s too, she had never even written a cheque. In the panic, she instructed ‘his’, now her, broker to sell it all. She lost … ‘he’ lost … a lot of money. A ‘lot’ of money.

I bumped into her only a couple of times since. All she could talk about was how ‘he’ (her husband), lost so much of now her money. She was angry. She was hurt. ‘The old fool’, she called him. Those were her thoughts and memories of him. Now, she’s gone too.

Had he thought about her instead of his money, instead of himself, had he sold even half of his holdings and put even half into bonds, say, for her, for his wife, his bride, the woman he loved, she would have had, well, better memories of him after he was gone. What an awful legacy to leave behind.

That, dear (male) investors, is a harsh lesson learned. Individual (male) Investors ought to have more respect.

Next time?

Dividends

Doug Cronk CFA is Manager, Investments for a Canadian Pension Plan

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5 Comments Post a comment
  1. Big Fan #

    Great advice!

    I’m heavily and disproportionately invested in oil and gas through professionally managed funds. Truth be told, it’s tough to pull out when things are looking good (and keep looking better for my investments). Can you comment on a good strategy to follow for reducing my exposure?

    Like

    March 29, 2011
    • How would you (&/or your family) feel … if you lost money? Markets have doubled in 2 years. Take some profits. Sell 1/2

      Like

      April 3, 2011
    • Rob #

      That’s exactly the time you _should_ be pulling at least some out. The great big glaring word there is “disproportionately”

      Like

      May 3, 2011
  2. Morgan Jones #

    Absolutely heartbreaking!

    Like

    March 29, 2011

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