Since I retired from Grainews, I now run a portfolio that could be like running 300 to 400 cows, but my “cows” leave me with more time to think. When I spoke to the beef seminar in Teulon, Man., in late January, I asked how much time it would take me to work 400 cows. The answer: a lot. And not just for me, but also for some hired help and some family labour. I’d also need machinery, fencing, and so on.
My portfolio takes two or three decisions a week, and we make cash money three ways in sheltered accounts and four ways in unsheltered accounts. Money in the Tax Free Savings Account (TFSA) will be tax free and most gains in our trading account will be taxed as capital gain, which is half taxable.
Where else or what other business can you run where up to three quarters of the gains can be tax free? Sure there’s a risk with stocks, but don’t tell me farming or a new business doesn’t have risks. Yet with knowledge and a little activity we can manage that risk, or even protect our money and our attitude.
I’m not telling you what to do, but if you don’t have cash for a TFSA maybe there is money in your AgriInvest account.
I read Laura Rance’s article in the Winnipeg Free Press some time ago and she wrote that something like 2,000 farm folk were calling the stress lines per year in Canada. I hope that wasn’t in Manitoba.
And I wondered. How many of those stressed families set up a fivelegged stool (my overall financial plan) since I started the idea in 1993? I know a lot of farmers who have a five-legged stool working for them and many are going on vacations, selling covered calls to bring in cash, and so on. But it takes some new skills and some discipline to run a five-legged stool.
I do have an essay on the fivelegged stool and I think it is such an important way of thinking that I will send it to you or any other reader of Grainews FREE if you send me an email at I could even send you a free month of our newsletter StocksTalk. The information in StocksTalk helps to run the fivelegged stool.
A LOOK AHEAD
Several documents out there suggest it will take the U. S. and some other countries five to seven years to get their economies back up to speed. A paper by the McKinsey Global Institute suggests that when central banks and government raising interest rates cause a recession, it often takes about 18 months for the recession to end. However, when the recession is caused by “de-leveraging,” it can take five to seven years. The latest recession was caused because people started to pay down debt and save money. Banks had to raise their capital reserves, and to do that they lent out less and many cut dividends. That’s all part of de-leveraging.
If you go to Google and type in McKinsey Global Institute and look around for an article on debt and de-leveraging, you should find the report. This report goes back about 80 years.
If you think that going back 80 years isn’t enough, then go to Google and type in the name of a book titled “This time it’s different” by Carman Reinhart and Kenneth Rogoff. You will find a report of over 100 pages. This one goes back 800 years and examines recessions, depressions and how they recovered.
I also read that the U. S. has about 130 million jobs in the economy, about the same as in 1999. But something like 30 million peo-