Podcast Episode 52: Mr. Positivity | Turning That Frown Upside Down

Humans have evolved to look for negative information and project possible outcomes. If we hadn’t evolved that way…well, we wouldn’t have evolved at all. So how do we overcome our natural instincts? Let Josh & Colin explain.

Episode Transcript

BARENAKED MONEY PODCAST: EPISODE 52

Mr. Positivity | Turning That Frown Upside Down

Announcer:
You’re about to get lucky with the Barenaked Money Podcast. The show that gives you the naked truth about personal finance, with your hosts Josh Sheluk and Colin White, portfolio managers with WLWP Wealth Planners iA Private Wealth.

Josh Sheluk:
Hello everyone. Next episode of Barenaked Money here and we’re doing things a little bit differently today. If you’re expecting a balanced, unbiased, on the other hand type of podcast, this is not it. This is us painting a rosy picture for you and talking about a whole bunch of wonderful things to get your mind off of what’s happening in the market right now. So from this point forward nothing but positivity, and don’t respond to us saying that, “Hey, what about this? What about that? What about that?”. We’re just looking at the positive side of things today.

Colin White:
Awesome. I don’t do well in these environments, Josh, but hey we can do this. Look full disclosure, one of my… And I guess this is going to be slightly negative or it’s going to be an observation anyway. One of my concerns is that we always keep it “real”. The industry talks about buy, hold and prosper and all that kind of stuff. Always be in the markets, always have all your money in the markets. We’re not that. But we do value your mental health and our own mental health. And having been in this industry for 30 years and gone through bad things, it was always important to have a good spin, at least somewhere in your head, so that when you gave it an opportunity to surface you had a smile on your face just a little bit. Now again, full disclosure, this is entirely Josh’s idea. So I’m thoroughly excited to be taken on this walk through wonderfulness that Josh has promised us. And he setting expectations pretty high, so I can’t wait.

Josh Sheluk:
Well on a positive note, Collin, stock markets go up over time. Don’t they?

Colin White:
Well, so we’ve been told, so history tells us. That’s mathematically irrefutable. Over time markets grow, largely based on the growth of the economy, which again too grows over time. And in spite of everything that human kind has been able to throw at it.

Josh Sheluk:
Yep. So long term average returns on the stock market around 8-9%. And that’s over a pretty big sample size, 150 years or so of really good quality data that we have. And on top of that, if you look at the returns after a downturn of the magnitude that we’ve experienced this year, average returns on stocks looking out three to five years and even one year are stronger than average, very positive. So that’s something to hold your hat on. Like, “Hey if I’m a stock investor, should make money over time”.

Colin White:
Well and whether you’ve got money to put to work now, or whether you’re just going to be hanging onto your money for the next five years, next five years you should see some nice numbers coming out of what we’re going through right now. So expectations are allowed to be higher now than they were earlier.

Josh Sheluk:
Now we’re not all markets here all the time, Collin. I know we probably focus on at 98% of our lives, but Netflix, Amazon Prime, what are you watching right now?

Colin White:
Well this is where I can give everybody a chance to make fun of me a little bit, or get a glimpse into how I spend my spare time. Oddly enough my wife and I have both stumbled onto the same Netflix series recently, and it’s Love on the Spectrum. So watching people who are on the autism spectrum somewhere generally, and how they date and how they interact with the world. Now for those who know me, I very, very much identify with these people. So I was like three or four episodes into it, binge watching it, when I realized my wife was also watching it. I think she was watching it as a how-to video to improve her skills and being able to deal with me. So yes, I thoroughly enjoy the lack of filters that exist in that world, and there’s many people there who say out loud the things I scream in my head. So I truly have enjoyed that. And hey while I’m on it, there’s also Asperger’s Are Us, which is a documentary about four guys in a comedy troupe on Netflix. So if you want to take your mind off of other things, for me that’s part of what I do. But Josh I defy you to come up with something, because you are so absorbed by the markets. I mean are you doing anything outside of watching numbers?

