Those were the only four words on a pair of 215 cm skis I had in late high school and University I ski like I manage money...I like to go fast and take some risks but try to always remain in control and do my research (of the terrain or the company) so I am taking calculated risks. That doesn't mean I don't fall down (skiing or investing), because I do. But when I fall down, I usually don't bust (myself or my portfolio) up too badly. Live to ski/invest another day.
So last night, my third son of three who is 16 years old and in grade 11, tells me that he and some classmates are doing the Lakehead University Stock Challenge. They are allocated a certain amount of fictitious capital and can "trade" stocks. Not really part of their Business Class curriculum but good exposure nonetheless.
He claimed that he bought a stock at 9:30am at the open at "60%" and went to sell it at "120%" but Lakehead doesn't allow day trading. It closed unchanged back down to his cost at "60%". First things first...I went through with him that stocks trade in $'s and Cents. After understanding that, in his excitable way, he said, "If only I could day trade". To which his next older brother and I both responded, "Well you can. You just opened up an account at High Rock so you could actually day trade". We told him how that would work...ie...he would call me, put on a trade and then call me back to sell it during the day. I said we could limit the amount to say, $500 per trade. All of a sudden, when he figured it was his hard-earned, real money, not play money, he was like, "No way am I doing that". Well his older brother and I ripped into him with laughter. No risk, no return. No guts, no glory. He'll learn. And if he doesn't, that is ok because he will succeed in life on his smile, good looks and natural charm.
As I have written a few times, I have spent my entire working life taking investment risk and being compensated for it. That is how I made my living/income.
Four mornings a week, I am in the gym early and I run intervals on the treadmill. I know what you are thinking, "Why on earth would you run on a treadmill? They are so boring". A few reasons and in this order: 1) I can keep track of exactly what my intervals are on time, distance, incline etc, 2) I can watch TV where I start out at CP24 for the weather outlook (being a cyclist and a Sportsman), move to CNN (which I can't stand but just in case there is actually some meaningful breaking news like the Pope abdicating his papacy) and then finally to BNN for the bulk of my time on the treadmill. Upon waking up each morning at home, the first thing I do is grab my Blackberry (I know what you are thinking and between Scott and Bianca at work and my family, I may be using an iPhone shortly) and log onto Bloomberg to see what markets have done overnight while I slept (or tossed and turned). BNN gives me a bit of an extension of Bloomberg while I am running where I can see if there are any major changes in certain markets (oil, nat gas, gold, C$, bonds, stock futures etc) since when I left the Blackberry/Bloomberg in the gym locker. Maybe not the most relaxing way to run but....1) what I do for a living is not always relaxing, 2) I need to be "wired in" to what is happening at all times and 3) my run itself is not relaxing, more painful than relaxing.
Now before the BNN live morning show starts at 7am, they run a replay of the previous night's show called "Market Call". I was on this show last April. Catherine Murray (who does a great job) hosts this show where they have a Portfolio Manager on for a full hour and most of the show has guest callers calling, emailing, Tweeting, Facebooking etc to ask the PM questions about all sorts of securities (mostly stocks). The producers try to keep the questions geared towards the PM's wheelhouse. So when I was on, it was more fixed income and Canadian small-mid cap stocks. Interesting experience.
Now I have been noticing something interesting for the past six months since I was on the show in April: at the end of the show, Catherine ask the PM for his/her Top 3 Picks. (When I was on I gave a high yield energy bond Athabasca 7.5% 2017 at $92.25, Canexus stock at $1.52 and a government of Canada bond 3.50% 2045 at 2.10% yield to maturity...you can look at how I did and read the Picks on the article the ROB posted after the show: www.theglobeandmail.com/globe-investor/investment-ideas/three-top-picks-from-high-rocks-paul-tepsich/article29755269/
Now every time a PM makes any sort of recommendation on an investment, BNN covers their butts, as they should, by putting a Full Disclosure page on the screen. The Disclosure screen looks like this:
Why? Because what kind of Portfolio Manager has his/her clients in a security (stock or bond) and doesn't actually own it for themselves or their household family members??? I can't tell you how many red X's I see on this Disclosure table each morning. It is mind boggling to me.
If a PM has done the research on the security and feels confident enough to buy it in client accounts, why on earth wouldn't he/she buy it in their own account?
A key difference at High Rock is the fact that I started our Private Client division to manage my household money and my parent's money...we had two clients. I told my old friend and colleague, Scott Tomenson, what I was doing and he liked what he heard...enough so as to join me and help build our Private Client business. The first tenet of High Rock's Private Client business is, and always will be, that we are managing our own money and that of our clients exactly the same. That is to say, whatever we do we do for everyone...same security, same timing, same price. So when I was on BNN, I got "green" check marks on Guest Position, Household Members...how couldn't I have got the green check marks? Next time I am on, I will tell the Producer that will always be the case. (If you see a green check mark on Investment Banking Client...beware...that means the PM could possibly be conflicted).
So back to my 16 year old son who wants to make money but not by risking his own money to do so. From what I see on BNN almost every morning, I think there is a career in the financial services sector where that is possible. Just look for the "red" X's on the Disclosure Statement.
I feel like I have taught my youngest son many things (and anything sports-related he is already better at than I am) but there may be at least one more lesson to teach him.