Understand Speculation Versus Investing


Someone asked this question on Quora yesterday.

“What is the difference between investing and speculating?”

For many, speculating sounds like gambling and investing sounds like the adult way. Many people do both but do not understand the fundamentals of each. Success should use aspects of each.

I think the question is a good one and one that many people find confusing.

The distinction is derived from how you assess value and price

Warren Buffett has stated that to make money in the stock market you must know two things.

  1. How to value a business, and
  2. How to understand what market prices mean and how they develop.

“Investors” tend to rely on the first to be real and the second to be more ethereal. They buy when the market is pricing the security too low in their estimation and sell when the market is pricing it much too high. Their task is more like engineering. Understand how the pieces work and put them together is a way that provides value. Market prices force them to rethink value over and over again. Perhaps they were wrong before.

Speculators tend to deal primarily with the market pricing mechanism and essentially become players in a game where all other buyers or sellers are their competition. Their aim is to be smarter, quicker, or better informed than the others and gain advantages that way.

It’s possible that either method might work

The skills required to be a successful speculator are not easily acquired. John Maynard Keynes, who was a skilled money manager too, attributes success in this “to anticipating the anticipations of others.” Anticipating what others will think in six months is a very difficult task. Few people understand how future events will influence how people will act.

Understanding people and how they work is much harder than understanding businesses. Buying on business factors is manageable and you can adjust your holdings if those factors change. New management, serious competition, economic factors, and such. Maybe you can know when people will become pessimistic or optimistic or part of group hysteria, and act on that, but it’s not very measurable.

The idea of investing is to use your knowledge to make the capital accumulation process easier and more predictable. Speculating is complex and volatile but for people with the right skills and temperament, it could be lucrative. It is certainly more exciting and that is worth something to some people. The problem is the method is essentially produces events as opposed to being systemic. What you learn from one trade may not have meaning for another one in the future.

The skilled investor, as Buffett suggests, understand both methods and acts on what the market offers.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Being Prepared Should Be Your Way Of Life


I have listened to a number of Jordan Peterson videos recently. Three things come to the surface very quickly

  1. He is a very smart and well-educated person
  2. He has thought about his subject matter in depth and has organized it so he can explain it to others.
  3. He is a good speaker.

Whether you agree with everything he says or not is not so important. There is something there for each of us. I think he is intellectually honest enough to address any reasons you might have to disagree with him. Perhaps you shuld direct questions to him.

Two thing come across clearly

  1. Belonging to an identified group is not beneficial for you as a person. People tend not to develop themselves very well when being part of the team is more important than being a responsible and growing individual. It is especially deleterious if you categorize others as members of a certain group and never connect to them or learn anything from them. Identity politics will turn out as tragedy.
  2. The world is a tough place and you should expect adversity and learn how to deal with it in productive ways. Tell the truth. Be responsible.

You advance by becoming more skilled

Not just in your subject or profession but in all facets of life. Health, mental strength, compassion, and more.

You cannot expect life to be easy and you should prepare for it being difficult. Even if the difficulty never arises you will be better off.

“Better to be a warrior in a garden that a gardener in a war.”

The mottos for the Boy Scouts and US Coast Guard are similar, “Be prepared” and “Semper Paratus”

Good advice

Being prepared means projecting the possible future, taking advantage of what it offers when possible, and acquiring the skills and tools that minimize future adversity. That’s what planning is about.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Why Own Life, Disability, Liability, Auto, and Fire Insurance?


Resources are allocated towards two purposes. Offense and defense.

If someone directs all their effort to offense (growth) their life will be more volatile. By focusing on growth alone, you do not dial out the risks. Paying an appropriate amount of attention and resources to the adverse things that can happen in life allows for a smoother, yet perhaps not so fast growing, track to success.

There is a simple thought that sums it up.

“Insure for what can go wrong, so you can invest for what can go right.” Jason Butler

The value is that protection on the downside prevents catastropic loss and thus the need to start over.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

An Estate Planning Wrinkle Many People Should Review


O’Sullivan Estate Lawyers is a boutique law firm in Toronto. A very good one in the area of wills, trusts, and estates. And they have awards to support that claim.

Most people spend little time worrying about their estate, but many are curious. To that, the firm publishes a blog with some interesting facts. Such a blog article appeared this week. Heads up on “Shacking Up”

Of interest to people in Ontario particularly and elsewhere generally

Many of the legal points are specific to Ontario but in other jurisdictions there are likely rules with similar effect. The idea of the article is to cause people to understand some of the issues that arise in common law situations when one of the partners dies. The need is real and the potential for costly litigation is clear.

According to the article common law relationships in the 1981 census accounted for 6.3% of the couples. While most of us would have assumed it would be higher by now, I am not so sure we would have guessed high enough. By 2016 it was 21.3%. A 3.5% growth rate. If that rate continues it will pass 25% within 18 months.

Any condition that affects 25% of the population is worth studying for its effects.

Questions to ask yourself

For this purpose a common law couple are a couple living together without benefit of marriage.