Josh Sheluk:
Yeah. A few things. Well on the streaming front I would say that I kind of go back to some of the mainstays when I’m looking for a good laugh. The Office and Trailer Park Boys are kind of staples for me. But Heather not interested in these, so I kind of have to watch these when I have 30 minutes to myself, but I always got a good chuckle out of them. TV front though, sports, it’s the Stanley Cup playoffs. You got at least a couple games left to go, so that’s something that’s always good to take your mind off things. And here is my I guarantee you’ll love it recommendation, the new Top Gun. It’s just amazing. Go see it in the theaters, it’s incredible. Tom Cruise is the same Tom Cruise from the original Top Gun, somehow. I don’t know how that guy does it, but he defies aging. So go see that in the theaters, I haven’t heard anybody tell me that they didn’t like it at this point. It’s a blast.

Colin White:
Hey my daughter took me to that for Father’s Day, so I got to do a daddy daughter date to go watch it. And yes, Tom Cruise is indeed a real vampire. He does not look any different at all. Everybody around him does, which makes it even freakier. But you have to… What do they say, the willing suspension of disbelief? You need to check that at the door when you go in, but yeah it’s well shot, well done, and brings you back to the original for those of us who saw the original in theaters.

Josh Sheluk:
Yeah. He might be onto something with that Scientology thing, eh Collin?

Colin White:
There you go. The jury is still out.

Josh Sheluk:
So back to markets. Another thing that is a lot more positive today than it certainly was a year ago. Government bond yields are hitting 3+% in North America. And those government bond yields, those interest rates, are a very good indicator of the rates of return that you should expect on those government bonds over that holding period. So if you have a 10 year government bond at 3.5%, you can reasonably expect something very close to 3.5% rate of return on your investment over that period of time. Now in case you’re saying to me, “Hey 3.5%, not that exciting”. Well they’re government bonds, they’re not supposed to be that exciting. But when you look at “Hey, we can get a good quality corporate bond now for over 5%, maybe 5.5. You can get some of the higher yielding corporate bonds at maybe closer to 7%”. That’s starting to look pretty attractive for the next little while.

Colin White:
Yeah. When we talk about our target rates to return for some kind of a balanced portfolio being in the 5-6% range. Back when bond yields were at 1%, you had to have a built in larger assumption on the equity side to even out, depending on your risk profile, to get to that target. Now it’s getting easier. Going forward we’ll have the latitude at some point to make a larger allocation to that space, and even out the ride hopefully the next time that the roller coaster goes over the hump like this.

Josh Sheluk:
So again, changing gears, I know we both read. Probably a lot of what we read is market related, but I’m sure you’re reading something not market related right now, Collin?

Colin White:
Well there’s a couple interesting books I’ve read recently. I tend to read when I go on vacation. The Netflix Story, the No Rules Rules was kind of fun. That’s not market related, but it is business related. I enjoyed reading that one. And there’s another one I’m part way through called The Halo Effect, which I find very fascinating talking about… Elon Musk comes to mind. He’s wealthy, therefore he must do everything right. So everything written about him is talking about great management, great decision making, all the rest of it. But if his stock price drops, how those articles are now going to be critical of exactly the same things that they were positive on. And this goes right up to the level of watching some of the stuff that comes out of Harvard Business School and some of the commentary written by the major publications. So that interests me, that makes me excited. I have trouble putting those books down, but that’s probably not for everyone. Josh, you’re more normal than me. What are you reading?

Josh Sheluk:
Well the one non-fiction, but not market related, is Shoe Dog. The autobiography of Phil Knight, the founder of Nike. So fascinating book, well written story. It is sort of a story of his life. And if you want reasons for optimism, just watch how this guy has kind of built this business from nothing over, I don’t know, I guess it’s like a 40, 50, 60 year time span. So really impressive story so far, and just a good read.

Colin White:
Well, I agree. I’ve read that one as well and it’s a good story for sure. But there’s huge gaping holes from those of us who actually followed Nike. And I was waiting for two or three chapters just on Air Jordan, because well that would’ve been exciting. But anyway, it is a good read, it’s a fantastic story. I’m not sure who, whether he wrote it or it was ghost written, but it’s a very, very well told story.

Josh Sheluk:
Mm-hmm. Now Colin, if I asked you to poll our audience. What percentage of people out there do you think would believe that corporate profits, business profits are higher today than they were at the start of the year?

Colin White:
30%.

Josh Sheluk:
Yeah. And that even may be optimistic, but it’s true. It’s true. Corporate earnings are still up. Now that’s not to say anything about what’s going to happen in the future, but we’ve seen a pretty steady climb for corporate earnings over the last couple years. So that flies a bit in the face of what’s happening out there with the markets.

Colin White:
I don’t think we’re celebrating this enough. That’s a hugely positive event. We just went through, or are in the process at the tail end of, a global pandemic that shut everything down. And we’re still functioning at a really high level, not as high as we could maybe, but I think things are going way rosier than anybody in March of 2020 would’ve foresaw at this point in the future.

Josh Sheluk:
Yep. That’s right. So Colin, plans for the summer outside of work, what are you doing?

Colin White:
I’m doing some mountain biking and some trail riding, really enjoying that. Considering venturing out and getting what they call the fat bike, one of those really thick tires on it for using on different terrains and stuff like that because the technology is amazing. I’m a huge fan of the nerds. These big bikes now weigh what my old bikes used to weigh that looked to be a fraction of the size, so it’s very comfortable. And on bike you can get to all kinds of interesting places and get interesting views and get some fresh air and outrun most of the grizzly bears. So yeah.

Josh Sheluk:
Have you fact checked that? Do you know how fast a grizzly bear is?

Colin White:
I said most. If I’m going downhill.

Josh Sheluk:
Yeah. That’s right.

Colin White:
I think you underestimated how motivated I can get.

Josh Sheluk:
Yeah. Well you’re going to be going straight down the side of a mountain that, yeah, you’ll run though. You may not be better off for it.

Colin White:
This is true. Whether I die by grizzly bear or impalement on a tree, I guess. But hey, this is good news. I’m going to do some mountain biking and have fun with it, Josh. You can’t scare me. What about you? What are you doing for fun this weekend?

Josh Sheluk:
Well I’m getting married in three days, so that should be a blast. We were talking about it before, should be a lot of fun. We’re looking forward to it. It seems like it’s going to be a hot sunny day. So you’re going to bring your shorts and t-shirt I think, right Colin?

Colin White:
Well again, I haven’t received permission from those people I need received permission from, but yes I think that may be on the agenda.

Josh Sheluk:
Well I’m on the record giving you permission. I don’t know if that’ll help you or not.

Colin White:
That’s just so cute. You think you can give permission for stuff like that. That’s not nice. That’s just great. I’m going to love this weekend.

Josh Sheluk:
I don’t know if I can or can’t, I’m just going on the record. So use it how you will. Shortly after we get married though we’re heading out to BC for four days, and we have a full day kayaking trip planned in Desolation Sound, which sounds like a blast. Right?

Colin White:
I hear that is epic.

Josh Sheluk:
Yeah. So apparently there’s waterfalls draining into the ocean and all kinds of rugged terrain, a little bit untouched. So it should be quite beautiful.

Colin White:
Sounds wonderful and I’m sure you’ll share the pictures.

Josh Sheluk:
Now last one here Colin. Human beings are incredibly innovative, aren’t they?

Colin White:
Oh look, absolutely. I’m blown away, and I’m actually a little disappointed we don’t spend time celebrating some of this. Like we’re flying helicopters on Mars. I mean like seriously, why are we not talking about that more? I mean that seems to be such an amazing marvel of just magic that we’re that we’re doing stuff like that. And properly motivated and properly organized, it’s amazing what could get accomplished. And sometimes technology, the way I heard it best described was that the best innovations are not normally accompanied by “Eureka! We did it”. It’s accompanied by, “Oh, that’s odd”. So sometimes in the moment we don’t know that something is going to be truly transformative, but that doesn’t mean that transformative things aren’t happening on the regular. So again, I think that dealing with this global pandemic is one example for sure. The advances we’ve made in how to treat people with this, and treatment plans that have worked and not worked. I mean it’s just constantly evolving. And having had friends and acquaintances who’ve gone through the hospital system during this… Again if you turn around twice and you look back at how something is, whether it’s replacing a knee, replacing a hip, or all these other things, the technology is just other worldly. So yeah, no I’ve got all kinds of faith in humankind.

Colin White:
But you have a couple of notes that you have here about people and books and stuff. Are you going to give us a story?