Some of the issues to consider.

  1. After three years, on breakup there could be a support order. Earlier if they have a child together.
  2. If a partner dies without a will, the survivor is not automatically entitled to a share of what would be “family property” in the ordinary estate procedures.
  3. The survivor will have no right to pension plans or insurance unless designated as a beneficiary.
  4. The survivor will not necessarily have a right to continue living in the couple’s former dwelling
  5. The survivor will have no automatic right to funds owned by the other.
  6. There will be complications if there are no powers of attorney for personal care. In general, substitute decision makers could be in the dark with no obvious path to clear that up.

Planning helps.

According to the O’Sullivan article, “No matter what stage you are at in life, whether you are a millennial, a baby boomer or a senior, it is important to have conversations around these topics with your partner, to seek legal advice and to effectively plan.”

Good advice. Take it to heart and act if it applies to you.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

The Planning Essential


In his book, “Collapse: How Societies Choose to Fail or Succeed” Jared Diamond makes an important point.

“Two types of choices seem to me to have been crucial in tipping the outcomes [of the various societies’ histories] towards success or failure: long-term planning and willingness to reconsider core values. On reflection we can also recognize the crucial role of these same two choices for the outcomes of our individual lives.”

Long-term planning and willingness to consider core values.

That’s why you can’t give up those to  others.

If you can only do one thing in financial planning, be sure you design your own idea of the long term, be sure you have a tight grasp of what makes up your skills and what your environment rewards.

The parts you can give up to others is help with the method and execution of the decision.

It is like planning a trip. You need to know where you are going and you need to know the resources you have and the things in the journey that matter to you.

You can delegate tactics

Whether by air, by car, by boat, or by rickshaw, the idea is use a method to support your goal. Same thing with financial things.

If you know where you are going and what you can anticipate to having to get it, then you can seek help from specialists who can show you alternate ways to get what you want with what you have to get it with.

You can delegate the tactics if you can see how they fit your idea and you control the decision.

You can change your mind

You can do it productively if you know where you are now and how your context is changing. That may point to a new direction.

Then you can assess your current tactics and decide which to revise.

The value

If you know what you are doing and the contextual field you play on, you can see how to attach tools to make the outcome better, cheaper, or sooner.

If you let tacticians do your work, you will never be sure how it is going to work.

“History as well as life itself is complicated — neither life nor history is an enterprise for those who seek simplicity and consistency.” Jared Diamond

Knowing where you are going and why, is crucial. You cannot choose methods well without that and you can’t know when or how to change.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Mistakes Matter. The Making Of Them Part


“The most valuable thing you can make is a mistake – you can’t learn anything from being perfect.” – Adam Osborne

The people who make the fewest mistakes are the ones who try the fewest things. Avoiding mistakes is itself a mistake.

Being perfect limits you.

Expose yourself, your children, and your employees to unfamiliar situations. Get it right or get it wrong, you learn to manage adversity or you learn your real boundaries are not as close as you thought.

Both promote growth.

From the outside.

Everyone judges other people. Make it habit to judge people on what they do right and how quickly they fix mistakes. They will be encouraged and you will learn more.

Thought for the day

Is it a mistake to be wrong, or is it a mistake to be right?


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

A Way To Solve Estate Liquidity Problems


On Jeopardy and at the racetrack you find the daily double. On Jeopardy it is a chance to double your score while at the racetrack it is the ability to bet on two events both occuring. At the racetrack you get better odds to bet on two events.

Joint life second to die life insurance is like that too. If an insurer doesn’t pay until the second death you’ll get a better price (lower premium) than you could get on either life. Even if one life is impaired the premium will still be less than on the standard life.

When it matters

  1. Many estates have no liquidity issues until the second death of a couple. No taxes and need to no equalize shares. Good life insurance design assesses both the amount and the timing of the need. Why pay extra to satisfy that need. 
  2. Consider a second to die policy to offset the potential capital loss in a joint life annuity.
  3. Consider a large charitable bequest. This one further has the advantage of creating a credit against taxes due in the estate. This one is always worth exploring. Sometimes their is a multiplication of value.

Where to look

Many people prefer participating life insurance late in life and it is not a follish move. However, universal life with level insurance cost is sometimes a better choice. You could compare and decide. My experience is universal life works a little better with older people. 

Estate planning is a complicated subject and every insurance solution fits with a myriad of other factors. It is important that estate planning be seem to part of the present and the rest of life. Many expenses in the estate can be less costly if they are part of the fabric of the retirement plan.

Always look for and easy advantage.

People often spend too much time focusing on minimizing costs in the estate and too little time understanding how the liquidity will be there to pay for them. They forget that the price to make the money available is consequential too. Estates only have cash from four sources. The deceased supplied it with liquid assets or life insurance. The executor acquires it by selling somehting or borrowing. 

In every estate there are costs due at the second death. In every estate there are economical and costly ways to arrange for that money. Second to die life insurance is among the least costly. Be sure to notice.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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