Josh Sheluk:
Well no, there’s just a couple things that kind of reinforce the idea that as much as we can look at today and say a whole bunch of things are messed up, by almost every quantifiable metric things are way better today than they ever been in history. And a couple books, just if somebody’s looking for an optimistic read, Enlightenment Now by Steven Pinker or Factfulness by Hans Rosling. These are, again, they’re looking at some of the real data to prove a point. To prove a point that, “Hey, we should be a lot more positive on where we’ve ended up here than I think we often are”.

Josh Sheluk:
And just talking about technology, I was talking to somebody a couple weeks ago, one of our clients. This is just a small thing, but it kind of blows me away sometimes when you talk about some of this technology stuff, but he’s very into birding and looking for plants and foraging for plants and different flowers and identifying these different species, if you want to call it that. And so I was saying, “Oh yeah, guess what I found out recently. You can have an app and you can go take a picture of a plant and it goes to Google or wherever and it tells you what the actual plant is. You don’t even have to know, you just take a picture on your phone and it tells you”. And well he kind of went up to me and he said yeah well when he goes bird watching he has an app on his phone that listens to the sounds of the birds and it tells him which birds are in the area just by the sounds of their songs. So he’s like looking at his phone, he is like, “Oh, this bird is in the area”. Sure enough, hung around for five minutes and saw this thing come by. And it was quite a beautiful bird, apparently. So all these little things that are making our lives better are more interesting that we often don’t think about are pretty remarkable.

Colin White:
Well I mean I’m reminded of a story. Again, perspective is worth a lot. And again, Air Canada’s in the news a lot lately about bad travel conditions and stuff and this one guy was talking about being at a friend’s house and they said, “Yeah, we were delayed on the runway for 45 minutes”. I was like, and then what happened? Did you fly through the air while you’re sitting in a comfortable chair like a Greek God being offered food? Is that what happened next? Did you travel halfway around the world after that? Yeah. Yeah. But I was stuck for 45 minutes on the runway, that’s the highlight.

Josh Sheluk:
Yeah.

Colin White:
Not the marvel of air travel and the fact that you were able to sit like a Greek God and be fed food and serve drinks while you traveled across the globe.

Josh Sheluk:
Yeah. Louis CK, he’s a comedian, he has a bit on that on a late night show where he’s talking about something similar and somebody in his airplane was complaining that the wifi wasn’t working properly while they were in the air. And his point was you’re on the internet 30,000 feet in the air flying to your destination. What more do you want?

Colin White:
Yeah, no. And again, I think that the comedians actually have it because if you listen to a lot of the different comedians, that’s the angle they take. They’re poking fun at all of y’all, including me. And listen, that’s just important to keep perspective during times like this. And maybe this has been a diversion, or maybe there’s only three people left listening now. Who knows? But if you need someone to talk to and take your mind off of things, we could do that. Give us a call.

Josh Sheluk:
Yeah. And last point is, if you’re trying to keep yourself in a positive frame of mind, stay away from the mainstream media. They do a fairly good job of presenting information to us, but they typically do it in a way that’s going to draw eyeballs, draw your attention. And usually that’s by making you scared, making you fearful, or giving you a little bit of shock and awe, which may not always be the best thing.

Colin White:
It can affect one’s brain negatively. Well thanks everybody for staying this long. We appreciate you. If you have any comments or requests for future podcasts, let us know. We are wide open to ideas and seem to be able to talk about just about [inaudible 00:18:57].

Announcer:
This information has been prepared by White Leblanc Wealth Planners, who is a portfolio manager for iA Private Wealth. Opinions expressed in this podcast are those of the portfolio manager only, and do not necessarily reflect those of iA Private Wealth, Inc. iA Private Wealth, Inc is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc operates.

Colin White:
We’ve noticed something. It seems there are a lot of people who would rather try to figure out their lives with an online calculator than airing your finances to a human. Stop doing that. You need to talk to someone who can help direct you, tell you where to start with what you’ve got to make the biggest impact on your future. You can’t figure that out at doihaveenoughcash.com, but you can figure it out by chatting with us. Call us. It’ll be okay, you’ll see.

Speaker 4:
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